Monsanto Co. v. Bayer Bioscience N.V.

United States Court of Appeals for the Federal Circuit

2007-1109

MONSANTO COMPANY,

Plaintiff-Appellee,

v.

BAYER BIOSCIENCE N.V.,

Defendant-Appellant.

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.

Appealed from: United States District Court for the Eastern District of Missouri

Judge E. Richard Webber
United States Court of Appeals for the Federal Circuit
2007-1109

MONSANTO COMPANY,

Plaintiff-Appellee,

v.

BAYER BIOSCIENCE N.V.,

Defendant-Appellant.

Appeal from the United States District Court for the Eastern District of Missouri in case
no. 4:00-CV-01915, Judge E. Richard Webber.

___________________________

DECIDED: January 25, 2008
___________________________

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 unenforceablity

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

1
Background on the science of genetically engineering plants to express Bt
toxin can be found in our previous opinion Mycogen Plant Science, Inc. v. Monsanto
Co., 243 F.3d 1316, 1324 (Fed. Cir. 2001).
2
kD, or kilodalton, is a measure of the molecular weight of a protein.

2007-1109 2
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 genes 4 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

3
When Agrobacterium infects certain plant cells, it integrates a part of its
DNA, the T-DNA plasmid, into the genome of the plant. To genetically engineer a plant
using the Agrobacterium transformation method, the foreign DNA of interest is first
introduced into the T-DNA plasmid. Then the plant is infected with Agrobacterium
containing the modified T-DNA, leading to the introduction of the foreign segment into
the plant cell genome. See In re Goodman, 11 F.3d 1046, 1048 (Fed. Cir. 1993). When
the encoding region of the foreign gene is linked to a regulatory region recognized by
the plant cell machinery, the transformed plant cell will be able to express the protein
encoded by the foreign gene.
4
A chimeric gene is an artificial (i.e., human made) gene created by linking
together separate segments of natural or synthetic DNA from different sources.
5
Not all Bt toxins have identical amino acid sequences. The sequence
limitation, added during the prosecution to overcome rejection, limits Bayer’s invention
to chimeric genes encoding a specific variant of Bt toxin.
6
The specification defines a gene naturally expressed in plants to include
both those genes that are originally part of a plant’s genome and those genes which are
introduced by agents such as bacteria and produce RNA or protein in the absence of
human intervention. ‘565 patent col.9 ll. 52-57. One plant promoter disclosed in the
specification is the promoter of the T-DNA nopaline synthase gene, the “nos promoter.”
7
Claims 2, 5, and 8 of the ’565 patent were at issue, with claim 5 being
representative. In independent form it recites:

5. A chimeric gene comprising:

(1) a DNA fragment encoding an insecticidal Bacillus thuringiensis Bt2
toxin of about 60 to about 80 kD, wherein said Bt2 toxin comprises the
amino acid sequence ID No. 1 from amino acid position 1 to amino acid
position 725; and

2007-1109 3
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.

(2) a promoter region of a gene naturally expressed in plant cells, wherein
said DNA fragment is under the control of said promoter region.

’565 patent col.115. Dependent claim 12 adds a limitation that the plant promoter come
from one of three genes, including the nopaline synthase gene. Id.

2007-1109 4
 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

2007-1109 5
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

2007-1109 6
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 toxin. Narrower, dependent

claims, akin to the claims that ultimately issued, specified that the chimeric gene must

encode a Bt toxin with a specified amino acid sequence. 8 In addition, the application

8
The claims which ultimately issued as the ’565 patent differ from these
preliminary claims, even those that are sequence specific, in that they do not require
that the Bt toxin be expressed in plant cells at an insect-controlling amount, but only that
the Bt toxin gene be “under the control of” the plant promoter. Bayer did not object to

2007-1109 7
claimed chimeric genes encoding the Bt toxin fragment fused to a selectable marker

protein. Dependent claims included limiting the selectable marker protein to neomycin

phosphotransferase (“NTP-II”), an enzyme that provides resistance to the antibiotic

kanamycin, and limiting the “plant promoter” to the nos promoter, which is the promoter

region from the T-DNA nopaline synthase gene.

