Trade Secrets vs. Patents: Pioneer's Plant Patent Strategy Raises Thorny Issues

by Dennis Crouch

The ongoing dispute between Inari Agriculture and Pioneer Hi-Bred over utility plant patents has taken its next step, with Inari seeking Director Review of the PTAB’s denial of institution in PGR2024-00020 — arguing that a patentee’s reliance on its own trade secret information when developing its invention (here a maize variety) is directly relevant to the question of obviousness. The case raises interesting and fundamental questions about the intersection of trade secrets and patent law in the context of plant breeding. Inari Agriculture, Inc. v. Pioneer Hi-Bred International, Inc., PGR2024-00020, Paper 19 (P.T.A.B. Oct. 24, 2024).

Utility Plant Patents: While three distinct forms of protection are available for plant varieties – Plant Variety Protection (PVP), plant patents, and utility patents – maize (corn) breeding typically relies on just two: PVP certificates and utility patents. Plant patents, which only cover asexually reproduced plants, aren’t relevant for crops like corn that are commercially propagated through seeds.

Here, Pioneer has obtained both utility patents and PVP certificates. Typically, utility patents obtained this type of situation cover specific genetic innovations – such Pioneer’s transgenic “DP-4114 event” that confers stacked glufosinate herbicide tolerance alongside insect resistance to both coleopteran and lepidopteran bugs. Although Pioneer has obtained these sorts of transgenic utility patents, the patent at issue in this post-grant review (U.S. Patent No. 11,666,020) is somewhat different because it claims a traditionally bred maize variety designated as 1PFHC43. (Biotech note: A doubled haploid method was used to help more quickly create a homozygous plant).

The claimed variety was developed by crossing two parent lines: PH1D84 (publicly known and previously patented) and PH1VNA (maintained as a trade secret by Pioneer). See U.S. Patent Nos. 8,759,636 (disclosing PH1D84); 7,375,263 (disclosing PHCCW, the parent of PH1D84); and 7,569,753 (disclosing PHE4N, another parent of PH1D84). During prosecution, the examiner requested information about both parent lines under 37 C.F.R. § 1.105. Pioneer responded that while PH1D84 was publicly available, PH1VNA “has not been made publicly available.” The examiner then allowed the claims without further inquiry.

Trade Secret Strategy: In its decision denying institution, the PTAB focused heavily on Pioneer’s use of the proprietary parent line, holding that Inari failed to establish obviousness because it “does not address how a person of ordinary skill in the art would have been able to produce the claimed seed, including its unique genotype, without having access to [the parental] PH1VNA or its genomic and phenotypic information.” In my prior post about the case, I noted that, even if secret, the parent line could still be used to bar patenting. “[W]e have to recognize that the courts have repeatedly recognized that secret information can still qualify as prior art — especially in the circumstances where the secrets are held by the patentee.” Dennis Crouch, Seeds of Doubt: PTAB Rejects Plant Patent Challenge, Citing Genetic Uncertainty, Patently-O (Oct. 21, 2024).

In analyzing potential commercial forfeiture of secret parent lines, an important jumping-off point is the Federal Circuit decision in Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337 (Fed. Cir. 2007), which held that the public sale of goods made by a secret process can render that process prior art – for both 102 and 103 purposes – even when the process itself remains confidential. While Dippin’ Dots specifically addressed sales activity – finding that selling the flash-frozen ice cream product put the secret cryogenic process into the public domain – the case leaves open questions about other forms of commercial exploitation that might similarly forfeit trade secret protection. In this agricultural context, secret parent lines might be indirectly commercialized through hybrid offspring sales rather than direct line-by-line transactions, and it is unclear to me whether that activity would cross the threshold into forfeiting commercialization.

Inari picks up on this trade secrecy argument in its request for Director Review — arguing that the PTAB’s reasoning creates a concerning loophole: allowing applicants to obtain plant utility patents by combining prior art with trade secret information, regardless of inventiveness.

In wrongly rewarding PO for having held back information as a trade secret, the Board wrongly disincentivized such disclosure while neglecting black-letter law that (1) patents and trade secrets are mutually incompatible forms of protection and (2) even “proprietary” activities can be highly relevant—even dispositive—to patentability, including obviousness under §103. . . .

Aside from blessing patents examined under such enormous blind spots, the Board’s decision directly contradicts recent USDA recommendations to the PTO in connection with Executive Order 14036’s mandate that the PTO and USDA collaborate to ensure that the patent system does not “unnecessarily reduce competition in seed …markets beyond that reasonably contemplated by the Patent Act.” 86 Fed. Reg. 36987 (July 14, 2021).

