Major Win for Ethanol Industry as Defendants Prevail in '858 Patent MDL Litigation

MINNEAPOLIS- In an October 23, 2014 order unsealed yesterday, U.S. District Judge Larry McKinney granted summary judgment to Stoel Rives client Al-Corn Clean Fuel and other ethanol defendants in a multidistrict litigation (“MDL”) involving the so-called “858 patent family.” The decision represents a major win for the wider ethanol industry, since it holds that standard industry methods of recovering corn oil from concentrated thin stillage do not infringe patents held by GS CleanTech Corporation and that those patents are invalid, on multiple independent grounds. Stoel Rives partner Marc Al represents Al-Corn in the MDL proceedings.

The practice of extracting corn oil from concentrated thin stillage (also called syrup), a byproduct of the corn-to-ethanol production process, first saw widespread commercial adoption starting around 2008. The recovered corn oil is sold primarily as an animal feed additive or for biodiesel production. Beginning in 2009, GS CleanTech began demanding patent royalties and licensing from individual ethanol plant owners engaged in corn oil extraction processes that it argued violated its claimed ‘858 patent. Beginning in October 2009, GS CleanTech began filing a series of lawsuits against plant owners and other entities throughout the United States for alleged infringement of its ‘858 patent family. These lawsuits were consolidated into an MDL in the U.S. District Court for the Southern District of Indiana for pretrial proceedings in August 2010.

In his comprehensive, 233-page order, Judge McKinney granted summary judgment to the defendants on more than a dozen separate grounds. Judge McKinney determined that neither Al-Corn nor any other defendant had infringed the GS CleanTech patents and that the ‘858 patent family was invalid on multiple grounds, including for failure to name all of the inventors, that the inventors practiced the “invention” more than 1 year before applying for a patent, and that the patented claims are obvious to one skilled in the art. Discovery on whether GS CleanTech engaged in inequitable conduct, which would result in liability for defendants’ costs and attorney fees, is on-going.

The business effect of this ruling, which remains subject to appeal, is that the wider ethanol industry no longer need entertain the substantial licensing or royalty cost demanded by GS CleanTech and its publicly-traded parent company GreenShift Corporation (GERS) for standard corn oil extraction procedures, with resulting profitability implications.

Download a copy of Judge McKinney’s order: In re: Method of Processing Ethanol Byproducts and Related Subsystems (‘858) Patent Litigation (PDF)