On March 21, 1994, the Examiner rejected all claims as obvious over various

prior art references including the Barnes Abstract. In particular, the Examiner noted that

the Barnes Abstract

provided motivation to genetically engineer plant cells with a truncated Bt
crystal gene rather than using the full length sequence. In the absence of
unexpected results it was obvious that a truncated version of the Bt crystal
protein would result in plants and plant cells which were insecticidal since
the art taught that only the N-terminal protein of the Bt protein, i.e. the
portion used by Applicants, was sufficient for insecticidal activity.
Furthermore, fusion proteins for truncated Bt. crystal proteins with NPT-II
were known as taught by Barnes.

The claims were also rejected for lack of enablement. The Examiner noted that the

prior art showed that “expression of [Bt] toxin genes in a plant cell is highly

unpredictable” and concluded that “[i]n view of the unpredictability of expression of

foreign genes . . . it does not appear that any Bt toxin protein would be effective in plant

cells against any species of insect. Consequently, Applicants broader claims are not

enabled.”

In reply to the office action, Bayer addressed both rejections. In order to

overcome the Barnes reference, 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

the district court’s holding and jury instruction that reduction to practice of the ’565
invention did not require making plants which expressed an insecticidal Bt toxin.

2007-1109 8
 “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.

On the enablement issue, Bayer argued that “[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. Any

protein expressed in a plant, by inserting a DNA encoding a truncated Bt protein will

inherently possess toxicity . . . , and thus the plants will be toxic to target insects.”

(emphasis added).

Although Bayer disclosed the Barnes Abstract during patent prosecution, it did

not disclose the notes taken by one of its employees, Dr. Celestina Mariani, regarding

the Barnes Poster, to which the abstract was in reference, nor the information contained

in the notes. Mariani had attended the conference and personally viewed Barnes’

poster. She explained in her deposition, which was presented at trial, that the notes

were made while in front of the poster and included copies of “the same schemes that

were presented on the poster.” Monsanto II, slip op. at 19 (quoting Mariani’s deposition

testimony (“Mariani depo.”)). The poster contained much more information than the

abstract itself. Id. at 24. In the deposition, Mariani carefully and extensively described

the content of her handwritten notes. Stepping through the figures and accompanying

text, she explained that her notes illustrated that 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

2007-1109 9
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. Id. at 19-24 (quoting Mariani depo.).

Mariani’s notes also stated that the chimeric construct was “not toxic if it is in leaves.” Id.

at 22 (quoting Mariani depo.). She explained in her deposition, “I must assume that ‘in

leaves’ then means they have done plant transformation, but I cannot remember

exactly, to be honest.” Id. at 22 (quoting Mariani depo.). But she emphasized that the

construct had been created and that the Barnes group “surely w[as] busy with

introducing in plants this cassette” since otherwise there would have been no reason to

make the construct in the Agrobacterium T-DNA system. Id. at 24 (quoting Mariani

depo.). The district court found that Mariani’s testimony demonstrated that she

remembered “a great deal about the notes” and was clearly and articulately able to

describe the contents of the Barnes Poster as detailed in the notes. Id. at 18. 9

The Mariani notes were “widely circulated” among Bayer’s Bt group. Dr. Wouter

Meulemanns worked in the intellectual property department at Bayer and was

responsible for the prosecution of the four patents at issue. Id. Meulemanns admitted

that he saw Mariani’s notes during the prosecution of the ’565 patent and remembers

9
At trial Mariani was much less forthcoming about the content of her notes
than she had been in the deposition. The district court, however, found her initial
deposition testimony more credible. Monsanto II, slip op. at 97. There is nothing clearly
erroneous in this credibility finding.

2007-1109 10
talking to Mariani about the Barnes Poster and her notes. He 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. Id. at 17-18 (quoting

Meulemanns depo.). However, Meulemanns stated that Mariani was unable to

remember “anything” about the presentation or poster during their conversation.

The district court, in its memorandum and order following the inequitable conduct

bench trial, carefully reviewed all of this evidence, quoting extensively from the

testimony of both Meulemanns and Mariani. The court found Meulemanns’ testimony to

stand in “sharp contrast” to Mariani’s detailed deposition testimony and determined that

Meulemanns was not credible in claiming not to have known nor understood the content

of the notes despite having discussed them with Mariani. And after quoting at length

from Dr. Mariani’s deposition testimony, 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 . . . . The Court finds
from all of the evidence in the case, that Bayer had a duty of candor and
good faith to disclose the Mariani notes and intentionally withheld the
information from the United States Patent Office examiner in the
prosecution of the ’565 patent with intention to deceive the PTO examiner.

