Opinion ID: 211774
Heading Depth: 2
Heading Rank: 2

Heading: Evidence of Experimentation

Text: 33 GE contends that EMD's sale of spare compressor bearings cannot be the subject of experimentation. We are persuaded by this contention, noting in particular that the record does not reveal when or how Norfolk Southern intended to use the spare compressor bearings. There also was no evidence showing that Norfolk Southern replaced even one of the compressor bearings found in locomotives that EMD considered part of its field program with one of the spare compressor bearings. Such replacement must have occurred prior to the production release of the new compressor bearings in August 1991. Any replacement after that date certainly could not qualify as experimentation because EMD incorporated the new compressor bearings into all diesel engine locomotive orders following production release. Therefore, for the reasons set forth below, we conclude that EMD's sale of spare compressor bearings to Norfolk Southern was not primarily for experimentation and thus that the district court did not err in holding the '242 patent invalid under § 102(b). 34 Regarding planetary bearings, EMD argues that, at a minimum, a genuine issue of fact exists as to whether the sale of the new planetary bearings was primarily for experimentation, pointing out that (1) completion of the field program was required under EMD's policy before releasing a new bearing for production; (2) neither monitoring nor inspection was necessary because the purpose of the field program was merely to verify durability; (3) inspection was not even possible because the new planetary bearings were embedded in the turbochargers housed inside locomotive engines; and (4) failed turbochargers were returned to EMD for teardown and inspection. EMD also analogizes the facts here to those in Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544 (Fed.Cir.1990), and EZ Dock, 276 F.3d 1347. In both cases, which involved durability testing, we rejected an assertion of the on-sale bar. 35 GE responds that the field program was unnecessary because the new planetary bearings had already been shown to work for their intended purpose during the in-house program. GE also asserts that durability testing under actual use conditions was not required because durability is not a claim limitation in the '056 patent. Additionally, GE contends that the district court correctly found, despite EMD's subjective intent to experiment, that the objective evidence revealed that EMD's sale to Union Pacific was not primarily for experimentation, noting, inter alia, that EMD did not control Union Pacific's use of the new planetary bearings and that the field program lacked the customary objective indicia associated with experimentation such as test records. 36 At the outset, we observe that EMD purchased the new planetary bearings from Daido to use in filling Union Pacific's pre-critical date locomotive order, which was to contain new planetary bearings instead of prior art bearings. Thus, we reason that the sale from Daido to EMD (upstream sale) and the sale from EMD to Union Pacific (downstream sale) are so inextricably linked that we cannot identify the purpose for the Daido's upstream sale without examining the purpose for EMD's downstream sale. Our analysis concerning whether the new planetary bearings were the subject of an invalidating sale under § 102(b), consequently, hinges on the purpose for the sale from EMD to Union Pacific. 37 It is important to recognize that this court has limited experimentation sufficient to negate a pre-critical date public use or commercial sale to cases where the testing was performed to perfect claimed features, or, in a few instances like the case here, to perfect features inherent to the claimed invention. See, e.g., EZ Dock, 276 F.3d at 1353 (experimentation focused on durability of claimed polyethylene floating dock in turbulent water of the Mississippi River, although durability was not a claim limitation); Seal-Flex, Inc. v. Athletic Track & Court Constr., 98 F.3d 1318, 1320 (Fed.Cir.1996) (experimentation focused on durability of claimed all-weather activity mat under harsh weather conditions, but durability was not a claim limitation); Manville, 917 F.2d at 550-51 (experimentation focused on durability of claimed self-centering, lightpole luminaire under severe winter conditions in Wyoming, even though durability was not a claim limitation). Here, EMD designed its field program to verify durability, a feature although unclaimed, we hold is inherent to the new planetary bearings. Hence, evidence showing that EMD's field program has the requisite objective indicia of experimentation may negate EMD's pre-critical date sale of the new planetary bearings to Union Pacific. 2 38 Few decisions address how to determine if a pre-critical date public use or sale is experimental rather than a public use or sale under § 102(b), even though the doctrine has been in existence since City of Elizabeth v. Pavement Co., 97 U.S. 126, 24 L.Ed. 1000 (1877). 3 But certain things are settled. Significantly, an inventor's subjective intent to experiment cannot establish that his activities are, in fact, experimental. 39 When sales are made in an ordinary commercial environment and the goods are placed outside the inventor's control, an inventor's secretly held subjective intent to experiment, even if true, is unavailing without objective evidence to support the contention. Under such circumstances, the customer at a minimum must be made aware of the experimentation. 