Patent Law

On-Sale Bar Ruffle

By Gary Odom and Jordan Kuhn

In reply to potential customer Sealy, a bed mattress maker, Atlanta Attachment developed a sewing machine for automatically creating gusset rufflers. There was a verbal understanding of confidentiality. Over time, Atlanta Attachment sent prototypes to Sealy, in September 2000 invoicing Sealy for the third of four prototypes ultimately delivered. The last prototype was but a minor jigger difference from the third.

Atlanta Attachment v. Leggett & Platt (CAFC 2007-1188)

Ultimately, Sealy demurred in buying the ruffle maker, freeing Atlanta Attachment to sell to others.

Atlanta Attachment filed a patent application August 15, 2002, which matured into 6,834,603, claiming "a machine that automatically attaches a gusset to a panel of a pillowtop mattress, rotating the panels at the corners, and pleating the corners of the gusset."

Atlanta Attachment sued Leggett & Platt for infringement, specifically claim 32. Leggett & Platt got nailed in summary judgment, its defenses unheeded.

Leggett & Platt responded that their machines do not infringe claim 32, and that claim 32 is invalid due to the on-sale bar, failing to satisfy the best mode and written description requirements, and obviousness, and the '603 patent is unenforceable due to inequitable conduct.

The district court construed the claim terms and by summary judgment held that the Leggett & Platt machines did infringe claim 32. Addressing the counterclaims, the district court determined that claim 32 was not invalid because the three pre-critical date prototypes were not on sale, because none of the pre-critical date prototypes reduced the limitations of claim 32 to practice, and because the prototype sales were experimental uses. The district court also held that Leggett & Platt had not proved a violation of the best mode or written description requirements, nor had it shown that claim 32 was obvious. Finally, the district court found no inequitable conduct because since the three prototypes were experimental and not disclosed to the public, they need not have been disclosed to the U.S. Patent and Trademark Office during prosecution.

Leggett & Platt appealed.

The CAFC pulled out all the stops to cover on-sale bar. Well, almost all the stops - a concurring opinion by two of the three in the panel that smacks of a job left undone. Mayer penned the decision, with Prost and DYK later getting in their two cents.

From the hymnal - the Pfaff two-pronged test for determining on-sale invalidity: 1) "a commercial offer for sale"; and 2) the later patented technology "ready for patenting at the time of the offer" -

Our patent laws deny a patent to an inventor who applies for a patent more than one year after making an attempt to profit from his invention by putting it on sale. 35 U.S.C. § 102(b); see also Elizabeth v. Am. Nicholson Pavement Co., 97 U.S. 126, 137 (1877). An invention is so barred when it was both the subject of a commercial offer for sale before the critical date and ready for patenting at the time of the offer. Pfaff v. Wells Elecs, Inc., 525 U.S. 55, 67, 199 S.Ct. 304, 311-12 (1998).

The overriding concern of the on-sale bar is an inventor's attempt to commercialize his invention beyond the statutory term. Netscape Commc'ns. Corp. v. Konrad, 295 F.3d 1315, 1323 (Fed. Cir. 2002). When the asserted basis of invalidity is an on-sale bar, the court should determine whether the subject of the barring activity met each of the limitations of the claim, and thus was an embodiment of the claimed invention. Id. (quotations removed).

We focus on the third prototype because it contains each element of claim 32. (We reach whether each element was reduced to practice infra, in discussing the second Pfaff prong.)

Experimental use does not trigger on-sale bar; only an attempt to sell what later becomes the claimed invention.

To meet the first, commercial offer, prong, the offer must be sufficiently definite that another party could make a binding contract by simple acceptance, assuming consideration. Netscape, 295 F.3d at 1323. In determining such definiteness, we review the language of the proposal in accordance with the principles of general contract law. Id. The law has long recognized a distinction between experimental usage and commercial exploitation of an invention. While "[a]ny attempt to use [an invention] for profit . . . would deprive the inventor of his right to a patent," an inventor's use "by way of experiment" does not bar patentability. Elizabeth, 97 U.S. at 137 (1877). Therefore, we must consider whether the suspect activities were experiments as opposed to an attempt to profit from the invention, that is, whether the primary purpose of the offers and sales was to conduct experimentation. Allen Eng'g Corp. v. Bartell Indus., 299 F.3d 1336, 1354 (Fed. Cir. 2002). Neither profit, revenue, nor even an actual sale is required for the use to be a commercial offer under section 102(b) - an attempt to sell is sufficient if it rises to an offer upon which a contract can be made merely by accepting it. Although the third prototype was never actually delivered to Sealy, it was indeed sold to Sealy because Atlanta Attachment sent Sealy an invoice for the machine (an offer), and Sealy paid for the machine (an acceptance).

Atlanta Attachment responds that its sales to Sealy were experimental, because they were prototypes submitted to determine if the invention fit Sealy's requirements. However, experimentation conducted to determine whether the invention would suit a particular customer's purposes does not fall within the experimental use exception. Allen Eng'g, 299 F.3d at 1355 (citing In re Theis, 610 F.2d 786, 792 (CCPA 1979)).