Id. at 24.

These findings were made in the section of the district court’s opinion entitled

“Findings of Fact.” In the section entitled “Discussion” the district court returned to the

question of the materiality of the Mariani notes. The court explained:

The Court will not repeat the lengthy Mariani recitation from above, but it 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

2007-1109 11
 examiner would have considered the Barnes notes important in deciding
whether to allow the application to issue as a patent. . . . The Barnes
notes by themselves withheld by Bayer from the PTO examiner, if
disclosed, would establish a prima facie case of unpatentability of Bayer’s
claims under the ’565 patent.

Id. at 97-98. Accordingly, the court concluded that “by clear and convincing evidence

for all of the reasons cited in this opinion,” Bayer made “a deliberate decision to withhold

the known highly material reference with the specific intent to deceive or mislead the

PTO examiner.” Id. The court emphasized that in reaching this determination, it was

relying on “all of the findings of fact stated in this opinion,” not just those in the

discussion section. Id. at 92.

The district court also found by clear and convincing evidence that Bayer’s

representation to the PTO that unpredictability of gene expression had been solved was

false and misleading and was submitted to the PTO examiner with the specific intent to

deceive the PTO. Id. at 96.

B.

Information is material for the purposes of an inequitable conduct determination if

“‘a reasonable examiner would have considered such [information] important in deciding

whether to allow the parent application.’” Digital Control Inc. v. Charles Mach. Works,

437 F.3d 1309, 1314 (Fed. Cir. 2006) (quoting Dayco Prods., Inc. v. Total Containment,

Inc., 329 F.3d 1358, 1363 (Fed. Cir. 2003)). “In evaluating materiality, this court has

consistently referred to the standard set forth in PTO Rule 56.” Purdue Pharma L.P. v.

Endo Pharms., Inc., 438 F.3d 1123, 1129 (Fed. Cir. 2006). Rule 56 defines material

information as:

2007-1109 12
 information that is not cumulative to information already of record or being
made of record in the application, and that

(1) establishes, by itself or in combination with other information, a prima
facie case of unpatentability of a claim; or
(2) . . . refutes, or is inconsistent with, a position the applicant takes in:
(i) Opposing an argument of unpatentability relied on by the Office,
or
(ii) Asserting an argument of patentability.

37 C.F.R. § 1.56. A misstatement or omission that is material under the Rule 56

standard is considered material for the purposes of the inequitable conduct inquiry.

Digital Control Inc., 437 F.3d at 1316. 10

Bayer argues that the “sole basis” for the district court’s determination that the

Mariani notes were material was the conclusion in one sentence of the discussion

section 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 argues that these findings were clearly

erroneous because they were based on the unsupported speculation that Barnes was

using the identical species of Bt toxin as Bayer, and that without this “erroneous finding

of fact, there can be no materiality.” We disagree.

To begin, Bayer is correct that there is nothing in the record which would support

a finding that the Bt toxin used by Barnes was identical to the Bt toxin claimed in the

10
Although all misstatements or admissions that satisfy Rule 56 are
considered material, the converse is not true: A misstatement or admission can be
material for the purposes of showing inequitable conduct even if it does not meet the
standard for Rule 56 if, in the totality of the circumstances, a reasonable examiner
would have considered such information important in deciding whether to allow the
parent application. See Digital Control Inc., 437 F.3d at 1316 (“[I]f a misstatement or
omission is material under the new Rule 56 standard, it is material. Similarly, if a
misstatement or omission is material under the ‘reasonable examiner’ standard or under
the older three tests, it is also material.”).

