U.S. Water Services, Inc. v. Novozymes A/S ( 2019 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
U.S. WATER SERVICES, INC., ROY JOHNSON,
Plaintiffs-Appellants
v.
NOVOZYMES A/S, NOVOZYMES NORTH AMERICA,
INC.,
Defendants-Appellees
______________________
2018-2075
______________________
Appeal from the United States District Court for the
Western District of Wisconsin in No. 3:13-cv-00864-jdp,
Judge James D. Peterson.
______________________
Decided: April 19, 2019
______________________
MICHELLE MARIE UMBERGER, Perkins Coie LLP, Madi-
son, WI, argued for plaintiffs-appellants. Also represented
by CHRISTOPHER GRAYDON WAYNE HANEWICZ, AUTUMN N.
NERO, DAVID R. PEKAREK KROHN, JOHN SINGLETON
SKILTON.
J. DAVID HADDEN, Fenwick & West, LLP, Mountain
View, CA, argued for defendants-appellees. Also repre-
sented by EWA M. DAVISON, ELIZABETH B. HAGAN,
2 U.S. WATER SERVICES, INC. v. NOVOZYMES A/S
JONATHAN THOMAS MCMICHAEL, DAVID KEITH TELLEKSON,
Seattle, WA.
______________________
Before MOORE, WALLACH, and TARANTO, Circuit Judges.
WALLACH, Circuit Judge.
This case returns to us for a second time from the U.S.
District Court for the Western District of Wisconsin (“Dis-
trict Court”). Appellants U.S. Water Services, Inc. and Roy
Johnson (collectively, “U.S. Water”) sued Appellees Novo-
zymes A/S and Novozymes North America, Inc. (collec-
tively, “Novozymes”). U.S. Water alleged Novozymes
infringed, inter alia, claims 1, 6, and 12 of U.S. Patent
No. 8,415,137 (“the ’137 patent”) and claims 1–2, 5, 7–9,
and 18–20 of U.S. Patent No. 8,609,399 (“the ’399 patent”)
(together, “the Asserted Claims”) (collectively, “the Pa-
tents-in-Suit”). After we remanded the case, a jury deter-
mined that the Asserted Claims were not inherently
anticipated by Patent Cooperation Treaty Publication No.
WO 01/62947 A1 (“Veit”) (J.A. 1000–29). See J.A. 203 (Jury
Verdict Form). Both parties filed post-trial motions, and
the District Court partially granted judgment as a matter
of law (“JMOL”) in favor of Novozymes, holding that the
Asserted Claims were invalid as inherently anticipated.
See U.S. Water Servs., Inc. v. Novozymes A/S (U.S. Water
II), 316 F. Supp. 3d 1076, 1084, 1085 (W.D. Wis. 2018); see
also J.A. 1 (Amended Judgment).
U.S. Water appeals. We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(1) (2012). We reverse and remand.
BACKGROUND
I. The Patents-in-Suit
Entitled “Preventing Phytate Salt Deposition in Polar
Solvent Systems,” the ’137 patent describes methods for re-
ducing the formation of deposits of “phytic acid salts and
phytates,” the metallic salts of phytic acid, during ethanol
U.S. WATER SERVICES, INC. v. NOVOZYMES A/S 3
production. ’137 patent col. 1 l. 17; see id. at col. 1 ll. 16–
19. 1 The Patents-in-Suit employ phytic acid along with
“soluble metals in food or fuel ethanol-processing fluid” to
“produc[e] insoluble organometallic salt deposit or scale on
the processing equipment that must be removed in order to
facilitate further ethanol processing.” Id. col. 1 ll. 12–16.
The invention, therefore, aids in “reducing or even prevent-
ing the formation of insoluble material, deposits, or scale
on equipment used,” id. col. 3 ll. 18–20, during ethanol pro-
duction, thereby allowing “the proper operation of mechan-
ical devices used in ethanol processing,” id. col. 1 ll. 35–36.
