Source: http://www.ipwatchdog.com/2013/08/15/hamilton-beach-sunbeam-cafc/id=44672/
Timestamp: 2015-03-02 23:07:23
Document Index: 151283974

Matched Legal Cases: ['Application No. 12', 'Application No. 11', '§ 102', '§ 102', '§ 102', '§ 102']

Hamilton Beach Brands v. Sunbeam Products: CAFC Says Manufacturer Supplying Innovator Creates a pre-AIA 102(b) Sale By Gene Quinn on August 15, 2013	twitter
Hamilton Beach and Sunbeam are direct competitors in the small kitchen appliance industry. Both Hamilton Beach and Sunbeam sell competing versions of “slow cookers,” which are electrically heated lidded pots that are used to cook food at low temperatures for long periods. Hamilton Beach sued Sunbeam for infringement of U.S. Patent No. 7,947,928. It was this patent that was at issue in the decision announced by the Federal Circuit yesterday in Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc.. The dispute between the parties centered on whether the district court erred when it granted a motion for summary judgment finding claims 1 and 3-7 of the ‘928 patent invalid.
The ‘928 Patent
The ’928 patent, filed June 4, 2010, is a continuation of U.S. Patent Application No. 12/255,188, which, in turn, is a continuation of U.S. Patent Application No. 11/365,222 (“the ’222 application”). The ’222 application was filed on March 1, 2006 and issued on February 3, 2009, as U.S. Patent No. 7,485,831 (“the ’831 patent”). In other words, the ’928 patent directly at issue in this case is the “grandchild” of the ’831 patent. The ’831 patent disclosed a “portable” slow cooker.
Truthfully, this is all you really need to know about the patent and more than what you need to know about the underlying technology because the issue of particular interest in the case dealt with whether there was an on-sale bar under pre-AIA 102(b) that should have prevented the ‘928 patent from issuing.
In the summary judgment filing Sunbeam, of course, alleged that there was no infringement. Also, with respect to invalidity, Sunbeam argued that the asserted claims of the ’928 patent were invalid because Hamilton Beach could not claim priority to the ’831 patent as it introduced new matter into the ’928 written description, which rendered the ’928 patent’s claims anticipated under 35 U.S.C. § 102(a) and (b). Sunbeam further claimed that Hamilton Beach offered for sale and publicly used the Stay or Go® slow cooker, the commercial embodiment of the ’831 patent, more than one year prior to the earliest possible filing date, i.e., one year prior to the ’831 patent’s application date—March 1, 2006 (the ’831 patent’s application date and the earliest possible filing date), rendering the ’928 patent claims invalid. Sunbeam last contended that the ’928 patent claims were invalid as obvious. Hamilton Beach moved the court for a finding that the ’928 patent claims were not invalid on the ground that no new matter was added.
The district court granted Sunbeam’s motion, finding that the Cook & Carry® slow cooker did not infringe the asserted claims of the ’928 patent. The district court also concluded that the ’928 patent was invalid because it was not entitled to an earlier filing date than the one listed on its face because Hamilton Beach added new matter when it filed its continuation; therefore, the sales of the Stay or Go® slow cooker more than one year before that date served as invalidating sales and uses of the ’928 patent under the on-sale and public use bars of 35 U.S.C. § 102(b). And, the district court found that, even if the ’928 patent was entitled to an earlier priority date coincident with the ’222 application, there were invalidating commercial offers to sell the Stay or Go® slow cooker prior to the critical date. The district court, however, determined that Sunbeam did not establish its public use defense with respect to the ’222 application date or that the patent was obvious.
The Federal Circuit first did not need to address the issues surrounding whether there was new matter in the ‘928 patent application. Instead it assumed that the critical date was March 1, 2005, which was the inference most beneficial to the patentee. Still, the Federal Circuit found that the district court was correct and that there was an on-sale bar even giving the patentee the benefit of that earliest critical date.
Sunbeam contended that Hamilton Beach’s foreign supplier offered to sell the Stay or Go® slow cooker, a commercial embodiment of the ’831 and ’928 patents, to Hamilton Beach prior to the relevant critical date of March 1, 2005. The district court agreed and found that the claimed invention in the ’831 and ’928 patents was offered for sale and was ready for patenting before the critical date.
In addressing the issues the Federal Circuit (per Judge O’Malley, with Judge Bryson joining) explained that “there is no ‘supplier exception’ to the on-sale bar. Thus, it is of no consequence that the ‘commercial offer for sale’ at issue in this case was made by Hamilton Beach’s own supplier and was made to Hamilton Beach itself.” Thus, under this view of the on-sale bar even if a company is paying a manufacturer to make the unit for themselves there is still an on-sale bar triggering event.
Without there being a “we are essentially selling it to ourselves” defense, the remaining issue becomes whether there was a contract, at least insofar as Hamilton Beach was concerned. They argued that the supplier responded prior to the critical date that it was ready to fulfill the order, but there was no contract entered into. Judge O’Malley explained: “In other words, the supplier made an offer to sell the slow cookers to Hamilton Beach. At that point, the commercial offer for sale was made and, under the governing corporate purchase agreement, Hamilton Beach could accept the offer when it so pleased.”
