Disclosure of prior art abstract only when more relevant detail known results in inequitable conduct
January 28, 2008

In a decision Friday, the Federal Circuit affirmed a district court's finding of inequitable conduct based on nondisclosure of details of a poster presentation presented at a scientific conference. While the patentee disclosed the abstract during prosecution of the patents-in-suit, notes taken by one of the patentee's employees with much more detail of what was actually presented at the conference were not. The court affirmed the conclusion that these notes were highly material, because they directly contradicted statements made by the patentee during prosecution in support of patentability.

The court also affirmed the finding of intent to deceive. The notes had been widely circulated among the patentee's scientists working in the field of the invention, and the prosecuting attorney was aware of them. The attorney stated that while he was aware of the notes, he did not know or understand the contents of the notes, even though he discussed them with the employee who took the notes. The district court found this statement not credible, and the Federal Circuit found no clear error. As a result, the finding of inequitable conduct, and therefore unenforceability, was affirmed.

There were three related patents also at issue, and the court likewise affirmed the holding of unenforceability as to those patents. Although the patentee dismissed its infringement claims under those patents with prejudice and offered a covenant not to sue after the first appeal in this case, the court held that because the alleged infringer maintained its claim for attorney fees under § 285, the issue of inequitable conduct was still within the district court's subject matter jurisdiction. As a finding of inequitable conduct necessarily results in unenforceability of the patents, the court affirmed the unenforceability of the three related patents.

More detail of Monsanto Co. v. Bayer Bioscience N.V. after the jump.

Bayer holds four patents (the '565, '372, '546, and '799 patents) related to Bt technology. Bt refers to proteins derived from a bacteria, Bacillus thuringiensis, which are toxic to several common crop pests. Genetic material from the bacteria encoding the toxic proteins are inserted into crop plants, which then express the toxic proteins, thereby making the plants insect resistant. The '565 patent specifically covers chimeric genes comprising a truncated Bt toxin, and a regulatory region (promoter) of a gene naturally expressed in plant cells, such that the Bt toxin gene is controlled by the promoter. The remaining three patents cover other aspects of the technology.

Monsanto sought a declaratory judgment that its MON810 corn product did not infringe these patents, and that the patents were invalid and unenforceable. The district court held all four patents unenforceable based on inequitable conduct. During the prosecution of the patents, Bayer disclosed an abstract of a poster presentation given at a scientific conference by Dr. Wayne Barnes. The abstract read, in relevant part:

We have found that the second half of the Bacillus thuringiensis toxin gene is dispensable for the expression of an active insecticide. Not only may it be deleted, the second half of the gene may be replaced by the codons of the NPTII kanamycin resistance from Tn5, and both activities are expressed. . . .
We have tailored transcriptional control signals from the [Agrobacterium] T-DNA of pTiT37 so that this fused gene may be inserted in the place of the nopaline synthase codons adjacent to the right border signal from T-DNA. This plant gene should express the insecticide and kanamycin resistance from the same promoter. . . .

Based on this description of the Barnes presentation, the examiner rejected Bayer's claims (which were broader at this point than those that actually issued) as obvious, and required a showing of unexpected results in order to establish patentability. Bayer responded that:

Barnes et al. fails to identify which Bt. toxin gene should be utilized and also fails to show that the fusion gene would work in plants. Also, if the "second half" of the Bt2 gene would be deleted, as Barnes et al. suggests, the remaining part would encode a protein of 576 amino acids, which is not toxic. Moreover, the Barnes et al. reference is not enabled since it is stated therein that the fused gene "may" be inserted into T-DNA and that the plant gene "should" express the insecticide and kanamycin resistance from the same promoter. But no concrete evidence is provided.

Bayer further argued that (emphasis added) "[t]he problem of the unpredictability of expression of foreign genes in plants, that the Examiner purports to exist, has actually been solved by the present invention by providing truncated Bt genes." Essentially, Bayer argued that Barnes did not disclose protein fragments of the proper length, and that he had not solved the problem of getting the plant to express the toxic protein.

Unfortunately for Bayer, the abstract wasn't the only information it had regarding the Barnes presentation. One of its employees had attended the conference and taken notes that provided additional detail regarding the content of the presentation. This additional information included:

Barnes disclosed in his poster that he had (a) truncated a Bt toxin gene at or near the restriction enzyme site xho and discovered that this gene fragment encoded a N-terminus 67 kD truncated Bt toxin which retained toxicity; (b) created a chimeric gene which encoded a fusion of this truncated Bt toxin protein and the NPT-II protein; (c) expressed this fusion protein in a bacterial system and demonstrated that the expressed protein provided kanamycin resistance and was toxic to insects when applied to plants "in drops"; and (d) inserted the gene for this fusion protein into an Agrobacterium T-DNA plant expression vector, creating a chimeric gene comprising the nos promoter, the Bt toxin gene fragment encoding a 67 kD toxin, and the NPT-II gene.