Control of a prototype is significant, and may even be dispositive, as it is in this case.

Additionally, Leggett & Platt is correct to emphasize that Atlanta Attachment did not retain control over the prototypes when they were in Sealy's possession. While we have held that control may not be the lodestar test in all cases, we have also said that it is important, and sometimes dispositive. Electromotive Div. of Gen. Motors Corp. v. Transp. Sys., 417 F.3d 1203, 1213 (Fed. Cir. 2005) (citing In re Hamilton, 882 F.2d 1576 (Fed. Cir. 1989)). In Allen Engineering, we simply catalogued a set of factors that previous cases had found instructive, and in some cases dispositive, for determining commercial offers versus experimental uses. 299 F.3d at 1353.

The issue of control is dispositive here, therefore we need not review each factor set out there. Atlanta Attachment was not experimenting within the contemplation of the experimental use doctrine when it sold its invention to Sealy because Sealy performed the testing and because Atlanta Attachment did not have control over the alleged testing to establish experimentation. See Electromotive Div., 417 F.3d at 1213. The fact that Sealy experimented with the prototypes is immaterial because the experimental use exception only concerns the actions of the inventors and their agents, and Sealy was not under the inventors' control.

Atlanta Attachment's offer of "commercial offer for sale of the invention en masse" negated experimental use, meeting the first prong of the Pfaff test.

Therefore, this quotation constitutes an offer for sale that cannot avoid the on-sale bar via the experimental use exception. An offer to mass produce production models does not square with experimentation under any standard; it is commercial exploitation.

On the second Pfaff prong: ready for patenting -

There are at least two ways to meet the ready for patenting prong: prior to the critical date the device was reduced to practice, or there is proof that "prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention." Pfaff, 525 U.S. at 67-68. An invention is reduced to practice when it works for its intended purpose. Honeywell Int'l Inc. v. Universal Avionics Sys. Corp., 488 F.3d 982, 997 (Fed. Cir. 2007) (citing Eaton v. Evans, 204 F.3d 1094, 1097 (Fed. Cir. 2000)). An invention is said to work for its intended purpose when there is a demonstration of its workability or utility. Id. (citing Fujikawa v. Wattanasin, 93 F.3d 1559, 1563 (Fed. Cir. 1996)).

[A]n invention can be considered reduced to practice "even though it may later be refined or improved." New Railhead Mfg. L.L.C. v. Vermeer Mfg. Co., 298 F.3d 1290, 1297 (Fed. Cir. 2002)... Consistent with the rule that later refinements do not preclude reduction to practice, it is improper to conclude that an invention is not reduced to practice merely because further testing is being conducted.

The third prototype provided by Atlanta Attachment embodied the invention.

Contrary to Atlanta Attachment's argument, once there has been a commercial offer, there can be no experimental use exception. We also conclude that the third prototype was a reduction of claim 32 to practice, and therefore the invention was ready for patenting.

While improvements were possible and ultimately manufactured in the fourth prototype, these deficiencies in the third prototype did not prevent reduction to practice of the invention actually claimed. Therefore, because the third prototype was both the subject of a commercial offer for sale before the critical date and was reduced to practice at the time, claim 32 is invalid due to the on-sale bar of section 102(b).

The record as to inequitable conduct was undeveloped, so the case was remanded for further flogging of the patent; to discover whether Atlanta Attachment had intent to deceive in not revealing the third prototype to the patent office.

Because the third prototype was on sale, we agree with Leggett & Platt that it was material to the examination. See Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1318 (Fed. Cir. 2006) (noting that a reasonable examiner would have considered the true nature of the invention's reduction to practice to be important in deciding to allow the claim). However, materiality does not presume intent. Manville Sales Corp. v. Paramount Sys. Inc., 917 F.3d 544, 552 (Fed. Cir. 1990). The district court did not consider intent after deciding the third prototype was an experimental use, leaving this issue of fact unresolved.

The concurring opinion by Prost and DYK, pointing out "the confusion in our caselaw regarding the applicability of the experimental use doctrine to the two prong test for the on-sale bar," namely, when experimental use cuts out -

The Supreme Court's decision in Pfaff v. Wells Electronics, Inc. redefined our test for the on-sale bar and affected how the experimental use doctrine applies to alleged instances of invalidating prior use. 525 U.S. 55 (1998). Without considering these issues in a comprehensive manner in future cases, we will never escape from the confused status of our current caselaw.

