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From Intellectual Property Law Daily, April 19, 2019

Jury’s $7.5 million award over fuel ethanol patent infringement reinstated

By Brian Craig, J.D.

The Federal Circuit ruled the district court improperly concluded two patents were invalid based on anticipation by prior art.

Concluding that the federal district court in Wisconsin erred in overturning the jury’s infringement verdict, the U.S. Court of Appeals has reinstated an award of approximately $7.5 million in damages to U.S. Water Services arising from infringement of two patents relating to fuel ethanol production by Novozymes A/S and Novozymes North America (collectively, Novozymes). The Federal Circuit held that the district court erred by granting judgment as a matter of law to Novozymes because the evidence permitted the jury to find that prior art does not inherently anticipate the asserted claims (U.S. Water Services, Inc. v. Novozymes A/S, April 19, 2019, Wallach. E.).

U.S. Water Services, Inc. and Roy Johnson (collectively, "U.S. Water") sued Novozymes A/S and Novozymes North America, Inc. (collectively, "Novozymes"). U.S. Water alleged Novozymes infringed certain claims of U.S. Patent No. 8,415,137 and U.S. Patent No. 8,609,399. The asserted patents share a common specification and disclose methods for using an enzyme called phytase to reduce the formation of deposits of phytic acid and phytates (metallic salts of phytic acid) during ethanol production. The asserted claims include various combinations of seven elements. U.S. Water sells a phytase-based product called pHytOUT to reduce phytate fouling on fuel ethanol production equipment. Novozymes sells a competing phytase-based product called Phytaflow—the accused product in the case. After finding infringement of the asserted claims, the jury returned a damages award of $7,582,966. The jury determined that the asserted claims were not inherently anticipated by Patent Cooperation Treaty Publication No. WO 01/62947 A1 ("Veit"). Entitled "Fermentation with a Phytase," Veit describes "a process of alcohol and other fermented compounds production, in particular ethanol production." The district court grantedjudgment as a matter of law ("JMOL") in favor of Novozymes, holding that the asserted claims were invalid as inherently anticipated by prior art. U.S. Water appealed.

Anticipation. The Federal Circuit first recognized that prior art reference anticipates a patent’s claim when the four corners of that document describe every element of the claimed invention, either expressly or inherently, such that a person having ordinary skill in the art (PHOSITA) could practice the invention without undue experimentation. Here, the Federal Circuit held that the district court erred in ruling as a matter of law that Veit inherently anticipates the asserted claims. The asserted claims require the reduction of phytic acid deposits in specific locations of an ethanol plant such as on the "heat transfer equipment" or in the "beer column." By contrast, Veit does not disclose any examples using phytase to reduce phytic acid deposits in an ethanol plant, but rather describes an experiment in a laboratory bottle. Example 1 explains that the phytase is not added into fermentation, but rather it is added into a saccharification step that’s happening at 60 to 70 degrees Celsius.

As U.S. Water’s expert explained, the asserted claims "talk about fouling in a beer col-umn . . . [and] heat transfer equipment, which [a PHOSITA] would look at and say . . . [the fouling is] in the beer/mash heat exchangers, in the evaporators, [occurs during] distillation." Similarly, unlike the stated limitations for reducing deposits found in the asserted claims, Example 1 in Veit does not provide any conditions necessary to determine whether any deposit on equipment is formed during the experiment, nor does it provide any specific variables that impact phytase in a way that will always reduce deposits in the plant equipment. Because Example 1 is silent as to whether its Protocol would reduce phytate fouling in the "beer column" or "heat transfer equipment" and Novozymes did not provide evidence that Example 1 satisfies all the required constraints in the asserted claims, Veit does not disclose whether any deposits would have formed when using Example 1’s Protocol in a fuel ethanol plant.

The Federal Circuit also found Noozymes’s primary counterargument unpersuasive. Novozymes argued that Example 1 was not itself conducted in a fuel ethanol plant, it was meant to exemplify actual use in a plant because it "was intended as proof of the concept that addition of phytase to ethanol processing fluid in a fuel ethanol plant would be effective to degrade all phytate present." Example 1 of Veit does not disclose any deposit reduction on plant equipment as required by the asserted claims. Rather, Novozymes’s expert simply explained that Example 1 is "equivalent" to the deposit reduction used by Novozymes’s infringing plants. Because all parties agreed that Veit does not expressly teach a method of deposit control, and it could not be determined by Veit alone how Example 1’s Protocol would reduce deposits in an actual plant, it was reasonable for the jury to agree with U.S. Water’s expert that Example 1 did not inherently anticipate the asserted claims. As the district court erred in granting judgment as a matter of law, the Federal Circuit reversed the district court and reinstated the jury verdict.

This case is No. 2018-2075.

Attorneys: Michelle Marie Umberger (Perkins Coie LLP) for U.S. Water Services, Inc. J. David Hadden (Fenwick & West, LLP) for Novozymes A/S and Novozymes North America, Inc.

Companies: U.S. Water Services, Inc.; Novozymes A/S; Novozymes North America, Inc.

MainStory: TopStory Patent FedCirNews

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