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GS Cleantech Corp. v. Adkins Energy LLC

United States District Court, N.D. Illinois, Eastern Division

March 26, 2018

GS CLEANTECH CORPORATION, Plaintiff/Counterclaim Defendant,
v.
ADKINS ENERGY LLC, Defendant/Counterclaim Plaintiff.

          MEMORANDUM OPINION AND ORDER

          REBECCA R. PALLMEYER, UNITED STATES DISTRICT JUDGE.

         Until recently, this case, originally filed in this court, was part of a multidistrict litigation ("MDL") in the Southern District of Indiana. Plaintiff, GS CleanTech Corporation ("CleanTech"), sued a number of defendants throughout the United States for infringement of CleanTech's patented method for extracting corn oil from byproducts produced during the manufacture of ethanol. The litigation ended badly for CleanTech, as Judge Larry J. McKinney, to whom the MDL was assigned, concluded that the patents-in-suit are invalid and not infringed.

         In this individual case, defendant Adkins Energy LLC ("Adkins") brought a counterclaim against CleanTech for breach of a contract in which CleanTech agreed to install a corn oil extraction system at Adkins' Illinois facility. CleanTech prevailed on the counterclaim, finding that Adkins suffered no damages as the result of any contract breach. CleanTech moved to alter or amend the judgment of invalidity [714], but early last year, Judge McKinney denied the request [744] ("January 19 Order" at 1-2). CleanTech also requested that the court defer briefing and/or ruling on exceptional case status, attorneys' fees, and costs issues relating to both this individual case and the MDL [738]. Judge McKinney denied that request as well. (January 19 Order at 2.) Following Judge McKinney's death, the individual case was remanded to this court. CleanTech has moved for reconsideration of the denial of its motion to alter or amend, as well as for reconsideration of the denial of its motion to defer. For the reasons explained below, CleanTech's motion [749] is denied but its request to defer rulings is granted. The motions for an award of fees and costs [704, 709, 711, 717] are stricken without prejudice to renewal following rulings from the Federal Circuit and the MDL court.

         BACKGROUND

         A. This Case and the MDL

         CleanTech is a Delaware corporation with its principal place of business in New York, New York. (Pl.'s Compl. [1], ¶ 1.) It is a wholly-owned subsidiary of GreenShift Corporation (hereinafter "GreenShift"), which is also a Delaware corporation with its principal place of business in New York. (Id.) CleanTech and GreenShift share headquarters in Alpharetta, Georgia. See In re Method of Processing Ethanol Byproducts & Related Subsystems ('858) Patent Litig., No. 1:10-ml-02181-LJM-DML, 2016 WL 4919980, at *1 (S.D. Ind. Sept. 15, 2016). "GreenShift and its subsidiaries focus on developing and commercializing technologies that promote more efficient use of natural resources" for market participants in "long-established industries, " including the corn oil extraction industry. Id.

         Adkins is a Delaware limited liability company with its principal place of business in Lena, Illinois. (Def.'s Ans. [12], ¶ 2.) Adkins operates a plant that processes corn to produce ethanol. (See Summary Judgment Order [1351] (hereinafter "SJ Order"), 10-12.)

         In 2006, CleanTech's predecessor-in-interest and corporate alias, Veridium Industrial Design Group (hereinafter "CleanTech" for ease of reference), entered into a contract with Adkins. In re Method of Processing Ethanol Byproducts & Related Subsystems ('858) Patent Litig., Nos. 1:10-ml-02181-LJM-DML, 1:10-cv-08011-LJM-DML, 2012 WL 5844746, at *1 (S.D. Ind. Nov. 19, 2012). The contract gave "Adkins the right to rent at its Lena facility a corn oil extraction system developed and owned by CleanTech and a license to CleanTech's related intellectual property." Id. Pursuant to the contract, CleanTech was to install the system and to "provide Adkins with all the equipment or other components necessary for Adkins to use the system at the Lena facility." Id. Adkins received "a first right of refusal to purchase the . . . system from CleanTech, " and CleanTech received "the first right of refusal to purchase corn oil extracted through the use of the system at a reduced rate." Id. In a forum-selection clause, the parties "consent[ed] to the exclusive venue and jurisdiction of the courts of the State of Illinois, in respect to the interpretation and enforcement of the provisions of this Agreement." (Equipment License and Corn Oil Off-Take Agreement, Ex. A to Def.'s Ans. [12-2], § 1.12(1).)

