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Federal Circuit “Dials In” on Telephone Security Device Patent

September 06, 2001

Decision icon Decision

Last Month at the Federal Circuit - October 2001

Judges:  Michel (author), Schall, and Dyk (concurring)

In Sandt Technology Ltd. v. Resco Metal & Plastics Corp., No. 00-1449 (Fed. Cir. Sept. 6, 2001), the Federal Circuit affirmed a district court’s SJ of invalidity of certain claims based on prior invention under 35 U.S.C. § 102(g) and reversed and remanded the case to the district court to conduct a validity determination on the remaining claims.

Sandt Technology, Ltd. (“Sandt”) is the patentee of U.S. Patent No. 5,509,057 (“the ‘057 patent”). The ’057 patent is directed to a two-plated, stainless-steel security cover for a pay telephone. Thieves typically drill into the vulnerable areas of a pay telephone and interfere with the coin-return mechanism. The vulnerable areas include the openings for the information pad and the dial buttons. The two-plated, stainlesssteel security cover of the ‘057 patent protects these vulnerable areas. Sandt sued Resco Metal and Plastics Corporation (“Resco”) for patent infringement. Resco counterclaimed for invalidity, asserting that prior invention of its own two-plated security cover anticipated the claims of the ‘057 patent. Sandt moved for SJ of infringement of certain claims and DJ that all other claims were not invalid. Resco responded with its own motion for SJ of invalidity of all claims.

The district court had held that the Resco inventor’s affidavit testimony that he had invented a security cover prior to the filing date of the ‘057 patent was corroborated by sufficient evidence. The evidence included a patent application that was ultimately abandoned after a final rejection for indefiniteness and a letter from Resco to a telephone company offering its security cover for sale. Figures and drawings (one of which was also filed in the abandoned patent application) accompanied the letter.

On appeal, Sandt argued that the district court had erred in holding that Resco’s security cover was prior art under 35 U.S.C. § 102(g)(2) because the inventor’s testimony had not been properly corroborated. Alternatively, Sandt argued, Resco had abandoned its invention.

Pointing to the earlier-filed patent application and Resco’s response to the telephone company’s request for proposals, the Federal Circuit held that the district court had correctly concluded that the testimony concerning manufacture of the Resco cover was sufficiently corroborated by the evidence.

Sandt argued that even if the Resco cover predates its application filing date, Resco had abandoned its invention under 35 U.S.C. § 102(g). The Court noted that an inventor may seek to avoid a determination of abandonment by showing that he or she marketed or sold a commercial embodiment of the invention. Relying upon Resco’s letter and drawings to the telephone company, as well as an affidavit from a former employee of the telephone company to whom Resco had directed its marketing efforts, the Court concluded that Resco had not abandoned its invention.

The Federal Circuit noted that although both parties only presented evidence or argument regarding the validity of claims 1, 3, and 19, the district court had ruled that all claims were invalid. This was legal error, so the Court remanded the case to the district court to determine the validity of the other claims. Noting that the claims asserted to be infringed were invalid, the Federal Circuit declined to reach the infringement issue.

Judge Dyk wrote a separate concurrence, urging that caution should be exercised in the determination of issues of alleged prior invention on SJ given that credibility of the affiant is usually at issue.