“Best Mode” Helps Chinese Companies Win 337 Investigation Case

Issue 28 By Pauline Farmer-Koppenol, M.S.,[Patent]

I. Introduction
On October 3, 2008, notice was given in the Federal Register that the U.S. International Trade Commission (“the Commission”) would not overturn the findings of the final initial determination for the investigation, in the Matter of Certain L-Lysine Feed Products, their Methods of Production and Genetic Constructs for Production (Investigation No. 337-TA-571).  That action by the Commission terminated the investigation that had been initiated by the Commission on May 26, 2006 based on a complaint filed on behalf of Ajinomoto Heartland LLC against Global Bio-Chem Technology, Group Company Ltd.; Changchun Dacheng Bio-Chem Engineering Development Co., Ltd.; Changchun Baocheng Bio Development Co., Ltd.; Changchun Dahe Bio Technology Development Co., Ltd.; Bio-Chem Technology (HK) Ltd. (collectively “Dacheng et al”). The final initial determination found that there was no violation of Section 337 of the Tariff Act of 1930 by Dacheng et al.1
The article will outline the requirements for investigations by the Commission and how they differ from a patent infringement suit brought in U.S. federal courts. Further the final initial determination in the lysine case will be summarized along with the relevant portions of U.S. patent law as applied in this decision.  An aspect of U.S. patent law which is unique to the United States, the best mode requirement, played a key role in this investigation. The article therefore includes an in-depth discussion of this requirement for patent applications in the United States.
II. Section 337 of the Tariff Act of 1930, as amended
Section 337 of the Tariff Act of 1930, as it is currently in force, is codified at 19 U.S.C. § 1337 (“Section 337”). The section addresses a number of unfair practices in imports of articles into the United States. Those unfair practices include importation of articles that infringe a U.S. patent or registered mask work, copyright or trademark. Additionally, importation of a product that is made outside of the United States but with a process that is covered by a U.S. Patent is also considered an unfair practice.2 The Commission has the power to issue exclusion orders 3 and cease and desist orders 4 but does not have the power to grant monetary damages. An exclusionary order prevents importation, at the border, of articles that violate Section 337. A cease and desist order prevents those who are determined to be violating Section 337 from continuing to do so.
When a patent holder believes that another entity is infringing the patent holder’s patent, he has the option to file suit in federal district court for patent infringement. Additionally, if the infringement involves articles being imported into the United States, the patent holder has the option to request an investigation by the Commission.
An investigation by the Commission does have one requirement not required for filing a patent infringement lawsuit in federal court. In order for importation into the United States of an article that infringes a U.S. patent to be an unfair trade practice and therefore under the jurisdiction of the Commission, there must be an industry related to the articles that are protected or there must be an industry in the process of being established. 5 There is no such requirement for filing suit for patent infringement in federal court.
A request for an investigation is initiated by filing a complaint with the Commission. That request may be accompanied by a request for a temporary exclusion order or a temporary cease and desist order to be in effect during the time of an eventual investigation.6Barring exceptional circumstances, the Commission will determine whether an investigation should be started within 30 days after receiving the complaint.7 If an investigation is instituted, a third party is added to the proceedings in addition to the complainant and respondent, the investigative attorney for the Commission’s Office of Unfair Import Investigations.
If the Commission determines, as a result of an investigation under this section, that there is a violation of this section, it shall direct that the articles concerned, imported by any person violating the provision of this section, be excluded from entry into the United States, unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry. The Commission shall notify the Secretary of the Treasury of its action under this subsection directing such exclusion from entry, and upon receipt of such notice, the Secretary shall, through the proper officers refuse such entry.
19 U.S.C. § 1337(d) (1)
Once an investigation has been instituted, it proceeds in a manner not unlike a lawsuit.  There is discovery and a hearing on the merits of the case. Investigations involve confidential business information on a regular basis. In such instances, the parties enter into a protective order. Furthermore one party’s confidential information is only visible to the opposing party’s outside attorneys but not to the opposing party itself.8
After the hearing, the Administrative Law Judge (“the ALJ”) makes an Initial Determination. The Commission has the option to either review the Initial Determination or not. Any of the parties can request that the Commission review the Initial Determination.  It is the Commission which may issue an exclusion order if a violation of 19 U.S.C. § 1337 is found. The final determination of the Commission may be appealed to the U.S. Court of Appeals for the Federal Circuit.
