GS CLEANTECH CORPORATION v. CARDINAL ETHANOL, LLC
CORRECTED MEMORANDUM OPINION & ORDER AFTER BENCH TRIAL - The Court has concluded that the '858 patent, the '516 patent, the '517 patent and the '484 patent are unenforceable because of inequitable conduct before the PTO. Judgmen t shall be entered accordingly. (See Order.) Signed by Judge Larry J. McKinney on 9/15/2016. Associated Cases: 1:10-ml-02181-LJM-DML, 1:10-cv-00180-LJM-DML, 1:10-cv-08000-LJM-DML, 1:10-cv-08001-LJM-DML, 1:10-cv-08002-LJM-DML, 1:10-cv-08003-LJM-DML, 1:10-cv-08004-LJM-DML, 1:10-cv-08005-LJM-DML, 1:10-cv-08006-LJM-DML, 1:10-cv-08007-LJM-DML, 1:10-cv-08008-LJM-DML, 1:10-cv-08009-LJM-DML, 1:10-cv-08010-LJM-DML, 1:13-cv-08012-LJM-DML, 1:13-cv-08013-LJM-DML, 1:13-cv-08014-LJM-DML, 1:13-cv-08015-LJM-DML, 1:13-cv-08016-LJM-DML, 1:13-cv-08017-LJM-DML, 1:13-cv-08018-LJM-DML, 1:14-cv-08019-LJM-DML, 1:14-cv-08020-LJM-DML (GSO)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
IN RE: METHOD OF PROCESSING
ETHANOL BYPRODUCTS AND
RELATED SUBSYSTEMS (‘858) PATENT
CORRECTED MEMORANDUM OPINION & ORDER AFTER BENCH TRIAL
Defendants/Counterclaim Plaintiffs ACE Ethanol, LLC; GEA Mechanical
Equipment US, Inc.; Al-Corn Clean Fuel; Blue Flint Ethanol, LLC; Big River Resources –
Galva; Big River Resources – West Burlington, LLC; Cardinal Ethanol; Flottweig
Separation Technologies; Guardian Energy, LLC; ICM, Inc.; Lincolnway Energy, LLC;
LincolnLand Agri-Energy, LLC; Little Sioux Corn Processors, LLLP; Pacific Ethanol Magic
Valley, LLC; Southwest Iowa Renewable Energy, LLC; David Vander Griend; Western
New York Energy, LLC; Bushmills Ethanol, Inc.; Chippewa Valley Ethanol Company, LLC;
Heartland Corn Products; United Wisconsin Grain Producers; Aemetis, Inc.; Aemetis
Advanced Fuels Keyes, Inc.; Pacific Ethanol Stockton; and Iroquois Bio-Energy, Co. (all
Defendants, collectively, “Defendants”), and Plaintiff/Counterclaim Defendants GS
CleanTech Corporation and Greenshift Corporation (collectively, “CleanTech”), appeared
for a Bench Trial on October 5-9 and 12-15, 2015, on Defendants’ inequitable conduct
counterclaim and/or defense. The Court now enters its Findings of Fact and Conclusions
of Law. 1
Because the Court was familiar with the parties, third-party entities and the
technology involved in this Multi-District Litigation (“MDL”), there were foundational facts
that were not specifically elicited during the Bench Trial. However, in order to provide
context for Defendants’ inequitable conduct allegations, the facts are necessary.
Therefore, some of the facts set forth in the Facts section are undisputed facts proffered
during the summary judgment phase of the Multi-District Litigation. Citation to the brief
that contained those facts is intended to incorporate by reference the exhibits that are
cited within the brief. All citations to the Master Docket will be in this format: MDN 1589
at (ECF page number).
CleanTech is the owner of the patents-in-suit, which have been termed the “‘858
patent family:” U.S. Patent Nos. 7,601,858 (the “’858 patent”); 8,008,516 (the “’516
Where appropriate or necessary, each of the following Findings of Fact shall be
considered a Conclusion of Law, and each of the following Conclusions of Law shall be
considered a Finding of Fact.
patent”), 8,008,517 (the “’517 patent”); and 8,283,484 (the “’484 patent”). GreenShift
Corporation is the parent corporation of CleanTech, the plaintiff in this action; the two
companies share headquarters in Alpharetta, Georgia. MDN 1028 at 25-26. GreenShift
and its subsidiaries focus on developing and commercializing technologies that promote
more efficient use of natural resources. Id. at 26. GreenShift has a track record of
identifying new market opportunities in long-established industries, and of developing
valuable technology for market participants to exploit those opportunities.
example, GreenShift has developed and continues to develop innovative technologies
relating to corn oil extraction, adhesives, and paper. Id. CleanTech holds six patents in
the corn oil extraction industry, U.S. Patent No. 7,608,729 (which is not at issue in this
case), the ‘858 patent family, and U.S. Patent No. 8,168,037 (the “‘037 patent”). 2 Id.
CleanTech has six additional patent applications pending before the PTO in this area. 3
Id. Defendants allege that inequitable conduct by the named inventors, David Cantrell
(“Cantrell”) and David Winsness (“Winsness”), and their attorneys during prosecution of
the ‘858 patent family should render them unenforceable.
A. BACKGROUND OF THE CLAIMED INVENTION
The ‘858 patent family relates to a method for recovering oil from the concentrated
thin stillage (or syrup) historically produced by a conventional dry mill ethanol plant. The
CleanTech is also the owner of a related patent, U.S. Patent No. 8,168,037 (the “’037
patent”). Defendants also allege that inequitable conduct by Winsness and his attorneys
during prosecution of the ‘037 patent should render that patent unenforceable; however,
the Court granted CleanTech’s motion in limine to exclude this claim because it was never
plead. See Master Docket No. 1612, Entry & Order for Thursday, September 24, 2015.
As a result of that ruling, the Court did not hear evidence or argument regarding
inequitable conduct as to the ‘037 patent.
3 Some of these patents may have issued since the Court published its Order on Cross
Motions for Summary Judgment, but they are not asserted in this litigation.
methods involve running the syrup through a mechanical process, such as a centrifuge,
to recover oil.
The “dry milling” process is the primary method of producing ethanol. MDN 1038
at 28. In this method, corn is ground and processed to release sugar that is fermented to
produce ethanol. Id. This is the same general process used to produce beer or whiskey.
The following diagram illustrates the dry milling process, focusing just on the production
of ethanol: 4
Starting in the upper right-hand corner of the diagram, the process begins with the
corn being ground into meal and then mixed with hot water, recycled thin stillage, and
enzymes. MDN 1173 at 16. The mixture is heated or “cooked” to form a less viscous,
liquefied “mash” stream. Id. The mash stream is then fermented with yeast to produce
Securities & Exchange Comm’n, Form S-1, Hawkeye Holdings Inc., at 66 (May 30,
http://www.sec.gov/Archives/edgar/data/1363908/000104746906007798/a2170573zs1.htm (last visited February 12, 2016).
ethanol and various fermentation byproducts. Id. at 16-17. The ethanol is boiled off,
concentrated, and processed into marketable product in a distillation system. Id. at 17.
After the distillation of ethanol, the remaining process stream, which is known as
whole stillage, contains water, corn oil and dissolved and undissolved solids. Id. The
corn oil is low grade and not human consumable. Id. The whole stillage stream exits
from the bottom of the distillation or beer column and cannot be disposed of or discarded
without violating environmental regulations.
However, because whole stillage
includes proteins, vitamins, minerals, and fats, it can be sold as a valuable ingredient in
animal feed. Id.
The lower portion of the diagram above also shows the typical prior art stillage
treatment process. Id. Whole stillage that exits the distillation system contains a large
amount of solid material and very large amounts of water. Id. The next step in the
conventional ethanol plant is to process whole stillage through a decanter centrifuge,
which separates into a mostly solid stream and a mostly liquid stream that contains oil,
water, and solids. Id. See also Securities & Exchange Comm’n, Form S-1, Hawkeye
http://www.sec.gov/Archives/edgar/data/1363908/000104746906007798/a2170573zs1.htm (last visited February 12, 2016) (describing the processing of whole stillage into
“co-products” of the ethanol production process).
The mostly solids stream, known as “wet grains” has nutritional value and,
historically, was sent to a dryer, then sold as feed for cattle and other livestock. MDN
1173 at 18. The dried wet grains are called Dried Distillers Grains or “DDG.” Id. The
mostly liquid stream is known as “thin stillage” and the presence of oil in this stream has
been known for many years, as described by the ‘858 patent family specification. Id. For
environmental and other reasons, the prior art processing of thin stillage at dry mill ethanol
plants included an evaporation step, typically consisting of an evaporator, to efficiently
boil off and remove much of the water from the thin stillage. Id. The evaporated water is
important to the functioning of the plant and is captured and recycled back into the ethanol
production process. Id. The resulting post-evaporation stream is commonly referred to
as “concentrated thin stillage,” or “syrup,” and is a mixture of water and dissolved and
suspended solids, including corn oil. Id. Concentrated thin stillage or syrup was placed
in an insulated storage tank to stay at a high temperature and contained enough moisture
to pump it through pipes. Id.
Historically, ethanol plants mixed the syrup back in with the wet grains before the
drying step, which increased the nutritional value of the cake and added to the product’s
feed value and market price. Id. The resulting product is known as Dried Distillers Grains
with Solubles, or DDGS. Id. DDGS is an important revenue source for an ethanol plant.
When run under standard operating conditions, the prior art process typically
produced concentrated thin stillage within a well-known range of temperature, pH, and
moisture content. Id. at 19. Evaporators in a conventional dry mill plant typically operate
between 150°F and 212°F, because temperatures outside this range cause problems
such as fouling or viscous flow. Id. The ultimate temperatures of the syrup may depend
upon many factors, but is generally in the same range, which is described in U.S. Patent
No. 4,944,954 to Strop (“Strop patent”), at column 10, lines 58 to 59. Id.
Further, thin stillage concentrate is typically slightly acidic (pH below 7) because it
contains acidic organic compounds and small amounts of acid added for process control
The acidity is not affected significantly by the evaporation process;
therefore, the syrup at a typical dry mill ethanol plant will have a pH somewhere between
3.0 and 6.0, as described in U.S. Patent No. 5,250,182 to Bento (“Bento patent”), at
column 9, lines 49 to 51. Id.
“Moisture content” is a measure of the amount of water contained in a mixture,
made on a mass or volume basis; its inverse is the solids concentration. Id. The moisture
content of the thin stillage stream entering the evaporation stage typically ranges from
approximately 80 weight percent to 93 weight percent; the concentrated thin stillage or
syrup exiting the evaporation stage typically has a moisture content ranging from
approximately 55 weight percent to 80 weight percent. Id. at 19-20. The prior art AgriEnergy, LLC, ethanol plant already produced syrup under these conditions (pH of 4.2,
moisture content of 70%-80%, temperature of 180°F) before it began dealing with
Winsness and Cantrell or recovering oil from the syrup using a centrifuge. Id. at 20.
In summary, a typical, prior art conventional dry mill ethanol plant produces
concentrated thin stillage or syrup within the following parameters: temperature - 150°F
to 212°F; pH – 3.0 to 6.0; moisture content (weight percent) – 55% to 80%. Id.
B. RELATIONSHIP WITH AGRI-ENERGY
The Court heard testimony from the inventors regarding their relationship with AgriEnergy in 2003 and 2004. However, the Court found Cantrell’s testimony on any topic of
little credible value. CleanTech introduced evidence of Cantrell’s medications and their
side-effects in an apparent attempt to defuse any negative inference to be drawn from
Cantrell’s inconsistent statements. PTX2248. In addition, CleanTech made much of
Cantrell’s poor health, Trial T. at 31-33, again apparently to negate any negative
inferences that might be drawn from Cantrell’s performance on the witness stand. The
Court notes that Cantrell had some difficulty staying focused. Further, although Cantrell
was argumentative and unclear about facts when questioned by Defendants’ counsel, he
fortuitously remembered when events took place and recalled the “real” meaning of
documents when questioned by CleanTech’s lawyers. This difference was more than
faded memory refreshed by looking at documents. Cantrell’s testimony sounded carefully
scripted rather than genuine and generally dismissive of the contemporaneous
Despite CleanTech’s attorney’s attempts to explain these
testimonial difficulties by reference to Cantrell’s health, the Court relies primarily on the
documents and testimony from other witnesses about the relationship between AgriEnergy and the inventors during this period, finding Cantrell’s testimony often times less
From 1998 to 2012, Agri-Energy operated a conventional dry-mill ethanol plant in
MDN 1173 at 39.
Luverne is located in western Minnesota,
approximately 200 miles by car from Minneapolis. Id. In the early 2000s, Agri-Energy
was researching ways to dry concentrated thin stillage and wet distillers grains and
contacted Vortex Dehydration Technology (“VDT”), a business formed by Cantrell, to see
if VDT’s Windhexe machine could dry its mixtures. Id. An employee of Agri-Energy
brought samples to VDT’s location to test the drying process. Id. This test was Cantrell’s
first exposure to the ethanol business. Id. at 40. Based on that test, Cantrell knew that
the byproducts contained oil and might have value. DX 359. However, he did not know
whether the oil should be recovered from thin stillage before or after the standard ethanol
evaporators (after the evaporators the product is called “concentrated thin stillage” or
Mark Lauderbaugh (“Lauderbaugh”) is the owner of Trident Process, Inc.
(“Trident”), a company located in Bloomington, Minnesota that “provides process
equipment to the chemical processing, pulp and paper, power, petroleum refining, food,
pharmaceutical, and other industrial markets.” MDN 1173 at 40. Lauderbaugh signed an
Independent Contractor Agreement with VDT dated January 1, 2002, that entitled him to
promote the sale of the Windhexe and “Related Apparatus” for the “processing of meat
and meat byproducts and waste and wastewater management and treatment for fish,
livestock, and poultry production” in a certain territory. Id. Lauderbaugh signed an
“Agreement for Confidentiality, Protection of Proprietary Information, Assignment of
Inventions and Non-Solicitation” as well. MDN 1028 at 53. Lauderbaugh was a member
of VDT’s “Marketing Team.” MDN 1173 at 40. Through Trident, Lauderbaugh had also
been selling Alfa Laval equipment to ethanol plants since the late 1990s. Id. Agri-Energy
was one of his long-time customers. Id.
In June 2003, Cantrell arranged to have Agri-Energy send Greg Barlage
(“Barlage”), then of Alfa-Laval, typical samples of thin stillage and syrup. Cantrell – Direct,
at 82; DX101. When Barlage received the samples, he heated them to 176°F and spun
them in a centrifuge. DX133. On June 12, 2003, Barlage wrote a report of his results in
which he concluded, in relevant part, “Something in the evaporation process allows for
the product to breakdown to a level where the oil can be taken out easily.” DX 133.
Barlage sent the report to Cantrell and Winsness.
On June 29, 2003, Cantrell sent an email to Agri-Energy stating,
We are very excited about the potential to remove the oil from your waste
syrup. The available oil in your syrup is approximately 13,000,000 pounds
per year. We are optimistic that we can recover over 80% of this oil. . . .
After reviewing the first testing of the product, we are considering a nozzle
machine, but a nozzle machine on the concentrated liquid with 56% solids
by volume in it could have a tough time handling the solids. With this, a
decanter and centrifuges may be necessary. Because of the speed that the
oil separated from the test product, taking the product from the top of the
feed tank that feeds the dryer may be the most logical option. This is
especially true since you are feeding the bottom of the tank. The oil should
be rising and the solids staying closer to the bottom. We have methods of
just sucking the top of the tank and centrifuging that product.
To prove this theory, I think the next logical step is to do a small spin test at
your plant with a Gyro tester and fresh product. This will tell us the true
quality of the product and the quantity of solids that make it to the top of the
tank. If step 2 is successful, we need to start talking about the right
centrifuge to bring in for a test. We see two options, a three phase nozzle
machine (harder to get a test unit) or a solids discharging machine (currently
available). Rental fees would be about $5000/month and we would have
someone there to help optimize the project. However, this machine
selection should take place after the gyro test occurs.
