Monsanto sued Bayer Bioscience claiming that four Bayer patents relating to chimeric genes, including U.S. Patent Nos. 5,545,565 [1], are invalid and not enforceable. After the district court declared the four patents unenforceable for inequitable conduct Bayer appealed. The U.S. Court of Appeals for the Federal Circuit agreed after finding their researcher was less than forthcoming on her notes. Monsanto Co. v. Bayer Bioscience N.V. (07-1109) [2].
The ’565 patent claims chimeric genes comprising (a) a truncated Bt toxin gene encoding an approximately 60 kD to 80 kD Bt toxin of a specific amino acid sequence, and (b) the regulatory region of a gene “naturally expressed in plant cells,” which enables the gene to be transcribed in plants, i.e., a plant promoter [3].
Certain strains of bacteria (Bacillus thuringiensis or Bt [4]) produce proteins, known as Bt toxins, that are harmless for humans and most animals but are toxic to certain insects.
At district court, a jury found the asserted claims of the ’565 patent not infringed and invalid for obviousness and prior invention by Monsanto. In a 99-page opinion, the district court found materiality and intent for two separate acts relating to the ’565 patent and concluded that inequitable conduct made the ’565 patent unenforceable.
Here, Bayer argued that prejudicial evidence was admitted during the jury trial, that there was insufficient evidence to sustain the jury findings of prior invention and obviousness, that the district court erred in finding the ’565 patent unenforceable for inequitable conduct.
To hold a patent unenforceable for inequitable conduct, a district court must find by clear and convincing evidence that a patent applicant breached its duty of candor and good faith to the United States Patent and Trademark Office by failing to disclose material information, or submitting false material information, with an intent to deceive the PTO.
During the prosecution of the ’565 patent, Bayer disclosed as prior art an abstract by Dr. Wayne Barnes from a conference at which Barnes had a poster presentation.
After the Examiner rejected all claims as obvious over various prior art references including the Barnes Abstract, Bayer argued:
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 Bt gene would be deleted, as Barnes et al. suggests, the remaining part would encode a protein of 576 amino acids, which is not toxic.
Although Bayer disclosed the Barnes Abstract during patent prosecution, it did not disclose the notes taken by one of its employees, Dr. Mariani, who viewed the Barnes Poster. The poster contained much more information in showing a truncated Bt toxin gene at or near the restriction enzyme site xho and that this gene fragment encoded a N-terminus 67 kD truncated Bt toxin which retained toxicity.
The Mariani notes were “widely circulated” among Bayer’s Bt group and the intellectual property department. The patent attorney handling the cases, Meulemanns, conceded that “if [the Mariani] notes would add anything of reliable information which could add to the abstract, that could be important” to a patent examiner.
One troublesome point for Bayer was that Bayer argued that its disclosure of a chimeric gene with one version of a truncated Bt gene was sufficient to enable the genus of all chimeric genes with any truncated Bt toxin gene. The court said Bayer can’t have it both ways – that is, they can’t now argue that only those prior art references disclosing the particular Bt toxin described in the specification can be material.
The district court concluded: “[I]t is very obvious that the poster notes, if they were disclosed to the patent examiner, which they were not, would stand in sharp contradiction to the Bayer argument before the patent examiner . . .”
Finding this material, the court explained:
[I]is clear that the Barnes notes coded for the same 67 Kd toxic protein Bayer wanted to claim, that the Barnes gene was 3.4 kb for the full length, that because of the identified xho site, it would be easy to determine the identity of the Bt gene being used, and the chimeric gene used was toxic to insects by the drop. There is a substantial likelihood that a reasonable examiner would have considered the Barnes notes important in deciding whether to allow the application to issue as a patent. . . .
Bayer argued that the district court’s determination that the Mariani notes were material was based on the conclusion that the Barnes construct “coded for the same 67 kD toxic protein Bayer wanted to claim” and “that because of the identified xho site it would be easy to determine the identity of the Bt gene being used.”
Bayer argued that these were unsupported speculations and that without this “erroneous finding of fact, there can be no materiality.”
The Federal Circuit thought differently holding that the district court didn’t need to find that Barnes used the identical Bt toxin to be material:
First, at the time of the Examiner’s rejection, Bayer was not limiting its claim to one species of Bt toxin protein but was broadly claiming a chimeric construct encoding any 60-80 kD N-terminal fragment of a Bt toxin protein. Thus, any species of chimeric gene created by Barnes within this genus would directly implicate the allowability of Bayer’s claims.
Second, none of the Examiner’s rejections, including his rejections of the sequence specific claims, nor any of Bayer’s arguments to overcome these rejections, relied on the exact sequence of Bt toxin used by Barnes.
The court noted that Bayer’s failure to disclose the Mariani notes to the PTO, even if highly material, is not sufficient to prove inequitable conduct. This requires clear and convincing evidence showing an intent to deceive the PTO.
We have held that absent a credible reason for withholding the information, “[i]ntent may be inferred where a patent applicant knew, or should have known, that withheld information would be material to the PTO’s consideration of the patent application.”
Having found that Bayer intentionally withheld material information when it failed to disclose the Mariani notes despite taking a position at the PTO that was refuted by the information contained in the notes, the Federal Circuit affirmed the district court’s discretion to hold the ’565 patent unenforceable for inequitable conduct.