2007-1109 13
issued ’565 patent. However, the district court need not have found that Barnes used

the identical Bt toxin as Bayer for the Mariani notes 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. Cf. Eli Lilly &

Co. v. Barr Labs., Inc., 251 F.3d 955, 971 (Fed. Cir. 2001) (noting that a “genus claim

limitation is anticipated by, and therefore not patentably distinct from, a[] . . . species

claim”). 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. Rather, the issue was whether

the Barnes Abstract made Bayer’s invention obvious absent unexpected results

because Barnes’ work with Bt toxin, regardless of the specific species used, provided

motivation to genetically engineer plant cells with “a truncated Bt crystal gene” and

“taught fusion proteins of truncated Bt crystal proteins with NPT-II.” Similarly, the exact

sequence of the Barnes protein is irrelevant to the question of whether Bayer’s

arguments to the PTO interpreting the Barnes Abstract were inconsistent with the

information contained in the Mariani notes. 11

11
Indeed, at the time, Bayer was arguing 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. See Response to Office Action (Sept.
28, 1994) (“Any Bt protein expressed in a plant, by inserting a DNA encoding a
truncated Bt protein will inherently possess toxicity characteristics against its target
insect, and thus the plants will be toxic to target insects. It is well within the skill of the
person in the art to select a particular Bt protein gene with an observed toxicity to a
target insect, truncate the gene and express it to attain resistance against the target

2007-1109 14
 Moreover, Bayer is incorrect that the “sole basis” for the district court’s materiality

finding was the court’s one sentence summary that the Barnes construct coded for the

“same 67 kD protein” as Bayer claimed, and the xho site would make it easy to identify.

Bayer ignores that the very sentence in the analysis section containing these two

statements also repeats the court’s critical finding that the Mariani notes showed that

the Barnes chimeric gene was toxic when applied to plants as a drop. 12 Furthermore,

the district court clearly stated that it was basing its finding of materiality not only on

those facts discussed in the analysis section, but also on all the factual findings

throughout the opinion. 13 These included finding Mariani’s deposition testimony credible

and illustrative of the “detail and scope of her notes and of her recollection of them.”

And the district court incorporated six pages of Mariani’s testimony verbatim into its

opinion. This testimony established that the Barnes Poster, as recorded in Mariani’s

notes, disclosed that Barnes had succeeded in making a fusion of the first 67 kD of a Bt

protein and NPT II; that this protein could be expressed and displayed kanamycin

resistance and toxicity to insects when applied as a drop; and that the gene encoding

for this fusion protein had been inserted into a T-DNA plasmid, creating a chimeric gene

comprising a plant promoter, the truncated Bt toxin gene, and the NPT-II gene. Based

insect.”). Bayer can therefore not now argue that only those prior art references
disclosing the particular Bt toxin described in the specification can be material.
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.
13
Accordingly, we need not decide whether if the facts repeated in the
analysis section had been the only basis for a finding of materiality the district court’s
finding would constitute clear error.

2007-1109 15
on Mariani’s testimony, the district court found it “very obvious” that the poster notes

would stand in “sharp contradiction” to Bayer’s argument before the patent examiner, in

which Bayer argued that the construct described in the Barnes Abstract was non-toxic

and non-enabled.

We see no clear error in these findings. The undisputed evidence established

that the arguments Bayer made to the Examiner to overcome the rejection based on the

Barnes Abstract cannot be reconciled with the information about the Barnes Poster

disclosed in the Mariani notes. 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. 14

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.

In light of these discrepancies between the interpretation of the Barnes Abstract

Bayer advocated and the information contained in the Mariani notes, the Mariani notes

14
A 576 amino acid protein is smaller than 67 kD.

2007-1109 16
clearly and convincingly “refute[], or [are] inconsistent with,” a position the applicant took

in opposing the Examiner’s argument of unpatentability. 37 C.F.R. § 1.56(2)(i). The

notes are therefore material under 37 C.F.R. § 1.56(2)(i). See also Bristol-Myers Squibb

Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1234 (Fed. Cir. 2003) (“[M]ateriality is

not limited to prior art but embraces any information that a reasonable examiner would

be substantially likely to consider important in deciding whether to allow an application

to issue as a patent.” (quoting GFI, Inc. v. Franklin Corp., 265 F.3d 1268, 1274 (Fed.

Cir. 2001))). 15 Since the notes meet the standard for materiality under § 1.56(2)(i), there

is no clear error in the district court finding the notes material even though a part of the

district court’s opinion, viewed in isolation, suggests that it may also have reached that

conclusion based on an untenable reading of the notes as stating that the Barnes

Poster disclosed a gene coding for the same Bt toxin used by Bayer. There is a

substantial likelihood that a reasonable examiner would have considered the Mariani

notes important in deciding whether to allow the application to issue.