DX111. He concluded, “The technology is available to remove the oil, and the quick
payback from the new revenue stream, makes this a very viable program.” Id.
On July 10, 2003, Barlage and Lauderbaugh traveled to Agri-Energy to perform an
on-site “gyro test.” Barlage Video Testimony; Lauderbaugh Dep. Designations at 104.
The test was performed with a bench-top centrifuge. Id. Based on that demonstration,
the next day, Agri-Energy’s plant manager, Jay Sommers (“Sommers”), reported to his
board of directors, “Things look promising here.” DX 214. This reflected Sommers’ view
that the demonstration had proven that corn oil could be recovered from syrup using a
centrifuge. Sommers Video Trial Testimony.
Even before Barlage’s and Lauderbaugh’s visit to Agri-Energy, Cantrell and
Winsness began preparing a proposal to sell an oil extraction system to Agri-Energy.
DX107. The initial draft offered an oil recovery module to separate oil from “condensed
sludge,” which Agri-Energy could buy for $373,000.00 after a thirty-day performance test
The draft contained a picture of the module as well as estimates of
productivity, operating costs and the net value to Agri-Energy. Id. Other drafts were
On or around July 22, 2003, VDT’s employee Jerry Dyer (“Dyer”) began working
on a process drawing for an ethanol oil recovery system at Winsness’ direction. Dyer
Video Trial Testimony. The drawing, entitled “Ethanol System VDS Process Drawing”
(“Ethanol System Diagram”) is reproduced here.
DX112. Winsness told Dyer what to include in the diagram, including a solids-ejecting
disk-stack centrifuge, and was instructed to use drawings of a system sold and used in
the poultry farming industry as a guide. Dyer Video Trial Testimony. Dyer understood
that the drawings would be used for sales purposes by Cantrell and Winsness. Dyer
Video Trial Testimony.
Sommers testified that he believed or assumed Agri-Energy received a copy of the
Ethanol System Diagram some time prior to Agri-Energy’s board meeting on August 18
or 19, 2003, but could not be sure; and that he understood it to be a “ready to go” system
to produce oil from the syrup at its facility. Sommers Video Trial Testimony. Sommers
understood that the centrifuge in the system would be a disk stack centrifuge that would
be placed as close as possible to the exit from the evaporators. Id.
Cantrell and Winsness went through several iterations of a proposal, and on
August 1, 2003, Cantrell sent an email with a letter attached to it to Sommers at AgriEnergy copying Gerald Winter (“Winter”) at Agri-Energy, Lauderbaugh, and Winsness. In
the email, Cantrell asks Sommers to “review the attached proposal.” DX105. The
proposal, dated July 31, 2003 (“July 31 Proposal”), stated, in pertinent part,
[VDT] would like to offer Agri-Energy a No-Risk trial “Oil Recovery
System”. The test module is designed to process 18,000 lbs. per hour of
evaporator condensate and recovers 16,000 lbs. of oil per day adding
annual profits of $312,000 to $530,000 per year. The module will contain
all items necessary to separate the oil, and pump the resulting oil and
sludge to their respective destinations. The oil will be cleaned to an
acceptable level for boiler fuel, or it can be sold as a nutritional ingredient.
VDS [sic] will allow Agri-Energy 60 days to operate the unit
and confirm its value. At the end of the 60 days Agri-Energy
a) purchase the system (system price: $423,000) or,
b) return the skid to VDS (no questions asked).
Confidentiality / Non-Compete:
All discoveries resulting in the trial process shall remain the
property of Vortex Dehydration Technology, LLC and is
confidential information. Due to the great expense by VDT to
design and fabricate the oil recovery system, Agri-Energy
agrees to protect the confidential information and not to
purchase a reverse-engineered system from any other
organization that infringes on the VDS [sic] process and/or
Id. (emphasis in original). The July 31 Proposal further stated that the system needed a
water line for use by “the Integrated CIP System (Self-Cleaning).” Id. It also referenced
a process patent. Id. No-risk trials were a sales technique frequently used by VDT, and
were common in the ethanol industry. MDN 1173 at 52. However, the letter lacked
payment terms, dates and terms of delivery, a list of components of the “test module” or
specifications of same, and a signature block. DX105.
Sommers testified that he believed the July 31 Proposal was an offer to sell AgriEnergy an oil recovery system. Sommers Video Trial Testimony. He understood that the
system would include a disk stack centrifuge that would process hot syrup and separate
the oil. Id. Sommers testified that “[i]f the offer was accepted” he would have expected
other documents to follow that would have been more specific about payment terms and
dates for delivery. Id.
CleanTech never produced the August 1, 2003, email and the attached proposal
during discovery in this litigation notwithstanding the fact that it was authored by Cantrell
and copied to Winsness and Lauderbaugh; Winsness also sent an electronic copy of the
July 31 Proposal to Cantrell in 2010.
On August 18, 2003, Cantrell travelled to Agri-Energy. DX106. The next day, on
August 19, 2003, the following occurred:
(i) Cantrell presented his proposal to the Agri-Energy Board of Directors (the
“Board”) for “a process where the corn oil is pulled off.” DX216. Cantrell told the Board
that the system worked and would generate additional income for Agri-Energy. Id. The
Board minutes from the meeting contain no reference to any further “testing” or
“experimenting” that needed to be performed. Id.
(ii) At 7:58 a.m., Winsness reported to VDT shareholders that Cantrell “is meeting
with an ethanol plant today and expects to have an order in the near future ($400K).”
DX144. Winsness further reported “we are attempting to patent the process as an
additional barrier so that we can obtain maximum market share.” Id.
(iii) At 10:37 p.m., Winsness updated VDT’s shareholders, reporting that Cantrell
“had a great meeting with Agri-Energy for a Centrifuge System. He presented the system
to the board of directors. This first sale will lead into 10 additional units as several board
members of Agri-Energy sit on the board of 10 additional plants.”
understood this to be a reference to a potential sale of an ethanol system by VDT. Dyer
Video Trial Testimony.
On August 27, 2003, Cantrell reported to Rod Lee, VDT’s Chairman, and Winsness
that “we have made an offer to Agri-Energy.” DX144. Cantrell stated, “Also, attached is
the offer to Agri-Energy.” Id.
On September 3, 2003, Winsness emailed Winter about solutions to “the Drum
Dryer Problems.” DX219. Winsness hypothesized that the “problems” may relate to the
presence of corn oil in the syrup. Id. He reported, “We can remove the oil from the syrup.”
Id. He further reported, “We have outlined two proven methods” . . . “using 50 year old
[sic] technology.” Id.
Sometime early in 2004, Sommers notified VDT that Agri-Energy wanted to install
a centrifuge to recovery oil; VDT informed Sommers that the one they had previously
discussed was not available. Sommers Video Trial Testimony. However, in a letter dated
February 9, 2004 (“February 2004 Proposal”), on letterhead for “CMC”, Cantrell proposed
the following to Agri-Energy:
CMC, in conjunction with Alfa Laval would like to enter into a research trial
with Agri-Energy to determine the merits of the Ethanol Oil Recovery
The test protocol will consist of timed runs to determine the
quantity of oil produced, oil quality and the economics of the
operation of the system. The research will be conducted
within a 30 day period.
Confidentiality / Non-Compete:
All discoveries resulting in the trial process shall remain the
property of CMC and is confidential information. Due to the
great expense by CMC to design and fabricate the oil recovery
system, Agri-Energy agrees to protect the confidential
information and not to purchase a reverse-engineered system
from any other organization that infringes on the CMC process
and/or process patent.
Requirements (by Customer):
Agri-Energy agrees to pay $5,000 toward the cost of the
Thank you for your interest in testing the Ethanol Oil Recovery
system. We both agree that the opportunities are enormous and time is of
the essence in making this decision.
DX148. The February 2004 Proposal included a payback and/or value analysis and
included an estimate for the cost of the “Ethanol Oil Recovery System:” “$423,000.” Id.
On March 24, 2004, Alfa Laval’s salesman, Dell Hummel (“Hummel”) drafted a
proposal for Agri-Energy entitled “Field Test Equipment Rental Proposal.” DX222. The
proposal listed an “Alfa Laval model CHPX510 solids-ejecting disc-stack centrifuge with
HP motor, starter panel and control panel” as the “Field Test Equipment;” and anticipated
“Test Period” of approximately one month; and a “Test Rate” of $5,000.00, total for freight
and start up supervision. Id. The proposal was valid for 60 days and the terms were net
30 days. Id. After some non-relevant revisions in April 2004, Agri-Energy accepted the
proposal and received the centrifuge.
On August 24, 2004, CleanTech offered to sell a “patent-pending” corn oil
extraction system to Agri-Energy; no mention of a license was made. DX236. Similarly,
on September 13, 2004, and October 18, 2004, CleanTech made additional offers to sell
a “patent-pending” corn oil extraction system. DX241 & DX243. On December 21, 2004,
CleanTech offered to license a corn oil extraction system to Agri-Energy. DX 250. On
January 17, 2005, CleanTech offered Agri-Energy a share in a collection of companies
producing corn oil using the CleanTech oil extraction system as an “early adopter.”
DX245. Agri-Energy rejected all of these offers.
C. CANTRELL & WINSNESS HIRE A PATENT ATTORNEY
On February 4, 2004, Winsness sent an email to Cantrell with the subject line
“Ethanol Oil Patent.” DX 147. Therein, Winsness identified the method they intended to
patent: separate corn oil from concentrated thin stillage using a centrifuge. The email
listed the parameters of the method: An evaporator would be used to concentrate thin
stillage to a moisture content between 60% and 85%, and the concentrated thin stillage
would then be mechanically processed to separate the oil from the concentrated thin
stillage. Id. The temperature and pH of the thin stillage would be the standard values of
thin stillage in an ethanol plant, i.e., 150°F to 212°F; pH of 3 to 6. Id. Winsness wrote,
“[I]t won’t work” at any other ranges. Id. Winsness specified that their method would use
a disk stack centrifuge, Alfa Laval Model 617. Id.
On or about February 8, 2004, Cantrell contacted patent attorney Michael Dorisio
(“Dorisio”), of King & Schickli, PLLC, to discuss patenting the corn oil extraction
technology. Dorisio Video Trial Testimony. On the same day, Cantrell or Winsness
printed out a page from the PTO website that advised them that a provisional patent
application could be filed up to one year following the date of the first offer for sale.
On February 9, 2004, Dorisio sent an email to Cantrell as a follow-up to the
previous day’s conversation.
MDN 1589, Stipulations of Fact for Bench Trial, ¶ 1
(“Stipulations ¶ 1”). Among other things, Dorisio informed Cantrell that an invention could
not be patented if it had been sold, offered for sale, or publicly disclosed more than one
year before filing a patent application and inquired about such events. Dorisio Video Trial
Testimony. After that first contact, Cantrell testified that he relied on Winsness to work
with the patent attorneys. Cantrell – Direct at 304, 312, 361 & 371; Cantrell – Cross at
On May 6, 2004, U.S. Patent Publication No. 2004/0087808, the application of
John Prevost and Neal Hammond published (“Prevost”), Stipulations ¶¶ 4 & 5. Prevost
provides a description of the prior art dry milling process to produce ethanol, including
prior art stillage processing. DX164. It describes methods for removing corn oil from a
number of points during stillage processing, including from the wet distillers’ grains, from
the thin stillage, from the syrup, and from dried syrup. Id. Figure 1 in Prevost is a diagram
of the typical dry mill ethanol processing plant including the stillage treatment process
including oil recovery points identified. Id. The stillage treatment process from Figure 1
is reproduced here with the oil recovery points circled.
Id. The Oil Removal point labeled “20A” is from the syrup after the evaporator. Id.
The Prevost application discloses several methods to recover oil including
centrifugation, pressing, and solvent extraction. Id. With respect to thin stillage and
syrup, Prevost states, in relevant part:
 The dried distillers grains can be subjected to an oil removal step.
It is preferred that an oil removal technique be used that will remove
substantially all of the oil from the dried distillers grains. Non-limiting
examples of oil removal techniques that can be used include centrifugation,
pressing with and without the use of a solvent, and solvent extraction
without the use of pressing. The preferred solvent for solvent extraction is
a normally gaseous solvent, more preferably butane, propane, or mixture
thereof. By normally gaseous we mean a solvent in which the oil is soluble
and being in the gas phase at atmospheric pressure and at room
temperature (approximately 75°F).
 The syrup can be added to the wet distillers grain prior to the drying
step and be processed under the same conditions as the wet distillers
grains as described above. An oil removal step can be performed on either
the thin stillage before evaporation or on the syrup after evaporation. If
performed prior to evaporation, an oil removal process such as
centrifugation is preferred whereas after evaporation a solvent extraction
process is preferred to extract at least a portion of the oil from the syrup.
 Both the thin stillage and syrup can each be individually, or a mixture
thereof, conducted to an oil removal step, 17A and 20A. For example, the
thin stillage can be centrifuged in a similar manner as the wet distillers
grains and the resulting oil/water mixture sent to a separation zone wherein
the water is separated from the oil. As mentioned previously, separation
can be done by simple decanting, by distilling the water from the oil, or by
passing a solvent, in which the oil is at least partially soluble or miscible,
can be run counter current with the flow of mixture, which solvent will pickup
[sic] the oil and carry it in the opposite direction than the water. If using
solvent extraction it is preferred that the material being oil-extracted be [sic]
substantially dry. For example, it is preferred to dry the syrup by any
suitable means, preferably by spray drying, before subjecting it to a solvent.
DX164 at 7-8.
Prevost explicitly claims the process of using a centrifuge to remove oil from syrup
in Claims 19 and 20:
19. The process of claim 12 wherein the thin stillage stream is conducted
to an evaporator to produce a syrup stream containing less than about 15
wt. % water, which syrup stream is itself conducted to an oil removal stage
wherein at least [sic] of the oil is removed from the syrup.
20. The process of claim 19 wherein the oil is removed from the syrup by
centrifugation to produce a mixture of oil and water stream.
Id. at 11.
At the summary judgment phase, the parties disputed whether or not there is an
error in Claim 19 where the reference is “a syrup stream containing less than about 15
wt. % water”: Defendants, relying upon co-applicant Neal Hammond’s (“Hammond’s”)
testimony, as well as expert testimony, claimed that one of ordinary skill in the art would
realize that it is an obvious error and that it should have read “about 15 wt. % fat or oil”,
MDN 1173 at 25-26; CleanTech asserted that it is impossible to tell what Prevost meant
based on Hammond’s or any other expert’s testimony, MDN 1028 at 43-44.
In June 2004, Winsness annotated Barlage’s test report from June 2003, labeling
it the “original discovery of oil separation June 2003.” DX792; Winsness – Direct at 54345; Winsness – Cross at 677-78. At trial, Winsness disavowed the idea that his notation
would cause an attorney, or anyone else, to believe that he and Cantrell had invented
anything in June or July 2003. Winsness – Direct at 562, 564. His testimony on this point
is belied by contemporaneous documents dating back to June, July and August of 2003
where Winsness himself boasted to his board of directors that the “first sale” to AgriEnergy would lead to 10 more from members of Agri-Energy’s board of directors. DX144.
Further, Winsness also wrote in February 2004 that the process would not work unless
certain system parameters were true. DX147. He claims he was looking for validation
from Cantrell, but there is simply no language in the email from which to infer that
Winsness was uncertain about the parameters under which their invention would work.
