Ajinomoto Co. v. Archer-Daniels-Midland Co.

• Decision Date: 03 October 2000
• Docket Number: ARCHER-DANIELS-MIDLAND
• Citation: 56 USPQ2d 1332,228 F.3d 1338
• Parties: (Fed. Cir. 2000) AJINOMOTO CO., INC., Plaintiff-Cross Appellant, v.CO., Defendant-Appellant. 99-1098,-1099,-1209,-1210 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1338

228 F.3d 1338 (Fed. Cir. 2000)

AJINOMOTO CO., INC., Plaintiff-Cross Appellant, v. ARCHER-DANIELS-MIDLAND CO., Defendant-Appellant.

99-1098,-1099,-1209,-1210

United States Court of Appeals for the Federal Circuit

DECIDED: October 3, 2000

Appealed from: U.S. District Court for the District of Delaware

Judge Sue L. Robinson

[Copyrighted Material Omitted] Marc R. Labgold, Piper Marbury Rudnick & Wolfe LLP, of Washington, DC, argued for plaintiff-cross appellant. With him on the brief were Arthur I. Neustadt, Oblon, Spivak, McClelland, Maier & Neustadt, P.C., of Arlington, Virginia. Of counsel on the brief was Catherine B. Richardson, Piper Marbury Rudnick & Wolfe LLP.

Charles A. Laff, Laff, Whitesel, Conte & Saret, Ltd., of Chicago, Illinois, argued for appellant. With him on the brief was Kevin C. Trock. Of counsel on the brief were Ari S. Zymelman, Williams & Connolly, of Washington, DC, and Jack B. Blumenfeld, Morris, Nichols, Arsht & Tunnell, of Wilmington, Delaware. Of counsel were Martin L. Stern, William A. Meunier, and Lisa C. Childs.

Before NEWMAN, Circuit Judge, SMITH, Senior Circuit Judge, and RADER, Circuit Judge.

NEWMAN, Circuit Judge.

Archer-Daniels-Midland Company ("ADM") appeals the judgment of the United States District Court for the District of Delaware, ¹ holding that ADM's use of certain strains of genetically modified bacteria to produce the amino acid threonine infringed Ajinomoto's United States Patent No. 4,278,765 ("the '765 patent") in terms of 35 U.S.C. 271(g), and awarding damages calculated as a royalty of $1.23/kg of threonine produced by ADM from May 1993 to March 27, 1998. ADM also appeals the district court's ruling that the '765 patent is valid and enforceable. Ajinomoto cross-appeals the ruling that infringement was not willful. The judgment is affirmed, with modification of the damages period.

BACKGROUND

Threonine is an essential nutrient amino acid for many animals. It is not produced in the mammalian body and must be obtained from food. Bacteria, however, normally produce the amino acids needed for their own nutrition. The bacterial process, as it occurs in nature, is internally regulated to limit amino acid production to the amount and kind required by the bacteria for their metabolic functions, and the amino acids produced are degraded as they are metabolized. The '765 patent, entitled "Method for Preparing Bacterial Strains Which Produce Amino Acids," is directed to modification of the bacterial genetic structure in order to produce amino acids in increased quantities. The patented method is based on a combination of mutation genetics and recombinant DNA technology. ²

The invention that is the subject of the '765 patent is the work of scientists at the Institute for Genetic Engineering and Industrial Microbiology ("Genetika") in the former Soviet Union. The patent describes and claims the modification of bacteria in order to block both the regulatory mechanism that limits amino acid production and the degradation pathway for the amino acid that is produced, leading to bacterial overproduction of the amino acid. That is, each bacterium produces more of the amino acid than it needs, and does not metabolize the excess amino acid that it produces. When conducted on a suitably large scale, commercial quantities of amino acid are obtained. Threonine is included in balanced animal feed supplements, and is of commercial value.

The '765 patent describes a strain of E. coli bacteria that normally produces and consumes threonine. This strain was mutated to a strain that was "feedback resistant" to the production of threonine; that is, a strain that did not limit the amount of threonine produced to what was needed for the bacterial metabolism. From this mutant strain the portion of the chromosome containing the mutated gene controlling the synthesis of threonine was isolated. This chromosome fragment (called a threonine "operon") was then combined with a plasmid ³ that had been found to be suitable for inserting this genetic material into a host bacterium, to produce a "hybrid plasmid." The hybrid plasmid was then inserted into a "recipient" changed or mutated host bacterial strain that was modified to have two characteristics: it was incapable of producing the desired amino acid before insertion of the hybrid plasmid, and it contained a mutation that partly blocked its natural mechanisms for degrading the desired amino acid. The new bacterial strain thus formed, when placed in an appropriate medium, produces an excess of the desired amino acid. According to the record, this had never before been accomplished.

