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Parties Involved:
California Table Grape Commission
Appellee
Delano Farms Company
Appellant
Department of Agriculture
Appellee
Four Star Fruit, Inc.
Appellant
Gerawan Farming, Inc.
Not party
United States
Appellee
Thomas J. Vilsack
Appellee

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

DELANO FARMS COMPANY, AND 

FOUR STAR FRUIT, INC.,

Plaintiffs-Appellants,

AND

GERAWAN FARMING, INC.,

Plaintiff,

v.

THE CALIFORNIA TABLE GRAPE COMMISSION, 

UNITED STATES, 

DEPARTMENT OF AGRICULTURE, AND 

THOMAS J. VILSACK, Secretary of Agriculture,

Defendants-Appellees.

______________________ 

2014-1030

______________________ 

Appeal from the United States District Court for the 

Eastern District of California in No. 1:07-cv-01610-SEHJLT, Judge Sam E. Haddon.

______________________ 

Decided: January 9, 2015

______________________ 

LAWRENCE M. HADLEY, McKool Smith Hennigan, P.C., 

of Los Angeles, California, argued for plaintiffsCase: 14-1030 Document: 63-2 Page: 1 Filed: 01/09/2015
2 DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 

appellants. Of counsel was Brian C. Leighton, Law Office 

of Brian C. Leighton, of Clovis, California.

JOHN J. FARGO, Director, Intellectual Property Staff, 

Commercial Litigation Branch, Civil Division, United 

States Department of Justice, of Washington, DC, argued 

for defendants-appellees United States, Department of 

Agriculture, and Thomas J. Vilsack. With him on the 

brief was STUART F. DELERY, Assistant Attorney General. 

THOMAS G. SAUNDERS, Wilmer Cutler Pickering Hale 

and Dorr LLP, of Washington, DC, argued for defendantappellee the California Table Grape Commission. With 

him on the brief were SETH P. WAXMAN, BRIAN M.

BOYNTON, and FRANCESCO VALENTINI. 

______________________ 

Before PROST, Chief Judge, BRYSON and HUGHES, Circuit 

Judges.

BRYSON, Circuit Judge.

This appeal involves a challenge to the validity of two 

plant patents for varieties of table grapes developed by 

the U.S. Department of Agriculture (“USDA”) and licensed to the California Table Grape Commission. The 

plaintiffs filed suit against the USDA and the California 

Table Grape Commission, seeking to invalidate the patents on the ground that the two grape varieties were in 

public use more than one year before the applications for 

both plant patents were filed, and that the patents are

therefore invalid under the public use bar of 35 U.S.C. 

§ 102(b) (2006). 

The United States District Court for the Eastern District of California initially ruled that sovereign immunity 

barred this action against the USDA, and that the case 

could not go forward without the USDA as a party. On 

appeal, we reversed the district court’s ruling as to the 

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DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 3

sovereign immunity issue, holding that the Administrative Procedure Act waives sovereign immunity for purposes of an action such as this one. Delano Farms Co. v. Cal. 

Table Grape Comm’n, 655 F.3d 1337 (Fed. Cir. 2011).

On remand, the district court granted partial summary judgment for the defendants on matters that are not 

at issue on appeal. The court held a bench trial on the 

remaining question whether the actions of two individuals 

who obtained samples of the two patented plant varieties

in an unauthorized manner and planted them in their

own fields constituted an invalidating public use of the 

plant varieties. The district court found that the actions 

of those individuals did not constitute a public use of the 

two plant varieties and therefore rejected the plaintiffs’ 

challenge to the patents. We affirm.

I 

The patented table grape varieties at issue in this 

case are known as Scarlet Royal (U.S. Patent No. 

PP16,229), and Autumn King (U.S. Patent No. PP16,284). 

The USDA, as owner of the patents, has exclusively 

licensed the patents to the California Table Grape Commission, an agency of the State of California. The Commission sublicenses the patents to grape growers in 

California and collects royalties that are shared by the 

Commission and the USDA. The licensing agreements 

with the growers require the growers to pay a royalty on 

the grapes produced by plants of the patented varieties, 

and they prohibit the growers from propagating the 

plants. 

The three plaintiffs are all California grape growers 

who purchased grapevines covered by the patents, signed 

license agreements with the California Table Grape 

Commission, and paid the Commission’s licensing fee. 