Independent claim 1 of the ’137 patent is illustrative
and recites:
A method of reducing formation of insoluble depos-
its of phytic acid or salts of phytic acid on surfaces
in a fuel ethanol-processing equipment, the method
comprising:
1 The Patents-in-Suit are “continuations of the appli-
cation that . . . led to U.S. Patent No. 8,039,244.” U.S. Wa-
ter Servs., Inc. v. Novozymes A/S (U.S. Water I), 843 F.3d
1345, 1348 (Fed. Cir. 2016). A continuation is a patent “ap-
plication filed subsequently to another application, while
the prior application is pending, disclosing all or a substan-
tial part of the subject-matter of the prior application and
containing claims to subject-matter common to both appli-
cations, both applications being filed by the same inventor
or his legal representative.” Id. at 1348 n.1. Because the
Patents-in-Suit share a common specification, we cite to
only the ’137 patent for ease of reference unless otherwise
specified.
4 U.S. WATER SERVICES, INC. v. NOVOZYMES A/S
adding phytase[2] to an ethanol processing
fluid in the equipment containing phytic
acid or salts of phytic acid under conditions
suitable for converting the insoluble phytic
acid or phytic acid salts to soluble products;
thereby reducing the formation of deposits
of insoluble phytic acid or phytic acid salts
on surfaces in the equipment; wherein the
equipment in which deposit formation is re-
duced comprises a beer column[3], and
wherein the pH[4] of the ethanol processing
fluid in the beer column is 4.5 or higher
during production of ethanol.
Id. col. 12 ll. 30–42; see 399 patent col. 12 ll. 45–47
(providing a similar method to reduce phytic acid de-
posits “in a piece of heat transfer equipment”).
2 “Phytase is an enzyme known to be capable of
breaking down the phytic acid found in plant material.”
’137 patent col. 5. ll. 39–40.
3 The “beer column” “is a component of a distillation
unit in which alcohol is vaporized and removed from the
beer.” J.A. 174 (internal quotation marks omitted). During
claim construction, the parties’ experts agreed that “the
term ‘beer column’ is one readily understood by [a person
having] ordinary skill in the art [(‘PHOSITA’)],” J.A. 1718
(citations omitted), and “[t]he parties agree[d] that the
function of the beer column is to remove ethanol from the
fermented fluid,” J.A. 1717.
4 U.S. Water’s expert testified that pH is “a measure-
ment of hydronium ion concentration in a solution,
which . . . means the measure of acidity, so the range is
from 0 to 14.” J.A. 2201.
U.S. WATER SERVICES, INC. v. NOVOZYMES A/S 5
II. The Prior Art
Entitled “Fermentation with a Phytase,” Veit de-
scribes, inter alia, “a process of alcohol and other fermented
compounds production, in particular ethanol production.”
See J.A. 1001. Veit discloses that “[t]he addition of phytase
during the fermentation . . . [or] a combined or simultane-
ous fermentation and saccharification[5] step” of ethanol
production may result in “increases [in] the fermentation
and ethanol yields.” J.A. 1005. Example 1 of Veit is an
experiment describing “a fermentation process of the in-
vention where the yeast is not stressed [and] . . . the addi-
tion of phytase is shown to improve[] the fermentation
process.” J.A. 1007. Example 1 is the only experiment car-
ried out in Veit, and it is conducted in two cups of liquid in
a “500 [milliliter] blue cap bottle.” J.A. 1016. During the
experiment, Example 1 uses “1.0 FYT/g of phytase” 6 added
during the pre-saccharification reaction (“the Protocol”).
J.A. 1017.
III. Procedural History
In U.S. Water I, we held that a dispute exists “as to
whether adding phytase in the manner disclosed in . . . Veit
will necessarily lead to a reduction of insoluble
5 Saccharification is a process for “produc[ing] low
molecular sugars . . . [extracted during liquefaction] that
can be metabolized by yeast [after further hydrolysis].”
J.A. 1003.