The only reasonable inference from the evidence is that Winsness knew they had
invented a process for removing oil from concentrated thin stillage using a centrifuge in
On July 29, 2004, Winsess contacted Dorisio to arrange for filing of a provisional
patent application and provided Dorisio with information about the oil recovery method
and apparatus on or about the same date. MDN 1589, Stipulations ¶ 2. Included in those
materials, was a copy of the Barlage test results from June 2003, with Winsness’
handwritten note, “original discovery of oil separation June 2003.” DX792. In the same
materials, Winsness described the Barlage bench-top test as a success. Id. Dorisio
testified that he did not believe that June 2003 was the “invention” date, because there
was no reduction to practice. Dorisio Video Trial Testimony. However, the Court found
Dorisio’s testimony less than credible. First, Dorisio was being coached throughout his
deposition by CleanTech’s lawyers, often being instructed not to answer, and at a critical
point in the testimony when Dorisio had been asked to explain a draft clearance opinion,
he specifically asked for a break to consult with the attorneys. Thereafter, his answers
were even more carefully scripted, terse and rehearsed. Second, Dorisio’s handwritten
notes on the Prevost application, DX684, evidence that, at the time, he believed Cantrell’s
and Winsness’ “invention” pre-dated anything that Prevost had done.
substantiated by the breadth of the non-provisional application he filed on May 5, 2005,
along with his letter filed the same day stating that the Prevost application “may be found
to claim the same invention as at least one claim of the instant application.” See DX686;
Stipulations ¶ 7. The only reasonable inference is that Dorisio was attempting to swear
behind the Prevost application.
It is also clear that Dorisio’s firm believed that Prevost likely contained a mistake
with respect to the use of a centrifuge to recover oil from thin stillage. DX684. A mistake,
which if corrected, reads directly on the claims of the ‘858 patent family application.
On or around July 1, 2005, Dorisio’s associate drafted a patentability and
clearance opinion. DX679. Therein, the firm references an invention date in 2003 that
coincides with the Barlage testing and the July 2003 bench-top testing at Agri-Energy.
DX788. Dorisio testified that he sent this draft to Cantrell and Winsness. Id. However,
there is no evidence that Cantrell or Winsness either corrected Dorisio’s opinion, told
Dorisio about the July 31 Proposal, or disclosed the Ethanol System Diagram to him.
On September 30, 2005, Dorisio filed the application that eventually led to the ‘516
patent. DX279. The application was published by the PTO on February 23, 2006. Id.
D. WINSNESS HIRES CANTOR COLBURN TO PROSECUTE THE PATENTS
According to Winsness, in March 2008, he made the decision to transfer
prosecution of the ‘858 patent family to his neighbor, Peter Hagerty (“Hagerty”) at Cantor
Colburn LLC, because it was more convenient for him. Winsness – Direct at 560. In
addition, Hagerty testified that the size and national reputation of Cantor Colburn
persuaded Winsness to switch. Hagerty – Direct at 964-66; Hagerty – Cross at 1251-52.
On or about March 18, 2008, Dorisio transferred the file to Hagerty. Stipulations ¶ 8.
Hagerty testified that his initial review of the file was fairly limited. Hagerty – Direct
at 978. It was telling that, when asked about the status of the ‘858 patent application
when he took over, Hagerty derisively commented with respect to the broadest of the
claims that he had “never seen a claim in that format in all of his years in practice.”
Hagerty – Direct at 974. See also id. at 975-76. He quickly added that he would amend
it, even though he considered swearing behind Prevost, but rejected it. See Hagerty –
Direct at 980-82; see also Hagerty – Cross at 1259-60, 1272-74 (discussing the
substantive amendments to claims in response to the first office action in the ‘858 patent
Dorisio claims that he sent all of his analysis, including his copy of the Prevost
Application and handwritten notes thereon as well as his firm’s patentability and clearance
opinion, but Hagerty says he never received any communications regarding the Prevost
Application, or the clearance opinion. Hagerty – Direct at 981-82, 1056, 1080, 1086.
There is no evidence that the inventors told Hagerty about them either. Hagerty – Direct
On June 13, 2008, the ‘858 patent application was rejected over the Prevost
Application, among other references.
PTX2059 at 140.
In response, Hagerty
“substantively” amended the claims and argued that the Winsness/Cantrell claims were
different from Prevost because Prevost did not disclose or suggest processing syrup in a
centrifuge to recover oil as claimed. Id. at 130. Hagerty admitted at trial that he was
aware that Prevost claimed a process for recovering oil from syrup with a centrifuge, but
that it was at a different moisture level. Hagerty – Direct at 1003-08. In fact, Hagerty
thought Prevost taught centrifuging a free-flowing powder (syrup with a 15% moisture
level), but he could never explain at trial how that could be done. Similarly, Hagerty could
never explain how the inventors could claim centrifuging syrup at just greater than a 15%
moisture level since it was insignificantly different from the range identified in claim 20 of
the Prevost Application. Id. at 1006-10 (discussing claims 19 and 20 of the Prevost
Hagerty also testified that Prevost advocated solvent extraction for
removing oil from syrup rather than centrifugation, which he decided taught away from
the Winsness/Cantrell invention. Id. at 130. On or around the same time, a similar
rejection and response occurred in prosecution of the ‘516 patent’s application. DX274;
DX279; Hagerty – Direct at 1023-28.
On December 22, 2008, the examiner issued a final rejection in the ‘858 patent’s
application. PTX2059 at 112. In response (“’858 Final Rejection Response”), Hagerty
again distinguished prior art, including Prevost. However, this time, in addition to his
previous arguments, the response stated, “Applicants have discovered that its claimed
processes frees a portion of the bound oil as a result of evaporating the thin stillage to
remove water and form a concentrated byproduct. Removing a portion of the bound water
breaks the emulsion allowing mechanical processing to further separate and recover the
oil.” PTX2059 at 101. This language tracks Barlage’s conclusion on his June 2003 test
report: “Something in the evaporation process allows for the product to breakdown to a
level where the oil can be taken out easily.” Compare PTX2059 at 101 (‘858 Final
Rejection Response) to DX792 at GCS(PRIV)001620 (Barlage test results conclusion).
Hagerty was aware of the Barlage test results in approximately September 2008, which
Winsness had characterized as testing history. DX792. Hagerty was also aware that
Winsness claimed that at the bench-top test in June 2003, “We poured ‘syrup’ into a
continuous disk-stack centrifuge a[nd] were able to separate the oil from the water
cleanly.” Id. at GCS(PRIV)001605. Hagerty denied that he used Barlage’s conclusion or
that it meant that much to the patentability of the invention and claimed that it was merely
a “theory.” Hagerty – Direct at 1029; Hagerty – Cross at 1269. This testimony was
unconvincing in light of the fact that this language was presented to the patent office as
a “discovery” not as a theory. DX279. On examination by his own attorney, Hagerty tried
to explain that it was later proven true at the May 2004 test, but there is nothing in the
record to evidence that the inventors came to this conclusion at the later date.
It seems that Winsness was Hagerty’s primary contact with respect to responses
to the PTO. Hagerty – Direct at 1003. When Cantrell and Winsness were asked about
who worked with Hagerty on responses and or correspondence with the PTO, Cantrell
claimed it was Winsness and specifically denied seeing many of the documents upon
which his name appeared and denied even keeping up with the patent prosecution
process. Cantrell – Direct at 197, 304, 312, 361, 371; Cantrell – Cross at 406. Even if
the Court could consider Cantrell a reliable witness, he continually undermined his
credibility when he disavowed documents upon which he was copied that related directly
to the patent applications, as well as documents that were sent to the patent attorneys
with his name on them; claimed that documents he wrote were wrong; claimed he never
would have said something he was purported to have said; or blamed clear statements
on his poor writing skills. See, e.g., Cantrell – Direct at 125-27 (disavowing anything to
do with preparation of DX792, a memorandum regarding the invention to Dorisio); id. at
205 (claiming that DX109, a memorandum he prepared dated June 11, 2004, had
misstatements about the connection between the meat industry and the ethanol industry);
206-07 (disavowing quoted statements in an article dated August 2005); id. at 209
(claiming that he never read the provisional application filed by Dorisio on his behalf); id.
at 211 (claiming a VDT executive summary dated January 17, 2005, DX158, which
indicates him as an author, was “written wrong in what I wrote”); id. at 219-21 (disavowing
any knowledge of Dorisio’s patent clearance opinion, DX788).
At times, Winsness seemed to confirm that he was the primary contact with the
attorneys, although he testified that Cantrell engaged Dorisio and collaborated on some
correspondence. Winsness Direct at 543. But, on direct examination with respect to
various pieces of written evidence he vaguely stated that the attorneys could have gotten
the information from someone else, maybe Cantrell for example. Winsness - Direct at
581-83. In addition, Winsness refused to acknowledge on direct examination that he
wrote key documents that Dorisio and Hagerty relied upon to draft and defend the patents
or even that he discussed them with the lawyers during the drafting process. See, e.g.,
Winsness – Direct at 243 (discussing DX792); Winsness – Direct at 546-47 (discussing
DX158); Winsness – Direct at 580-83 (discussing DX284); Winsness – Direct at 604
(discussing DX621 and stating, “I don’t know where [O’Brien] got that information from”).
Winsness’ prevarications and evasions severely undermined his credibility.
In total, the Court considered Cantrell’s apparent complete avoidance and
ignorance of the process and Winsness’ protestations evidence of the inventors’ complete
lack of regard for their duty to the patent office. The Court cannot expect Winsness and
Cantrell to understand the nuances of patent prosecution; however, it is reasonable to
expect them to communicate with the person they have hired to represent their interests
to the PTO to ensure that the communications are factually accurate.
reasonable inference is that Cantrell and Winsness acted to deceive the PTO about the
facts of the discovery process of the invention. “No one paid attention” cannot and does
equal candor by any inferential stretch.
In April 2009, the PTO issued a notice of allowance for the application that became
the ‘858 patent; Hagerty paid the issue fee in May 2009. MDN 1589, Stipulations ¶¶ 9 &
In May 2009, CleanTech needed capital and Raymon Bean (“Bean”), a potential
investor, was contemplating a significant investment. Winsness – Direct at 564-65;
Hagerty – Direct at 1035-36. During the due diligence process, Bean’s attorney, Scott
Bialecki (“Bialecki”), requested information from Hagerty regarding the defendability of
the Cantrell/Winsness patents. Hagerty – Direct at 1046. Specifically, Bialecki requested
the following information: (1) “any pre-filing disclosures of the inventions;” (2) “any . . .
pre-filing offers for sale of these inventions by the inventors or others;” (3) “any information
relating to any inventorship-related issues;” (4) “any information potentially affecting the
validity and/or enforceability” of the applications, and (5) “all third party correspondence”
relating to these applications.” DX 694. Upon receiving this list, Hagerty asked Cantrell
and Winsness, as well as others at CleanTech, for responsive information or documents;
Cantrell and Winsness denied having any relevant information or documents. Hagerty –
Direct at 1047-48. Hagerty responded to Bialecki on May 22, 2009, stating, “To the best
of our knowledge, there has been no pre-filing disclosure and/or offers for sale of the
subject matter as it relates to the above applications.” DX 695. He further represented
that there were “no known inventorship issues” or “information that affects validity and/or
enforcement” of the patents. Id.
On May 29, 2009, Bean’s attorney talked with Cantrell and Winsness on the
telephone to discuss the patents. DX 688. Hagerty did not participate in the call. Hagerty
– Direct at 1057. Apparently, not all of Bialecki’s questions were answered. On May 30,
2009, Winsness emailed Cantrell, Barlage and Whit Davis (“Davis”), also of CleanTech,
with action items to address Bean’s attorney’s concerns. DX688. Among other action
items, Cantrell and Winsness were to look through their files for evidence that VDT had
released its invention rights to Cantrell/Winsness and to look for a non-disclosure
agreement between VDT and Agri-Energy. Id.
In 2010, a signed version of the July 31, 2003, letter to Agri-Energy was in
Cantrell’s home files and an unsigned version was on Winsness’ computer; but neither
were turned over to Bean’s attorney or Hagerty in May or June of 2009 during the Bean
due diligence process. It is apparent that Cantrell never looked at any of his files at this
time. It is questionable as to whether or not Winsness ever looked either because in
2010, he sent an electronic version of the July 31, 2003, offer letter to Agri-Energy to
DX659; Winsness – Direct at 612.
The letter was clearly relevant and
responsive to the inquiry from Bean’s attorney. After repeated inquiries from Hagerty
about responsive documents and, what Hagerty testified was the “pretty clear” intent
behind the request, Hagerty – Direct at 952, 1046, the only reasonable inference is that
Cantrell and Winsness purposefully withheld the information about their dealings with
Agri-Energy because they knew they had made an offer for sale that could kill both the
deal with Bean and their opportunity to obtain a patent.
As previously mentioned, Hagerty testified that he learned about some of the
inventor’s dealings with Agri-Energy around the September 2008 timeframe from
Winsness; in particular, the Barlage bench test. Hagerty – Direct at 1038-47. In fact,
Winsness had described the bench test as a successful separation of oil from syrup,
which “led [the inventors] to believe the process would work on a commercial scale.”
DX792 at GCS(PRIV)001605. At trial, Hagerty seemed perplexed that Bialecki’s request
should have covered the 2003 testing because Hagerty had determined it was irrelevant
to patentability. Hagerty – Direct at 1048. This conclusion is problematic in light of the
fact that the written information Hagerty received from Winsness about the 2003 bench
test stated that it worked – oil was cleanly separated from syrup.
GCS(PRIV)001605. At trial, Winsness tried to deny that what he wrote was truthful, or
that he expected Hagerty to rely upon the information. Winsness – Direct at 563-65.
Winsness further claimed that it was “inaccurate” and that they must have discussed it at
the time. Winsness – Direct at 576-77. Hagerty also tried to explain that this was not
factual; his understanding of the test was different based on “data,” which consisted of a
conversation with Winsness. Hagerty – Direct at 1038-40, 1078-79; Hagerty – Cross at
1263-64, 1267. Winsness and Hagerty’s testimony on this issue, which is critical to the
question of reduction to practice and/or ready for patenting, is belied by the fact that when
he sent it to Hagerty, Winsness specifically corrected the mistake on page 12 of the
disclosure and surely would have done so with the key discovery a few pages earlier if it
were, in fact, “inaccurate.” DX792 at GCS(PRIV)001591.
Hagerty also claimed that the 2004 testing at Agri-Energy was not disclosed to
Bialecki for the same reason - it was not material to patentability. Hagerty – Direct at
1053. He specifically said that the inventors did not show the invention to Agri-Energy,
they “tested it.” Id. at 1048-50. The Court finds this to be a distinction without a difference.
Like with Winsness and Cantrell, Hagerty’s purposeful evasion of the plain meaning of
Bialecki’s request for any disclosure of the invention to a third party damaged his
On June 5, 2009, Hagerty withdrew the ‘858 patent application from issue and filed
a new information disclosure statement. Stipulations ¶ 11. On the same day, Hagerty
submitted a letter that stated, in part:
Sometime in May 2004, feasibility testing of a process and system for
recovering oil from thin stillage was performed that included evaporating
thin stillage to form a thin stillage concentrate having a moisture content
greater than 30 and less than 90 percent by weight followed by centrifuging
the thin stillage concentrate to separate the oil from the thin stillage
concentrate. The recovered oil was subsequently sold. Following the
feasibility testing, provisional patent application 60/602,050 was filed on
August 17, 2004.
DX 284. See also Stipulations ¶ 12. This information had no relevance to prosecution of
the ’858 patent application. Hagerty – Direct at 1074. Rather, Hagerty testified that he
filed this in the prosecution of all the then-pending applications to clear up what he called
an inconsistency in the prior art cited to the PTO amongst the three related patent
application families, the ‘858 patent family, the ‘037 patent family and the ‘425 application
family. Hagerty – Direct at 1060-62; Hagerty – Cross at 1284-85, 1284-91. The ‘425
application and its patents are not a part of this MDL and have to do with superheating.
Hagerty – Direct at 1060-62; Hagerty – Cross at 1295. Hagerty also testified that he
wanted to make sure this 2004 activity was before the examiner in the ‘858 patent file
history, even though he determined it was immaterial to patentability in that patent family.