40 LaBounty Mfg., Inc. v. U.S. Int'l Trade Comm'n, 958 F.2d 1066, 1072 (Fed.Cir. 1992) (citing In re Brigance, 792 F.2d 1103, 1108 (Fed.Cir.1986)). Thus, while EMD officials may have subjectively believed they were conducting experimentation under actual use conditions, their beliefs cannot establish that EMD's sales were primarily for experimentation. 41 We have generally looked to objective evidence to show that a pre-critical date sale was primarily for experimentation. For example, in T.P. Laboratories, Inc. v. Professional Positioners, Inc., 724 F.2d 965, 972 (Fed.Cir.1984), we indicated that various objective indicia may be considered in determining whether the inventors engaged in experimentation: 42 The length of the test period is merely a piece of evidence to add to the evidentiary scale. The same is true with respect to whether payment is made for the device, whether a user agreed to use secretly, whether records were kept of progress, whether persons other than the inventor conducted the asserted experiments, how many tests were conducted, how long the testing period was in relationship to tests of other similar devices. 43 Id. at 971-72; see also Baker Oil Tools, Inc. v. Geo Vann, Inc., 828 F.2d 1558, 1564 (Fed.Cir.1987) (listing similar types of objective evidence to be considered in determining if a public use or sale is experimental). 44 Recently, we catalogued and consolidated all these considerations into a list of thirteen objective factors: (1) the necessity for public testing; (2) the amount of control over the experiment retained by the inventor; (3) the nature of the invention; (4) the length of the test period; (5) whether payment was made; (6) whether there was a secrecy obligation; (7) whether records of the experiment were kept; (8) who conducted the experiment; (9) the degree of commercial exploitation during testing; (10) whether the invention reasonably requires evaluation under actual conditions of use; (11) whether testing was systematically performed; (12) whether the inventor continually monitored the invention during testing; and (13) the nature of the contacts made with potential customers. Allen Eng'g, 299 F.3d at 1353 (citing EZ Dock, 276 F.3d at 1357 (J. Linn, concurring)). This list is not exhaustive, and all of the experimentation factors may not apply in a particular case. See Brigance, 792 F.2d at 1108. They simply represent various kinds of evidence relevant to the question of whether pre-critical date activities involving the patented invention — either public use or sale were primarily experimental and not commercial. 45 This court, however, has held or at least suggested that certain evidentiary showings can be dispositive of the question of experimentation. In In re Hamilton, 882 F.2d 1576 (Fed.Cir.1989), we stated: 46 First, we may agree with [the inventor] that control is not the lodestar test in all cases involving experimental use. It is nonetheless an important factor. The experimental use doctrine operates in the inventor's favor to allow the inventor to refine his invention or to assess its value relative to the time and expense of prosecuting a patent application. If it is not the inventor or someone under his control or surveillance who does these things, there appears to us no reason why he should be entitled to rely upon them to avoid the statute. 47 Id. at 1581 (internal citation omitted and emphasis in original). We observed that nothing in the record showed that the Hamilton inventor knew what, if anything, the customer was doing in terms of testing the invention. As a result, we concluded that the inventor's purpose in making the sale was not primarily experimental. 48 Following Hamilton, this court again emphasized the importance of control in Lough v. Brunswick Corp., 86 F.3d 1113 (Fed.Cir.1996). In particular, this court said that an inventor must show control over the alleged testing to establish experimentation. Id. at 1120. Additionally, the Lough court placed critical emphasis on experimental records. After listing various objective indicia of experimentation, which included both whether records or progress reports were made concerning the testing and the extent of control the inventor maintained over the testing, this court stated: The last factor of control is critically important, because, if the inventor has no control over the alleged experiments, he is not experimenting. If he does not inquire about the testing or receive reports concerning the results, similarly, he is not experimenting. Id. The Lough court also stated: When one distributes his invention to members of the public under circumstances that evidence a near total disregard for supervision and control concerning its use, the absence of these minimal indicia of experimentation require a conclusion that the invention was in public use. Id. at 1122 (emphasis added). Hence, this court held, based primarily upon the absence of control and records, that the inventor's public use of the claimed invention was not experimental. 49 Two years after Lough, in a concurring opinion in C.R. Bard, Inc. v. M3 Systems, Inc., 157 F.3d 1340 (Fed.Cir.1998), Judge Bryson urged that control and recordkeeping are vital to a showing of experimentation. 4 Certain factors, such as the requirement that the inventor control the testing, that detailed progress records be kept, and that the purported testers know that testing is occurring, are critical to proving experimental purpose. Id. at 1380 (citing Lough, 86 F.3d at 1120; 2 Donald S. Chisum, Chisum on Patents § 6.02[7][c] (1998)). Judge Bryson stressed awareness by the purported testers that testing is occurring. He suggested or at least implied that consideration of these three factors form the first, and potentially decisive, step in determining whether a public use or sale was primarily experimental. Indeed, we discern that Judge Bryson applied only these three factors to conclude that the on-sale bar applied. 