6 One unit of phytase activity (“FYT”) is the amount
the phytase enzyme hydrolyzes the phytic acid per gram of
the specified mash. See U.S. Water II, 316 F. Supp. 3d at
1083; see also J.A. 1008 (explaining that “the phytase ac-
tivity is determined [in] FYT units, one FYT being the
amount of enzyme that liberates 1 micromole inorganic or-
tho-phosphate per min[ute]” under the conditions of the ex-
periment).
6 U.S. WATER SERVICES, INC. v. NOVOZYMES A/S
organometallic salt deposits,” and “the District Court im-
properly granted summary judgment on inherent anticipa-
tion.” 843 F.3d at 1352. 7 We determined that U.S. Water
provided “sufficient evidence” to support a jury verdict of
no inherent anticipation over Veit, id. at 1351, and we re-
manded the case to the District Court to determine
whether the Asserted Claims were inherently anticipated
by Veit, see id. at 1348, 1352. On remand, the jury deter-
mined, inter alia, that “Novozymes [had not] proven by
clear and convincing evidence that Veit anticipates the
[A]sserted [C]laims by inherently disclosing the require-
ment of reducing the formation of insoluble deposits of
phytic acid or salts of phytic acid.” J.A. 203. After finding
infringement of the Asserted Claims, see J.A. 195–203, the
jury returned a damages award of $7,582,966, J.A. 206–07.
Following the entry of judgment, Novozymes moved for
JMOL. See J.A. 3989. Novozymes argued that Veit “inher-
ently anticipat[es] the Asserted Claims,” J.A. 3997 (capi-
talization modified), because Example 1 shows that “in the
absence of any phytate, no deposits of phytate can form,”
J.A. 4003 (italics omitted). While the District Court agreed
that U.S. Water provided enough evidence to demonstrate
that Veit failed to reduce deposits, explaining “that break-
ing down only some of the vast amount of phytic acid in the
ethanol fluid would not necessarily reduce deposits,” U.S.
Water II, 316 F. Supp. 3d at 1082, it ultimately overturned
the jury’s verdict, id. at 1084. The District Court deter-
mined, in contrast to the jury’s finding, that “Veit inher-
ently disclosed using phytase to reduce phytate deposits
because Veit’s fermentation test expressly disclosed condi-
tions sufficient to break down all the phytic acid present in
7 Because the relevant facts have been recited in
part in U.S. Water I, 843 F.3d at 1348–49, we presume fa-
miliarity with that decision and recite only those facts nec-
essary to address subsequent developments here.
U.S. WATER SERVICES, INC. v. NOVOZYMES A/S 7
the ethanol fluid, thereby preventing phytate fouling.” 8 Id.;
see id. at 1082–84 (explaining that Example 1 inherently
anticipated the Asserted Claims). Based on this determi-
nation, the District Court granted Novozymes’s JMOL Mo-
tion pursuant to Federal Rule of Civil Procedure 50(b),
amended the judgment, and denied all remaining motions
as moot. Id. at 1085; see J.A. 1 (Amended Judgment).
DISCUSSION
I. Standard of Review and Legal Standards
In reviewing the grant of JMOL, we apply the law of
the regional circuit, Energy Heating, LLC v. Heat On-The-
Fly, LLC, 889 F.3d 1291, 1303 (Fed. Cir. 2018), here, the
Seventh Circuit. The Seventh Circuit reviews a grant of
JMOL de novo. Learning Curve Toys, Inc. v. PlayWood
Toys, Inc., 342 F.3d 714, 721 (7th Cir. 2003). When “a party
has been fully heard on an issue during a jury trial and the
court finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for that party,” the dis-
trict court may “grant a motion for [JMOL] against the
party.” Fed. R. Civ. P. 50(a)(1); see Fed. R. Civ. P. 50(b)
(allowing for renewed JMOL motions). A grant of JMOL is
appropriate “if no reasonable juror could have found in fa-
vor of [the non-movant].” Waters v. City of Chicago, 580
F.3d 575, 580 (7th Cir. 2009).