The Supreme Court in Pfaff introduced an explicit test for the on-sale bar. Specifically, it created the two prongs of commercial sale and "ready for patenting," and distinguished "ready for patenting" from reduction to practice. As to the second prong, the Court stated, "one can prove that an invention is complete and ready for patenting before it has actually been reduced to practice." Id. at 66. This court, following pre-Pfaff decisions, has stated on several occasions, post-Pfaff, that the experimental use doctrine cannot provide an exception to the on-sale bar once an invention is reduced to practice. Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1371 (Fed. Cir. 2007) (quoting Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1354 (Fed. Cir. 2002) (quoting EZ Dock, Inc. v. Schafer Sys., Inc., 276 F.3d 1347, 1357 (Fed. Cir. 2002) (Linn, J., concurring))); Allen Eng'g, 299 F.3d at 1354 (quoting EZ Dock, 276 F.3d at 1357 (Linn, J., concurring)); New Railhead Mfg., LLC v. Vermeer Mfg. Co., 298 F.3d 1290, 1297, 1299 (Fed. Cir. 2002); EZ Dock, 276 F.3d at 1357 (Linn, J., concurring); Zacharin v. United States, 213 F.3d 1366, 1369 (Fed. Cir. 2000)

If we were to accept that reduction to practice eliminates availability of the experimental use doctrine as a whole, the continuing viability of that doctrine would exist only between the time an invention is ready for patenting and the time it is reduced to practice. Such a result would severely restrict the rights of inventors to conduct ongoing work on an invention; they could do so only in private without using outside resources that may be necessary. Private work that is primarily experimental would not trigger the on-sale or public use bars to patentability in the first place, and thus has no need for the experimental use doctrine.

Pfaff indicates that the experimental use doctrine should apply more broadly than the limited period suggested by a reduction to practice cutoff. First, the Pfaff Court explicitly discusses the experimental use doctrine as it relates to the first prong, offering it as an example of how an "inventor can both understand and control the timing of the first commercial marketing of his invention." 525 U.S. at 67. This statement confirms the ongoing viability of the experimental use doctrine under the Pfaff prongs, calling into question the idea that the doctrine only applies during the limited time between when an invention is ready for patenting and when it is reduced to practice.

Further, the Court stated that "invention" as used in 35 U.S.C. § 102(b) "must refer to a concept that is complete, rather than merely one that is 'substantially complete,'" and that "one can prove that an invention is complete and ready for patenting before it has actually been reduced to practice." Id. at 66. Such statements minimize the relevance of a distinction between "ready for patenting" and reduction to practice, other than as relaxing evidentiary requirements for proving the on-sale bar. Indeed, if the justification for eliminating the experimental use exception upon reduction to practice comes from completeness of the invention--and therefore a lack of need for further experimentation--then the exception should also not apply to protect an invention ready for patenting, a proposition flatly contradicted by Pfaff. ¹

¹ Use of the phrase "experimental use exception" does not imply that the experimental use doctrine is a free-standing doctrinal exception to a statutory bar; the experimental use doctrine is more accurately characterized as a negation of a statutory bar. EZ Dock, 276 F.3d at 1351 (noting that "[t]his court has repeatedly stressed that evidence of experimental use does not give rise to a free-standing doctrinal exception to statutory bars, but instead operates to negate application of section 102(b)").

In other words, Pfaff suggests that the experimental use doctrine continues to provide a way for patentees to avoid invalidation through the on-sale bar. Because an invention is complete when it is either ready for patenting or reduced to practice, the experimental use doctrine must remain available after that stage. In my view, therefore, experimental use in this respect represents the counterpoint to commercial sale or public use. Assuming a complete invention, ready for patenting, inventors should be able to continue to privately develop any claimed aspect of that invention without risking invalidation, if they conduct development activities in a way that is neither public nor simply commercial, even if there is some commercial benefit to the inventor in connection with the experimental use. Such development should fall under the post-Pfaff application of the experimental use doctrine, and should be protected if it satisfies the first prong of Pfaff--i.e., it is neither a simply commercial offer for sale nor a public use.

When the inventor conducts a commercial transaction in order to facilitate development, but the development activity meets the requirements of the experimental use doctrine, the inventor avoids the on-sale bar. This exception to the on-sale bar does not evaporate upon reduction to practice. In essence, just as inventors could develop any aspect of the invention privately, they may employ the concepts of agency and confidentiality to also accomplish the same result.

In the present case, as the majority opinion demonstrates, Atlanta Attachment cannot use the experimental use doctrine to avoid the first prong of the on-sale bar because it did not demonstrate experimental, rather than simply commercial, purposes for the sale. Similarly, the quote for fifty "production unit" machines separately demonstrates an offer to sell with simply commercial intent. Both the sale and offer to sell conclusively demonstrate satisfaction of the first Pfaff prong. The experimental use doctrine is inapplicable.

While the experimental use doctrine, as such, is not pertinent to the second Pfaff prong, an inventor's experimentation may have relevance to that prong. As to the second prong, a patentee may still avoid the on-sale or public use bars by proving that the "invention" required additional experimentation, and was not in fact complete. Such a showing parallels the pre-Pfaff experimental use doctrine, but instead of involving an exception to the on-sale or public use bars, takes effect as merely avoiding the ready for patenting prong in the first place. Experimentation of this type must concern claimed aspects of the invention, because those aspects control whether the invention is ready for patenting or not.

As this case indicates, the one-year on-sale bar statutory provision itself is a major flaw in the patent code, spawning unnecessary complication in patent validity determination. The quid pro quo of a patent grant should be that an inventor first apply for patent, experimental use aside. There should be no one-year grace period of public exposure or commercial sale. File first, then toot your horn, ought to be the rule. A patent grant should not play second fiddle to public exploitation.

Full post as published by The Patent Prospector on February 21, 2008 (boomark / email).