Monsanto Co. v. Bayer Bioscience N.V.

• Decision Date: 25 January 2008
• Docket Number: No. 2007-1109.,2007-1109.
• Citation: 514 F.3d 1229
• Parties: MONSANTO COMPANY, Plaintiff-Appellee, v. BAYER BIOSCIENCE N.V., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

514 F.3d 1229

MONSANTO COMPANY, Plaintiff-Appellee, v. BAYER BIOSCIENCE N.V., Defendant-Appellant.

No. 2007-1109.

United States Court of Appeals, Federal Circuit.

January 25, 2008.

Susan K. Knoll, Howrey LLP, of Houston, Texas, argued for plaintiff-appellee. With her on the brief were Steven G. Spears, Daniel T. Shvodian, and Michelle C. Replogle.

George Pazuniak, Womble Carlyle Sandridge & Rice, PLLC, of Wilmington, Delaware, argued for defendant-appellant. With him on the brief was Anna Martina Linnea Tyreus. Of counsel on the brief was Virginia Whitne Hoptman, of Tysons Corner, Virginia. Of counsel was Timothy G. Barber, of Charlotte, North Carolina.

Before BRYSON, GAJARSA, and DYK, Circuit Judges.

GAJARSA, Circuit Judge.

This is a patent infringement case relating to chimeric genes. Plaintiff-Appellee Monsanto Co. ("Monsanto") brought a declaratory judgment action against Defendant-Appellant Bayer Bioscience N.V. ("Bayer") challenging the validity and unenforceability of four Bayer patents, U.S. Patent Nos. 5,545,565 ("the '565 patent"), 5,767,372 ("the '372 patent"), 6,107,546 ("the '546 patent"), and 5,254,799 ("the '799 patent"), and asserting that Monsanto's transgenic corn products did not infringe these patents. Bayer appeals a final judgment, issued after jury trial, declaring the asserted claims of the '565 patent invalid and non-infringed. In addition, Bayer appeals the final judgment of the district court that the four patents are unenforceable for inequitable conduct. We affirm the district court's conclusion that the '565 patent is unenforceable for inequitable conduct and hold that the district court had jurisdiction to declare the '372, '546, and '799 patents unenforceable. Accordingly, we do not reach the other issues raised by Bayer on appeal.

I.

Strains of the bacteria Bacillus thuringiensis ("Bt") produce proteins, known as Bt toxins, that while harmless for humans and most animals, are toxic to certain crop-destroying insects. In the 1980s multiple companies and academic groups took advantage of the newly emergent science of genetic engineering by attempting to insert a gene for Bt toxin into plants through a process known as transformation. The goal was for these genetically engineered plants to express (i.e., produce) a Bt toxin protein in sufficient quantities to make the plants insect-resistant.¹ Difficulties in getting plants to express a full-length Bt toxin gene, which encodes a protein of approximately 130 kD,² led researchers to investigate various alternatives. In 1986, Plant Genetic Systems, N.V., a predecessor of Bayer (hereinafter referred to as "Bayer"), succeeded in obtaining plants that expressed a truncated form of a Bt toxin. This shortened protein was produced by transforming the plants with a fragment of a Bt toxin gene that encoded the first part (or N-terminal end) of the toxin, using the bacterium Agrobacterium tumefaciens ("Agrobacterium"), a known system for plant transformation.³

The four patents involved in the present suit relate to this invention. The '565 patent claims chimeric genes⁴ comprising (a) a truncated Bt toxin gene encoding an approximately 60 kD to 80 kD Bt toxin of a specific amino acid sequence,⁵ and (b) the regulatory region of a gene "naturally expressed in plant cells,"⁶ which enables the gene to be transcribed in plants, i.e., a "plant promoter," where the Bt toxin gene is under the control of the plant promoter.⁷ The '372 patent, '546 patent, and the '799 patent are directed towards various other aspects of the technology including plant cells and plants that produce the insecticidal protein, and methods of transforming plants with the chimeric genes.