“A person shall be entitled to a patent unless,” inter
alia, “the invention was . . . described in a printed publica-
tion in this or a foreign country or in public use or on sale
in this country, more than one year prior to the date of the
application for patent in the United States.” 35 U.S.C.
8 During ethanol production, the deposits formed on
processing equipment are referred to as “fouling” through-
out the ethanol industry. See J.A. 1640.
8 U.S. WATER SERVICES, INC. v. NOVOZYMES A/S
§ 102, 102(b) (2006). 9 A prior art reference anticipates a
patent’s claim “when the four corners of [that] . . . docu-
ment describe every element of the claimed invention, ei-
ther expressly or inherently, such that a [PHOSITA] could
practice the invention without undue experimentation.”
Spansion, Inc. v. Int’l Trade Comm’n, 629 F.3d 1331, 1356
(Fed. Cir. 2010) (internal quotation marks and citation
omitted). “Anticipation by inherent disclosure is appropri-
ate only when the reference discloses prior art that must
necessarily include the unstated limitation.” Monsanto
Tech. LLC v. E.I. DuPont de Nemours & Co., 878 F.3d 1336,
1343 (Fed. Cir. 2018) (internal quotation marks, brackets,
ellipsis, and citation omitted); see In re Cruciferous Sprout
Litig., 301 F.3d 1343, 1349 (Fed. Cir. 2002) (“[A] prior art
reference may anticipate when the claim limitations not
expressly found in that reference are nonetheless inherent
in it.”). “[A]nticipation is a question of fact that we review
for substantial evidence when tried to a jury.” Orion IP,
LLC v. Hyundai Motor Am., 605 F.3d 967, 974 (Fed. Cir.
2010) (citation omitted). Likewise, “[w]hether a claim lim-
itation is inherent in a prior art reference is a question of
fact.” Telemac Cellular Corp. v. Topp Telecom, Inc., 247
F.3d 1316, 1328 (Fed. Cir. 2001) (citation omitted).
9 Congress amended § 102 when it passed the Leahy-
Smith America Invents Act (“AIA”). Pub. L. No. 112-29,
§ 3(b)(1), 125 Stat. 284, 285–87 (2011). However, because
the applications that led to the Patents-in-Suit never con-
tained a claim having an effective filing date on or after
March 16, 2013 (the effective date of the statutory changes
enacted in 2011), or a reference under 35 U.S.C. §§ 120,
121, or 365(c) to any patent or application that ever con-
tained such a claim, the pre-AIA § 102 applies. See id.
§ 3(n)(1), 125 Stat. at 293.
U.S. WATER SERVICES, INC. v. NOVOZYMES A/S 9
II. The District Court Erred by Granting JMOL Because
the Evidence Permitted the Jury to Find That Veit Does
Not Inherently Anticipate the Asserted Claims
The District Court determined that “as a matter of law”
“Novozymes met its burden to show that the [P]atents-in-
[S]uit were anticipated by Veit,” and “[n]o reasonable view
of the evidence supports the jury’s verdict on this point.”
U.S. Water II, 316 F. Supp. 3d at 1084. U.S. Water asserts
that the District Court erred because “Novozymes was re-
quired to show that no rational jury could have found that
Example 1 did not inherently anticipate” the Asserted
Claims, Appellants’ Br. 41, and that “it is the reduction of
deposits on the[] specific surfaces—heat transfer equip-
ment and beer columns—that must ‘inevitably’ be reduced
following Example 1,” id. at 45. We agree with U.S. Water.
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 depos-
its in specific locations of an ethanol plant such as on the
“heat transfer equipment” or in the “beer column.” ’399 pa-
tent col. 12 l. 47; ’137 patent col. 12 l. 40. By contrast, Veit
does not disclose any examples using phytase to reduce
phytic acid deposits in an ethanol plant, but rather de-
scribes in Example 1 an experiment in a laboratory bottle.
