OKLAHOMA CITY, OKLAHOMA, May 5, 2020 – GreenShift Corporation (the “Company”), today announced that its chairman and chief executive officer, Kevin Kreisler, issued the following letter to GreenShift’s stakeholders:
On March 2, 2020, the Federal Circuit upheld the District Court’s rulings that five of our patents were invalid, and that our inventors and former attorneys, Cantor Colburn LLP, withheld information from the U.S. Patent and Trademark Office (“USPTO”). In doing so, the Federal Circuit ignored our arguments and its own prior rulings, further depriving us of our rights to due process and a jury trial on these issues.
About a week earlier, on February 21, 2020, the USPTO issued a notice of allowance on our twelfth corn oil extraction patent. It did so after taking pains to evaluate the same District Court rulings and underlying evidence that were just reviewed by the Federal Circuit, along with facts that we never had a chance to present to a jury. In allowing this new patent, the USPTO concluded that the information the District Court determined to have been “withheld” from the USPTO was immaterial to patentability, and that our patents-in-suit should have been held valid and enforceable.
Tragically, on the same day – February 21, 2020, David Cantrell, a co-inventor of the patents-in-suit, passed away, succumbing to illnesses that he had fought for many years. He was a great man. A loving husband to his amazing wife of 52 years, an incredible father and grandfather, and a pillar in his community. He was the founder and spiritual leader of a pioneering team that disrupted the U.S. Corn Ethanol Industry. If he were still here, he would just smile and nod at the Federal Circuit opinion and say “that dog don’t hunt.”
I am writing this letter to provide a full update for our shareholders in view of our long history of litigation-induced silence. A summary of our intentions and next steps is also provided for all parties it may concern.
Two separate branches of the United States government reviewed the same District Court ruling and record at the same time, and made two simultaneous conflicting determinations. One had the facts. The other had a narrative.
We are here today because of a single disputed premise. The District Court erroneously concluded that any reasonable jury would find that the inventive process which gave rise to our patents-in-suit was “ready for patenting” in July 2003; and that, therefore, an invalidating “offer for sale” occurred in July 2003, when the inventors sent an experimental offer letter to supply equipment for confidential full scale testing in an operating ethanol plant. The District Court then relied on its erroneous 2014 determinations to find that our inventors and former attorneys “deliberately withheld” information regarding the invention’s alleged “readiness for patenting” and “offer for sale” from the USPTO. However, if the invention was not “ready for patenting” in July 2003 (it was not), then the “offer for sale” analysis would not even apply, and any information regarding the invention’s alleged “readiness for patenting” and “offer for sale” would be immaterial to patentability. In reality, the invention could not possibly have been ready for patenting in July 2003, no offer for sale of the inventive process occurred in July 2003, and no material information was withheld from the USPTO. The subject matter experts at the USPTO have consistently agreed.
So what happened? The core issues all come down to failed bench testing in 2003, and whether or not it was sufficient to “ready the invention for patenting,” when taken with the rest of the contemporaneous evidence. The District Court made incomplete and improper factual determinations when it erroneously issued summary judgment in 2014, without conducting a jury trial on the merits of the 2003 testing and related issues. Because the District Court ruled on these issues at summary judgment, due process required the Federal Circuit to perform a de novo review of the District Court’s rulings, which would have brought the facts into full and fair view. Unfortunately, that review did not occur on appeal. If it had, only one result would have been proper as a matter of law: reversal and remand for trial.
Additional Testing Was Obviously Required
If the 2003 bench testing involved a cold fusion process that flared for a beat before fizzling out, then we wouldn’t be here today. It would be clear that the invention was not “ready for patenting.” Yet, that is exactly what happened here. A few milliliters of oil separated on the bench before the bench-top centrifuge plugged and fizzled out. The defendants called that success. We called it failure.