III. Commission Investigation No. 337-TA-571 – In the Matter of Certain L-Lysine Feed Products, Their Methods of Production and Genetic Constructs for Production (“Lysine Investigation”)
This summary of investigation 337-TA-571 is assembled from the “Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond,” the public version, decided by Administrative Law Judge Charles E. Bullock on July 31, 2008. This decision as well as the other documents relevant to this investigation can be found at the Commission’s Electronic Document Information System at edis.ustic.gov.
A. Facts
The complaint leading to this investigation being instituted by the Commission was filed by Ajinomoto Heartland LLC, a United States corporation. The parent company of Ajinomoto Heartland LLC, Ajinomoto Co., Inc., a Japanese corporation later joined as additional complainant. Ajinomoto Co., Inc. is the owner of the two asserted patents. The respondents Dacheng et al. are all Chinese corporations with the exception of Global Bio-Chem Technology Group Company Limited, which is a Cayman Islands corporation.
The imported article at issue was L-lysine feed products for use in feed for pigs and poultry.  Ajinomoto asserted that the L-lysine imported by the Dacheng et al. was made by a method covered by two of Ajinomoto’s patents, U.S. Patent No.6,040,160 (“the ’160 Patent”) and U.S. Patent No. 5,827,698 (“the ’698 Patent”). Therefore, the legal rationale for the complaint was that the L-lysine was a protected article because it was made by a patented process and not that the L-lysine product itself was protected by a patent.
The method of making L-lysine at issue in this investigation is making the amino acid with bacteria. Ajinomoto’s patents disclose particular mutations that address those issues and therefore optimize the production of L-lysine by bacteria.
Dacheng et al. make L-lysine using three different strains of bacteria, SD-5590 (“Old Escherichia bacterium”), SD-5260 (“Corynebacterium”) and SD-5717 (“New Escherichia bacterium”). The numbers are the Accession numbers under which the strains were deposited with the American Type Culture Collection. Ajinomoto asserted only one claim from each of the patents. The asserted claim from the ’160 Patent was claim 15, which depends from claim 3. This claim addresses altering the bacterium in such a way that it does not “turn off” production of L-lysine as it naturally would with feedback inhibition.
15. A method of producing L-lysine, comprising: cultivating the bacterium of claim 3 in a suitable culture medium, producing and accumulating L-lysine in the culture thereof, and collecting L-lysine from the culture.
3. A bacterium belonging the genus Escherichia which is transformed with a DNA coding for a dihydrodipicolinate synthase originating from a bacterium belonging to the genus Escherichia and having mutation to desensitize feedback inhibition by L-lysine, wherein the mutation is selected from the group consisting of [a list of 5 possible mutations follows].
the ’160 Patent at claims 3 and 15
The asserted claim from the ’698 Patent was claim 15, which depends from claim 13 which in turn depends from claim 3. The method of the ’698 Patent is directed towards limiting the amount of lysine decarboxylase made by the bacterium such that more of the lysine produced by the bacterium remains to be harvested rather than broken down by lysine decarboxylase.
15. The method of claim 13, wherein the microorganism belongs to the species Escherichia coli.
13. A method for producing L-lysine, comprising: (a) cultivating the microorganism of claim 3 in a liquid medium, thereby producing the L-lysine and accumulating the L-lysine in the liquid medium, and (b) collecting the L-lysine produced and accumulated in step (a).
3. An isolated microorganism belonging to the genus Escherichia, wherein the microorganism contains a mutant of a wild-type gene encoding a wild-type lysine decarboxylase; the microorganism lacks the wild-type gene encoding the wild-type lysine decarboxylase; the wild-type lysine decarboxylase comprises the amino acid sequence of SEQ ID NO:4; and the mutant gene encodes no lysine decarboxylase having decarboxylating activity, the mutant gene encodes a mutant lysine decarboxylase having less decarboxylating activity than the wild-type lysine decarboxylase, or the mutant gene contains a mutation in a regulatory region causing the microorganism to produce less of the wild-type lysine decarboxylase than a microorganism containing the wild-type gene encoding the wild-type lysine decarboxylase.