We hold that the Mariani notes are material because they directly contradict

arguments Bayer made to the PTO in support of patentability. We do not suggest that

all internal documents of potential relevance must be submitted to the PTO as a matter

of course. Rather, it is the particular circumstances that render the internal documents

material in this case. We need not decide whether, as the district court found, they are

also material because the notes by themselves would establish a prima facie case of

15
That the Mariani notes may have required some explanation by Mariani to
be fully understood does not alter their materiality. Rather, it is the information contained
in them that makes the notes material and which Bayer, in light of its interpretation of
the Barnes Abstract, had an obligation to communicate to the PTO. If an accompanying
declaration by Mariani was necessary to make the notes legible, then the duty of candor
would require disclosing both the notes and such a declaration.

2007-1109 17
unpatentability of the ’565 patent’s claims. But certainly their materiality is augmented

by the fact that Mariani’s notes demonstrate, in significantly more detail than the Barnes

Abstract, that Barnes had already disclosed that a 67 kD N-terminal fragment of a Bt

toxin protein retained toxicity either alone or fused to a NPT-II protein and taught a

chimeric gene comprising the 67 kD Bt toxin gene and a plant promoter. Bayer was

attempting to claim a nearly identical invention—a chimeric gene comprising a gene

encoding a 60 to 80 kD Bt toxin protein and a plant promoter. Accordingly, we affirm

the district court’s finding that the Mariani notes were highly material. 16

C.

Bayer’s failure to disclose the highly material Mariani notes to the PTO during the

prosecution of the ’565 patent is not sufficient to prove inequitable conduct. Rather,

clear and convincing evidence must also establish an intent to deceive the PTO. To

prove intent, “the involved conduct, viewed in light of all the evidence, including

16
In Bayer’s reply brief, Bayer argues for the first time that even if its other
arguments fail the Mariani notes lack materiality because they would have been “merely
cumulative” in light of the prior art reference of a Gene article by Dr. Adang which
“disclosed toxic genes encoding Bt proteins of about 67-68 kd.” We do not consider this
argument as it has been waived. Becton Dickinson & Co. v. C.R. Bard, Inc., 922 F.2d
792, 800 (Fed. Cir. 1990) (“[A]n issue not raised by an appellant in its opening brief . . .
is waived.”).
Even if we were to reach the issue, Bayer’s argument ignores that the materiality
of the Mariani notes is based not only on the size of the protein disclosed in her notes,
but also on the notes’ disclosure that Barnes had constructed a chimeric gene
containing a 67 kD fragment of a Bt toxin gene fused to a kanamycin resistance gene
attached to a plant promoter. Bayer overcame the Adang Gene reference by expressly
arguing that it “fails to describe the development of a chimearic gene.” It can, thus, not
now argue that the Mariani notes, which do disclose a chimeric gene, are merely
cumulative over the Adang Gene article. Moreover, unlike the Mariani notes, nothing in
the Adang reference could refute Bayer’s interpretation of the Barnes Abstract. A
reference cannot be merely cumulative if there is no other reference which “refutes, or is
inconsistent with” a position the applicant has taken in opposing an argument of
unpatentability.

2007-1109 18
evidence of good faith, must indicate sufficient culpability to require a finding of intent to

deceive.” Digital Control Inc., 437 F.3d at 1319 (quoting Paragon Podiatry Lab., Inc. v.

KLM Labs., Inc., 984 F.2d 1182, 1189 (Fed. Cir. 1993)). Direct evidence of intent to

deceive is not necessary, but may be inferred from the surrounding circumstances.

Critikon, Inc. v. Becton Dickinson Vascular Access, 120 F.3d 1253, 1256 (Fed. Cir.

1997). 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.” Id.; see also Bruno Indep. Living Aids, 394 F.3d at 1354 (holding that an

“inference of deceptive intent may fairly be drawn in the absence” of a “credible

explanation for the non-disclosure”); cf. Dayco Prods., 329 F.3d at 1367 (“Intent to

deceive cannot be inferred simply from the decision to withhold the reference where the

reasons given for the withholding are plausible.”).