With the determination being made that there was a commercial offer for sale prior to the critical date the case was over. The on-sale bar of pre-AIA 102(b) does not only prohibit sales, but rather also prohibits offers for sale within the U.S.
Reyna’s Dissent
At the start of his dissent Judge Reyna explained:
The Supreme Court has instructed that an on-sale bar under 35 U.S.C. § 102(b) shall arise, if at all, only when the patented invention is the subject of a commercial offer for sale and the invention is ready for patenting more than one year before the patent’s filing date. Yet the majority concludes that Hamilton Beach’s purchase order sent to its foreign supplier, which asked the supplier to build a set of slow cookers pursuant to Hamilton Beach’s specifications, resulted in an offer to sell a patented invention that anticipates the claims of Hamilton Beach’s patent. In order to reach this conclusion, the majority is quick to note that there is no “supplier exception” to otherwise anticipatory offers for sale under § 102(b), while at the same time it overlooks the Supreme Court’s requirement that the offer be a “commercial” one. Because the majority’s oversight portends grave consequences for innovation and experimental use, I respectfully dissent.
But how exactly is it possible that a decision about whether there was an offer for sale more than 12 months before filing the patent application could ever impact the experimental use exception to the prohibition against public use? Judge Reyna explained:
If the experimental-use exception is to have any continued vitality, this court must refrain from overlooking the Supreme Court’s express requirement for a commercial offer for sale when deploying the no-supplier-exception rule.
My greatest concerns involve the implications this case will have for future innovators, most notably small enterprises and individual inventors who lack in-house prototyping and fabricating capabilities. Whenever the development process requires those entities to manufacture working prototypes or pre-mass-production samples, they often have no choice but to reach out to third-party suppliers. Under the majority’s holding in this case, a single offer to buy for purely experimental purposes may trigger the on-sale bar, and the experimental-use exception will offer them no salvation. It is from this evisceration of the experimental-use exception that I respectfully dissent.
It certainly does seem odd to me that an offer for sale essentially by one’s own representative to themselves could trigger the on-sale bar clock to begin running. That seems problematic for a number of reasons, particularly given the reality that virtually no one makes anything anymore and relies on outside suppliers for everything. Still, it is hard to for me to get to worked up about this case for several reasons.
First, it is hard to feel bad about a company that manufacturers overseas. They make the choice to bypass the American workers in order to save money. As with all choices in life, that choice comes with certain foreseeable and certain unforeseeable consequences. When the decision to manufacture overseas comes back to bite those companies I’m about to shed a tear for anyone that chooses to manufacture overseas.
Second, while it is concerning that an agent of the company that manufactures for the company can create an on-sale bar by offering to fulfill an order, it is hard to justify the decision not to file a patent application before the product even gets to that stage. Why shed a tear for a company that doesn’t operate in a responsible manner? They chose not to file a patent application sooner and run the risk of losing rights both in the U.S. and abroad. The prudent thing has always been to file a patent application as early as possible. Hamilton Beach didn’t follow that prudent advice.
Third, we are now living under the America Invents Act. While there does remain a grace period, the USPTO interpretation of that grace period is that it is extraordinarily narrow. No patent practitioner in their right mind would ever advise a client to anticipate a grace period at all. The grace period is extremely narrow and should only be treated as the cure for an “oops” moment. If someone engaged in disclosing activity you tell them there is still a chance they could get a patent, so file quickly. But no one is (or should) be telling clients to rely on a grace period any more.
Fourth, even under pre-AIA it was always risky to rely on a grace period. Yes, you could file within 12 months of certain events transpiring without having to prove derivation or that the subsequent disclosure was identical (or nearly identical) to the first disclosure. But unknown third-party activities have always started the pre-AIA 102(b) clock running, so relying on a grace period has always been a risk. Under AIA it is just far more risky.
The moral of the story is this: File a patent application as early as possible. Waiting is a strategy for losing any and all chance to ever obtain a patent.
You can contact Gene via e-mail.	Tags:anticipation, CAFC, Federal Circuit, novelty, on sale, patent, patents, statutory bar	Posted In:Federal Circuit, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patentability, Patents
Michael Risch August 15, 2013 5:24 pm
I think this is wrong as a legal matter. I like Reyna’s analysis. That said, I find your point 2 compelling from an equitable point of view: you made the spec, ordered the product, and then it was sold to you, and THEN you waited more than a year to file a patent application (and THEN you added new matter, but we won’t even get to that). Cry me a river.
step back August 15, 2013 9:34 pm
The big boys are NPE’s (Non Practicing Entities)
They don’t “build that” themselves.
(You “didn’t build that”.)
Instead they buy it from somebody else.
Then they have the hope and audacity to assert patents which they acquired while being NPE’s (a.k.a. trolls). OMG!
Gene Quinn August 16, 2013 12:13 pm
step back August 16, 2013 12:22 pm
Not to engage in blog whoring, but … I have a post which cites Hamilton as an example of why the FOXSEes in the inventor hen house are what they are …
Full Of S888 and then some: http://patentu.blogspot.com/2013/08/hunting-for-foxses-under-troll-tale.html