Hagerty – Direct at 1063, 1074; Hagerty – Cross at 1285, 1296-97. The Court found
Hagerty’s testimony about this filing canned and evasive, particularly when he claimed
the 2004 testing was irrelevant to the ‘858 patent family and was not “prior art;” it simply
raises a question about why he would file it in the ‘858 patent family applications when he
only intended to ensure that the three patent family cited consistent prior art. It is even
more perplexing because Hagerty failed to disclose information at this time about the
June and July 2003 Barlage testing, the Ethanol Systems Diagram, and the Barlage test
report, which he had similarly determined were immaterial to patentability of the ‘858
patent family, but possibly relevant to the ‘425 application.
The ‘858 patent issued on October 13, 2009. Stipulations ¶ 14.
Hagerty filed the same letter regarding the 2004 feasibility testing with the PTO
during prosecution of the ‘516 patent on June 10, 2009; during prosecution of the ‘517
patent on September 14, 2009; and during prosecution of the ‘484 patent on July 21,
2011. DX 279A (‘516 Patent File History Excerpt), DX280A (‘517 Patent File History
Excerpt), DX289 (‘484 Patent File History Excerpt).
E. THE INVENTORS HIRE CANTOR COLBURN LLC TO LITIGATE THE PATENTS
In or around September 2009, CleanTech hired litigation counsel through
Hagerty’s firm, Cantor Colburn LLC. O’Brien – Direct at 721. Hagerty was the managing
partner and testified that the retention agreement between the parties was based on a
contingency fee, that CleanTech could elect to pay off at any time, and the potential for
CleanTech to pay an outstanding balance with stock; the latter clause was never
effectuated. Hagerty – Direct at 1088.
The initial lawsuits that led to this MDL were filed in and around February 2010.
See, e.g., GS CleanTech Corp. v. Cardinal Ethanol, LLC, 1:10-cv-00180-LJM-DML (S.D.
Ind. Feb. 11, 2010), Dkt. No. 1. At the outset of the litigation, Hagerty had conversations
with the litigation team, which included Charles O’Brien (“O’Brien”), Michael Rye (“Rye”)
and Chad Dever (“Dever”), about obtaining documents and/or information filed and/or
obtained through the litigation. Hagerty – Direct at 1098-99.
On February 12, 2010, the PTO issued a notice of allowance of the ‘516 patent.
DX279. Hagerty paid the issue fee on March 2, 2010. Id.
Despite being asked to search for pre-filing relevant records by Hagerty and/or
Bialeski in May 2009, on March 18, 2010, Winsness travelled to Cantrell’s home to collect
Cantrell’s files. Winsness – Direct at 584-85; Stipulations ¶ 16. At trial, as if distancing
himself, Winsness testified that he never looked at the documents, he just picked them
up and handed them over to a secretary to be scanned. Winsness – Direct at 584-85.
But, the parties stipulated that Winsness reviewed them on the day he picked them up
and found an ink-signed original of a July 31, 2003, letter to Agri-Energy, which the parties
have designated as “Q1”, DX650; and an ink-signed original letter dated August 19, 2003,
to Agri-Energy, which the parties have designated as “Q2,” DX651. Stipulations ¶ 17. If
it had not questioned Winsness’ veracity on other issues, the Court could certainly
conclude from this that Winsness has a propensity to evade the truth. In any event, the
two letters, Q1 and Q2, have a different letterhead than the electronic versions of the
same letters that Cantrell emailed to Agri-Energy; specifically, the letter “D” in the VDT
logo is open in Q1 and Q2, but closed in the electronic versions. Stipulations ¶ 23. The
Q1 and Q2 letters had been in Cantrell’s possession until Winsness obtained them in
March 2010. Stipulations ¶ 21.
At trial, the parties presented expert testimony about whether or not Q1 and Q2
were printed and signed in 2003 or at some later time. See, generally, LaPorte Trial
Testimony at 431-529; 1397-473. Cantrell also testified about the documents. Cantrell
– Direct at 272-78. The Court finds the results of the experts’ analyses inconclusive with
respect to dating the Q1 and Q2 documents. What is clear, and in fact was stipulated, is
that there are differences in the VDT logo on Q1 and Q2 versus electronic versions of
those documents. This fact lends some additional support to the Court’s conclusions
regarding the poor credibility of Catnrell and the lackluster investigation performed by
Cantor Colburn regarding the July 31 Proposal.
On March 24, 2010, someone in Winsness’ employ scanned the letters and
emailed full-color, .pdf copies to CleanTech’s litigation counsel at Cantor Colburn LLC,
O’Brien and Rye. Stipulations ¶ 18; Winsness Direct at 585. Attorneys Hagerty, Rye and
O’Brien were not aware of the July 31, 2003, letter or any offer to Agri-Energy in 2003
prior to receiving Winsness’ email with the scanned documents on or about March 24,
2010. Stipulations ¶ 19. It was on or around this date that Hagerty learned of the July
31, 2003, letter. Stipulations ¶ 20; Hagerty – Direct at 954, 1104.
At trial, Hagerty
dismissed the importance of the document and its relevance to the then-pending
applications of the patents-in-suit. Hagerty – Direct at 1104-10 (explaining that on his first
review, he believed the letter did not disclose anything).
Even so, it appears that Cantor Colburn began researching the on-sale bar fairly
quickly thereafter. Hagerty – Direct at 1111 (mentioning an on-sale bar memorandum
prepared by an associate in the litigation department); O’Brien – Direct at 759 (agreeing
that an on-sale bar memorandum was generated in May 2010). From March 2010
through mid-August 2010, Hagerty, Rye and O’Brien were working under the assumption
that the July 31 letter, Q1, was delivered to Agri-Energy on or about that date. Stipulations
In mid-May and early-June 2010, Winsness and Ed Carroll (“Carroll”), President of
then GreenShift, had a series of meetings with a competitor, Solution Recovery Services,
LLC (”SRS”), to discuss a potential license for the patents. Winsness – Direct at 600-01;
Czartoski Trial Video Testimony. Although the circumstances surrounding the meetings
sounded odd, it was clear that at the time of the meetings, SRS believed the patents to
be invalid due to an offer to sell a system. Winsness – Direct at 600-01; Czartoski Trial
Video Testimony. Specifically, SRS disclosed to Winsness and Carroll that it had an
opinion from an attorney that concluded that the ‘858 patent was invalid. Czartoski Trial
Video Testimony. Winsness concluded that SRS may have talked with Agri-Energy
because it was the only company they had talked with about the technology. Winsness
– Direct at 601-02 (stating that it “led me to believe that maybe they were in discussions
with Agri-Energy because we had nobody else that we, to my knowledge, talked to
In June 2010, shortly after meetings with SRS, Winsness travelled to Laverne,
Minnesota and met with Darryl Nelson (“Nelson”) and others at Argi-Energy. Winsness –
Direct at 602-03; Winsness – Cross at 689-90. Winsness claims he confronted AgriEnergy employees about why they were dealing with SRS. Winsness – Direct at 602-03.
Nelson testified that he was surprised by Winsness’ visit. Nelson Trial Video Testimony.
Further, during the visit, although Winsness denied it, Nelson claimed that Winsness
offered Agri-Energy a royalty-free license in exchange for Agri-Energy’s willingness to
admit that the pending patents were valid. Nelson Trial Video Testimony. Winsness
testified that a royalty-free system was offered to Agri-Energy in 2004 and some kind of
early adopter advantage was also offered at some unspecified time, but Agri-Energy
declined the offers.
Winsness – Direct at 602-03; Winsness – Cross at 689-90.
Winsness’ visit to Agri-Energy soon after his meeting with SRS evidence his concern that
Agri-Energy had adverse information. Winsness testified that he wanted to “clear the air”
by having Agri-Energy talk with his lawyers because “it was beyond [his] ability.”
Winsness – Direct at 603. Winsness’ visit left Nelson with a negative impression, which
supports an inference that Winsness tried to coerce or threaten Agri-Energy regarding
the interaction between the inventors and Agri-Energy in 2003.
Meanwhile, between March and May 2010, Hagerty discussed the letter with the
litigation team, but not with the inventors, to determine a strategy to address the letter.
Hagerty – Direct at 1115-17; O’Brien – Direct at 745. In mid-May 2010, Hagerty sent
O’Brien and Rye drafts of an information disclosure statement in which he dismissed the
July 31, 2003, letter as irrelevant because it related to an apparatus, not a method.
DX612; DX613; Hagerty – Direct at 120-21. Hagerty’s versions were focused on the
elements of a case, Plumtree Software, Inc. v. Datamize, LLC, 473 F.3d 1152 (Fed. Cir.
2006), which had been discussed in an on-sale bar memo prepared by Dever. Hagerty
– Direct at 1122. Hagerty testified that, after he presented his option, the “litigation group
thought there was a different way to present it; and that’s when Mr. O’Brien got involved.”
Hagerty – Direct at 1127. In fact, at this point, Hagerty relied upon O’Brien and the
litigation team to investigate the circumstances surrounding the letter and to draft a
submission to the PTO. Hagerty – Direct at 1110-18. Hagerty’s version was never filed.
From mid-May to late July 2010, O’Brien talked with the inventors and others at
CleanTech to gather facts. O’Brien – Direct at 760-61. It appears that the lawyers did
not attempt to get information from Agri-Energy until July 2010. O’Brien – Direct at 761.
On July 27, 2010, Rye sent a letter to Agri-Energy’s counsel. Stipulations ¶ 25;
DX252. The letter states, in relevant part:
. . . I have spoken with my client and we have determined that GreenShift
is able to provide a release of liability for any prior use of an extraction
system and will indemnify Agri Energy against any liability for cooperating
with GreenShift and for clarifying the use of the corn oil system in 2004.
We would like to obtain a statement from Mr. Sommers confirming and
clarifying only the following matters:
With respect to the system VDT offered Agri Energy the opportunity to
operate in July 2003, we would like confirmation that VDT did not provide
any drawings or diagrams of the proposed system in 2003 and VDT did not
describe a specific system or method for recovering the corn oil in 2003
except that Mr. Cantrell stated that system included a disc stack centrifuge.
Further, the proposed use of the system was intended to be experimental
and confidential, and Agri Energy understood that it had, after the ninetyday trial period, the option to then purchase the system.
As we discussed with respect to the use of the system in 2004, Agri Energy
understood the use and purpose of the VDT corn oil recovery system at Agri
Energy was experimental and confidential. Specifically, Agri Energy
understood VDT had not proved that its corn oil method and system worked,
needed to test it and Agri Energy had a history of allowing others to use its
facility to experiment with processes related to ethanol production. When
Agri Energy agreed to allow VDT to try the extraction method and system,
it understood the method and system had not been tested an ethanol
production facility and there was a need for public testing to determine
whether the concept worked. During the experimental period, Agri Energy
understood it had a secrecy obligation to VDT and regularly kept and
communicated the results of the oil extraction tests to VDT. VDT explained
how to perform the corn oil extraction method, monitored the progress and
made recommendations to tweak and improve the use of the system. The
VDT corn oil extraction system was in operation at the Agri Energy facility
for approximately two months in 2004. Agri Energy did not buy the system
from VDT and, although Agri Energy sold the corn oil recovered by the
system with the method, Agri Energy understood the purpose of the use of
the system to have been for experimental purposes.
Of course, if Mr. Sommers believes any of the above is inaccurate or
requires further clarification, we would welcome a discussion.
O’Brien claimed that they presumed Agri-Energy had no issue with the statement
in the letter because they never responded and it comported with conversations they had
with Agri-Energy’s lawyer. O’Brien – Direct at 807-08, 873-74, 884. But, Sommers
testified that Agri-Energy did not accept the offer from Rye/GreenShift because the
statements were not true. Sommers Trial Video Testimony. Even if Agri-Energy had
accepted the offer, it appears to this Court that the offer was an empty promise because
the only liability for which this letter offered a release was prior use of the system/method;
there is no mention of any ongoing license or indemnification. In any event, it is striking
that Rye failed to request that Agri-Energy provide any documents it might have in its
possession that would shed light on the interactions between the company and his client
in the relevant time frame. Further, two attempts at contact within a year is inadequate in
light of the uncertainty surrounding the July 31 Proposal at this point in time, which raises
an inference that counsel was avoiding the truth.
On August 12, 2010, Winsness emailed Cantrell an electronic version of the
unsigned July 31, 2003, offer letter to Agri-Energy and an electronic copy of the Barlage
test results. DX 659.
Litigation counsel O’Brien prepared a first draft of a Supplemental Response for
filing in the then-pending applications for the ‘516 and ‘517 patents. Stipulations ¶ 30.
O’Brien’s first draft stated that the July 31 Proposal was not material to the pending patent
application because it was not first delivered to Agri-Energy within one year of the August
17, 2003, date. Id. It further stated that the letter was not prior art. Id. A draft circulated
on August 12, 2010, discussed the bench testing performed in June 2003 and argued
that the offer letter was not a binding contract. DX 618. On or about August 16, 2010,
counsel provided their assessment to CleanTech regarding the inventors’ interactions
with Agri-Energy in the June through August 2003 time frame. DX 620. Up to and
including August 20, 2010, O’Brien made urther drafts, some even more detailed than the
one circulated on August 12, 2010. DX619, DX621, DX622, DX624. These drafts set out
such arguments such as (1) why the offer fit the experimental use exception; (2) why the
invention was not ready for patenting; and (3) why the letter was not a “sales” offer. See,
e.g., DX618; DX619; DX621; DX622; DX624; O’Brien – Direct at 761-63. At least with
respect to the majority of these drafts, the attorneys thought that it was important to
disclose the letter to the PTO because it was dated before the critical date, contained a
price, and was addressed to a third party. O’Brien – Direct at 758.
Then, in late August or early September, O’Brien received a call from Carroll
reporting that Cantrell recalled that he hand-delivered a signed copy of the July 31, 2003,
offer letter to Agri-Energy when he attended the Board Meeting on August 18, 2003;
Cantrell claimed this was the first time Agri-Energy saw the letter. O’Brien – Direct at
796. O’Brien and Hagerty testified that they were skeptical that this was true because of
the timing of Cantrell’s recollection, the date on the letter, and the convenient “August 18”
date that would negate any worry about an on-sale bar. O’Brien – Direct at 796-99;
Hagerty – Direct at 1143-44. The litigation team talked with Cantrell and Winsness about
whether or not they had any corroboration that Cantrell’s recollection was true. O’Brien
– Direct at 799-800. Winsness testified that it was how Cantrell conducted business,
Winsness – Direct at 610, and O’Brien took that as confirmation. O’Brien – Direct at 799800.
Also, on or about September 9, 2010, Cantrell received credit card records
reflecting his credit card transactions in August 2003. Stipulations ¶ 26. It took several
weeks for the credit card company to deliver the copies of his credit card records from the
time Cantrell requested them. Id. On or about September 13, 2010, Rye and O’Brien
received Cantrell’s credit card records. Stipulations ¶ 27. O’Brien claimed that these
records helped corroborate that Cantrell was at Agri-Energy on August 18, 2003, and that
he tested Cantrell on the telephone about it, but he never visited Cantrell in person or
attempted to review Cantrell’s or CleanTech’s files himself. O’Brien – Direct at 800-801.
Other than the letter to Agri-Energy seeking confirmation of the purpose of its
interactions with the inventors in July 2003, neither Hagerty, O’Brien nor Rye sought to
obtain information regarding the delivery of the July 31, 2003, offer letter from AgriEnergy. It is clear that the Rye letter did not ask for a copy of the letter or any information
regarding when it was received. Further, there were multiple document available to the
litigation team that evidenced Cantrell was working with a team of people including
Lauderbaugh; however, the attorneys failed to discover, or the inventors failed to disclose
that fact, or both chose to ignore it, and no one obtained further corroboration.