the ’698 Patent at claims 3, 13, and 15
Both Ajinomoto and Dacheng et al. stipulated that L-lysine produced by the Old Escherichia bacterium infringes both claim 15 of the ’698 Patent as well as claim 15 of the ’160 Patent.  Both parties also stipulated that L-lysine made by the Corynebacterium or the New Escherichia bacterium do not infringe both claim 15 of the ’698 Patent as well as claim 15 of the ’160 Patent.  With these stipulations, the ALJ did not have to decide whether or not the imported articles infringed the asserted patents.  Rather, the ALJ had to determine whether the asserted patents are valid and enforceable.
B. The Initial Determination
1. Validity of Ajinomoto Patents
The validity of the Ajinomoto Patents was challenged on several grounds. However, the most time in the analysis was spent on the best mode requirement and this was the only criteria on which the ALJ found invalidity.
a. Best Mode Requirement
The best mode requirement is unique to U.S. patent law. The statutory basis for the best mode requirement is found in 35 U.S.C. § 112, “The specification … shall set forth the best mode contemplated by the inventor of carrying out his invention.”  This avoids the situation where an inventor may be tempted to withhold the best embodiment for using the invention when filing a patent application in an attempt to have both the protection offered by a patent and maintain the best way of using the invention as a secret.
The test for determining whether or not the best mode requirement has been satisfied is laid out by the Federal Circuit in Eli Lilly & Co. v. Barr Laboratories Inc.  The test has two prongs. The first is a subjective inquiry about whether or not, at the time of filing, the inventor knew a way practicing the invention that was superior to others. The second prong is an objective inquiry about whether or not that particular mode has been described in such a way as to allow one of ordinary skill in the art could practice that mode of the invention. 9
The Federal Circuit summarized a further aspect of its jurisprudence on the best mode requirement in the recently decided Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc., “We have recognized that best mode requires inventors to disclose aspects of making or using the claimed invention [when] the undisclosed matter materially affects the properties of the claimed invention.”10It is not required however that the disclosure in the patent application label the particular mode that the inventor considers to be the best mode as the best mode.  It is enough that the best mode is described within the disclosure. 11
If benefit of the filing date of an earlier filed foreign application is sought for a U.S. application, that foreign application must also meet the best mode requirement.12 Therefore, keeping in mind the best mode requirement is in the interest of any entity filing an application anywhere, if the benefit of that earlier filing date will be sought for a later-filed U.S. application.
b. The ’160 Patent and the Best Mode Requirement
The best mode analysis of the ’160 Patent starts with an inquiry as to what the scope of the claimed invention is. That analysis is a necessary first step to determining whether or not the inventors knew of a mode of the invention that was better than others at the time of filing.
Claim 15 reads, “A method of producing L-lysine, comprising: cultivating the bacterium of claim 3 in a suitable culture medium, producing and accumulating L-lysine in the culture thereof, and collecting L-lysine from the culture.” Because claim 15 depends from claim 3, the limitations of claim 3 are also part of claim 15. Claim 3 reads, “A bacterium belonging to the genus Escherichia which is transformed with a DNA coding for a dihydrodipicolinate synthase originating from a bacterium belonging to the genus Escherichia and having mutation to desensitize feedback inhibition by L-lysine, wherein the mutation is selected from the group consisting of [a list of 5 possible mutations follows]”
Dacheng et al argued that the invention is a method of lysine production using a microorganism and the claim recites “bacterium belonging to the genus Escherichia.”  Therefore, if, at the time of filing, the inventors knew of one particular bacterium belonging to the genus Escherichia, that was better than others for practicing the method of lysine production, and that bacterium were not disclosed in the patent, Dacheng et al argued that the best mode requirement had been violated.
On the contrary, Ajinomoto argued the only limitations of the claims that are relevant to the best mode analysis are those that distinguish the invention from the prior art.  Ajinomoto argued that the novelty of the invention of the ’160 Patent lies in the particular mutations claimed and not the fact that those mutations are in a bacterium of the genus Escherichia. Therefore, whether or not a particular species of the genus Escherichia worked better than others in the method of producing lysine is not relevant to the best mode analysis.