They brought this action challenging the validity and 

enforceability of the plant patents, as well as the conduct 

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4 DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 

of the Commission and the USDA in licensing and enforcing the patents.

Following the bench trial, the district court made detailed findings of fact. The court’s findings, and the 

evidence at trial that supported those findings, are summarized below.

The applications that resulted in the plant patents 

covering Scarlet Royal and Autumn King were filed on 

September 28, 2004. The “critical date” for the public use 

bar of 35 U.S.C. § 102(b) (2006), i.e., the beginning date of 

the one-year period before which a public use would 

invalidate the patents, is therefore September 28, 2003. 

Both varieties were made commercially available on July 

13, 2005.

Jim Ludy, a California grape grower, cultivated table 

grapes at J&J Ludy Farms, in Delano, California, with 

his brother, Jack Ludy, from 1976 to 2003. Larry Ludy, 

Jim Ludy’s first cousin, also cultivated table grapes at 

various properties in the area. 

On August 22, 2001, the USDA held an experimental 

variety open house at the California State University, 

Fresno. At the open house, USDA representatives displayed several unreleased table grape varieties, including 

Scarlet Royal and Autumn King. Only the mature fruit 

from the varieties was on display, not other plant material such as the vines or wood. Visiting growers were not 

permitted to take any plant material relating to the 

unreleased varieties or even view the plants in the field. 

Both Jim Ludy and Larry Ludy attended the August 

open house. While they were there, the Ludy cousins 

spoke with Rodney Klassen, who was employed by the 

USDA at the facility where the Scarlet Royal and Autumn 

King varieties were being developed. Jim Ludy asked Mr. 

Klassen if Mr. Klassen could give him some of the plant 

material for the Scarlet Royal and Autumn King varieties. 

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Mr. Klassen had previously given Jim Ludy plant material for other unreleased table grape varieties. Mr. Klassen

was not authorized to provide Jim Ludy with any unreleased plant material.

Despite his lack of authority, Mr. Klassen informed 

Jim Ludy that he would “take care” of him. Subsequently, in early 2002, Mr. Klassen met with Jim Ludy and 

gave him plant material for multiple, unreleased varieties, including Scarlet Royal and Autumn King. Mr. 

Klassen instructed Jim Ludy not to let the material “get 

away from [him]” and not to “put them in a box,” which 

Jim Ludy understood to mean that he should not sell the 

resulting grapes until the varieties were commercially 

released. Jim Ludy understood that he was to keep the 

plant material secret. He did not want other growers to 

obtain the same unreleased plant material he had, and he 

knew that Mr. Klassen would be in “big trouble” if his 

actions were discovered. Jim Ludy subsequently testified 

falsely under oath to protect Mr. Klassen’s identity as the 

person from whom he had obtained the plant material for 

the unreleased varieties. 

After receiving the plant material from Mr. Klassen, 

Jim Ludy grafted fewer than 50 vines of each of the 

Scarlet Royal and Autumn King varieties in early 2002. 

Jim Ludy also provided “a few buds” of Scarlet Royal and 

Autumn King to his cousin, Larry Ludy. Larry Ludy 

knew that the material had originally come from a USDA 

facility and had not yet been released. He admitted that 

Jim Ludy told him that they should “keep it to ourselves.”

Jim Ludy testified that it was understood between the 

two of them that their possession of the Scarlet Royal and 

Autumn King varieties “was supposed to be a secret” and 

that Larry Ludy would keep his possession of the plant 

material confidential. 

Larry Ludy subsequently grew eight plants of Scarlet 

Royal and 25 plants of Autumn King. In 2003, Larry 

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6 DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 

Ludy grew additional plants by grafting wood from the 

original group of plants, producing a total of 108 vines of 

Scarlet Royal and 650 vines of Autumn King.

Most of the plantings by both Ludys prior to the patents’ critical date bore no usable fruit, and the Ludys

sold no grapes from those plantings prior to the critical 

date. Neither of the Ludys provided plant material to any 

other persons until after the critical date. Although the

various plantings were visible from publicly accessible 

roads, none of the vines were marked or labeled in any 

way, and the evidence showed that the particular variety 

of the grapes could not be readily ascertained from simply 

viewing the vines. 

The only other person who was informed of the Ludys’ 

possession of the unreleased plant material was Richard

Sandrini, who had long served as a table grape marketer 

for Jim and Larry Ludy.