Monsanto sells a genetically modified corn product MON810 that expresses a Bt toxin with the same amino acid sequence claimed by Bayer. In December 2000, Monsanto filed a declaratory judgment action in the Eastern District of Missouri seeking a declaration that its product did not infringe the '565, '372, '546, and '799 patents and that these patents were invalid and unenforceable. Bayer counterclaimed alleging infringement of certain claims in each patent. The district court initially granted summary judgment to Monsanto, holding that all four patents were unenforceable due to inequitable conduct, that certain patent claims were invalid, and that the '565 patent was not infringed. Bayer appealed to this court. We reversed the trial court's claim construction as to the term "Bt2 toxin" and vacated the unenforceability and invalidity judgments. Monsanto Co. v. Bayer BioScience N.V., 363 F.3d 1235 (Fed.Cir.2004) (Monsanto I). In particular, we held that the summary judgment of unenforceability based on inequitable conduct during the prosecution of the '799 patent was improper because there were material facts in dispute, and we concluded that the district court erred in giving collateral estoppel effect to an earlier case between predecessors of the parties in this case and basing its invalidity findings on this estoppel.

On remand, Bayer dismissed all claims that MON810 infringed the '799, '372, and '546 patents and filed a Statement of Non-Liability as to these patents. Accordingly, when the case, proceeded to trial, only the '565 patent was at issue. The jury found the asserted claims of the '565 patent not infringed and invalid for obviousness and prior invention by Monsanto.

Subsequently, the district court held a four-day bench trial on inequitable conduct. 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. Monsanto v. Bayer BioScience N.V., No. 400cv01915, slip. op. (E.D.Mo. Aug. 28, 2006) (Monsanto II). The court also found inequitable conduct in the prosecution of the '799, '372, and '546 patents and accordingly held these patents unenforceable. Id. at 95. Bayer appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

In the current appeal, Bayer argues that the district court erred in claim construction, that allegedly 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, and that the district court lacked jurisdiction to find the '799, '372, and '546 patents unenforceable.

Because we affirm the district court's holding that the '565 patent is unenforceable for inequitable conduct, we need not reach the other issues raised by Bayer relating to the jury findings of invalidity and non-infringement of the patent. See eSpeed, Inc. v. Brokertec USA L.L.C., 480 F.3d 1129, 1138-39 (Fed.Cir.2007). Accordingly, we review only the district court's inequitable conduct holdings.

II.

When this Court reviews an inequitable conduct determination, "[w]e review the district court's findings on the threshold issues of materiality and intent for clear error." Cargill Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1365 (Fed.Cir. 2007). Accordingly, "the district court's determination will be reversed only if there is a `definite and firm conviction' that a mistake has been made." Id. The ultimate decision on inequitable conduct is reviewed for abuse of discretion. On appeal, Bayer does not challenge the ultimate discretionary determination. Therefore, we review here only whether there was clear error in the district court's underlying materiality and intent findings.

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 ("PTO") by failing to disclose material information, or submitting false material information, with an intent to deceive the PTO. Bruno Indep. Living Aids, Inc. v. Acorn Mobility Servs. Ltd., 394 F.3d 1348, 1351 (Fed.Cir. 2005); Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 872 (Fed. Cir.1988) (internal citations omitted); see also Monsanto I, 363 F.3d at 1239 (explaining that inequitable conduct can be found when the "applicant omitted or misrepresented material facts with the intention of misleading or deceiving the patent examiner"). Once the requisite levels of materiality and intent have been proven, a district court "must balance the equities to determine whether the patentee has committed inequitable conduct that warrants holding the patent unenforceable." Monsanto I, 363 F.3d at 1239.

A.

During the prosecution of the '565 patent, Bayer disclosed as prior art an abstract by Dr. Wayne Barnes entitled "A Bifunctional Gene for Insecticide and Kanamycin Resistance" (the "Barnes Abstract") that had been prepared in 1985 for a large scientific conference at which Barnes had made a presentation by displaying a poster presenting his findings (the "Barnes Poster"). 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. . . .

Bayer's application, as amended following an initial rejection, claimed any chimeric gene comprising a plant promoter linked to a truncated Bt toxin gene encoding a 60-80 kD N-terminal fragment of a Bt toxin, in which the chimeric gene could be expressed in the cell as an insect-controlling amount of Bt...