The inventors weren’t aware of the prospects for extraction until corn oil gummed up their dryer in another application. Standard ethanol industry practices had completely ignored the oil, and preliminary research showed that nobody had developed a viable process to remove it at scale. The 2003 bench testing was devised to learn more about what was going on. It was the first testing that we ever performed – the very beginning of development, not the end. And it raised questions, not answers; including counter-intuitive indications that the inventors had never seen before. For example, the few milliliters of bench oil came from a concentrated downstream sample (syrup) while nothing came from a dilute upstream sample. That result was contrary to conventional wisdom. The inventors guessed as to a possible cause, but the sample sat, settled, and cooled before testing, thereby introducing time, temperature, and prior gravimetric separation as variables that did not occur in real life at scale. The inventors had no way of knowing if the sampling protocol itself was responsible for the result, or if it was something inherent in the chemistry or the ethanol production process. The trace yield from the concentrated downstream sample could have been a false positive, or the absence of yield from the dilute upstream sample could have been a false negative, or both. Further testing was obviously required.
Hopes and Guesses are Not Patentable
The inventors had nothing more to go on at that point than their imagination, entrepreneurial instincts, and adjacent experience. They envisioned how they might design a process to extract the oil. They dreamt up and sketched a generic process flow. They used examples with different chemistries for conceptual descriptions. They spoke openly of the potential, making aspirational predictions of success and value creation. They excitedly wrote that they “knew” that they could do a thing that had never been done before. However, in reality – and as the facts clearly show, nothing was proven or known in July 2003. The inventors had merely hoped that they could extract the oil, and they guessed as to how they might get it done.
The USPTO doesn’t issue patents for hopes and guesses. Every extraction process is specific to the physiochemical fingerprint of the target stream, the conditions under which it is generated, the ongoing interactions with the host process, and myriad other application-specific variables. The inventors had to experiment in real time at full scale in a living, breathing, continuously-operating ethanol plant to assess viability and confirm the conditions necessary to enable the specification for a patent application. The invention could not possibly be “ready for patenting” until that occurred. No investor or producer would risk their capital or install anything into their facility without proof of concept after seeing the failed 2003 bench testing results. Why would the inventors? Or the USPTO? Or the law?
The inventors sought the assistance of Agri-Energy LLC for that very purpose in July 2003, when they issued an experimental offer to supply a centrifuge and related components to Agri-Energy, in order to complete confidential full scale experiments in Agri-Energy’s ethanol plant. Those experiments were completed in May 2004, and they provided the inventors with the proof of concept and information they needed to “ready” the invention for patenting. Our first patent application was filed shortly thereafter, in August 2004.
Genuine Disputes of Material Fact
None of the facts surrounding the testing were ever introduced to a jury. We are confident that a reasonable jury would have followed the evidence to conclude that the invention was not “ready for patenting” in July 2003. But the District Court improperly deprived us of that chance, erroneously concluding that the inventors’ early hopes and guesses comprised conclusive evidence of patentability in July 2003 because they closely aligned with the May 2004 experimental results. For example, a conceptual diagram that the inventors prepared in 2003 was found by the District Court to be “proof” that the inventive process was “ready for patenting” in 2003 because it was very similar to the process the inventors used in May 2004. Stated differently, the District Court used the May 2004 proof of concept to conclude that the inventors knew that their initial concept would work in July 2003. That conclusion defied common sense, and it was clearly the result of improper hindsight.
Inventions can’t be ready for patenting upon conception simply because the inventors subsequently invent what they previously envisioned and sketched. If that were true, then every invention would be ready for patenting upon conception, and enablement would be irrelevant. Anyone could get a patent for curing cancer without providing experimental evidence of a cure. The entire patent system would descend into chaos. We were accordingly stunned when Judge McKinney ruled in 2014 that all reasonable juries would have to conclude that the invention was “ready for patenting” and “on sale” in July 2003; despite the mountains of evidence we introduced to the contrary – including testimony from the inventors, contemporaneous documents, and multiple expert declarations; and despite the incontrovertible existence of genuine disputes of material fact.
We could not appeal the summary judgment ruling until after all other pre-trial proceedings were completed in 2018, due to the rules against “interlocutory” (intermediate) appeals. The flawed 2014 ruling thus established the law of the case, and Judge McKinney used it as the foundation upon which everything else followed.