         CleanTech began installing the corn oil extraction system in late 2006 or early 2007, but did not finish the project. In re Method of Processing Ethanol, 2012 WL 5844746 at *2. Adkins terminated the contract, and according to Adkins, CleanTech agreed that it "would not sue Adkins if Adkins obtained alternative technology to extract corn oil at its facility." Id. Adkins alleges that it incurred damages by, among other things, paying off liens related to CleanTech's unfinished construction and purchasing alternative technology and equipment for corn oil extraction. Id. CleanTech denies that it breached the contract and denies that it made an express agreement not to sue Adkins. Id. at *3.

         Indeed, despite the purported agreement not to sue, CleanTech sued Adkins in this District on July 14, 2010, for alleged infringement of U.S. Patent No. 7, 601, 858 ("the '858 Patent"). (Pl.'s Compl. ¶¶ 1-25.) The '858 Patent is generally directed toward a method for extracting corn oil from byproducts produced while ethanol is manufactured from corn. (Id. ¶ 6.) In its answer, Adkins asserted numerous affirmative defenses, including breach of the agreement not to sue. (Def.'s Ans. at 9-11.) Adkins also brought counterclaims, including for breach of contract. (Id. ¶ 13-30.)

         Around the same time, CleanTech and GreenShift filed lawsuits against entities throughout the Midwest alleging infringement of the '858 Patent. (MDL Transfer Order [MDN 1].)[1] On August 6, 2010, the United States Judicial Panel on Multidistrict Litigation ("the Panel") consolidated the actions and transferred them to the United States District Court for the Southern District of Indiana for pretrial proceedings. (Id. at 1-2.) On or around December 6, 2010, the Panel conditionally transferred this case for inclusion in the MDL. (Conditional Transfer Order [26], 1-2.) In doing so, the Panel denied Adkins' request to "separate[] and remand[] [Adkins'] contract-related counterclaim" to the Northern District of Illinois. (Id.)

         CleanTech subsequently amended its MDL complaints to assert claims of three continuation patents against Adkins and other defendants. (See, e.g., SJ Order at 1-2.) These patents-U.S. Patent No. 8, 008, 516 ("the '516 Patent"), U.S. Patent No. 8, 008, 517 ("the '517 Patent"), and U.S. Patent No. 8, 283, 484 ("the '484 Patent")-all claim priority to the provisional application from which the '858 Patent issued. (See Id. at 149.)[2] Thus, they are all members of the '858 Patent family.

         The MDL proceeded to summary judgment and on October 23, 2014, the court issued a 233-page ruling. Most relevant for purposes of CleanTech's motion for reconsideration, the court granted summary judgment of non-infringement to Adkins on all asserted claims of the patents-in-suit, finding that CleanTech had failed to present admissible evidence of infringement. (SJ Order at 17, 90-91.) In addition, the court granted summary judgment of invalidity to defendants, including Adkins, finding that all patents in the '858 Patent family are obvious in light of prior art and failure to name the correct inventors. (Id. at 192, 202 (citing 35 U.S.C. § 103; 35 U.S.C. § 102(f)).) Finally, the court granted summary judgment to defendants, including Adkins, on the basis that the '858 Patent, the '516 Patent, the '517 Patent, and Claim 30 of the '484 Patent, are invalid under the on-sale bar. (Id. at 174 (citing 35 U.S.C. § 102(b)); see also Order on Request for Clarification [MDN 1359], 1-2.)[3]