An application for an Inventors' Certificate was filed in the Soviet Union on June 30, 1978. A corresponding United States patent application was filed on June 28, 1979 and issued as the '765 patent on July 14, 1981. Ajinomoto is the owner of the '765 patent, having acquired Genetika's United States patent rights. Claims 1 and 2 of the '765 patent are in suit:

1. A method for preparing bacterial strains which produce aminoacids comprising

combining a chromosome DNA fragment of a donor bacterium containing genes controlling the synthesis of a selected aminoacid and having a mutation which destroys the negative regulation of the synthesis of said aminoacid, with a plasmid DNA molecule capable of ensuring amplification, to form a hybrid DNA molecule;

transforming with said hybrid DNA molecule, cells of a recipient bacterial strain having a mutation blocking the synthesis of the selected aminoacid in said strain and a mutation partly blocking the related step of metabolism of said aminoacid,

to yield a bacterial strain possessing increased productivity of the selected aminoacid.

2. A method as claimed in claim 1, wherein for the removal of ballast genetic material, the hybrid DNA molecule is treated, prior to transforming cells of the recipient strain, with specific endonucleases ensuring cleavage of the hybrid molecule of DNA in predetermined sites of the molecule, followed by recombination and joining of the required DNA fragments with polynucleotide ligase.

In 1993 ADM, a producer of feed supplements for livestock, commenced the production of threonine using a bacterial strain that was made in Sweden by ABP International, a Genetika licensee using the Genetika process. ABP's license was territorial, and granted no rights in the United States. ADM purchased the bacterial strains and strain documentation and the right to use the bacteria for the production of threonine of feed grade quality, along with the specifications and operating manual for the design and construction of a plant to produce threonine using the designated process.

Ajinomoto sued ADM, invoking 35 U.S.C. 271(g) and charging that the genetically engineered bacteria imported by ADM and used in the United States infringed the '765 patent because the bacteria were made by the method patented in the United States.

STANDING TO SUE

After trial was over, ADM challenged Ajinomoto's standing to sue for infringement of the '765 patent. ADM challenged the license to Ajinomoto from the Soviet licensing agency and the subsequent direct assignment by the inventors to Ajinomoto. The district court, despite finding that ADM had raised the issue tardily, considered the question in light of the information of record.

The district court determined that the Soviet government owned the Genetika invention and that Licensintorg, the Soviet government's technology licensing agency, had the right to grant a license to Ajinomoto. The court explained that "even though the Inventors' Certificate was issued in the names of the inventors, according to Soviet law, the invention became the property of the Soviet government." In 1991 the Russian state returned patent ownership and any license agreements to the various entities from which they originated. In May 1991 Genetika assigned the '765 patent to Ajinomoto, and in October 1991 the inventors executed an assignment directly to Ajinomoto. The district court found the evidence in the record sufficient to establish Ajinomoto's ownership of the '765 patent and its standing to sue for infringement.

We agree that the 1982 exclusive license from Licensintorg, in which no substantial right was retained by the Soviet government or any other entity, as well as the ensuing assignments of the ownership rights of Genetika and of the inventors, conveyed all substantial rights to the '765 patent. ADM argues that "the record contains no written transfer of title to the '765 patent from the inventors," apparently referring to transfer from the inventors to the Soviet state for the purposes of Licensintorg's grant of an exclusive license to Ajinomoto in 1982. However, it is not disputed that the inventors were all employed at Genetika, a Soviet institution, and that they made the invention in the course of their employment. ADM argues that there is no evidence of record of Soviet law concerning the transfer of patent rights by employed inventors, including rights to foreign patents. However, ADM proffered no evidence and offered no argument of any flaw or illegality under Soviet law.

The district court observed that although "neither Ajinomoto nor the court was sufficiently put on notice that standing was a contested issue," standing was established by the evidence of record. ADM presented and presents no evidence to negate the unchallenged Licensintorg representations and grant of rights in the exclusive license agreement. It is well established that the holder of all substantial patent rights, by assignment or by exclusive license, has standing to sue for infringement in its own name. See, e.g., Vaupel Textilmaschinen KG V. Meccanica Euro Italia S.P.A., 944 F.2d 870, 875, 20 USPQ2d 1045, 1049 (Fed. Cir. 1991).

With respect to the assignment by the inventors, ADM argues that the recorded assignment was not entered into evidence, although it was identified on an exhibit...