Valid and Enforceable
Judge McKinney held a “bench trial” in 2016 to decide the limited issue of whether or not our inventors and attorneys “intended” to withhold “material information” from the USPTO. It was a farce. The District Court barred us from fighting back with the simple truth that the information cited by the defendants was immaterial to patentability, because the invention was not “ready for patenting” or “on sale” in July 2003. Instead, the District Court relied on its own improper factual determinations from 2014 to erroneously decide that our directly contrary denials could not be true, and that our inventors and prior attorneys must have intentionally deceived the USPTO.
The USPTO subsequently disagreed that deception of any kind occurred when, on February 21, 2020, it issued another patent to us after reviewing the very evidence that was allegedly “withheld,” along with everything the defendants ever submitted and claimed, as well as the District Court’s 2014 and 2016 rulings – all in light of the facts that were never presented to a jury. Significantly, the new patent was allowed by the same examiner that the District Court said was deceived. In other words, the same patent examiner that was allegedly deceived looked at the purported evidence and claims of deception, and disagreed that she had ever been deceived. Thus, in issuing that patent, the examiner concluded that the inventive process was not “ready for patenting” in July 2003, that an invalidating “offer for sale” did not occur in July 2003, and that the “ready for patenting” and “offer for sale” information that the District Court determined to have been “deliberately withheld” from the USPTO was immaterial to patentability. We see that result as nothing short of total vindication, and proof that our patents-in-suit should have been held valid and enforceable.
No corn oil was recovered from dry mill corn ethanol plants in 2003. 17 years later, more than 90% of the industry is producing about 5.2 billion pounds of corn oil annually with processes covered by the patents that David Cantrell conceived and co-invented. At current prices, that output works out to about $1.2 billion in additional annualized income after applicable costs and offsets. In total, the industry has received more than about $8 billion in additional income in the 11 years since our first patent was issued; and, it is expected to generate more than an additional $12 billion before the last claim of our last patent expires.
That’s upwards of $20 billion in lifetime value-add to the industry and its communities, and yet the defendants continue to defame and speak of us as common criminals, as if we are holding the industry hostage. We cannot tolerate any reality in which the defendants continue their slanderous charade, with open and unresolved claims of fraud and other wrongs that never occurred – without the slightest thought of a child’s pride in the departed, or the careers and lives that they are destroying. That dog will never hunt. There will be no outcome here in which I will both draw breath and let that stand. The record must and will be corrected.
The Federal Circuit erroneously failed to conduct a de novo review of the 2014 summary judgment ruling, thereby depriving us yet again of due process. If we had received that review, the District Court’s “ready for patenting” and “on sale” rulings would have been reversed as a matter of law, because there were clearly genuine disputed issues of fact before the District Court when it granted summary judgment. The case would have been remanded for trial. We filed a petition on April 15, 2020, in part on that basis for an en banc review by the Federal Circuit. We are also evaluating additional alternatives to finally obtain a trial on the merits of our case.
We survived the 2008 financial crisis and avoided bankruptcy to preserve our intellectual properties at the expense of irreparable dilution. We did so in pursuit of justice and a small fraction of the value that we brought to the ethanol industry, and our shareholders have nothing to show for it. I intend to remedy that deficiency regardless of what happens with our corn oil saga. We are reviewing several compelling options in that regard. Additional updates on that front will be provided in the coming weeks and months. Suffice it to say, we’re beyond done holding back, innovating in silence while the litigation runs its course.
That said, the world is in crisis again. Our communities are at urgent financial risk. The industry is reeling from wide-spread shut downs in the wake of sudden drops in demand and pricing. And an unthinkable pestilence is washing over humanity, putting all of our loved ones at risk. Today is a time for unity, not division. For peace, not war. We will continue to preserve our rights, but anything we do in the immediate term will be with that perspective and our shared global circumstances in mind. Please distance yourselves and stay safe.
Chief Executive Officer
About GreenShift Corporation
GreenShift Corporation develops and commercializes technologies that facilitate the more efficient use of natural resources. GreenShift is focused on doing so today in the U.S. ethanol industry and emerging agricultural industries, where GreenShift innovates and offers technologies that improve the profitability of its licensees. Additional information on GreenShift and its technologies is available online at www.greenshift.com.
This press release contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of GreenShift Corporation and members of its management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of commodity prices and operating results, the ability to compete successfully, and the ability to complete before-mentioned transactions. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.
Kevin Kreisler, Chief Executive Officer