DC denial of on-sale bar defense reversed; claim construction affirmed; grant of enhanced damages reversed based on attorney opinion; reasonably royalty affirmed

Sunoco Partners Marketing & Terminals, L.P. v. U.S. Venture, Inc. et al. (“Venture”)

Docket No. 2020-1640, -1641 (https://cafc.uscourts.gov/opinions-orders/20-1640.OPINION.4-29-2022_1943607.pdf)

PROST, REYNA, STOLL

April 29, 2022

Brief Summary:  DC denial of on-sale bar defense reversed; claim construction affirmed; grant of enhanced damages reversed based on attorney opinion; reasonably royalty affirmed.

Summary: Venture appealed DC’s “(I) rejection of its on-sale-bar defense, (II) determination that it infringed two patents…since held invalid, (III) construction of two claim terms, and (IV) decision to enhance damages” relating to butane-blending systems for production of gasoline    Sunoco cross-appealed regarding the denial of lost-profit damages and the award of treble damages.   Regarding the on-sale bar, the FC panel explained that “[t]o prevail…Venture needed to show that, before the critical date, Sunoco’s patented invention was both (1) ‘the subject of a commercial offer for sale’ and (2) ‘ready for patenting’…by clear and convincing evidence” (Pfaff, US 1998; Helsinn, US 2019; Allen Eng’g, FC 2002; Honeywell, FC 2007), and that while “inventors may delay patenting to engage in “bona fide effort[s] to bring his invention to perfection, or to ascertain whether it will answer the purpose intended…’[a]ny attempt to use [the invention] for a profit[] and not by way of experiment’ before the critical date will ‘deprive the inventor of his right to a patent’” (City of Elizabeth, US 1877).  The FC panel reversed the DC decision “that Venture’s on-sale-bar defense is negated by the experimental use doctrine and (B) remand for the district court to evaluate the ready-for-patenting prong of the on-sale bar” because the disputed portions of Venture’s contract with alleged buyer (Equilon) “was an offer for sale made to commercially exploit the invention rather than primarily for experimental purposes” (not experimental testing but confirmation “that it is working as promised”).  The FC panel also noted that on remand it must be shown “that the system sold anticipated or rendered obvious the claimed invention and that it was ready for patenting” (Pfaff, Allen).  The infringement judgment of claims subsequently found invalid by the USPTO (affirmed by the FC in 2021; XY, FC 2018) was reversed.  The FC panel agreed with the DC that “the plain claim language” regarding ““vapor pressure of the butane stream” “strongly suggests that there is no measurement requirement” (e.g., specification expresses “a preference but not a mandatory requirement”; Intel, FC 2021; Phillips, FC 2005).  The FC panel agreed with the DC’s finding that a method claim “comprising” steps “may cover unclaimed elements” (Inivtrogen, FC 2003).  Venture also challenged the DC’s decision to enhance damages, which the FC panel explained requires consideration of nine non-exclusive factors (Halo, US 2016; Presidio, FC 2017).  It disagreed with the DC decision due “a clear factual error in the [DC’s] treatment of” a non-infringement opinion of Venture’s attorney “on which Venture relied” (Omega Pats., FC 2019 (“relevant to the infringer’s state of mind”); Comark, FC 1998 (opinion “must be competent”)).  The FC panel affirmed the DC’s denial of lost profits (Graphics, FC 2017) because, e.g., “neither butane nor blended gasoline is the patented invention” and the disputed agreements extend “beyond just the patented invention” and affirmed its reasonable-royalty calculation.