The Commission’s investigative attorney argued that the invention of the ’160 Patent does include both the bacterium and the mutations. 
The ALJ found that the invention of the ’160 Patent did encompass both the bacterium and the mutation and therefore those were both relevant to the best mode analysis. The ALJ’s decision rested in part on the preamble of the claim stating that the utility of the method was the production of lysine, which requires not just the mutation but also the host bacterium and the other steps of the method. 
Both Dacheng et al and the investigative attorney argued that the lab notebooks and research reports of the inventors showed that a strain identified as “AE-70” was considered by the inventors to be the best strain for the method of producing lysine claimed in claim 15 of the ’160 Patent. This strain is not disclosed in the ’160 Patent.
Ajinomoto argued that the strains disclosed in the ’160 Patent are the ones that best show the effect of amplifying the specific genes. In support of Ajinomoto’s arguments, one of the inventors of the ’160 Patent, Dr. Kojima, testified that he believed the invention to be that the effect of amplifying the specific genes. 
The ALJ agreed with the arguments presented by Dacheng et al and the investigative attorney for the Commission. While the notebooks and research reports also mentioned certain drawbacks to the AE-70 strain of Escherichia, when measured in totality against other strains experimented upon, the ALJ found that the inventors favored AE-70. Therefore, the ALJ determined that the inventors had a best mode at the time of filing which was to use strain AE-70.
The next prong of the analysis is to determine whether or not the description of the invention allowed one of ordinary skill in the art to practice the best mode.  Since the strain AE-70 was not disclosed, the best mode could not be practiced. Therefore Ajinomoto had violated the best mode requirement and claim 15 of the ’160 Patent therefore invalid.
Because a claim must be valid to be infringed, the fact that the method used by Dacheng et al to make L-lysine by Old Escherichia bacterium encompasses the method of claim 15 of the ’160 Patent is moot and there is no infringement of the ’160 Patent by Dacheng et al.
c. The ’698 Patent and the Best Mode Requirement
The first step again is to determine the scope of the invention. The asserted claim 15 depends from claim 13 which in turn depends from claim 3. Claim 13 reads, “A method for producing L-lysine, comprising: (a) cultivating the microorganism of claim 3 in a liquid medium, thereby producing the L-lysine and accumulating the L-lysine in the liquid medium, and (b) collecting the L-lysine produced and accumulated in step (a).”  Claim 15 limits the microorganism to being Escherichia coli and the limitations from claim 3 limit the E. coli to having certain mutations.
As to the scope of the invention of the ’698 Patent for the purpose of the best mode analysis, the parties made arguments similar to those made in reference to the scope of the invention of the ’160 Patent.  The ALJ decided here as well that the scope of the invention included all of the limitations of the asserted claim.  For this patent as well, the claim preamble recites the utility of the method as the production of lysine. Here again, this method requires more than just the mutations, it requires the host bacterium and the other steps of the method as well. 
Dacheng et al argue that the strain of Escherichia coli used by the inventors for practicing the invention at the time of filing is WC80-196S and that this is the best mode because it is the only strain used by the inventors. The method disclosed in the ’698 Patent for making the host bacterium is missing two of the steps required to make WC80-196S. The method for making WC80-196S is known from the inventors’ research reports. Therefore, the host bacterium disclosed is not WC80-196S according to Dacheng et al and Ajinomoto has violated the best mode requirement.
Ajinomoto argued that one of the steps to make WC80-196S was an experiment and the inventor did not even know if it worked. That step was replacing a gene on the bacterium’s chromosome with a mutant version of the gene, the intent of which was to make the resultant bacterium feedback desensitized. Since it was not known if the mutant version of the gene had the desired effect, Ajinomoto argued, doing that step cannot be part of the best mode of the invention.  Furthermore, Ajinomoto argued that even if the best mode did include this step, it was disclosed that a microorganism that is feedback desensitized was one way to increase lysine production by the microorganism. The mechanics of doing so were known in the art and therefore one having ordinary skill in the art was enabled to practice the best mode of the invention.