50 The facts of this case are analogous to those in U.S. Environmental Products, Inc. v. Westall, 911 F.2d 713 (Fed.Cir. 1990). In Westall, this court affirmed a district court's conclusion that a patent was invalidated by a sale more than one year before the filing date. That conclusion was based primarily on (1) the lack of written progress records and the failure to adhere to a testing schedule; (2) the inventor's failure to maintain control over the testing; and (3) promotion of the invention during the testing. In this case, as in Westall, the evidence shows that neither the in-house tests . . . nor the field tests . . . were under the control of the inventor or his company. There is little or no evidence of any written progress records; indeed, the inventor was apparently never provided with any test results. Finally, the communications between [a company with which the inventor was associated] and [the customer] throughout the purported testing period emphasized commercial sales and projections, not controlled experimentation. 51 Id. at 1381 (internal citation omitted). 52 We agree with Judge Bryson that a customer's awareness of the purported testing in the context of a sale is a critical attribute of experimentation. If an inventor fails to communicate to a customer that the sale of the invention was made in pursuit of experimentation, then the customer, as well as the general public, can only view the sale as a normal commercial transaction. Indeed, our predecessor court recognized in In re Dybel, 524 F.2d 1393, 1401 (Cust. & Pat.App.1975), that [an inventor's] failure to communicate to any of the purchasers or prospective purchasers of his device that the sale or offering was for experimental use is fatal to his case. And, we have held that the assertion of experimental sales, at a minimum, requires that customers must be made aware of the experimentation. Paragon Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182, 1186 (Fed.Cir.1993) (citing LaBounty, 958 F.2d at 1072; Dybel, 524 F.2d at 1401). Accordingly, we hold not only that customer awareness is among the experimentation factors, but also that it is critical. 53 Our precedent has treated control and customer awareness of the testing as especially important to experimentation. Indeed, this court has effectively made control and customer awareness dispositive. See, e.g., Lough, 86 F.3d at 1120; Hamilton, 882 F.2d at 1581. Accordingly, we conclude that control and customer awareness ordinarily must be proven if experimentation is to be found. 54 We now consider the facts of this case. First, the record, as the district court noted, is devoid of any evidence that EMD, or Union Pacific under EMD's direction, controlled the field program for its new planetary bearings. EMD did not provide any protocols to Union Pacific directing their use of locomotives containing the new planetary bearings. EMD likewise neither supervised nor restricted Union Pacific's use of the new planetary bearings in any way. Mr. Blase testified that the railroads involved in the field testing were not required to run the subject locomotives under any specific conditions. 55 The record also shows that EMD made no attempt to monitor the conditions under which Union Pacific used the test locomotives. EMD explains away its lack of oversight by arguing that the field program was conducted solely to verify the durability of its new planetary bearings as measured by the number of turbocharger failures, not by the daily use of its new planetary bearings. Such an argument is, however, unconvincing. EMD did not request or receive any comments or data from Union Pacific concerning the operation or durability of its new planetary bearings. Without obligating Union Pacific to provide such feedback, it cannot be reasonably said that EMD exercised any monitoring over the field program. 56 That Union Pacific returned failed turbochargers to EMD for teardown and inspection is insufficient to establish EMD's control over the field program. Union Pacific voluntarily returned failed turbochargers under the basic warranty given by EMD to all of its customers. It was not, however, under any obligation to do so. Mr. Blase testified that EMD requested the return of failed components from all customers in the ordinary course of business. Union Pacific thus would have returned all failed turbochargers whether it was participating in experimentation or was merely an ordinary customer. What is more, EMD's teardown reports focused only on the appearance and features of the new planetary bearings without any correlation to the field conditions. Nothing in the teardown reports thus distinguish them from any other failure reports prepared outside the field program. Accordingly, the district court did not err in finding that EMD exercised no control over Union Pacific's use of the new bearings. 57 Second, the record is insufficient, even on summary judgment, to objectively establish Union Pacific's awareness of the field program. The only evidence regarding communications with Union Pacific concerning the field program comes from Mr. Blase's deposition testimony and an internal memo he prepared. In his deposition, Mr. Blase testified: 58 Q: Okay. Now when you would generally send out or do field verification or reliability verification in the field, were there agreements that customers entered into in connection with those? 