Bayer did not disclose these notes to the USPTO during prosecution. The district court held that this additional information was material, as it directly contradicted the statements made by Bayer in support of the patentability of its claims, as it showed that Barnes did disclose the proper protein fragments, and also had been able to successfully express the toxic protein in bacteria as well as insert the gene in to a common plant expression vector.

As to whether Bayer acted with intent to deceive, Bayer offered evidence that its attorney spoke with the employee who took the notes, and that she couldn't remember "anything" about the presentation or poster. However, during that employee's deposition, she provided extensive testimony regarding the notes, their meaning, and the content of the poster and presentation. As a result, the district court found the prosecuting attorney's testimony not credible, and as a result found the required intent to deceive. Accordingly the court concluded the patents had been obtained via inequitable conduct and were therefore unenforceable.

The Federal Circuit affirmed. Regarding materiality, the court noted that it was not necessary that Barnes disclose the exact same Bt toxin as claimed by Bayer to make the notes material. At the time of the rejection in response to which Bayer made its arguments quoted above, the claims were broader than those allowed and covered any chimeric construct encoding a 60-80 kD N-terminal fragment of a Bt toxin protein. Further, none of the relevant rejections or arguments relied on the particular sequences disclosed in the Barnes presentation. The court also took Bayer to task for misquoting a sentence of the district court's opinion (footnote 12):

In its opening brief to this court and again in its reply brief, Bayer's quotation of the sentence of the district court's opinion upon which it places primary reliance leaves out this important final clause of the sentence and, by failing to use ellipses, makes it appear that it has quoted the entire sentence. Such misquotation of text, whether inadvertent or purposeful, risks misleading this Court and cannot be of help to the client.

Additionally, the court noted how the additional detail from the poster contradicted Bayer's arguments in favor of patentability:

First, Bayer argued to the Examiner that he should read the Barnes Abstract's statement that the "second half" of the Bt toxin gene is dispensable literally, as referring to a gene of exactly half the length of the full length gene, and thus one that encoded a 576 amino acid protein, a size known to be too small to be toxic. This was perhaps a plausible, if strained, reading of the Abstract itself. But the interpretation cannot be reconciled with the additional information disclosed about the Barnes Poster in the Mariani notes. Mariani's notes demonstrated that the truncated protein referred to in the abstract was a 67 kD protein with proven insect toxicity. Second, Bayer relied on the use of the word "may" in the Abstract to argue that Barnes had not enabled inserting the Bt toxin/NPT-II fusion gene into Agrobacterium T-DNA because there was no "concrete evidence" that the construct had been made. In contrast, the Mariani notes disclosed that Barnes had in fact created the described T-DNA construct.

As a result, the court held the district court's finding of materiality was not clearly erroneous. The court did note that it was not suggesting that "all internal documents of potential relevance must be submitted to the PTO as a matter of course." It was the particular circumstances here that made the documents material.

Turning to intent, the Federal Circuit once again held the district court's finding not clearly erroneous. First, the court noted that intent may be inferred when the applicant knew or should have known that the withheld information would be material to the consideration of the application. When such intent is inferred, the patentee must come forward with a credible explanation as to why the information was withheld.

Here, there was no such credible explanation. As noted by the district court, the prosecuting attorney's testimony that the employee who took the notes did not remember anything about the poster was belied by that employee's deposition testimony in this case. As a result, the district court found the explanation not credible, and inferred intent to deceive. The Federal Circuit noted that credibility determinations by a district court "can virtually never be clear error," and affirmed the finding of intent to deceive.

Because Bayer did not challenge the ultimate discretionary finding of inequitable conduct, just the underlying findings of materiality and intent to deceive, the court therefore affirmed the inequitable conduct holding.

There was one additional wrinkle, however. After the previous appeal in this case, Bayer dismissed its infringement allegations on all patents other than the '565 patent, and granted Monsanto a covenant not to sue on the remaining three patents. Nonetheless, the district court held these three patents unenforceable due to inequitable conduct as well. Bayer argued that given the covenant not to sue, the district court lacked jurisdiction to make such a determination.

The Federal Circuit also affirmed on this issue. While the infringement claims may have been dismissed, Monsanto's claims for attorney fees under § 285 remained, and that claim was based on Bayer's inequitable conduct. Accordingly, in order to resolve Monsanto's attorney fee claim, the district court had to determine whether the other patents were obtained via inequitable conduct as well. Further, because "the unenforceability of a patent follows automatically once a patent is found to have been obtained via inequitable conduct," the finding that these three patents were unenforceable was likewise affirmed.

To read the full decision in Monsanto Co. v. Bayer Bioscience N.V., click here.

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