Experimentation That Was Conducted to Determine Whether the Invention Would Suit a Particular Customer’s Purpose Without Inventor Control Did Not Fall Under the Experimental Use Exception
February 21, 2008
Last Month at the Federal Circuit - March 2008
Judges: Mayer (author), Dyk, Prost (concurring)
[Appealed from: N.D. Ga., Judge Evans]
In Atlanta Attachment Co. v. Leggett & Platt, Inc., No. 07-1188 (Fed. Cir. Feb. 21, 2008), the Federal Circuit reversed the district court’s grant of SJ in favor of Atlanta Attachment Company (“Atlanta”), holding that embodiments of Atlanta’s U.S. Patent No. 6,834,603 (“the ’603 remanded for the district court to reconsider the allegation of inequitable conduct.
Atlanta developed the invention of the ’603 patent in response to a request from Sealy, Inc. (“Sealy”) to create an automatic gusset ruffler machine. Atlanta developed a total of four prototypes, which it presented for sale to Sealy along with offers to sell production models. The first and second prototypes were sent to Sealy. Sealy tested these prototypes, gave verbal comments, and returned them to Atlanta. The third prototype was not sent to Sealy. Although Sealy paid for this prototype, its representatives inspected this prototype at Atlanta’s facilities on February 7, 2001, before the critical date of March 5, 2001. The final prototype, which was substantially similar to the third prototype, was delivered to Sealy on April 10, 2001.
In August 2002, Atlanta filed the ’603 patent application claiming priority to a provisional application filed on March 5, 2002. After the ’603 patent application matured into a patent, Atlanta sued Leggett & Platt, Inc. (“Leggett”) alleging infringement of claim 32 of the ’603 patent. Leggett responded that its machines did not infringe claim 32; that claim 32 was invalid due to various reasons, including Atlanta’s sales to Sealy; and that the ’603 patent was unenforceable due to inequitable conduct. The district court construed the claim terms and granted SJ in favor of Atlanta. It found that Leggett’s machines infringed claim 32 and that claim 32 was not invalid or unenforceable, noting, inter alia, that the three precritical date prototypes were not on sale because none of the precritical date prototypes reduced the limitations of claim 32 to practice, nd because the prototype sales were experimental uses. Leggett appealed.
On appeal, the Federal Circuit explained, relying on Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), that an invention is barred under the on-sale bar of 35 U.S.C. § 102(b) when it is both (1) the subject matter of a commercial offer for sale before the critical date, and (2) ready for patenting at the time of the offer. The Court noted that when the asserted basis of invalidity is the on-sale bar, a 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. The Court found the third prototype met all the lmitations of claim 32 and focused its on-sale bar analysis on the third prototype.
The Court observed that to meet the commercial offer prong of Pfaff, the offer must be sufficiently definite that another party could make a binding contract by simple acceptance, assuming consideration. It noted, however, that an inventor’s experimental use does not bar patentability. The Court determined that although the third prototype was never actually delivered to Sealy, it was indeed sold to Sealy because Atlanta sent Sealy an invoice for the machine (an offer), and Sealy paid for the machine (an acceptance). The Court rejected Atlanta’s argument that its sales to Sealy were experimental, stating that “experimentation conducted to determine whether the invention would suit a particular customer’s purposes [did] not fall within the experimental use exception.” Slip op. at 6. It found additionally that Atlanta was not experimenting within the experimental use exception because Atlanta did not have control over the alleged testing to establish experimentation. In addition, the Court found that the first prong of Pfaff was also met, and experimental use was negated, because Atlanta had presented a commercial offer for sale of the invention “en masse.” Id. at 7.
With respect to the ready for patenting prong of Pfaff, the Federal Circuit determined that because the third prototype was a reduction to practice of claim 32, the invention was ready for patenting. The Court explained that there are at least two ways to meet the ready for patenting prong: (1) prior to the critical date, the device was reduced to practice; or (2) 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. It noted further that an invention is reduced to practice when it works for its intended purpose, which can be established through a demonstration of its workability or utility. The Court found that because the third prototype demonstrated the workability and utility of the invention of claim 32 during Atlanta’s February 2001 demonstration to Sealy, claim 32 was reduced to practice and, thus, ready for patenting. It noted that an invention may be considered reduced to practice “even though it may later be refined or improved,” and that while improvements were possible and ultimately made in the fourth prototype, the deficiencies in the third prototype did not prevent reduction to practice of the invention actually claimed. Id. at 9.
Accordingly, 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, the Federal Circuit held that claim 32 was invalid due to the on-sale bar. In addition, the Court noted that the third prototype was material to examination because it was on sale. It explained, however, that materiality does not presume intent. Because the district court had not considered the issue of intent, the Court remanded for the district court to reconsider the allegation of inequitable conduct.
In a concurring opinion, joined by Judge Dyk, Judge Prost addressed the confusion in the Federal Circuit’s case law regarding the applicability of the experimental use doctrine to the two-prong test for the on-sale bar. Judge Prost observed that the Federal Circuit has repeatedly found that the experimental use doctrine cannot provide an exception to the on-sale bar once an invention is reduced to practice. Under this rule, noted Judge Prost, the experimental use doctrine would only exist between the time an invention was ready for patenting and the time it was reduced to practice. She contended that such a result would severely restrict the rights of inventors to conduct ongoing work on an invention and that they could do so only in private without using outside resources that may be necessary. According to her, Pfaff indicates that the experimental use doctrine should apply more broadly than the limited period suggested by a reduction to practice cutoff. She reasoned that 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. Nonetheless, Judge Prost agreed with the majority and found that Atlanta could not use the experimental use doctrine to avoid the first prong of the on-sale bar because it did not demonstrate experimental purposes for the sale.