Larry Ludy showed Mr. Sandrini vines of the unreleased varieties at least twice prior to the patents’ critical 

date. After the critical date, Mr. Sandrini sold Larry 

Ludy’s 2004 harvest of Autumn King (the first sale of 

either unreleased variety), but he labeled the grapes as 

“Thompson Seedless” to avoid detection. Additionally, 

after the patents’ critical date Larry Ludy provided Mr. 

Sandrini with wood from which Mr. Sandrini could graft 

Autumn King on his own property. Larry Ludy testified 

that he knew it was a “huge competitive advantage” to 

have grapes that sold at a significant premium before 

other growers. Mr. Sandrini likewise recognized the 

competitive advantage inherent in possessing the unreleased plants and intended to grow his own Autumn King 

grapes.

Based on the findings summarized above, the district 

court held that the plaintiffs failed to meet their burden of 

showing, by clear and convincing evidence, that the 

Ludys’ use of the unreleased varieties constituted a public 

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DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 7

use that invalidated the patents under 35 U.S.C. § 102(b)

(2006). The plaintiffs appeal.

II

A 

An applicant may not be granted a patent for an invention that was “in public use . . . in this country, more 

than one year prior to the date of the application for 

patent in the United States.” 35 U.S.C. § 102(b) (2006). 

Following a bench trial, as in this case, “the district 

court’s conclusion on public use under § 102(b) is subject 

to review as a question of law while the facts underlying 

the conclusion on public use are subject to the clearly 

erroneous standard of review.” Moleculon Research Corp. 

v. CBS, Inc., 793 F.2d 1261, 1266 (Fed. Cir. 1986). “The 

proper test for the public use prong of the section 102(b) 

statutory bar is whether the purported use was accessible 

to the public or was commercially exploited.” Invitrogen 

Corp. v. Biocrest Mfg., L.P., 424 F.3d 1374, 1380 (Fed. Cir. 

2005). 

Our case law defines the contours of what it means to 

be “accessible to the public.” The principal policy underlying the statutory bar is to prevent “the removal, from the 

public domain, of inventions that the public reasonably 

has come to believe are freely available.” Tone Bros. v. 

Sysco Corp., 28 F.3d 1192, 1198 (Fed. Cir. 1994). The 

question in a case such as this one is thus whether the 

actions taken by the inventor (or, as in this case, a third 

party) create a reasonable belief as to the invention’s 

public availability. 

Factors that we have previously identified as being 

helpful in analyzing that question include “the nature of 

the activity that occurred in public; the public access to 

and knowledge of the public use; [and] whether there was 

any confidentiality obligation imposed on persons who 

observed the use.” Bernhardt, L.L.C. v. Collezione Europa 

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8 DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 

USA, Inc., 386 F.3d 1371, 1379 (Fed. Cir. 2004), quoting 

Allied Colloids Inc. v. Am. Cyanamid Co., 64 F.3d 1570, 

1574 (Fed. Cir. 1995). The last factor captures “the commonsense notion that whether an invention is ‘accessible 

to the public’ . . . depends, at least in part, on the degree 

of confidentiality surrounding its use: ‘[A]n agreement of 

confidentiality, or circumstances creating a similar expectation of secrecy, may negate a public use where there is 

not commercial exploitation.’” Dey, L.P. v. Sunovion 

Pharm., Inc., 715 F.3d 1351, 1355 (Fed. Cir. 2013), quoting Invitrogen, 424 F.3d at 1382.

The analysis is similar when the allegedly public use 

is performed by an unaffiliated third party rather than 

the inventor. “Third party prior use accessible to the 

public is a section 102(b) bar.” Eolas Techs. Inc. v. Microsoft Corp., 399 F.3d 1325, 1334 (Fed. Cir. 2005). In 

order to be invalidating, such use must still be publicly 

accessible; “secret or confidential third-party uses do not 

invalidate later-filed patents.” Dey, 715 F.3d at 1355. 

The adequacy of any confidentiality guarantees are measured in relation “to the party in control of the allegedly 

invalidating prior use.” Id. at 1358. The actions of an 

unaffiliated third party acting in secret are evaluated as if 

he stood in the place of the inventor.

With these principles in mind, we turn to their application to the facts found by the district court. 