The district court did not clearly err in finding that Bayer’s “attempts to establish

subjective good faith sufficient to overcome the intent to mislead [were] not persuasive”

and concluding that Meulemanns intentionally withheld the material Mariani notes with

the intent to deceive the PTO. Monsanto II, slip op. at 97-98. Meulemanns himself

admitted that he was aware of the notes during the prosecution of the ’565 patent, that

he had discussed the content of the notes with Mariani, and that the notes would have

been important to the Examiner if the notes contained reliable information. The only

explanation that Meulemanns or Bayer provided for failing to disclose the information

contained in the notes was that the notes were not decipherable standing alone and that

when Meulemanns discussed the notes with Mariani, Mariani had been unable to

2007-1109 19
remember “anything” about them. The district court, however, found this explanation to

lack credibility, particularly in light of Mariani’s ability to testify with clarity and detail

about the contents of the notes during her deposition. We find nothing clearly

erroneous in the court’s credibility finding. See First Interstate Bank of Billings v. United

States, 61 F.3d 876, 882 (Fed. Cir. 1995) (“[C]redibility determinations by the trial judge

‘can virtually never be clear error.’” (quoting Anderson v. City of Bessemer, 470 U.S.

564, 575 (1985))); JVW Enters. v. Interact Accessories, Inc., 424 F.3d 1324, 1334 (Fed.

Cir. 2005). And absent a credible reason for Meulemanns to have not understood the

content of Mariani’s notes after having discussed them with Mariani, the district court did

not clearly err in inferring the requisite intent. See Bruno Indep. Living Aids, 394 F.3d at

1354. Intent is easily inferred when, as here, an applicant makes arguments to the PTO

that it knows, or obviously should have known, are false in light of information not before

the examiner, and the applicant knowingly withholds that additional information. See

Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1368 (Fed. Cir. 2007) (holding that

an applicant’s argument that the information was withheld in “‘good faith’ does not

negate an intent to manipulate the evidence” when “an applicant knows or obviously

should know that information would be material to the examiner”).

Having found without clear error 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 district court had

discretion to hold the ’565 patent unenforceable for inequitable conduct. See Hoffmann-

La Roche, Inc. v. Promega Corp., 323 F.3d 1354, 1359 (Fed. Cir. 2003). As Bayer does

2007-1109 20
not challenge this discretionary decision, we affirm the district court’s holding that the

’565 patent is unenforceable for inequitable conduct.

Because the failure to disclose the information in the Mariani notes was alone

sufficient to support holding the ’565 patent unenforceable, we need not consider

whether the statement Bayer made during the prosecution of the patent that its

invention had solved the problem of unpredictability of expression of Bt toxins in plants

also amounted to inequitable conduct.

III.

The district court also concluded that the ’799, ’372 and ’546 patents were

unenforceable for inequitable conduct. Bayer argues on appeal that the district court did

not have jurisdiction to hold these three patents unenforceable. We review questions of

jurisdiction de novo. See, e.g., Pennington Seed, Inc. v. Produce Exch. No. 299, 457

F.3d 1334, 1338 (Fed. Cir. 2006).

Although Monsanto initially sought a declaratory judgment that four Bayer

patents were infringed, Bayer subsequently dismissed with prejudice its infringement

claims under the ’799, ’372, and ’546 patents and filed a Statement of Non-Liability,

covenanting not to sue Monsanto for past, present, or future infringement of these

patents. Even if filing such a covenant may divest the court of jurisdiction over a

declaratory judgment action regarding these patents, see Amana Refrigeration, Inc. v.

Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999); Fort James Corp. v. Solo Cup Corp.,

412 F.3d 1340 (Fed. Cir. 2005), under our precedent the district court retained

independent jurisdiction over Monsanto’s request for attorney fees under 35 U.S.C.

§ 285. As this court recently explained:

2007-1109 21
 While the covenant [not to sue for infringement] may have eliminated the
case or controversy pled in the patent-related counterclaims and deprived
the district court of Article III jurisdiction with respect to those
counterclaims, the covenant does not deprive the district court of
jurisdiction to determine the disposition of . . . the request for attorney fees
under 35 U.S.C. § 285.

Highway Equip. Co. v. FECO, Ltd., 469 F.3d 1027, 1033 n.1 (Fed. Cir. 2006) (internal

citation omitted); see also H.R. Techs., Inc. v. Astechnologies, Inc., 275 F.3d 1378,

1385 (Fed. Cir. 2002).

