September 24, 2013
LES Insights
By John C. Paul; D. Brian Kacedon; Justin E. Loffredo
Authored by Justin E. Loffredo, D. Brian Kacedon, and John C. Paul
Hamilton Beach and Sunbeam sell competing slow cookers—large electric pots for cooking food for a long duration. Hamilton Beach owns a patent for a slow cooker, which covers a product it sells as the "Stay or Go" cooker. Hamilton Beach's first patent application for the Stay or Go was filed on March 1, 2006.
In response to Hamilton Beach's apparent success in the market with the Stay or Go, Sunbeam developed a competing slow cooker, called the "Cook & Carry." Instead of mounting sealing clips on the body of the slow cooker, as required by the claims in Hamilton Beach's patent, Sunbeam's Cook & Carry included sealing clips mounted on the lid of the slow cooker. In response to Sunbeam's introduction of the Cook & Carry, on June 4, 2010, Hamilton Beach filed another patent application based on its first application, now claiming a slow cooker with sealing clips mounted on the lid. The USPTO granted a patent on Hamilton Beach's new application, and Hamilton Beach sued Sunbeam, alleging infringement by the Cook & Carry.
In district court, Sunbeam moved for summary judgment, arguing that Hamilton Beach offered its Stay or Go slow cooker for sale more than one year before March 1, 2006, thereby rendering the claims in Hamilton Beach's later-issued patent invalid. The district court granted Sunbeam's motion, finding that Hamilton Beach made invalidating commercial offers to sell the Stay or Go more than one year before March 1, 2006.
On appeal, the Federal Circuit explained1 the "on-sale bar" underlying the district court's decision that a commercial offer for sale invalidated Hamilton Beach's patent. Under Supreme Court precedent, the on-sale bar applies when, before the critical date (i.e., one year before the date of application for patent in the United States), the claimed invention was the subject of a commercial offer for sale and was ready for patenting. Any attempt to sell is sufficient for a "commercial offer for sale" as long as it is sufficiently definite that another party could make a binding contract by simple acceptance. Additionally, an invention is "ready for patenting" when, before the critical date, the invention is reduced to practice, depicted in drawings, or described in writings that enable a person of ordinary skill in the art to practice the invention.
Because the filing date of Hamilton Beach's first patent application for the Stay or Go slow cooker was March 1, 2006, the critical date in this dispute was one year earlier, or March 1, 2005. Sunbeam argued that Hamilton Beach's foreign supplier offered to sell the Stay or Go before that critical date. Specifically, Hamilton Beach issued a purchase order for nearly 2,000 Stay or Go slow cookers to its foreign supplier on February 8, 2005. Hamilton Beach listed its Tennessee facility as the shipping address for the merchandise and its Virginia office as the billing address. The supplier confirmed receipt of the purchase order on February 25, 2005, and responded that it would begin manufacturing the slow cookers once it received Hamilton Beach's release.
As a result of these facts, the Federal Circuit agreed with the district court's conclusion that there was a commercial offer for sale. At the outset, the Federal Circuit noted that there is no "supplier exception" to the on-sale bar. Thus, the Court found it was of no moment that the alleged offer for sale was made by Hamilton Beach's supplier. Next, the Court noted that after Hamilton Beach sent the purchase order to its foreign supplier on February 8, 2005, the supplier responded on February 25, 2005, that it had received and was ready to fulfill the order. This response from the supplier was significant, the Federal Circuit explained, not because it formed a binding contract, but rather because it was an offer to sell Stay or Go slow cookers that could form a binding contract upon Hamilton Beach's "release." This was sufficient to satisfy the Supreme Court's first prong requiring a commercial offer for sale, according to the Federal Circuit.
Next considering the "ready for patenting" prong of the Supreme Court's test, the Federal Circuit agreed with the district court that the Stay or Go slow cooker was ready for patenting before the critical date. In reaching its decision, the district court considered evidence of Hamilton Beach's meetings with retail customers before the critical date. At these meetings, Hamilton Beach presented formal drawings showing the Stay or Go with all of the elements claimed in both of Hamilton Beach's patents. Moreover, Hamilton Beach conceded that, by February 2005, it had at least one product sample and a successful working prototype of the Stay or Go that operated as claimed in its later patent. The Federal Circuit stated that even if some of the prototypes did not work quite as intended, fine-tuning an invention after the critical date does not mean that the invention was not "ready for patenting." Because Hamilton Beach's invention claimed in its patent was both the subject of a commercial offer for sale and ready for patenting before the critical date of March 1, 2005, the Federal Circuit affirmed the district court's decision that the asserted claims were invalid.
In a dissenting opinion, Judge Reyna argued that the majority failed to decide whether the offer for sale was commercial in nature or for purely experimental purposes, thereby extending the no "supplier exception" rule to even experimental uses. According to Judge Reyna, there was no "commercial" offer for sale here because at the time of the purchase order, the lid on Hamilton Beach's slow cooker could not prevent leakage of foodstuffs from the interior of the container. Therefore, the dissent concluded, Hamilton Beach was entitled to perfect its slow cooker under the experimental-use exception to the on-sale bar.
This case demonstrates the importance of filing patent applications covering commercial embodiments of an invention as early as possible. When timing is crucial, applicants might consider filing provisional applications, which may offer an inexpensive and useful tool to obtain the earliest possible filing date. This case also shows the need for potential patentees to be cautious when dealing with suppliers, including overseas suppliers, as those dealings may trigger the on-sale bar.
1 The Hamilton Beach decision can be found at http://www.finnegan.com/files/Publication/195f895d-f04d-465b-bc4a-63e2468423f8/Presentation/PublicationAttachment/fba82337-b7f5-470d-8fc4-64bf62aee2e1/12-1581%208-14-13.pdf.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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