B 

The appellants argue that the cultivation of the unreleased varieties by Jim Ludy and Larry Ludy constituted 

public use. They point to previous opinions of this court 

in which the court has held third-party uses of an invention to be invalidating when, for example, “the third party 

‘made no attempt to maintain confidentiality or to deliberately evade disclosure’; made no ‘discernible effort to 

maintain the [invention] as confidential’; or ‘made no 

efforts to conceal the device or keep anything about it 

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secret.’” Dey, 715 F.3d at 1355 (citations omitted). As 

evidence of the Ludys’ lack of effort to maintain secrecy 

regarding their possession of the Scarlet Royal and Autumn King plant varieties, the appellants point to Jim 

Ludy’s provision of plants to Larry Ludy, Larry Ludy’s 

sharing of information with Mr. Sandrini, and the lack of 

concealment of the vines at either of the Ludys’ farms. 

The appellants first argue that Jim Ludy’s provision 

of plant material to his cousin Larry Ludy resulted in 

public use. This argument relies primarily on the Supreme Court’s nineteenth century decision in Egbert v. 

Lippmann, 104 U.S. 333 (1881). In that case, the Court 

ruled that the inventor of a type of corset steel who gave 

two of the corset steels to a friend for use 11 years before 

applying for a patent on the device had put the invention 

into public use, resulting in the invalidation of the patent. 

The Court held in that case that “[i]f an inventor, having 

made his device, gives or sells it to another, to be used by 

the donee or vendee, without limitation or restriction, or 

injunction of secrecy, and it is so used, such use is public, 

even though the use and knowledge of the use may be 

confined to one person.” Id. at 336. 

Although the inventor of the plant varieties in this 

case did not give or sell the invention to anyone, Jim Ludy 

obtained control over the unreleased varieties. The 

appellants argue that for purposes of the public use 

doctrine, Jim Ludy therefore stands in place of the inventor. They contend that if Jim Ludy gave Larry Ludy the 

unreleased plant material “without limitation or restriction, or injunction of secrecy,” Larry Ludy’s subsequent cultivation of the plants would be an invalidating 

public use of the inventions. 

The problem with the appellants’ argument is that it 

is squarely contrary to the district court’s findings of fact. 

Larry Ludy was present during and participated in Jim 

Ludy’s conversation with Mr. Klassen and knew that Mr. 

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10 DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 

Klassen did not have the authority to provide the Ludys

with unreleased varieties. When Jim Ludy gave Larry 

Ludy the plants, Jim Ludy explicitly told his cousin to 

“keep [knowledge of the plants] to ourselves” and expected 

the fact of their possession of the plants to remain private. 

After the critical date, Larry Ludy allowed Mr. Sandrini

to sell the fruit of the unreleased vines under a different 

name to avoid detection. Moreover, during a deposition in 

this case, Larry Ludy refused to identify Mr. Klassen as 

the source of the Ludys’ unreleased plants; he acknowledged at that time that the information “should be confidential and not out in the public domain.” The findings of 

the district court clearly establish, therefore, that both 

Ludys knew that they were not authorized to have the

plants and that they needed to conceal their possession of 

the plants. 

To the extent that the appellants’ argument as to Larry Ludy is based on the lack of an explicit confidentiality 

agreement between the cousins, “[w]e have never required 

a formal confidentiality agreement to show non-public 

use.” Dey, 715 F.3d at 1357; see also Moleculon, 793 F.2d 

at 1266 (“[T]he presence or absence of [an express confidentiality] agreement is not determinative of the public 

use issue.”). Instead, we evaluate whether there were 

“circumstances creating a similar expectation of secrecy.” 

Invitrogen, 424 F.3d at 1382.

The Supreme Court’s decision in Egbert turned on the 

inventor’s lack of any effort to maintain control over the 

use of his invention. The facts of this case, by contrast, 

show that Jim Ludy sought to maintain control of the 

plants he obtained from Mr. Klassen. Although Jim Ludy 

shared the plants with his cousin, the evidence showed 

that Larry Ludy was aware of the need to keep the plants 

secret, and at Jim Ludy’s urging, Larry Ludy continued to 

treat his possession of the unreleased varieties as confidential and non-public. This case is therefore wholly 

different from the Supreme Court’s decision in Egbert v. 

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Lippmann, where the inventor himself gave the invention 

to a third party with no understanding or expectation that 

the third party would maintain secrecy as to the invention.