The second omitted step was to insert five sucrose-utilization genes into the chromosome of the host cell. Ajinomoto argued that this also is not a violation of best mode because generally glucose is a preferred carbon source for these experiments and so using sucrose instead of glucose and modifying the microorganism accordingly cannot be a violation of best mode.  Furthermore, Ajinomoto argued that even if the best mode is to insert the sucrose utilization genes, how to do so is well-known in the art and therefore the best mode is described in such a way as to enable one having skill in the art to practice the best mode.
At the hearing, Inventor Kikuchi testified that WC80-196S and its derivatives were the only strains which he had altered so as to “knock out” the gene that makes lysine decarboxylase. This is the mutation claimed in claim 3. Additionally, Kikuchi testified that the method disclosed in the research reports, which includes the two steps not disclosed in the patent, was the best way that he knew of at the time to make WC80-196S.
Having determined that there was a best mode, the ALJ determined that the disclosure of the patent did not teach one of ordinary skill in the art to practice that best mode because the method used by the inventors to make WC80-196S was not disclosed. The ALJ did not accept Ajinomoto’s arguments that the omitted steps were well-known steps in the art. By not disclosing that the omitted steps were part of the method used by the inventors, at the time of filing, to make the host bacterium, it was not possible to know to do those steps, regardless of whether or not the mechanics of doing those steps was considered routine in the art.
Ajinomoto also argued that any defect of the best mode disclosure in the ’698 Patent was not relevant because Ajinomoto had deposited a sample of what it contended was the inventors’ preferred strain with the Agency of Industrial Science and Technology under accession number FERM P-14690 and that the deposited strain was made using the mutant gene resulting in the feedback desensitized bacterium.  The specification’s description of how the deposited strain was made, however, did not include using the mutant gene that would result in a feedback desensitized bacterium and did not describe the deposited strain as having this characteristic.  The specification identifies the deposited sample as being of strain WC196. In reality the deposited strain WC80-196 which is indeed feedback desensitized. However, the mismatch between the specification description of the deposited strain and the actual deposited strain, the ALJ found, effectively resulted in concealment of this characteristic. 
Therefore the ALJ found claim 15 of the ’698 Patent also invalid for having failed to meet the best mode requirement. Similar to claim 15 of the ’160 Patent, the fact that the method used by Dacheng et al encompassed the method claimed in claim 15 of the ’698 Patent is moot because a claim must be valid for there to be infringement.
2. Conclusion of the Initial Determination
Because none of the asserted claims were found to be valid, the ALJ found no infringement by Dacheng et al and therefore no violation of Section 337 of the Tariff Act of 1930 by Dacheng et al.
C. Conclusion of the Investigation
Ajinomoto requested that the Commission review the Initial Determination. The Commission did review certain issues but did not take a position on any of those.  Further, the Commission did not review the finding that there was no violation by Dacheng et al. of Section 337. Therefore the Initial Determination by the ALJ became the final determination of the Commission and the investigation was closed.
However, on November 25, 2008 Ajinomoto filed a notice of appeal to the U.S. Court of Appeal for the Federal Circuit.
IV.Conclusion
Investigations at the Commission tend to be resolved more quickly than patent infringement lawsuits. Therefore, when time is of the essence, as is frequently the case in global commerce, an investigation before the Commission can be an efficient way to resolve the dispute.
Endnotes:
1. Fed. Reg., vol. 73, no. 193, pp. 57653-57654, Oct. 3, 2008.
2.19 U.S.C. § 1337(a)(1)
3.19 U.S.C. § 1337(d)
4.19 U.S.C. § 1337(f)
5.19 U.S.C. § 1337(a)(2)
6.19 C.F.R. Subpart H
7.19 C.F.R. § 210.10
8.19 C.F.R. § 210.5
9.215 F.3d 955, 963 (Fed. Cir. 2001)
10.518 F.3d 1353, 1364 (Fed. Cir. 2008)
11. Ernsthausen v. Nakayuma, 1 USPQ2d 1539 (Bd. Pat. App. & Inter. 1985)
12. In re Gosteli, 872 F.2d 1008, 1011 (Fed. Cir. 1989)

About the author:
Pauline Farmer-Koppenol, M.S. is an associate in the Intellectual Property Group of Fenwick & West LLP.
Fenwick & West provides comprehensive legal services to technology and life sciences clients of national and international prominence. For more information please visit: www.fenwick.com

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