Our corn oil extraction technologies are widely considered to be the quickest and best path for margin improvement for corn ethanol producers today. The current market value of corn oil recovered by our licensees is many times higher than its value without use of our patented corn oil extraction processes. Our corn oil extraction technologies increase corn-to-biofuel yields while reducing the energy and greenhouse gas intensity of corn ethanol production for dry mill ethanol producers. These benefits correspond to increased ethanol producer income, depending on the extent to which the producer uses our patented and patent-pending extraction technologies.

We are focused on driving and supporting the full utilization of our patented corn oil extraction technologies by as many licensed ethanol plants as possible, as quickly as possible. We generate revenue by licensing our technologies to ethanol producers, and by providing our licensees with success-driven, value-added services and other solutions based upon our expertise, know-how, technologies, and patent position.

Status of Infringement Litigation

On October 13, 2009, the U.S. Patent and Trademark Office (“PTO”) issued U.S. Patent No. 7,601,858, titled “Method of Processing Ethanol Byproducts and Related Subsystems” (the ’858 Patent) to GS CleanTech Corporation, a wholly-owned subsidiary of the Company. On October 27, 2009, the U.S. Patent and Trademark Office (“USPTO”) issued U.S. Patent No. 7,608,729, titled “Method of Freeing the Bound Oil Present in Whole Stillage and Thin Stillage” (the ’729 Patent) to GS CleanTech. Both the ‘858 Patent and the ‘729 Patent relate to the Company’s corn oil extraction technologies. GS CleanTech Corporation, the Company’s wholly-owned subsidiary, subsequently filed legal actions in multiple jurisdictions alleging infringement by various persons and entities. Multiple additional related suits and countersuits were filed. On May 6, 2010, CleanTech submitted a “Motion to Transfer Pursuant to 28 U.S.C. § 1407 for Consolidated Pretrial Proceedings” to the United States Judicial Panel on Multidistrict Litigation (the “Panel”) located in Washington, D.C. In this motion, CleanTech moved the Panel to transfer and consolidate all pending suits involving infringement of our patents to one federal court for orderly and efficient review of all pre-trial matters. On August 6, 2010, the Panel ordered the consolidation and transfer of all pending suits in the U.S. District Court, Southern District of Indiana for pretrial proceedings (the “MDL Case”). In October 2014, the District Court in Indiana ruled in favor of the defendants in our pending patent infringement matter on their motions for summary judgment alleging that the patents in suit were “reduced to practice” in 2003 as a result of limited, confidential small-scale bench testing, and that an invalidating “offer for sale” occurred when the inventors submitted a confidential non-public letter to an operating ethanol plant in 2003 in connection with the inventors’ efforts to conduct a confidential full-scale feasibility test. That full-scale feasibility test eventually occurred in May 2004. The first patent application giving rise to the ‘858 Patent was filed shortly thereafter. In September 2016, the District Court then ruled that the patents in suit were additionally unenforceable, concluding that since it had previously determined that the invention had been “reduced to practice” and “offered for sale” in 2003, the only reasonable inference that could be drawn was that CleanTech’s inventors and attorneys knowingly withheld material information with the intent to deceive the USPTO about the timing of the “reduction to practice” (i.e., that the invention was “ready for patenting” after the 2003 bench test as alleged by the defendants, instead of 2004 as CleanTech’s inventors and attorneys believed and knew to be correct). CleanTech strongly disagreed with the District Court’s conclusions in each ruling, and believes that each decision relied heavily on an erroneous determination that the inventions were “reduced to practice” in 2003 as a result of the limited, small-scale bench testing – the first experimentation ever conducted by the inventors. Critically, no jury trial or hearing was ever held in respect of the material factual determinations supporting the District Court’s 2014 ruling, including material factual issues that should have resulted in the right to a jury trial.

Further, in connection with ongoing patent filings, the USPTO allowed CleanTech’s new corn oil extraction patents after considering the very information that the District Court found to have been withheld, and upon which the bulk of the District Court’s rulings were based. All of the information alleged to have been “knowingly withheld” from the USPTO in connection with the patents in suit was provided to and considered by the USPTO prior to issuance of several additional patents that are not covered by the District Court’s prior rulings (the “New Patents”). 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.

Under applicable law, a patent cannot be declared irrevocably invalid or unenforceable until all available appeals have been exhausted. CleanTech appealed the October 2014 and September 2016 rulings, however, on March 2, 2020, the Federal Circuit upheld the District Court’s rulings that five of CleanTech’s twelve corn oil extraction patents were invalid, and that CleanTech’s inventors and former attorneys, Cantor Colburn LLP, withheld information from the USPTO. In doing so, the Federal Circuit ignored CleanTech’s arguments and its own prior rulings, further depriving CleanTech of its rights to due process and a jury trial on these issues. A petition for a writ of certiorari to the U.S. Supreme Court was filed on November 25, 2020, and denied in early 2021.

CleanTech strongly disagrees with each of the foregoing rulings. CleanTech subsequently received an opinion of counsel that its remaining seven of twelve corn oil extraction patents are clearly valid and enforceable, along with a contingency-based offer to restart the infringement litigation from scratch. We are evaluating our rights and remedies in connection with all applicable matters, and we are unable to characterize or evaluate the probability of any outcome at this time