Suspiciously absent from any submission to the Court is testimony from any witness that
Cantrell’s recollection of hand delivery of a signed letter dated July 31, 2003, was true.
The relative ease with which Cantor Colburn could have obtained additional information
reveals the insincerity of any professed concern that the lawyers had about the veracity
of Cantrell’s claim that August 18, 2003, was the first time Agri-Energy received the July
31 Proposal. In other words, it is evident that they rather easily suspended any disbelief
in favor of keeping the Barlage test results, the Ethanol System Diagram and other
VDT/CleanTech interactions with Agri-Energy from the PTO.
On October 29, 2010, the Court held an Initial Pretrial Conference in the MDL.
MDN 49. On November 3, 2010, this Court issued its Case Management Order setting
relevant deadlines, including a Markman hearing on April 25, 2011; and a preliminary
injunction hearing on June 13, 2011. MDN 50; Stipulations ¶28. CleanTech’s litigation
and/or patent prosecution lawyers still did nothing to secure information from Agri-Energy,
Alpha-Laval or Lauderbaugh about the inventors’ interactions with Agri-Energy in the
summer months of 2003. O’Brien testified that they could not have subpoenaed AgriEnergy, for example, because no Rule 26(f) conference occurred until February 2011.
O’Brien – Direct at 804-05. However, with the Rule 16 initial conference behind them,
and even in the face of Defendants’ claims that discovery should not commence until a
Rule 26(f) conference was held, this excuse rings hollow.
F. FIRST CANTRELL DECLARATION
In early November 2010, O’Brien drafted a “Declaration of Cantrell” for review and
discussion with Cantrell, Rye and Hagerty. Cantrell signed the declaration on November
5, 2010 (“Cantrell’s First Declaration”). Stipulations ¶ 29. Winsness testified that he
reviewed and discussed with the attorneys that the declaration would be filed. Winsness
– Direct at 614. Cantrell’s First Declaration states, in relevant part:
In 2003, I was the Executive Vice president of Vortex
Dehydration Technology, LLC (“Vortex”).
Attached hereto as Exhibit A is a true and accurate copy of a
letter dated July 31, 2003 (the “Letter”) to Agri-Energy, LLC that was signed
by me in my capacity as Executive Vice President of Vortex.
Attached hereto as Exhibit B is a redacted copy of the relevant
portion of my credit card statement for the relevant period in August 2003
On August 8, 2003, I booked a flight for August 17, 2003 from
Atlanta International Airport (ATL) to Minneapolis St. Paul International
Airport (MSP). The primary purpose of flying to Minnesota was to attend a
face-to-face meeting with Agri-Energy’s representatives on August 18,
2003. The Statement reflects that I booked this flight on August 8, 2003.
On August 17, 2003, I flew from Atlanta International Airport
(ATL) to Minneapolis St. Paul International Airport (MSP). After landing on
August 17, 2003 in Minnesota, I spent the night at the Country Inn & Suites,
which is located in West Bloomington, Minnesota. The Statement reflects
that I reserved a room at the Country Inn & Suites, with an arrival date of
August 17, 2003.
On August 18, 2003, I drove approximately 200 miles from
West Bloomington, Minnesota to Agri-Energy’s facility in Luverne,
On August 18, 2003, I attended a face-to-face meeting with
Agri-Energy’s representatives. It was during that meeting on August 18,
2003 that I hand delivered the Letter to Agri-Energy’s representatives. My
hand delivery of the Letter at this meeting on August 18, 2003 was the first
time that the Letter was shown to Agri-Energy. The Letter was never mailed
to Agri Energy [sic].
On August 19, 2003, I prepared a letter dated August 19, 2003
to address the discussion that took place at the meeting the day before at
Agri-Energy on August 18, 2003.
On August 19, 2003, after checking out of the Luverne
Comfort Inn, I drove back to the Agri-Energy facility in Luverne, Minnesota.
While at the Agri-Energy facility, I met again face-to-face with Agri-Energy’s
representatives at which time I hand delivered the letter dated August 19,
2003 to Agri-Energy’s representatives.
I hereby further declare that all statements and
representations made herein of my own knowledge are true and that all
statements made on information and belief are believed to be true; and
further that these statements and representations were made with the
knowledge that willful false statements and the like so made are punishable
by fine or imprisonment, or both, under Section 1001 of Title 18 of the United
States Code, and that such willful false statements may jeopardize the
validity of the application or any patent issued therefrom.
Cantrell’s statements in paragraph 11 that he hand delivered the letter to AgriEnergy on August 19, 2003, and that this was the first time anyone at Agri-Energy saw
the letter are false. Notwithstanding the extensive amount of third-party discovery that
took place in this case, no signed copy of the letter dated July 31, 2003, that makes an
offer to Agri-Energy has been produced, other than Q1, the one that was in Cantrell’s
files. Therefore, other than Cantrell’s demonstrably false recollection and his testimony
that it was his practice to hand deliver offer letters, there is no evidence that he did so
with this letter. As previously discussed, Cantrell’s testimony on any issue related to the
relevant time period is not credible and the Court finds that he did not hand deliver the
July 31, 2003, offer in this case.
Even more importantly, Agri-Energy received an
electronic, unsigned letter with the same content on August 1, 2003; therefore, Cantrell’s
statement that Agri-Energy first saw the July 31, 2003, offer letter on August 19, 2003, is
On November 9, 2010, Hagerty filed Cantrell’s First Declaration and a
Supplemental Response with the PTO in the applications for the ‘516 and ‘517 patents.
Stipulations ¶ 31. Hagerty made no changes to the documents before filing them; they
were filed as drafted by O’Brien. Hagerty – Direct at 1150. A copy of Q1, the July 31,
2003, ink-signed original letter, was submitted with Cantrell’s First Declaration.
Stipulations ¶ 32. See also DX104. The Supplemental Response repeats the false
statements in Cantrell’s First Declaration: “Although the Letter is dated July 31, 2003, it
was nonetheless first disclosed to Agri Energy [sic] on August 18, 2003 by David Cantrell
hand delivering the Letter to Agri Energy’s [sic] representatives during a face-to-face
meeting that took place at Agri-Energy’s facility in Luverne, Minnesota on August 18,
2003.” DX 104. The Supplemental Response then reiterates paragraphs 9 through 14
and paragraph 16 from Cantrell’s First Declaration. Id. The Supplemental Response
closes stating, “As the Letter was not delivered to Agri-Energy prior to August 17, 2003,
the Letter is not material to the above noted patent application because it is not prior art
to the above noted patent application.” Id.
On May 11, 2011, Hagerty filed the application that led to the ‘484 patent. DX288.
On July 21, 2011, Hagerty filed Cantrell’s First Declaration with the PTO in that
application. Stipulations ¶ 34.
Despite earlier intentions to disclose the whole story to the PTO, as evidenced by
O’Brien’s multiple drafts of an information disclosure statement; O’Brien, Hagerty and the
inventors failed to mention in any of the pending applications any work performed at AgriEnergy earlier in the summer of 2003 or disclose the Ethanol System Diagram, even
though it was dated July 22, 2003. DX298.
O’Brien waited until August 26, 2011, to issue a subpoena to Agri-Energy. O’Brien
– Direct at 825; DX632. The response date was September 9, 2011. O’Brien – Direct at
On August 30, 2011, the ‘516 and the ‘517 patents issued. Stipulations ¶ 35.
G. SECOND CANTRELL DECLARATION
On September 21, 2011, Defendants deposed Cantrell for the first time. O’Brien
– Direct at 814. At the deposition, Defendants confronted Cantrell with a copy of his
August 1, 2003, email to Agri-Energy with the July 31, 2003, letter attached to it. Cantrell
– Direct at 351, 354. Initially, Cantrell claimed that Defendants fabricated the August 1,
2003, email. Id. at 354-55 (discussing Cantrell deposition testimony). At trial, Winsness
too claimed it was “suspicious.” Winsness – Direct at 616. And, O’Brien testified that he
was skeptical of its veracity when he first saw the email, although he admitted there was
nothing inherent in the email from which to conclude that it had not been sent on August
1, 2003. O’Brien – Direct at 814. These statements at trial only further eroded the
credibility of both Winsness and O’Brien. Eventually, CleanTech’s litigation counsel
ended Cantrell’s deposition early because Cantrell became ill. O’Brien – Cross at 892.
On September 21, 2011, Hagerty learned that Cantrell emailed the July 31 letter
to Agri-Energy on August 1, 2003. Stipulations ¶ 36. During his initial deposition in April
of 2013, Hagerty agreed that “it sent a chill up his spine” when he learned that the letter
was actually sent on August 1, 2013. MDN 949-15, Hagerty Dep. at 213. At trial, Hagerty
said he was “shocked” or “surprised” to learn of the email version. Hagerty – Direct at
1155; Hagerty – Cross at 1315. However, as previously discussed, the parties stipulated
that during the March 2010 to mid-August 2010 time frame, the Cantor Colburn lawyers
were working under the impression that the July 31, 2003, letter was sent on or near that
date. Stipulations ¶ 24. Further, at trial, Hagerty shrugged off the significance of the July
31, 2003, letter and asserted that he was never worried because it did not disclose
anything or amount to an offer. Hagerty – Direct at 1104-10; Hagerty – Cross at 1315.
The contrast in Hagerty’s testimony regarding his reaction to the letter between the two
time frames, when it was first discovered by Cantor Colburn in 2010, and when it was
revealed in September 2011 that Cantrell had emailed it to Agri-Energy prior to the critical
date, is troubling. If he had no concerns about it when he was under the impression in
March of 2010 that it was sent on or around July 31, 2003, why was Hagerty getting chills
up his spine in August 2011 when it was revealed that Cantrell had sent it in an email on
August 1, 2003? The Court cannot believe it was because of the first Cantrell declaration
because Hagerty was content to let it sit unaddressed in the prosecution of the ‘484
patent’s application while O’Brien did an investigation, which lasted over seven months.
The only plausible reason for Hagerty to be concerned at all is because the story he had
presented the PTO was false.
Over the next approximately seven months, O’Brien testified that Cantrell was too
ill to contact about anything, much less follow up with regarding the August 1, 2003, email.
O’Brien – Cross at 893. O’Brien also claimed that he and the litigation team were busy
responding to motions for summary judgment that had been filed in the MDL. O’Brien –
Cross at 893-94. Further, O’Brien testified that at this point, no one at Cantor Colburn
thought Cantrell’s First Declaration was wrong. O’Brien – Direct at 815-16. He stated,
“We needed to talk with Mr. Cantrell to understand what is this document? Is it, in fact - does he have some explanation for this to say this is just made up? We didn’t know.
So we didn’t know. We wanted to talk with Mr. Cantrell.” O’Brien – Direct at 816. O’Brien
had no plausible or reasonable explanation for why it was imperative to talk with Cantrell
alone about the email before taking some action to prepare an information disclosure
statement to the PTO about the false information in Cantrell’s First Declaration. O’Brien
claimed they talked with Winsness, but “[h]e didn’t know either.” O’Brien – Direct at 816.
Hagerty never followed up with anyone; he claimed litigation counsel was now
handling the “investigation.” Hagerty – Direct at 1157. In effect, Hagerty had relinquished
control over the prosecution back in May 2010 when O’Brien had a better idea and started
to draft responses to the PTO regarding the July 31, 2003, offer letter. Other than the
subpoena issued in August, no one from CleanTech or its counsel attempted to contact
Agri-Energy between September 2011 and April 2012. Further, there is no evidence that
Winsness or Lauderbaugh were asked to comb their records for the August 1, 2003, email
on which they were copied. Most disturbing is that, during this period, neither litigation
counsel nor Hagerty did anything to alert the PTO that Cantrell’s First Declaration was
false or that other testing activity had taken place at Agri-Energy prior to the August 1,
On December 13, 2011, the PTO issued an office action in the application for the
‘484 patent. DX 704; Hagerty – Direct at 1165. Under the rules, Hagerty had until May
2012 to respond. Id. at 1166. However, on February 10, 2012, Hagerty filed a response
to that office action. DX278; Hagerty – Direct at 1166. Hagerty testified that he failed to
include anything in this response to correct Cantrell’s First Declaration because O’Brien
had not completed the “investigation,” which entailed speaking with Cantrell “to find out
exactly what happened.”
Hagerty – Direct at 1165-68.
Hagerty made no
recommendation as to how to perform the investigation, he left it completely up to the
litigation team. Id. at 1168-69. Hagerty also asserted that he did not wait for the
investigation to conclude to file a response to the office action because he usually
responds to office actions within three months instead of waiting to closer to the deadline.
Id. at 1170. Hagerty’s lack of urgency and failure to engage in his own investigation raises
questions about his ability to separate his responsibility to be candid with the PTO and
his perceived responsibility to Cantor Colburn’s litigation team.
Before April 5, 2012, Rye and O’Brien had communications with Cantrell about
scheduling his second deposition. Stipulations ¶ 37. On or about that date, O’Brien met
with Cantrell to prepare him for the deposition. Stipulations ¶ 38. Defendants deposed
Cantrell a second time on April 10, 2012. O’ Brien – Direct at 827. It was unclear from
the testimony at trial whether or not O’Brien even discussed the August 1, 2003, email
with Cantrell in April when O’Brien prepped Cantrell for the deposition. Cantrell – Direct
at 357; O’Brien – Cross at 894. O’Brien claimed that in April, they might have talked with
Cantrell and could now “kind of think this through.” O’Brien – Cross at 865. But, on cross
examination, O’Brien stated that he was unsure what he talked with Cantrell about in
April, but he knows he talked with Cantrell in July about the August 1, 2003, email.
O’Brien – Cross at 894.
Perhaps the reason for the urgency in July was that on April 13, 2012, the PTO
had issued a notice of allowance for the ‘484 patent and the fee was due on July 13,
2012. DX706; Stipulations ¶39. In any event, on or about July 9, 2012, apparently having
now thought it through, O’Brien drafted a second declaration for Cantrell (“Cantrell’s
Second Declaration”). DX602 at 69; DX192; O’Brien – Direct at 837-40. O’Brien testified,
[W]e wanted to be very clear with the examiner and link the two. So the
examiner gets this declaration and knows this refers back to the first
declaration from November of 2010. So the examiner can go, then, look at
the first declaration, look at the second one, and it’s clear, all right, now I
know the letter went before the critical date.
O’Brien – Direct at 841. He explained that there was a lot of discussion about Defendants’
invalidity contentions and pleadings regarding the July 31 letter being an offer for sale
and “we wanted to link those two declarations together and make sure the examiner
understood how you kind of link these documents together and what your [Defendants’]
story is.” Id. at 841. The litigation team gave Hagerty the declaration, “precritical date
documents” he did not already have, and Defendants’ contentions and pleadings that
were not sealed. Id. at 842. O’Brien and Hagerty decided “to be very clear, very direct
with the examiner” by filing a number of Defendants’ documents with Cantrell’s Second
Declaration instead of a letter. O’Brien – Direct at 843; Hagerty – Direct at 1203-04. Many
of the contentions and pleadings had significant information redacted. See, generally,
DX707 & DX288.
On July 12, 2012, Hagerty withdrew the application from issue, filed Cantrell’s
Second Declaration, and filed the information disclosure statement comprised of some
inventor documents and Defendants’ contentions and pleadings. DX192; DX707; DX288;
Stipulations ¶ 40. Cantrell’s Second Declaration stated, in its entirety:
I, David F. Cantrell, declare and state:
Attached is an e-mail sent from my e-mail account on August
1, 2003 to Jay Sommers of Agri-Energy, LLC and copied to Mark
Lauderbaugh of Trident Corporation, Gerald Winter of Agri-Energy, LLC
and David Winsness, co-inventor of the present application (“the August 1st
email” [sic]), which attached a version of a letter dated July 31, 2003 (the
“July 31 Letter”).