See J.A. 1016–18. 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
C[elsius].” J.A. 3005 (Novozymes’s expert testimony). The
“pre-saccharification” reaction described in Example 1,
J.A. 1016, however, differs from the reaction required by
the Asserted Claims, in which the formation of “insoluble
deposits of phytic acid or salts of phytic acid on surfaces in
fuel ethanol processing equipment,” i.e., the beer column,
’137 patent col. 12 ll. 30–32, is reduced, see id. col. 12 ll. 33–
36 (claiming “adding phytase . . . under conditions suitable
for converting the insoluble phytic acid or phytic acid salts
to soluble products” (emphasis added)), col. 6 ll. 11–13
10 U.S. WATER SERVICES, INC. v. NOVOZYMES A/S
(explaining, in the specification, the suitable conditions, in
which phytase is added “at a time point and under condi-
tions required for the particular type of equipment or stage
of ethanol processing”). 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,” which occurs after the phytase addi-
tion during the pre-saccharification stage of Veit.
J.A. 2998, 2171–73, (stating that fermentation occurs “be-
fore [the beer] moves into the distillation process”), 2544
(explaining, by Novozymes’s expert, that “saccharification”
occurs before fermentation).
The conditions in Example 1 of Veit’s pre-saccharifica-
tion reaction differ from the conditions recited in the As-
serted Claims, which is meaningful because, of the “phytic
acid that’s running through th[e] heat exchanger[, t]here’s
only 1 or 2 percent that actually [reduces deposits].” J.A.
2964; see J.A. 3004 (explaining that pre-saccharification “is
not” the same as fermentation). Enzymes that may be ef-
fective at saccharification’s temperatures may be ineffec-
tive at the lower temperatures required during
fermentation. J.A. 3007 (explaining, by U.S. Water’s ex-
pert, that “[m]any enzymes are inhibited by ethanol” and
that “an enzyme that would be usable at 50 to 70 degrees
C[elsius] presaccharification where there’s no ethanol”
may be inhibited “if you add it into a fermenter [where] the
ethanol . . . [is] up to 13% or more”). Further, the condi-
tions under which the phytase is added, such as the pH,
pressure, and temperature, impact how phytase reacts.
See J.A. 3005–07 (explaining, by U.S. Water’s expert, that
conditions, such as temperature and pH, impact phytase
and differ between the fermentation and saccharification
stages); see also J.A. 2712 (explaining, by Novozymes’s ex-
pert, that he could not “speculate on the amount [of phytic
acid reduction] required to see a measurable change” in
U.S. WATER SERVICES, INC. v. NOVOZYMES A/S 11
deposits without understanding the “variables that are re-
sponsible for deposits” in the plant). Therefore, Veit’s ad-
dition of phytase at the pre-saccharification stage cannot
disclose the reduction of phytic acid deposits on ethanol
processing plant equipment as required by the Asserted
Claims. See J.A. 3008 (providing, by U.S. Water’s expert,
that Veit “doesn’t talk about fouling and deposits; he’s fo-
cused on fermentation”), 3047 (explaining, by U.S. Water’s
expert, that “phytic acid deposits or fouling” will not occur
if there is no phytic acid).
Similarly, unlike the stated limitations for reducing de-
posits found in the Asserted Claims, Example 1 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. See, e.g., ’137 patent col. 12 ll. 41–42
(providing that “the pH of the ethanol processing
fluid . . . is 4.5 or higher”); see also J.A. 1016–18 (Veit Ex-
ample 1). U.S. Water’s expert explained that the reduction
in deposits would not occur in the ethanol plant if the pro-
cess conditions are not correct. J.A. 3017 (explaining that
“the purpose of phytase broadly is to break down phytic
acid, but it does it with different success in different path-
ways under different conditions”), 3023 (stating the condi-
tions “matter very much”). There is, therefore, substantial
evidence to support the jury finding that Example 1 only
discloses the possibility of reducing phytic acid concentra-
tion below detection levels, which is not legally sufficient to
demonstrate inherent anticipation. J.A. 1004; see
J.A. 3005 (explaining that “there’s only one experiment
given in the Veit patent application” and that “in their one
example they don’t actually add the phytase into fermen-
tation; they add it into a saccharification step,” which hap-
pens at a higher temperature), 3008 (providing that “Veit
doesn’t give any guidance for how to pick phytases with re-
spect to the reduction of fouling in deposits because it
12 U.S. WATER SERVICES, INC. v. NOVOZYMES A/S
doesn’t talk about” deposit reduction and that it does not
provide “guidance that would necessarily result in deposit
reduction”); Hansgirg v. Kemmer, 102 F.2d 212, 214 (CCPA
1939) (“Inherency, however, may not be established by
probabilities or possibilities. The mere fact that a certain
thing may result from a given set of circumstances is not
sufficient.”(emphasis added)); see also PAR Pharm., Inc. v.