The parties do not dispute that the district court’s jurisdiction to rule on attorney

fees encompassed the jurisdiction to make findings of inequitable conduct regarding all

four patents. See Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1380

(Fed. Cir. 2001) (“A district court may award reasonable attorney fees to the prevailing

party in a patent infringement case where the conduct of a party is deemed to be

‘exceptional.’ . . . . The prevailing party may prove the existence of an exceptional case

by showing: inequitable conduct before the PTO . . . .” (quoting 35 U.S.C. § 285)). 17 The

district court’s holding that the ’799, ’372, and ’546 patents are unenforceable stemmed

directly from its inequitable conduct findings. See Monsanto II, slip op. at 95 (“The Court

. . . finds by clear and convincing evidence that the equities warrant a conclusion that

. . . Bayer committed inequitable conduct. . . . The ’799 patent, the ’372 patent, and the

’546 patent are accordingly unenforceable.”). The question facing this court is, thus,

whether a district court’s jurisdiction under § 285 to determine whether there was

inequitable conduct in the prosecution of patents that are otherwise no longer in suit

17
Inequitable conduct regarding the three withdrawn patents was relevant to
the question of attorney’s fees because Monsanto’s request for attorney’s fees included
fees accumulated before the three patents had been withdrawn.

2007-1109 22
confers on that court the jurisdiction to hold such patents unenforceable for inequitable

conduct. We hold that it does.

A district court has no discretion to decide whether a patent is unenforceable

once it enters a finding of inequitable conduct. To the contrary, this court has long held

that the unenforceability of a patent follows automatically once a patent is found to have

been obtained via inequitable conduct. Kingsdown Medical Consultants, Ltd. v. Hollister

Inc., 863 F.2d 867, 877 (Fed. Cir. 1988) (en banc in pertinent part) (“When a court has

finally determined that inequitable conduct occurred in relation to one or more claims

during prosecution of the patent application, the entire patent is rendered

unenforceable.” (emphasis added)); see also J.P. Stevens & Co. v. Lex Tex, Ltd., 747

F.2d 1553, 1560 (Fed. Cir. 1984) (“If the court reaches th[e] conclusion [that there was

inequitable conduct], it must hold that the patent claims at issue are unenforceable.”).

Any distinction between the two findings is merely semantic. As a result, jurisdiction to

decide whether a patent was obtained through inequitable conduct necessarily includes

the jurisdiction to declare a patent unenforceable as a result of that inequitable conduct.

In an opinion issued after the briefs were filed in the instant case but prior to oral

argument, this court explicitly held that a district court has the power to declare patents

that are no longer in suit unenforceable for inequitable conduct. Nilssen v. Osram

Sylvania, Inc., 504 F.3d 1223 (Fed. Cir. 2007). In Nilssen, the plaintiff had originally

alleged that the defendant infringed fifteen patents related to electrical lighting products

but withdrew four of the patents shortly before trial. The district court nevertheless held

the four withdrawn patents unenforceable for inequitable conduct in the process of

determining whether the patents which remained in the suit were unenforceable for

2007-1109 23
inequitable conduct. This court affirmed, explaining that “[b]ecause inequitable conduct

with respect to one or more patents in a family can infect related applications, we find

no abuse of discretion in the district court’s holding the [four patents no longer in suit]

unenforceable.” Id. at 1230. In Nilssen the jurisdiction of the court to reach the

inequitable conduct inquiry for the withdrawn patents was itself in question because the

district court reached the issue only collaterally to determining whether there was

inequitable conduct regarding patents that remained in suit. Here, the outcome is even

clearer as there is no dispute that the court had an independent grant of jurisdiction

under § 285 to consider inequitable conduct relating to the withdrawn patents. The

district court, therefore, did not lack jurisdiction to hold the ’799, ’372, and ’546 patents

unenforceable. 18

IV.

We affirm the district court’s holding that the ’565 patent is unenforceable

for inequitable conduct, and we conclude that the court did have jurisdiction to declare

the ’799, ’372, and ’546 patents unenforceable. Since we affirm the court’s holding that

the ’565 patent is unenforceable, we do not reach the remaining issues raised by Bayer

on appeal. The final judgment of the district court is therefore

AFFIRMED.

Costs to appellee.

18
Bayer does not, in this appeal, challenge the district court’s findings of
inequitable conduct regarding the ’799, ’372, and ’546 patents. Therefore, those findings
are affirmed. We do not address the impact of those findings on the question of
attorney fees under section 285.

2007-1109 24