At the time that I signed a Declaration dated November 5,
2010 that was submitted to the United States Patent and Trademark Office
in the following related cases: App. Serial Nos. 12/559,136, which issued
into US Patent 8,008,517 and 11/241,231, which issued into US Patent
8,008,516, I did not recall the August 1st email [sic].
The July 31 Letter attached to the August 1 email [sic] was
I hereby further declare that all statements and
representations made herein of my own knowledge are true and that all
statements made on information and belief are believed to be true; and
further that these statements and representations were made with the
knowledge that willful false statements and the like so made are punishable
by fine or imprisonment, or both, under Section 1001 of Title 18 of the United
States Code, and that such willful false statements may jeopardize the
validity of the application or any patent issued therefrom.
Despite O’Brien’s claim that they wanted to be “clear,” Cantrell’s Second
Declaration not only repeats false information, it also fails to distinctly point out and/or
explain the false information previously provided to the examiner in Cantrell’s First
Declaration. In addition, the declaration creates the false impressions that Cantrell may
not have sent the August 1, 2003, email and that the unsigned letter had less significance
than the “signed” one he allegedly hand delivered later the same month. Further, Hagerty
and/or the litigation attorneys, failed to provide any explanation with the declaration as
had been done with Cantrell’s First Declaration or as required by Rohm & Haas Co. v.
Crystal Chemical Co., 722 F.3d 1556 (Fed. Cir. 1983) and Intellect Wireless, Inc. v. HTC
Corp., 732 F.3d 1339 (Fed. Cir. 2013). Rather, Hagerty testified that he decided to
provide selected, redacted filings from the MDL proceedings and three emails from 2003
that Defendants had produced in discovery and obtained from third parties because he
was concerned about mischaracterizing any document. Hagerty – Direct at 1174, 1175
(“Just list the facts and then file in combination with the answers and counterclaims of all
the defendants.”), 1202, 1203-04. Again, no explanation for the 26 documents was
provided. DX707. In addition, no attempt to explain the significance of the arguments
made in the documents or to explain the information contained in the redacted portions
of the documents was made. When questioned about the propriety of providing the
litigation documents rather than an explanation, Hagerty stated that no roadmap was
required. Hagerty – Direct at 1239. Further, he felt compelled to provide the Defendants’
story to the examiner and that such was proper under and required by the MPEP. See,
e.g., Hagerty – Cross at 1314, 1319-30, 1328. In addition, Hagerty testified that he was
unaware of the following documents prior to filing the July 12, 2012, information disclosure
statement: DX797, Cantor Colburn’s list of documents sent to Hagerty; DX101, Email
from David Cantrell dated June 5, 2003, re: Agri-Energy - contact information; DX136,
Email from David Winsness dated June 10, 2003, re: VDS – Agents; DX135, Agri-Energy
Visitor Register, 12/24/03 – 3/30/05; DX108, Letter dated July 11, 2003, from VDT to AgriEnergy, re: VDS Oil Recovery System; DX107, Email chain from David Cantrell dated
August 5, 2003, June 17, 2003, June 13, 2003, re: List of Ethanol Production Facilities.
No one accepted responsibility for ensuring that Hagerty received all the documents from
the litigation group. O’Brien – Direct at 853-54, 861 (stating that “there was no one person
in charge”), 862 (admitting that he did not know whose fault it would be if Hagerty did not
get relevant documents); Hagerty – Direct at 1098 (stating there was no formal procedure
for requesting and/or receiving documents from the litigation team), 1157 (discussing how
O’Brien did the investigation to substantiate Cantrell’s hand-delivery story), 1167-69
(discussing how he relied on O’Brien to investigate the August 1, 2003, email), 1180
(professing no knowledge of DX108, a draft offer letter to Agri-Energy dated the day after
the Barlage bench-top test at the company, and no knowledge of whose fault it would be
if he did not see the document), 1193 (stating, “All I know is that I requested documents
that were coming out of the litigation periodically to have them sent to me so I could review
them as to whether they need to be cited to the patent office.”), 1196-97 (stating that he
had no idea what other documents there might have been available).
Hagerty failed to answer in any cogent way Defendants’ questions about why unredacted versions or the documents referenced in the litigation papers were withheld from
the examiner or why he chose to provide an explanation of their relevance. Hagerty did
claim that Defendants filed them under seal; therefore, he felt strongly that under the
protective order in this Court, he was not allowed to file un-redacted copies with the PTO.
Hagerty – Cross at1339. The Court considers both the failure to explain the significance
of the documents and the failure to provide the PTO with either an un-redacted version
of the filed papers or the underlying documents themselves strong evidence of an intent
to deceive. Much of the redacted information was confidential to CleanTech; therefore,
as the holder of the privilege, it had the authority to waive the privilege and release the
information to the PTO in an un-redacted form. Further, there is no record that CleanTech
sought permission from this Court to unseal the selected documents so they could be
filed with the PTO in an unadulterated form. It is this Court’s view that Hagerty and the
inventors had a duty to disclose the un-redacted versions and the actual documents
referenced in the filings to the PTO because the best source of the information was the
documents themselves rather than Defendants’ arguments and allegations about them.
Moreover, without the redacted information, there was no meaningful disclosure of some
relevant information. Finally, it is not enough after Rohm & Haas to simply inundate the
PTO with paper when the purpose of the filing is to correct a prior misrepresentation.
Such a correction requires (1) expressly advising the PTO of the existence of the
misrepresentation, “stating specifically where it resides,” Rohm & Haas, 722 F.2d at 1572;
(2) if a factual misrepresentation, advise the PTO of the actual facts, “making it clear that
further examination in light thereof may be required if any PTO action has been based on
the misrepresentation,” id.; and (3) upon the new factual record, establish patentability of
the claimed subject matter. Id.
Here, none of the requirements were met.
The ‘484 patent issued on October 9, 2012. DX288; Stipulations ¶ 41.
H. THE PATENTS-IN-SUIT AS ISSUED
Although dependent claims were at issue in this case, the Court sets forth the
asserted independent claims of the patents to give context to the inequitable conduct
The asserted independent claims of the ‘858 patent family read:
1. A method of recovering oil from thin stillage, the method comprising, in
sequence: evaporating the thin stillage to remove water and form a
concentrated byproduct; and recovering oil from the concentrated
byproduct by heating and mechanically processing the concentrated
byproduct to separate the oil from the concentrated byproduct, wherein
the concentrated byproduct has a moisture content of greater than 30%
and less than 90% by weight.
8. A method of recovering oil from thin stillage, comprising, in sequence:
evaporating the thin stillage to create a concentrate having a moisture
content of greater than 30% by weight and less than about 90% by weight;
and centrifuging the concentrate to recover oil.
10. A method of processing whole stillage, comprising: recovering thin
stillage from the whole stillage, the thin stillage including oil and solids;
concentrating the thin stillage including the solids to produce a thin stillage
concentrate, wherein the thin stillage concentrate has a moisture content of
greater than 30% and less than 90% by weight; and recovering oil from the
concentrate by a process consisting essentially of heating and mechanically
processing the concentrate to separate the oil from the concentrate.
16. In a method for processing corn to produce ethanol and concentrated
thin stillage, the improvement comprising the step of recovering a product
consisting essentially of oil from the concentrated thin stillage by heating
and mechanically processing the concentrated thin stillage to separate the
oil from the concentrated thin stillage.
‘858 Patent, col5 I.66 to col6 l.64.
The asserted independent claims of the ‘516 patent read:
1. A method of recovering oil from thin stillage; the method
consisting essentially of, in sequence:
evaporating water from the thin stillage to form a thin stillage
concentrate, wherein the thin stillage concentrate has a moisture content of
greater than 30% and less than 90% by weight before the recovering step;
mechanically processing the thin stillage concentrate to separate oil
from the thin stillage concentrate; and
recovering the separated oil.
7. A method of processing whole stillage, comprising, in sequence:
separating distiller wet grains and thin stillage from the whole stillage,
the thin stillage including oil and solids;
concentrating the thin stillage including the solids to form a
concentrate having a moisture content of greater than 30% and less than
90% by weight; and
disc [sic] stack centrifuging oil from the thin stillage concentrate to
form a substantially oil free concentrate.
‘516 Patent, col6, l.11 to col 6, l52.
The asserted independent claim of the ‘517 patent reads:
A method of recovering oil from thin stillage, comprising:
evaporating the thin stillage to create a concentrate having a moisture
content of greater than 15% by weight and less than about 90% by weight;
and centrifuging the concentrate to recover oil.
‘517 Patent, col 6, ll32-37.
The asserted independent claims of the ‘484 patent read:
1. A method of recovering oil from thin stillage; the method
consisting essentially of, in sequence:
evaporating water from the thin stillage to form a thin stillage concentrate,
wherein the thin stillage concentrate has a moisture content of greater than 30%
and less than 90% by weight before recovering step;
mechanically processing the thin stillage concentrate to separate oil from
the thin stillage concentrate;
recovering separated oil; and
drying the thin stillage concentrate to reduce the moisture content in the thin
8. A method of processing whole stillage, comprising, in sequence:
separating distiller wet grains and thin stillage from the whole stillage, the
thin stillage including oil and solids;
concentrating the thin stillage including the solids to form a thin stillage
concentrate having a moisture content of greater than 30% and less than 90% by
disc [sic] stack centrifuging oil from the thin stillage concentrate to form a
substantially oil free concentrate; and
drying the thin stillage concentrate to reduce the moisture content in the thin
16. A method of recovering oil from thin stillage, comprising, in sequence:
evaporating the thin stillage to create a thin stillage concentrate having a
moisture content of greater than 30% by weight and less than about 90% by
centrifuging the thin stillage concentrate to recover oil; and
drying the thin stillage concentrate to reduce a moisture content in the thin
19. A method of recovering oil from thin stillage, the method comprising, in
evaporating the thin stillage to remove water and form a concentrated by
product, wherein the concentrated byproduct has a moisture content of greater
than 30% and less than 90% by weight;
recovering oil from the concentrated byproduct by heating and mechanically
processing the byproduct to separate the oil from the concentrated byproduct; and
drying the concentrated byproduct to reduce the moisture content in the
30. A method of recovering oil from thin stillage; the method comprising
evaporating water from the thin stillage to form a thin stillage concentrate,
wherein the thin stillage concentrate has a moisture content of greater than 30%
and less than 90% by weight;
mechanically processing the thin stillage concentrate to separate oil from
the thin stillage concentrate; and
recovering the separated oil.
‘484 Patent, col6, l. 9 to col8, l.37.
In its claim construction orders, the Court construed the claims as follows:
“concentrate” / “concentrated byproduct” / “syrup containing water, oil and solids
“concentrated thin stillage”
“to subject to a mechanical device (or devices)
to effect a particular result”
“heating and mechanically processing the “the Concentrate Term (as set forth above)
subjected to heat and a mechanical device (or
byproduct/concentrated thin stillage to
byproduct/concentrated thin stillage”
“centrifuging the concentrate to recover oil”
“substantially oil free concentrate”
devices) to extract a product that is
substantially (meaning largely or mostly) oil
from the Concentrate Term (as construed
“processing the concentrate (as set forth
above) with a centrifuge to separate the oil
from the concentrate so that the oil stream
coming out of the centrifuge is substantially
(meaning largely or mostly) oil”
“the syrup exiting the centrifuge is largely or
mostly oil free compared to the incoming thin
II. CONCLUSIONS OF LAW
The standard for inequitable conduct was enunciated by the Federal Circuit Court
of Appeals in Therasense, Inc. v. Becton Dickinson & Co., 649 F.3d 1276, 1287-93 (Fed.
Cir. 2011) (en banc). In the instant case, Defendants allege that CleanTech withheld
certain material references from the PTO. Therefore, Defendants must prove by clear
and convincing evidence two elements: (1) specific intent to deceive the PTO and (2)
“but for” materiality of the references allegedly withheld. Id. at 1290. Stated another way,
Defendants must prove “that the applicant made a deliberate decision to withhold a known
material reference.” Id. (quoting Molins PLC v. Textron, 48 F.3d 1172, 1181 (Fed. Cir.
1995) (emphasis added by Therasense Court)). However, “[p]roving that the applicant
knew of a reference, should have known of its materiality, and decided not to submit it to
the PTO does not prove intent to deceive.” Id. (citing Star Sci. Inc. v. R.J. Reynolds
Tobacco Co., 537 F.3d 1357, 1366 (Fed. Cir. 2008)). Rather, “the specific intent to
deceive must be ‘the single most reasonable inference drawn from the evidence.’” Id.
(quoting Star Sci., 537 F.3d at 1366). “Indeed, the evidence ‘must be sufficient to require
a finding of deceitful intent in the light of all the circumstances.’” Id. (quoting Kingsdown
Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 873 (Fed. Cir. 1988) (emphasis
added by Therasense Court)).
Materiality is a separate and distinct inquiry. Id. (citing Hoffmann-La Roche, Inc.
v. Promega Corp., 323 F.3d 1354, 1359 (Fed. Cir. 2003)). To assess materiality, “the
[C]ourt must determine whether the PTO would have allowed the claim if it had been
aware of the undisclosed reference.” Id. at 1291. In making this determination, the Court
applies “the preponderance of the evidence standard and give[s] claims their broadest
reasonable construction.” Id. at 1291-92 (citing Manual of Patent Examining Procedure
(“MPEP”) §§ 706, 2111 (8th ed. Rev. 8, July 2010)). Further, if a claim is invalidated based
on a deliberately withheld reference, the reference is necessarily material. See id. at
There is an exception to the “but for” materiality requirement when the patentee
engages in affirmative acts of egregious misconduct. See id. at 1292. The filing of an
unmistakably false affidavit, for example, is considered egregious misconduct that
supports a finding of materiality because “a patentee is unlikely to go to great lengths to
deceive the PTO with a falsehood unless it believes that the falsehood will affect issuance
of the patent.” Id. (citing Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1571
(Fed. Cir. 1983), and Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 247
(1944), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17
(1976)). Under Rohm & Haas, if “an applicant files a false declaration, [the Federal
Circuit] requires that the applicant ‘expressly advise the PTO of [the misrepresentation’s]
existence, stating specifically where it resides.’” Intellect Wireless, Inc. v. HTC Corp., 732
F.3d 1339, 1343 (Fed. Cir. 2013) (quoting Rohm & Haas, 722 F.2d at 1572)). The Intellect
Wireless court affirmed that the correction must be open and do more than provide
accurate facts; rather the corrective submission must call the examiner’s attention “to the
untrue or misleading assertions sought to be overcome.” Id. (quoting Rohm & Haas, 722
F.2d at 1572)).
Defendants argue that multiple pre-critical date documents, including, but not
limited to, the Ethanol System Diagram, DX112; the June 29, 2003, email from Cantrell
to Agri-Energy outlining the process for oil separation using a centrifuge, DX111; the
August 19, 2003, email from Winsness to VDT shareholders describing the July 31, 2003,
letter and meeting with Agri-Energy as a “first sale,” DX144;” Winsness’ February 2004
email that outlined the parameters under which the method would work, DX147; and the
Barlage test results, DX133; because, taken together, they evidence a pre-critical date
offer for sale under Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 67 (1998). In particular,
these documents compel a finding of an offer because the July 31, 2003, letter offered a
system at a set price; and drawings and other descriptions existed that would allow one
of ordinary skill in the art to make or practice the invention. Further, Defendants assert
that all of the inventors’ testimony that reduction to practice did not occur until May 2004
is contradicted by contemporaneous documents that describe the Barlage bench-top
testing in June 2003 as a success and the offer to Agri-Energy dated July 31, 2003, and
sent on August 1, 2003, as an offer for sale. Because the inventors knew this critical
information and allowed Hagerty to file the feasibility testing letter during prosecution of
the ‘858 patent, but not tell the whole story about their 2003 successes and the offer, they
intended to deceive the PTO. With respect to the ‘516, the ‘517 and the ‘484 patents, the
inventors allowed Hagerty to file a false affidavit notwithstanding their knowledge that
Barlage had practiced the method in June 2003 and they had made an offer to sell the
method to Agri-Energy in July or early August of 2003. Finally, with respect to the ‘484
patent, when they had an opportunity to clean up the record during prosecution of the
‘484 patent, rather than following the clear dictates of Rohm & Haas and Intellect
Wireless, the attorneys chose a path of obfuscation and offered diaphanous excuses by
filing Cantrell’s Second Declaration and an information disclosure statement that was no
more than a dump of incomplete accusations without the supporting documents. All of
this, according to Defendants, is clear and convincing evidence of an intent to deceive.