         CleanTech attempted to overcome the on-sale bar with numerous arguments. Directly relevant to its motion for reconsideration, CleanTech argued that the inventors had not reduced the claimed method to practice by late July or early August 2003, when the inventors made what the court deemed an invalidating offer for sale to Agri-Energy LLC ("Agri-Energy"), an ethanol plant in Minnesota. (See SJ Order at 120, 166-67.) The court, however, found that no reasonable juror could reach that conclusion. (See, e.g., Id. at 170.) Among other things, the court found that "the method of the patented invention" had been performed at least by July 10, 2003, when individuals affiliated with the named inventors, David Cantrell and David Winsness, conducted "a small spin test . . . with a Gyro tester" at Agri-Energy's facility. (Id. at 112, 127-28, 171.) The court rejected CleanTech's argument that at the time of the test, "the inventors did not know whether or not the invention would work for its intended purpose." (Id. at 172 (internal quotation marks and citation omitted).) The court also found that a diagram prepared at the direction of Winsness, combined with lab tests, lab test results, and Cantrell's communications to Agri-Energy in 2003, "would allow a [person of ordinary skill in the art] to practice the invention of the patents." (Id. at 112, 130-31, 173-74 (discussing the "Ethanol System Diagram").)

         After the court issued its summary judgment order, the court granted Adkins' motion to remand its case to this District for adjudication of the contract claims.[4] (Ex. 1 to September 11, 2015 Conditional Remand Order [596].) Thereafter, the court held a bench trial on Adkins' counterclaim for breach of contract. See GS CleanTech Corp. v. Adkins Energy LLC, No. 10 C 4391, 2016 WL 1019672, at *1 (N.D. Ill. Mar. 15, 2016). The court found against Adkins on that claim because Adkins did not prove it suffered any damages from the alleged breach. Id. at *2. More specifically, Adkins "received the full value" of CleanTech's construction work, and thus "received the same benefit of any landowner who knew of improvement work being performed on its property and pays a lien arising therefrom." Id. Several months after the bench trial, the court denied Adkins' request for a trial on the claim that CleanTech had breached the covenant not to sue Adkins for infringement. (May 20, 2016 Order [701], 3.) The court reasoned that injunctive relief was "the appropriate remedy" on the claim, and that in light of the court's invalidity and non-infringement findings, there was no case or controversy between the parties with respect to the covenant. (Id. at 1-3.)

         Meanwhile, in the MDL, the remaining defendants asserted an inequitable conduct defense against CleanTech. See In re Method of Processing Ethanol Byproducts & Related Subsystems ('858) Patent Litig., No. 1:10-ml-02181-LJM-DML, 2016 WL 4919980, at *1 (S.D. Ind. Sept. 15, 2016). The court held a bench trial on that defense, see id., but Adkins chose not to participate.[5] During the trial, the court heard three pieces of testimony relating to the on-sale bar that are central to CleanTech's motion for reconsideration. First, Peter Hagerty, an outside attorney for CleanTech who helped prosecute the patents-in-suit, testified that he did not think testing performed shortly before the July 10, 2003 "Gyro test" was "material to patentability, " because, he asserted, the testing was "limited" and not "representative of the intended purpose" of the invention. (Bench Trial Tr. Vol. 5 [MDN 1646], 923-24, 928; Bench Trial Tr. Vol. 7 [MDN 1648], 1262-64; Pl.'s Mot. for Reconsid. at 2, 5 (citing Bench Trial Vol. 7 at 1263-64).) Second, Cantrell testified that he did not recall discussing the Ethanol System Diagram with any customer, and that such a diagram would not be helpful for showing a customer "what [his] system would look like." (Bench Trial Tr. Vol. 1 [MDN 1641], 169-71; Pl.'s Mot. for Reconsid. at 2, 5 (citing Bench Trial Tr. Vol. 1 at 170-71).) Third, Winsness testified that he did not give the ...


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