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Failure to Appreciate Invention When Offered for Sale Does Not Save Patent

01-1005
October 23, 2001

Decision icon Decision

Last Month at the Federal Circuit - November 2001

Judges: Dyk (author), Rader, and Bryson]

In Scaltech, Inc. v. Retec/Tetra, L.L.C., No. 01- 1005 (Fed. Cir. Oct. 23, 2001), the Federal Circuit affirmed the district court’s SJ of invalidity based on a violation of the on-sale bar.

Scaltech, Inc. (“Scaltech”) owns U.S. Patent No. 5,443,717 (“the ‘717 patent”) directed to a process for using oil refinery waste to make coke, which can be burned as a fuel. The ‘717 patent claims an improvement over prior art processes of this sort, the improvement involving the treatment of waste in a manner that increases the amount of solids in the waste to within a particular range and reduces the particle size distribution of the solids to the point where about 70% of the solids are composed of particles smaller than 15 microns. The claimed invention allows for the processing of significantly larger amounts of waste.

After Scaltech sued Retec/Tetra, L.L.C. (“Retec”) for infringement, Retec moved for SJ of invalidity based on a violation of the on-sale bar, which the district court granted. Scaltech appealed that decision to the Federal Circuit, which vacated the SJ and remanded for consideration of whether the process that was offered for sale inherently possessed each of the claim limitations. On remand, the district court, again on SJ, found that the process offered had met this condition and again found the patent invalid on the existing record. Scaltech once again appealed.

Scaltech’s undisputed activities prior to the critical date of January 19, 1992, included offers in 1988 to process refinery waste for two refining companies. The processing was to involve the use of a DC-6 centrifuge on “DAF” waste. Scaltech submitted formal proposal documents to both companies, stating that the quotation was based on one centrifuge and that the offer was firm for ninety days. Scaltech argued on appeal that these activities did not constitute an on-sale bar because (1) while the offered process would inherently produce solids within the claimed limitations for DAF waste, which already has a small particle size, it would not necessarily do so for other kinds of waste; (2) Scaltech did not appreciate that the offered process would allow the processing of larger amounts of DAF waste; and (3) this lack of appreciation meant there was no conception of the invention and, therefore, no reduction to practice.

As to Scaltech’s first argument, the Federal Circuit concluded that while a genuine issue of material fact exists with respect to whether the DC- 6 centrifuge will produce particle sizes within the claim limitations for waste other than DAF waste, that is irrelevant because it is sufficient to show that one embodiment of the invention was offered for sale during the one-year period. As to Scaltech’s appreciation argument, the Court pointed out that appreciation of the invention is not a requirement to trigger the statutory bar.

With respect to conception, the Court first pointed out that an inquiry into conception is not required to establish reduction to practice when the invention is on sale. The Court also concluded that a document used to persuade one of the companies to accept Scaltech’s offer provided a description sufficient to satisfy the requirement that an invention is ready for patenting if the inventor’s drawings or descriptions enable the practice of the claimed invention. Clarifying that Scaltech’s offer to employ a process was sufficiently definite to constitute a commercial offer for sale of the invention and having concluded that the offer for sale was within the scope of a claimed invention that was ready for patenting before the critical date, the Court affirmed the SJ below.