CleanTech contends that Defendants have failed to prove both materiality and
intent to deceive. Specifically, at the time of patenting, neither the inventors nor the
attorneys believed that the invention had been reduced to practice until May 2004.
Therefore, the feasibility testing letter was accurate and the July 31 Proposal was not an
offer for sale under Pfaff. Similarly, Cleantech argues there was no intent to deceive the
PTO because everyone always believed that the July 31, 2003, letter was an offer to
perform a test and that the May 2004 test was the first reduction to practice since it was
the first time that oil was sold. CleanTech relies on Cantrell’s email to his “team” after the
May 2004 test, DX114, as evidence that this test was the “eureka” moment. CleanTech
further relies on the Barlage test report, DX133 and DX792, as evidence that at that point,
the inventors still did not know if they could remove oil from syrup in an ethanol plant
because of clogging in the centrifuge. CleanTech compares Barlage’s results to the
Wright brother’s discovery that their plane could lift two inches above the ground, but they
did not know at that time whether or not it would fly. CleanTech dismisses the other
contemporaneous evidence regarding testing done in 2003 and the July 31 letter as
puffery. CleanTech also asserts that the Court must believe Winsness and Cantrell when
they testified that they were desperate to get a centrifuge to perform a test at Agri-Energy.
In the final analysis under Therasense, CleanTech contends, the single most reasonable
inference must be that neither the inventors nor the attorneys intended to deceive the
patent office because they reasonably considered the reduction to practice to have
occurred in May or June 2004 and they provided all of Defendants’ arguments to the
contrary to the PTO.
In its Order on Cross Motions for Summary Judgment (“Summary Judgment
Order”), the Court concluded that there was no question of material fact that the
contemporaneous documents written by the inventors or drawn up at the request of the
inventors evidenced that the July 31, 2003, letter that was emailed to Agri-Energy on
August 1, 2003, was an offer for sale and that the invention was ready for patenting by
the time the letter was sent. MDN 1351 at 164-75; MDN 1359 (incorporating claim 30 of
the ‘484 patent into the analysis). After hearing the testimony of the inventors and the
attorneys at the bench trial, the Court confirms its conclusion that those documents
evidence both elements of the on-sale bar. Namely, before the critical date the invention
in the ’858 patent family was the subject of a commercial offer for sale; and the ‘858 family
invention was ready for patenting. The Court adopts herein by reference the findings of
fact and conclusions of law in the Summary Judgment Order, and it’s Order on Motion for
Clarification, Master Docket No. 1351, at 164 to 175, and Master Docket No. 1359.
Further evidence at trial only buttresses the Court’s earlier conclusion, particularly with
respect to the ready for patenting element of the on-sale bar. Specifically, Winsness’
discovery story, DX792, clearly evidenced that in July 2004, when he first wrote the
document, he believed that they had reduced the method to practice in July 2003 when
Barlage performed the bench-top test. If it had not been a success, the inventors would
not have started drafting an offer letter to Agri-Energy the very next day. See, e.g.,
DX107. Further, if his enthusiasm about that test had been a “mistake,” as Hagerty and
Winsness testified at trial, Winsness would have corrected it in 2008 when he sent the
document to Hagerty because he corrected other important information with respect to
the Barlage test report at that time. That Winsness believed the invention had been
reduced to practice, or that they had drawings and/or other descriptions at the time for
one of ordinary skill in the art to practice the invention, is only confirmed by Winsness’
earlier email to Cantrell in February 2004 in which he lays out the parameters under which
the invention would work. DX147. It was clear from the testimony at trial that Winsness
was the technically-savvy member of the invention team; therefore, his testimony that in
this email he was looking to Cantrell to confirm the accuracy of this detailed list of
parameters is implausible. The only reasonable conclusion is that the inventors knew
their invention would work after the Barlage bench test and knew the parameters under
which it would work. Their later protestations to the contrary are simply not credible.
The Court also found implausible Hagerty’s testimony about documents he found
either not material or “cumulative,” such as the Ethanol System Diagram and the July 31
Proposal. See, e.g., Hagerty – Direct at 1202 (discussing why the June testing was not
disclosed because it was in Defendants’ allegations), 1215 (discussing why the Barlage
test results were not disclosed) Hagerty – Cross at 1299-300 (discussing the July 31
Proposal). Hagerty claimed that as he looked at documents, he determined individually,
but looking at them “as a whole,” whether or not they were relevant. Hagerty – Direct at
1208, 1238; Hagerty – Redirect at 1352, 1355-57; 1367. He testified that the Ethanol
System Diagram did not tell him anything about the inventions or was cumulative.
Hagerty – Direct at 1181-82; Hagerty – Cross at 1299-1300; Hagerty – Redirect at 1350.
But, it is clear from these statements that he failed to put it in the context of the
contemporaneous emails and other documents regarding the discovery. In other words,
he purposefully looked at each document in isolation without reference to the total
understanding of the inventors or Agri-Energy at the time. Further, Hagerty admitted that
he did not ask the inventors who witnessed Barlage perform the bench-top test at AgriEnergy, or to explain the diagram to him, or to explain the equipment discussed in the
July 31, 2003, offer letter. Hagerty – Direct at 1038-39; Hagerty – Redirect at 1352.
Because he was the representative of the inventors in the ex parte proceedings before
the PTO, it was incumbent upon Hagerty to inquire of and himself grasp the entire picture
rather than focus on singular indicia of discrete ideations. Further, Hagerty testified that
he never saw other documents that contradicted his view of the case until 2014. Hagerty
– Direct at 1086, 1206-09; Hagerty – Cross at 1255-56; Hagerty – Redirect at 1375-76.
When asked what he would have done if had seen certain documents prior to filing
information disclosure statements, Hagerty said he would do an investigation. See, e.g.,
Hagerty –Direct at 1208. However, Hagerty never asked the inventors key questions
about their invention or the meaning of contemporaneous documents and, after the
litigation started, he relied on the litigation team to do all the investigation. The Court has
already concluded that the litigation team investigations were inadequate.
The Court was unpersuaded by CleanTech’s argument that two statements, one
by each of the inventors, completely substantiated that the inventors did not intend the
July 31 Proposal to be an offer for sale because they had not reduced the method to
practice. For example, CleanTech relies on an email Cantrell wrote to his marketing team
on May 31, 2004, after the commercial test at Agri-Energy, stating, in part, that it was “a
very successful first test. Remember, removing the oil from the syrup has never been
done before.” DX114. In addition, CleanTech relies on an email from Winsness dated
May 30, 2009, in conjunction with the Raymon Bean investigation, which states, in
pertinent part, “This patent was developed over ’03, 04 and filed 8-19-04 and we produced
our first quote in Sept ’04 (it was important that we not quote before filing).” DX688. But,
by 2004, and certainly by 2009, the inventors had talked with Dorisio (and later Hagerty)
and had information from him about the consequences of offering an invention for sale
more than one year prior to filing and had researched and obtained similar information
from the PTO website. Dorisio Video Trial Testimony; DX788; DX751; Winsness – Direct
at 560. At trial, the Court doubted Cantrell’s testimony in its entirety for the reasons
already stated, but even if it had not, his testimony about the development process was
contradicted by so many other contemporaneously-produced documents that it was not
credible. For example, multiple documents written by or endorsed by the inventors or
VDT claimed that they derived the new process by their work in the poultry industry. See,
e.g., DX109; DX110; DX142; DX151, DX158. However, at trial, Cantrell completely
disavowed the majority of these statements saying that he misspoke or it was not true
and blamed his poor writing skills. See, e.g., Cantrell – Direct at 125-27 (disavowing
anything to do with preparation of DX792, a memorandum regarding the invention to
Dorisio); id. at 205 (claiming that DX109, a memorandum he prepared dated June 11,
2004, had misstatements about the connection between the meat industry and the
ethanol industry); 206-07 (disavowing quoted statements in DX151, an article dated
August 2005); id. at 209 (claiming that he never read the provisional application filed by
Dorisio on his behalf); id. at 211 (claiming a VDT executive summary dated January 17,
2005, DX158, which indicates him as an author, was “written wrong in what I wrote”). In
other words, it is not reasonable to believe that all the documents that point away from an
offer to sell are accurate, but all the ones that point toward such an inference are
inaccurate. Further, the Court believes that the claims of the ‘858 patent family are broad
enough to include a process that occurs outside of an ethanol facility, one in which the
syrup is shipped to a contractor who heats it, then processes it through a centrifuge to
obtain oil (a batch process) because only a few of the claims require a continuous
process; as well as one on a small scale because none of the claims require a commercial
process. Moreover, Cantrell’s statement can still be true, but the inventors reduced the
method to practice earlier and just merely proved commercial viability in 2004. This is the
only reasonable inference in light of the remaining evidence.
Similarly, and also as previously discussed, Winsness evaded giving forthright
answers during Defendants’ direct examination and rarely looked the attorneys from
either side in the eye when he answered. Even during points of the cross examination
by CleanTech’s attorney, Winsness failed to provide straight answers. His evasive tactics
left the Court with the clear impression that he knew they had made a mistake by offering
a system to Agri-Energy in early August 2003; but, later, recognizing the mistake, he
wanted to make it appear as if they would not make such an offer until after the provisional
application was filed. In other words, the Court believes Winsness purposefully dropped
this phrase to create the false impression that the July 31 Proposal meant something
other than what the inventors and VDT originally intended. Further, Winsness’ credibility
was severely undermined when he disavowed that the invention disclosure he wrote
would be relied upon by the attorneys to help them prosecute the patent because the
lawyers, including Dorisio, had no other way to get the basis of the invention story.
Moreover, as to the key paragraphs of that disclosure, where he describes the bench-top
testing as a success, Winsness had no good answer for why he failed to correct the
statement when he sent the document to Hagerty in 2008, but corrected other information
showing oil recovery in the Barlage centrifuge tests.
All in all, the Court is left with the firm impression that the inventors made a mistake
in July/August 2003 and offered their invention for sale to Agri-Energy. Later, they took
affirmative steps to hide that fact from their lawyers, then, later the PTO when they learned
that it would prevent them from profiting from the patents.
Further, from the beginning, attorneys for CleanTech placed this patent case on a
precarious platform. Counsel chose to aggressively pursue patent infringement suits in
multiple forums while simultaneously prosecuting further family patents. Deciding to
litigate and prosecute simultaneously, while taking a potential financial interest in the
patents themselves, necessitated the creation of a litigation team and a prosecution team.
The schism in the dual plan was the failure to provide for an individual responsible for
coordinating these efforts so that documents discovered during litigation would be
earmarked for presentation to the patent prosecution attorney. And further, no one was
charged with the task of being sure that the advocacy required in litigation did not taint
the candor required in the PTO.
O’Brien made it clear that no one was in charge of ensuring that Hagerty received
documents that were discovered during the litigation that bore witness to the inventor’s
or Agri-Energy’s perception of their interactions during the 2003 and 2004 timeframe.
O’Brien – Direct at 861.
Moreover, the lawyers’ repeated statements that they
concentrated on “pre-critical date documents,” O’Brien – Direct at 831, 8942, 845, 847,
850, 855, 860; only heightens the notion that Hagerty’s focus was purposefully and, in
this Court’s view improperly, narrow. The fact is, material documents related to the true
invention story and the on-sale bar were never revealed to the PTO in the prosecution of
any patent in the ‘858 patent family and the inventors allowed the false story to be told.
The ‘858 Patent – Looking at each patent individually, the Court must determine
whether material documents were intentionally excluded when they should have been
submitted. Taking the ‘858 patent first, when Dorisio filed the non-provisional application
for the ‘858 patent in May 2005, he filed a letter in which he stated that Prevost “may be
found to claim the same invention as at least one of the instant application.” DX686;
Stipulations ¶ 7. Hand-written notes on the Prevost application indicate that Dorisio, or
someone in his firm working on the file, believed that the reference in Prevost Claim 19
to “15 wt. % water” was a mistake. DX684. This substantiates Dorisio’s claim in the nonprovisional application that Prevost may be found to claim the same invention as at least
one of the claims in that application. Further, in July 2005, Dorisio’s firm had prepared a
patentability and clearance opinion that he shared with the inventors. DX788. Therein,
the firm referenced an invention date in 2003 that coincides with the Barlage testing and
July 2003 bench-top testing at Agri-Energy. There is no written record that the inventors
disagreed with the conclusions in the opinion. It is clear that the original strategy was to
swear behind Prevost.
Hagerty received the patent prosecution file in March 2008, and testified that he
waited to review it until the PTO issued the June 13, 2008, office action in the ‘858 patent
prosecution, which rejected all of the claims. Hagerty – Direct at 978, 981. Hagerty claims
that at this time, he did not have Dorisio’s clearance opinion or Dorisio’s hand-written
notes regarding his view of Prevost. Hagerty – Direct at 981-82. But, to help him prepare
a response to the first office action, on or around September 14, 2008, Winsness emailed
Hagerty several documents including the invention story that he had told Dorisio and the
Barlage test results. DX792. Therein, Winsness stated the following regarding the 2003
We tested the syrup in June 2003 using a bench top centrifuge (we have
documentation on file).
We poured “syrup” into a continuous disk-stack centrifuge a[nd] were able
to separate the oil from the water cleanly.
WHAT IS UNIQUE ABOUT THIS?
Disk-Stack Centrifuges [sic] are designed to separate oil from water. In this
case, however, the product contains high levels of solids, which exceed the
normal design limits of disk stack centrifuges. During the bench-top test
[sic] however, it appeared that the solids would not foul the centrifuge and
led us to believe that the process would work on a commercial scale.
DX792 at GCS(PRIV)001605). Winsness’ email also contained the Barlage test results,
which included the conclusion that something in the heating process broke the emulsion
and allowed oil to be recovered from the syrup; Winsness’ note to Hagerty clarified these
results. See DX792 at GCS(PRIV)001591 & GCS(PRIV)001614-20. At this time, Hagerty
also had a copy of the Ethanol System Diagram.
In response to the office action, Hagerty substantively amended the claims and
distinguished the prior art, stating, in part, that Prevost did not teach heating of the thin
stillage concentrate then mechanically processing it to remove the oil. DX273. The
amendments and arguments were not enough to get the ‘858 patent issued; rather, on
December 22, 2008, the examiner issued a final rejection. PTX2059 at 112. In response,
in addition to his previous statements regarding Prevost, Hagerty claimed that the
inventors had “discovered that its claimed processes frees a portion of the bound oil as a
result of evaporating the thin stillage to remove water and form a concentrated byproduct.
Removing a portion of the bound water breaks the emulsion allowing mechanical
processing to further separate and recover the oil.”
PTX2059 at 101.
protestations otherwise, this statement clearly has its roots in the June 2003 Barlage test
results conclusion; there is simply no other part of the record from which either inventor
claimed to have made this “discovery.” At this point, not providing information regarding
the inventors’ dealings with Agri-Energy or the Barlage bench-top test raises an inference
that the patentees intended to deceive the PTO – it was pre-critical date information that
had a direct bearing on the ability of the inventors to prove that their claims were
patentable. But, Hagerty made no such disclosure and the inventors said nothing either.
In April 2009, shortly after Hagerty submitted this response to the final office action,
the PTO issued a notice of allowance; Hagerty paid the issue fee in May 2009.
