Federal Circuit reverses DC grant of SJ based on § 102(b) on-sale bar defense (e.g., inventor declarations not “sham affidavits”)

Quest Integrity USA, LLC v. Cokebusters USA Inc.
Docket No. 2017-2423
DYK, TARANTO, HUGHES
May 21, 2019

Brief summary: DC grant of SJ based on § 102(b) on-sale bar defense (e.g., inventor declarations not “sham affidavits”) reversed.

Summary: Quest appealed DC grant of SJ of invalidity of certain claims of US 7,542,874 relating to commercial furnace inspection systems under § 102(b) (on-sale bar (Pfaff, US 1998; Medicines Co., FC 2016)) to Cokebusters. The claims are directed to “computer-readable medium having computer-executable instructions for” detecting problems with furnace tubes and “system[s] for displaying inspection data”. Cokebusters defended Quest’s infringement allegations “on the ground that the claims were invalid under 35 U.S.C. § 102(b) because there was a commercial sale of services that used the claimed methods, computer-readable media, and system more than one year before” the earliest filing date of ‘874 patent (June 1, 2004). The FC panel opinion explains that “[t]he basis for the on-sale bar defense was an offer by Quest itself to provide furnace tube inspection services to a client in the petrochemical industry”, and performed those services in February and March 2003 (“the Norco sale”). During the course of the Norco sale, “Quest provided to the customer..furnace inspection data” (“the Norco Strip Charts”), and “did not sell any hardware or software to the customer.” The DC construed “the Display Limitation” which was construed to include “strip chars, such as those described in Example 1 of the ‘874 patent, and concluded that Example 1 was not disclaimed during prosecution.” The DC granted SJ to Cokebusters after determining “that the Norco Sale satisfied the Display Limitation, which appears in all of the asserted claims”. In making its decision, the DC “relied on deposition testimony of Robert DeLorenzo, a co-inventor…who conducted the furnace inspection for the Norco Sale”; later declarations by De Lorenzo and another co-inventor (Phil Bondurant) were determined to be “sham affidavits” and not considered by the DC. The FC panel explained that the two-part Pfaff test for whether an invention is “on sale’ within the meaning of § 102(b)” requires determining if the invention was “(1) ‘the subject of a commercial offer for sale’ and (2) ‘ready for patenting’” “before the critical date” (“the invention that [wa]s the subject matter of the offer for sale must satisfy each limitation of the patent, though it may do so inherently” (Scaltech, FC 2001); “a sale or offer of sale need not make an invention available to the public” and “‘secret sales’ can invalidate a patent” (Helsinn, US 2019); “commercial exploitation [of the claimed invention] is a clear indication of public use” (Invitrogen, FC 2005)). Here, the “parties agree…that the Norco Sale…was ‘a commercial offer for sale’” (not an “experimental use” as argued to the DC; “Quest used its method…to produce the Norco reports” (Medicines; D.L. Auld, FC 1983; Quanta Comp., US 2008; Plumtree, FC 2006)). Quest argued the Norco Strip charts were excluded from claims 12, 24 and 33 during prosecution, but the FC panel disagreed. Regarding claims 30 and 40, the FC panel explained that the question on appeal the existence of a material dispute regarding “whether the software used during the Norco Sale had” the claimed “‘composite bend indicator’ function”. The DC granted SJ on this point without considering the De Lorenzo and Bondurant declarations after finding those to be “sham affidavits” but the FC panel found this to be erroneous since “Boundurant’s declaration did not contradict any earlier testimony that he gave”, even if “arguably inconsistent with a plaintiff’s deposition testimony” (Cleveland, US 1998), De Lorenzo “explained why his deposition testimony was incorrect” (e.g., he “was only given a portion of the source code during his deposition”), and “there is also present here ‘independent evidence in the record’ that bolsters De Lorenzo’s declaration.” Thus, the DC was reversed and case remanded regarding claims 30 and 40.

This entry was posted in Anticipation (35 USC 102), On-Sale Bar, Prosecution History Estoppel. Bookmark the permalink.

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