The strategy of parental trade secrecy appears particularly potent in the seed industry where, as Pioneer admits in parallel litigation, inbred lines are typically “not sold commercially, and their use is carefully restricted.” Corteva Agriscience LLC v. Inari Agric., Inc., C.A. No. 23-1059-JFM (D. Del.). In Inari’s view, this approach contradicts a fundamental principle that patents and trade secrets are mutually incompatible forms of protection. See Atl. Rsch. Mktg. Sys., Inc. v. Troy, 659 F.3d 1345, 1357 (Fed. Cir. 2011) (“A trade secret is secret. A patent is not. That which is disclosed in a patent cannot be a trade secret.”). The incompatibility stems from the quid pro quo nature of the patent system – the grant of exclusivity in exchange for public disclosure. And, as the Federal Circuit has noted, even non-public information can be highly relevant to obviousness analysis. National Steel Car, Ltd. v. Canadian Pacific Ry., Ltd., 357 F.3d 1319 (Fed. Cir. 2004).

National Steel Car involved an unpublished drawing by a railroad engineer named Lund who had sketched out a depressed-floor railcar design. While the district court dismissed the drawing’s relevance because it wasn’t widely shared and therefore was not prior art, the Federal Circuit disagreed. The court explained that public distribution isn’t required when using evidence to show whether a motivation to combine references would have been implicit in the knowledge of a skilled artisan. As the court noted, “[s]omething that has already been rendered obvious to a relative newcomer in a field is probative of what would be obvious to someone who has been around for a longer period of time.” This holding provides a broader framework for considering motivation to combine, allowing parties to rely on internal documents and private work as evidence of what would have been obvious to those in the field, even if those materials never became public prior art.

Trade Secrets as Patent Precursors: A key problem with Inari’s approach is that the pathway to invention typically involves numerous trade secrets – components, precursors, and interim developments that an inventor maintains confidentially while developing the innovation to a patentable level. The mere existence of these development-phase trade secrets does not prevent the eventual patent grant. This makes sense from both a practical and policy perspective – inventors need space to develop and refine their innovations before making the choice between continued trade secret protection or patent disclosure. And, although the precursors are often disclosed within the patent document, their disclosure is not required unless needed to satisfy the requirements of Section 112. Pioneer’s use of proprietary parent lines in its breeding program may well fit within this general framework of innovation development, and the deposit of the seed line being patented obviates the need to disclose details of the parentage.

Of course, certain actions can transform these precursor trade secrets into patent-defeating prior art. Most notably, commercialization of the secret information – even if done confidentially – can create an effective prior art barrier against the party benefiting from that commercialization. This principle traces back to cases like Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., which established that an inventor cannot exploit their invention commercially and later obtain a patent. A separate doctrine of “abandonment” can also bar patentability, although abandonment doctrine traditionally applies only to the ultimate claimed invention, not to its precursor elements. It is likely that Pioneer had already made some commercial use of the parental line – by using it as a parent for other Maize varieties. It is unclear whether such use would be sufficient to trigger the commercialization bar.

Executive Order 14036, titled Promoting Competition in the American Economy, specifically addresses concerns about competition in seed markets, directing the USPTO to work with the USDA to ensure that the patent system does not “unnecessarily reduce competition in seed and other input markets beyond that reasonably contemplated by the Patent Act.” This directive reflects a broader concern that intellectual property rights, while important for innovation, shouldn’t create excessive barriers to market entry or competition in agricultural markets. The order recognizes that consolidation in agricultural industries has made it increasingly difficult for small family farms to survive, partially due to concentrated market power in agricultural inputs like seeds.

Taking a step back, the order establishes a whole-of-government approach to promoting competition, with the USPTO playing a key role in balancing innovation incentives against competitive concerns. While the Patent Act is designed to promote innovation through temporary monopoly rights, the Executive Order suggests these rights should be carefully calibrated to avoid unnecessary competitive restrictions. This creates an interesting tension between the USPTO’s traditional role of promoting innovation through strong patent rights and this newer mandate to consider competitive effects of issuing patent rights.

The political dimensions of this case are particularly salient given that Director Review decisions, while requiring a legal basis, also involve policy considerations that align with administration priorities. Director Vidal, as a political appointee, will likely need to balance the Executive Order’s competition mandate when deciding next steps for this case. Although Director Review is unlikely in any particular case, advancement of this case could set an important precedent for how the patent system treats the interplay between trade secrets and patents, especially in the biotech and agricultural sector.

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A parallel request for Director Review in PGR2024-00019 (challenging Pioneer’s US 11,659,803 patent) highlights another aspect of Pioneer’s strategy. In that case, Inari argues that the PTAB has improperly created a heightened standard for challenging plant utility patents by requiring petitioners to genetically analyze deposited seed samples – something not required during initial patent examination. Inari argues catch-22: In particular, Pioneer is suing Inari in district court for patent infringement based Inari’s analysis of deposited seeds, while the PTAB is requiring such analysis in order to challenge Pioneer’s patents.

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Scott McKeown of Wolf, Greenfield & Sacks, P.C. is lead counsel for Inari in the PGR and filed the request for Director Review. In the USPTO cases, Inari is also represented by Oona Johnstone, Thomas Foley and Zhiyun Ge.

Michael Kane and Katie E. Hyma from Fish & Richardson are counsel on the other side along with Dexter Whitley, Yong (Lucien) Wang, and Jonathan Singer.

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