TWI Pharm., Inc., 773 F.3d 1186, 1195–96 (Fed. Cir. 2014)
(explaining that “to rely on inherency . . . the limitation at
issue necessarily must be present, or the natural result of
the combination of elements explicitly disclosed by the
prior art”).
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 evi-
dence 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 Pro-
tocol in a fuel ethanol plant. Cf. Perricone v. Medicis
Pharm. Corp., 432 F.3d 1368, 1377 (Fed. Cir. 2005) (recog-
nizing the principle “that disclosure of a broad genus does
not necessarily specifically disclose a species within that
genus,” but finding, in that case, that “the prior art does
not merely disclose a genus of skin benefit ingredients
without disclosing the particular claimed ingredient”). No-
vozymes, therefore, did not meet its burden at trial of show-
ing by clear and convincing evidence that Example 1 would
always eliminate phytic acid deposits under the conditions
required by the Asserted Claims. See Core Wireless Licens-
ing S.A.R.L. v. LG Elecs., Inc., 880 F.3d 1356, 1364 (Fed.
Cir. 2018) (explaining that, “[b]ecause the burden rests
with the alleged infringer to present clear and convincing
evidence supporting a finding of invalidity, granting
[JMOL] for the party carrying the burden of proof is gener-
ally ‘reserved for extreme cases,’ such as when the opposing
party’s witness makes a key admission” (citation omitted));
PAR Pharm., 773 F.3d at 1195 (vacating and remanding
U.S. WATER SERVICES, INC. v. NOVOZYMES A/S 13
the district court’s inherency analysis and reasoning that
“the concept of inherency must be limited when applied to
obviousness, and is present only when the limitation at is-
sue is the ‘natural result’ of the combination of prior art
elements”). Given a jury could reasonably find that Veit
does not inherently anticipate the Asserted Claims, the
District Court erred in granting Novozymes’s JMOL Mo-
tion.
Novozymes’s primary counterargument is unpersua-
sive. Novozymes argues, “while Example 1 was not itself
conducted in a fuel ethanol plant, it was meant to exem-
plify actual use in a plant” because it “was intended as
proof of the concept that addition of phytase to ethanol pro-
cessing fluid in a fuel ethanol plant would be effective to
degrade all phytate present.” Appellees’ Br. 56 (italics
omitted). Example 1 of Veit, however, does not disclose any
deposit reduction on plant equipment as required by the
Asserted Claims. See J.A. 1000–29. Rather, Novozymes’s
expert simply explained that Example 1 is “equivalent” to
the deposit reduction used by Novozymes’s infringing
plants. See J.A. 2639. Because “[a]ll [parties] agree that
Veit does not expressly teach a method of deposit control,”
U.S. Water II, 316 F. Supp. 3d at 1082, 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, see Circuit
Check Inc. v. QXQ Inc., 795 F.3d 1331, 1335 (Fed. Cir.
2015) (explaining that the jury “was entitled to weigh th[e]
testimony” presented at trial). Therefore, the District
Court erred in overturning the jury’s verdict.
CONCLUSION
We have considered Novozymes’s remaining argu-
ments and find them unpersuasive. Accordingly, the
14 U.S. WATER SERVICES, INC. v. NOVOZYMES A/S
Amended Judgment of the U.S. District Court for the West-
ern District of Wisconsin is
REVERSED AND REMANDED