The appellants’ second argument is that the Ludy 

cousins’ disclosure of the unreleased plants to Mr. Sandrini constituted public use. Unlike the Ludys, however, 

Mr. Sandrini could not practice the inventions because he 

did not possess plant material until after the critical date. 

Instead, the appellants argue that the disclosure of the 

plants’ existence to Mr. Sandrini demonstrates the lack of 

confidentiality with which the Ludys treated the unreleased varieties.

The circumstances under which the disclosure to Mr. 

Sandrini occurred weigh against the application of the 

public use bar. In similar cases, we have held that the 

nature of the disclosure did not give rise to a “public use.” 

For example, in American Seating Co. v. USSC Group, 

Inc., 514 F.3d 1262 (Fed. Cir. 2008), we affirmed the

district court’s decision that demonstration of a prototype 

to “friends and colleagues” was not invalidating because 

the evidence supported the existence of “a general understanding of confidentiality.” Id. at 1267-68. Similarly, in 

Bernhardt, L.L.C. v. Collezione Europa USA, Inc., we 

vacated a district court decision finding an invalidating 

public use where “access was tightly controlled,” “there 

was an industry-wide understanding [of confidentiality],”

“a breach of confidence could have serious consequences 

for an attendee,” and “there was no effective means for 

the attendees to divulge the designs they viewed.” 386

F.3d at 1380-81.

In this case, the district court found that Mr. Sandrini

was a friend, business partner, and mentor of the Ludys. 

The court also found that “[e]ach [of the Ludys and Mr. 

Sandrini] had incentives to keep the Ludys’ possession 

secret, creating an environment of confidentiality, [and] 

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12 DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 

[e]ach maintained tight control over who knew about the 

Scarlet Royal and Autumn King vines and their use.” We

have no reason to overturn these findings. Based on the 

district court’s findings and our case law, the Ludys’ 

disclosure to Mr. Sandrini that they were in possession of 

the unreleased plants does not qualify as an invalidating 

public use of the patented plant varieties. 

Finally, the appellants argue that the lack of secrecy 

with which the Ludys cultivated the unreleased varieties 

mandates a finding of public use. The appellants are 

correct that the district court found that both Ludys 

grafted the plants and grew them in locations that were 

visible from public roads. However, the appellants ignore 

the district court’s finding that grape varieties cannot be 

reliably identified simply by viewing the growing vines 

alone. The plantings of the unreleased varieties were 

extremely limited in comparison to the total cultivation of 

the Ludys’ farms. The unreleased varieties were not 

labeled in any way, and the appellants introduced no 

evidence that any person other than the Ludys and Mr. 

Sandrini had ever recognized the unreleased varieties. As 

this court explained in the Dey case, 715 F.3d at 1359, “a

reasonable jury could conclude that if members of the 

public are not informed of, and cannot readily discern, the 

claimed features of the invention in the allegedly invalidating prior art, the public has not been put in possession 

of those features.” In this case, the district court, sitting 

as the trier of fact, came to exactly that conclusion, and 

the evidence supports the court’s conclusion.

C 

As an alternative ground of decision, the district court 

found that the plaintiffs failed to satisfy their burden of 

proof on public use because they failed to corroborate the 

testimony of the Ludys and Mr. Sandrini. Because we 

uphold the district court’s determination that the plaintiffs failed to demonstrate a public use even after admitCase: 14-1030 Document: 63-2 Page: 12 Filed: 01/09/2015
DELANO FARMS COMPANY v. CALIFORNIA TABLE GRAPE COMM. 13

ting the testimony of the Ludys and Mr. Sandrini, it is 

unnecessary for us to address whether that evidence was 

inadmissible for want of corroboration.

In addition, because the evidence at trial was sufficient to support the district court’s finding that the patented plant varieties were not in public use prior to the 

critical date, we need not address the question whether 

use of invention by one who has misappropriated that 

invention (or obtained it through other improper means) 

can ever qualify as an invalidating public use. The district court properly ruled that the Ludys’ use of the plant 

varieties at issue in this case was not public, even apart 

from the fact that the Ludys obtained the plant material 

in an unauthorized manner.

Accordingly, we affirm the district court’s decision rejecting the appellants’ challenge to the validity of the 

Scarlet Royal and Autumn King patents.

AFFIRMED

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