Stipulations ¶¶ 9 & 10. Based on Hagerty’s arguments that incorporated the Barlage test
result conclusions, the Court concludes that the examiner would have found those results
On June 5, 2009, Hagerty withdrew the application from issue and filed a new
information disclosure statement listing additional prior art. Also on the same date,
Hagerty filed his letter that specifically pointed out feasibility testing that had occurred in
May 2004, where oil was recovered using the proposed process and subsequently sold.
DX284; Stipulations ¶ 12. Hagerty admitted that this had no relevance to the prosecution
of the ‘858 patent and the Court found contrived his explanation that it had something to
do with consistent disclosures of prior art amongst patent families. There was no effort
made to disclose the year-earlier documents upon which Hagerty had based his
arguments to overcome the final rejection by the PTO; rather, he filed an irrelevant letter,
which created a false impression that the first time information existed to confirm the
method was May 2004. The inventors did nothing to clear up the error. The Court can
only conclude that Winsness and Cantrell intentionally allowed Hagerty to create this false
impression and that Hagerty, knowing and relying on facts to the contrary, purposefully
withheld the results in 2003 in favor of the new story.
The ‘516 and ‘517 Patents – With respect to prosecution of the ‘516 patent, on
September 30, 2005, Dorisio filed the application that led to the ‘516 patent. DX279.
There was no substantive or relevant activity on the file before Hagerty received the
Winsness/Cantrell patent portfolio from Dorisio in March of 2008. Id.
On June 17, 2008, the examiner rejected the selected method claims in light of
Prevost and a patent to Yokoyama. Id. In response, on September 16, 2008, Hagerty
amended the claims and made substantively similar arguments as those he made in the
‘858 patent prosecution:
Prevost fails to teach or suggest a post-evaporation process for recovering
oil from thin stillage that includes, inter alia, mechanically processing the
thin stillage concentrate to separate oil from the thin stillage concentrate
(claim 1) or disc stack centrifuging oil to form a substantially oil free
concentrate (claim 4).
On December 26, 2008, the examiner again rejected the claims under 35 U.S.C.
§ 103(a) as being unpatentable over “Minowa et al. in view of Prevost et al.” DX279. On
February 3, 2009, in response to this objection, Hagerty again amended the claims and
argued, “Applicants have carefully studied Prevost and can find no teaching or suggestion
of a post-evaporation process for recovering oil from the thin stillage concentrate that
includes centrifuging the concentrate to recover oil.” Id. Hagerty also argued, as he had
in the ’858 prosecution, that the inventors had discovered that the heating freed up bound
On April 7, 2009, Hagerty filed an information disclosure statements in the ‘516
prosecution listing additional prior art. Id. On September 30, 2009, Hagerty filed an
information disclosure statement, which again included prior art, but it also included the
admittedly irrelevant statement regarding the May 2004 feasibility testing that he had also
filed in the ‘858 prosecution. Id. There was no disclosure of the earlier 2003 Barlage
testing, the bench-top test or the inventors’ conclusions regarding the same.
On September 14, 2009, just shortly after Defendant GEA Westfalia filed its suit
against CleanTech, Hagerty filed the application that led to the ‘517 patent. PTX2063.
On the very same day, Hagerty files an information disclosure statement listing which
included prior art and references the co-pending applications, but it also included the
admittedly irrelevant statement regarding the May 2004 feasibility testing that he had also
filed in the ‘858 prosecution. Id. There was no disclosure of the Barlage 2003 testing,
the Barlage bench-top test or the inventors’ conclusions regarding the same.
In a petition to make special filed on November 12, 2009, in the ‘517 prosecution
Hagerty uses identical language as he had in the ‘516 patent prosecution to distinguish
Prevost. Id. Specifically, he states, in part: “Applicants have carefully studied Prevost
and can find no teaching or suggestion of a post-evaporation process for recovering oil
from the thin stillage concentrate that includes centrifuging the concentrate to recover oil.”
Id. at 251.
On February 17, 2010, the PTO issued a notice of allowance of the ‘516 patent.
Id. On March 2, 2010, Cantor Colburn paid the issue fee. DX279.
As previously discussed, later in March 2010, the litigation team and Hagerty
learned of the July 31, 2003, letter to Agri-Energy. Stipulations ¶¶ 19 & 20.
On May 13, 2010, Hagerty filed a Petition to Withdraw from Issue and a Request
for Continued Examination in the ‘516 prosecution. DX279. On the same date, Hagerty
submitted an information disclosure statement that contained some additional prior art as
well as multiple complaints and answers and counterclaims of the parties in this MDL. Id.
The petition was accepted by the examiner on August 2, 2010; and on August 11, 2010,
the PTO issued a second notice of allowance for that application. Id.
On July 6, 2010, in the ‘517 patent prosecution, the PTO issues a rejection based
on obviousness. PTX 2063 at 163. In apparent response, on November 9, 2010, Hagerty
files an information disclosure statement with Cantrell’s First Declaration and the Cantor
Colburn litigation team’s explanation of why the document is irrelevant. Id. at 142.
Specifically, Hagerty repeats Cantrell’s recollection that he hand delivered the letter on
August 18, 2003, after the critical date. Id. No mention of the pre-August activities at
Agri-Energy, the Barlage test results or the Ethanol System Diagram are made.
Also on November 9, 2010, in the ‘516 patent prosecution, Hagerty submits a
supplemental response, and Cantrell’s First Declaration as part of an information
disclosure statement, in which Cantor Colburn and Cantrell advise the PTO of the July
31, 2003, letter and Cantrell’s recollection that the first time Agri-Energy saw the letter
was August 18, 2003. DX279. Hagerty’s supplemental response states that the letter is
not material. Id. These documents are rejected as non-compliant by the PTO and resubmitted shortly thereafter. Id.
On November 23, 2010, the PTO granted the petition to withdraw. Id. On March
23, 2011, Hagerty filed another information disclosure statement in which he cited multiple
patents and articles as potential prior art. Id. He also filed several Defendants’ invalidity
contentions. Id. There was no explanation with the documents nor were any of the
documents underlying any of Defendants’ contentions provided. Id.
On January 21, 2011, the PTO issued a notice of allowance for the ‘517 patent.
PTX2063 at 125.
But, in early March 2011, Hagerty filed a request to continue
examination and an information disclosure statement. Id. at 52, 55. The information
disclosure statement included invalidity contentions from many of the Defendants. Id. at
55. No explanation of the documents or copies of documents referenced within the
contentions was made.
On April 21, 2011, in the ‘516 prosecution, the examiner issued another notice of
allowance. Id. Cantor Colburn paid the issue fee on the same date. Id. But, on May 9,
2011, Hagerty again filed a petition to withdraw and an information disclosure statement
in which he filed additional potential prior art; the petition was granted on May 10, 2011.
On June 24, 2011, the PTO issued a notice of allowance for the ‘517 patent.
PTX2063 at 10.
On July 22, 2011, the PTO issued another notice of allowance for the ‘516 patent;
Cantor Colburn paid the issue fees the same day along with the issue fee for the ‘517
patent. DX279; PTX2063 at 5. Both the ‘516 patent and the ‘517 patent issued on August
30, 2011. DX279; PTX2063 at 1.
In prosecution of the ‘516 and ‘517 patents, the inventors and attorneys
misrepresented to the PTO that the July 31 offer letter was immaterial by filing the false
Cantrell First Declaration and by leaving un-rebutted the irrelevant 2004 feasibility testing
letter. In the face of Cantrell’s poor health, Winsness’ and Cantor Colburn’s reliance on
Cantrell’s recollection of the events surrounding the Q1, July 31, 2003, letter and the
credit card receipts, as well as their lackluster investigation of events is solid evidence of
purposeful behavior. It appears to the Court that the lawyers ignored the red flags waiving
before them. In order to believe Cantrell, they had to ignore other evidence that the
inventors thought they had a discovery in 2003, such as Winsness’ invention story, the
Barlage test results (which Hagerty relied upon, in part, to convince the PTO to allow the
‘858 and ‘516 patent claims), and the Ethanol System Diagram.
Moreover, the lawyers had to ignore the suspicious timing of Wisness’ visit to AgriEnergy in June 2010, after he had learned that competitors had opinions of counsel that
concluded the patents were invalid because they were offered for sale. Although the
lawyers did not know of Winsness’ visit before it occurred, they knew of it afterward,
because Rye sent his letter to Agri-Energy shortly thereafter. To the extent it has not
already done so, the Court finds that Winsness threatened Agri-Energy with legal action
if it did not corroborate his and Cantrell’s story. In addition, the Court finds that Rye’s
letter was a thinly-veiled threat and was not a truth-seeking inquiry. By itself this may
perceived as an accepted tactic in patent litigation. None-the-less, this correspondence
was just that, a litigation tactic, not a request for information.
Further, no one, not even Winsness who was familiar with VDT’s deals in 2003
and likely drafted the very letter at issue, thought it would be prudent to talk with
Lauderbaugh, the team member who accompanied Barlage to Agri-Energy in June 2003
and, as the sales representative with the relationship with Agri-Energy, to see what he
remembered about Cantrell’s visit in August 2003.
Finally, if Winsness and the lawyers were convinced that the July 31, 2003, offer
letter was not an offer for sale and had always believed that to be true, as they all testified
at trial, then why did they decided to throw away months of work by O’Brien, who spent
considerable time drafting a detailed disclosure regarding the invention story (which
referenced the Barlage test report and the Ethanol System Diagram) and just explain why
the July 31 letter was not an offer for sale? The only reasonable inference is that they
believed the inventors had made an offer and, with the feasibility testing letter already
before the PTO in both prosecutions, DX279A (‘516 Patent File History Excerpt), DX280A
(‘517 Patent File History Excerpt), which implied a later reduction to practice date, they
chose advocacy over candor.
This is a consequence of pursuing litigation and
prosecution simultaneously. Here, these principles, very apparently, got mixed.
The ‘484 Patent – With respect to the ‘484 patent prosecution, on May 13, 2011,
Hagerty filed the application. DX288. On July 21, 2011, Hagerty filed an information
disclosure statement including initial pleadings in the various lawsuits that comprise the
original MDL. Id. On the same day, he also filed the admittedly irrelevant feasibility
testing letter that is identical to the one filed in the ‘516 and ‘517 patent prosecutions and
Cantrell’s First Declaration, which falsely states that the July 31, 2003, offer letter was
hand delivered on August 18, 2003. Id.; Stipulations ¶ 34. No reference was made to
the earlier testing at Agri-Energy or the Ethanol System Diagram.
On July 27, 2011, Hagerty filed another information disclosure statement in which
he included Defendants’ invalidity contentions. Id. Again, there was no disclosure of the
2003 testing at Agri-Energy or the Ethanol System Diagram.
On September 21, 2011, Defendants deposed Cantrell and the August 1, 2003,
email with the July 31 Proposal attachment was disclosed. At this point, the inventors
and Cantor Colburn know for certain that Cantrell’s First Declaration is false. The Court
finds strong evidence of intentional deceit in the ensuing delay by Cantor Colburn in
investigating the facts and Winsness’ equally nonchalant response.
discussed, by this time, Hagerty had relinquished control of investigating the facts with
The Court disagrees with Hagerty’s claim that this was reasonable
because of the ongoing litigation. Once he made that decision, objective prosecution of
the patents became extremely problematic.
That a shiver went down his spine upon
learning about the August 1, 2003, email is the most believable statement Hagerty made
– he realized they were in trouble. His and O’Brien’s later testimony at trial did not
plausibly explain the delay that occurred between the discovery of the August 1, 2003,
email and the preparation and filing of Cantrell’s Second Declaration.
Notwithstanding the amount of time that elapsed between late summer 2003 and
September 2011, Winsness most likely created the draft of the letter that was sent to AgriEnergy and knew the key players at the Agri-Energy meeting in 2003, including
Lauderbaugh. Yet, even at trial, Winsness claimed that he thought the email might be
fabricated. For the reasons previously stated, Winsness was not a credible witness, but
this testimony strained reasonableness. SRS told him in May or June 2010 that it had an
opinion of counsel that the patents were invalid and he connected that immediately to
VDT’s work with Agri-Energy. His visit to Agri-Energy so quickly after the SRS meetings
and his failure to alert his lawyers to his impending visit there evidences his true purpose,
which was to bury any notion that VDT had made an offer or that Agri-Energy perceived
it as such.
On December 13, 2011, the PTO issued an office action rejecting all the claims of
the ‘484 patent, in part, based on obviousness, citing Prevost and other references. Id.
As previously discussed, Hagerty responded on February 10, 2012, three months prior to
the deadline, without reference to the inaccuracies in Cantrell’s First Declaration because
he was waiting for the litigation team to finish its investigation. There is no evidence that
Hagerty or anyone else was preparing any kind of information disclosure statement at this
time. If the Court has not already stated it clearly, and it bears repeating if it already has
so stated, Cantor Colburn’s delay was unjustified. Winsness and Lauderbaugh were
always available to question. Further, O’Brien’s explanation for not issuing a subpoena
to Agri-Energy sooner than August 2011 is more excuse than reason, and certainly the
lawyers should have had the Agri-Energy documents before February 2012.
Cantrell’s health obviously in question and his memory now demonstrably faulty,
O’Brien’s, and by acquiesce and possible deference, Hagerty’s, reliance on any more
information from Cantrell about the events that occurred in 2003 demonstrates poor
judgment. In their pursuit of additional pickets in the fence against competitors, it appears
to the Court that the attorneys substituted advocacy for candor in the ex parte proceeding
occurring before the PTO.
O’Brien finally drafted Cantrell’s Second Declaration; the Court disagrees with
O’Brien’s characterization of it as “clear.” His rambling justification for it and repeated
claims that he intended for it to be “clear,” in addition to the lack of drafts, evidenced a
carelessness and lack of sincerity that clinches the inference that he was trying to cover
up his misdeeds with compounded complexity. As previously discussed, the declaration
did not distinctly point out the misrepresentations in the first declaration. Moreover, in this
Court’s view, inundating the PTO with arguments from the Defendants, many of them
incomplete, is not the kind of candor contemplated by the Federal Circuit in Rohm & Haas
and Intellect Wireless. Hagerty testified that he made the decision to file Cantrell’s
Second Declaration and the documents in favor of any explanation, but also claims not
to have seen many documents that were introduced during Cantrell’s deposition or that
Defendants’ relied upon in their arguments. In fact, it was not clear whether or not he
even saw the un-redacted copies of pleadings he sent in. Both O’Brien and Hagerty said
that letting Defendants tell their story was the best way to put the information before the
examiner because it was the most bias view of the facts. O’Brien – Direct at 850, 85152; O’Brien – Cross at 902; O’Brien – Redirect at 911-12; Hagerty – Direct at 1175, 1187,
1192, 1202-03, 1209-15, 1218; Hagerty – Cross at 1322-23, 1326, 1328-33. But the
Defendants’ filings were not evidence that the Barlage tests had occurred prior to AgriEnergy’s receipt of the letter; or that the day after the bench-test the inventors prepared
drafts of an offer letter and later described the test as a success; or that the inventors had
prepared a drawing of a system for oil extraction, labeled with “Ethanol System” in its title,
that included a disc stack centrifuge, a point that Hagerty had argued distinguished the
invention from prior art. In fact, a many of the documents were redacted and never
To the extent it is necessary, the Court incorporates by reference its discussion
above regarding the failure of the attorneys and the inventors to follow the dictates of the
Federal Circuit in Rohm & Haas and Intellect Wireless. For those reasons, as well as the
reasons outlined here, the Court concludes that the inventors and the attorneys
intentionally withheld material information from the PTO during prosecution of the ‘484
For the reasons stated herein, the Court has concluded that the ‘858 patent, the
‘516 patent, the ‘517 patent and the ‘484 patent are unenforceable because of inequitable
conduct before the PTO. Judgment shall be entered accordingly.
IT IS SO ORDERED this 15th day of September, 2016.
LARRY J. McKINNEY, JUDGE
United States District Court
Southern District of Indiana
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