59 A: The customer would understand that — that the — that what they were receiving would be a reliability verification test. 60 Q: Would you tell them which components were associated with that? 61 A: We would indicate to them which components are under reliability — reliability verification test, yes. 62 Q: You would tell them that. 63 A: Sure. 64 Q: Okay. Did they sign any type of secrecy agreement or confidentiality agreement in connection with that? 65 A: I do not know that. 66 Q: Okay. Who would know that? 67 A: The — the correspondence with the customer would be handled through the sales department as far as I know. 68 Q: And who was in the sales department during this timeframe? 69 A: I don't recall. 70 Similarly, in his memo, Mr. Blase stated under the heading Status of Public Disclosure that [u]pon applying for field test on a customer's locomotive, the customer is made aware that there is an experimental part in the turbochargers they are receiving, yet details of the part are not fully disclosed. Apart from this single sentence, Mr. Blase did not otherwise describe EMD's communications with any customer or state exactly what Union Pacific was told, if anything. 71 Neither Mr. Blase's testimony nor his memo establishes awareness by Union Pacific that the new planetary bearings were substituted into their pre-existing order for the purpose of testing those bearings in actual use rather than as part of a commercial sale. Mr. Blase's testimony simply suggests the possibility that an unidentified EMD employee may have engaged in a conversation with one or more unidentified employees of Union Pacific about substituting the new planetary bearings. 72 Further, the record fails to show any objective evidence supporting Mr. Blase's inference that Union Pacific was aware of the field testing. It does not contain even the hint of a written agreement with Union Pacific, testimony from any representative of Union Pacific describing the railroad's awareness of the field program, or any other form of corroborating documentation held by Union Pacific regarding the field program. The lack of such evidence to corroborate Mr. Blase's conclusory testimony and memo thus validates the lack of customer awareness. 73 The facts here are closely analogous to those in Lough, where, as noted above, this court rejected an inventor's claim that a pre-critical date public use of his liquid seal assembly invention was made for experimentation. In Lough, the inventor distributed six prototypes of his liquid seal assembly invention to his friends for use in their boats. After distribution, the Lough inventor did not maintain any supervision over his friends' use of the liquid seal assemblies or follow-up with them for comments as to the operability of the liquid seal assemblies. Similarly, EMD allowed Union Pacific unsupervised use of the new planetary bearings. EMD neither monitored the conditions under which Union Pacific used the new planetary bearings nor solicited any feedback from Union Pacific regarding the bearings' performance. What is more, EMD, like the inventor in Lough, did not maintain any records of the alleged testing or require Union Pacific to do so. As we stated in Lough, Lough's failure to monitor the use of his prototypes by his acquaintances, in addition to the lack of records or reports from those acquaintances concerning the operability of the devices, compel the conclusion that, as a matter of law, he did not engage in experimental use. 86 F.3d at 1122. We are equally compelled to conclude as a matter of law that EMD did not engage in any experimentation on its new planetary bearings. 74 Finally, contrary to EMD's contention, Manville and EZ Dock do not control the outcome here, even though both cases involve durability testing of inventions under actual use conditions which we held to be experimental. EZ Dock and Manville are factually distinguishable, especially with respect to control, recordkeeping, and customer awareness. 75 In EZ Dock, two inventors designed a floating dock made of polyethylene. They later installed one at a customer's fishing camp located in an area of the Mississippi River that experienced heavy boat traffic and turbulent water flow. Unlike the inventors in EZ Dock who routinely inspected the installed polyethylene floating dock over the course of a summer, EMD did nothing to control, monitor, or systematize the field testing of its new planetary bearings. EMD did not require Union Pacific to follow any protocols when using the subject locomotives. EMD likewise did not examine the new planetary bearings on any schedule. Instead, it did so only when a turbocharger failed. 76 Additionally, while shopping at one of the inventor's office supply stores to buy a copier, the EZ Dock customer noticed the polyethylene floating docks being stored in the window and approached that inventor requesting to purchase one. Here, EMD approached Union Pacific, a long-time customer, requesting permission to substitute the new planetary bearings into an order that Union Pacific had previously placed. The customer in EZ Dock thus was aware that the polyethylene floating dock was not commercially available, but instead experimental. The same cannot be said for Union Pacific given that the record contains only vague, conclusory, and uncorroborated testimony about Union Pacific's awareness of the experimental nature of the field program. Moreover, the sale in EZ Dock was an isolated, unexpected occurrence. The EZ Dock inventor clearly was not intending to sell the polyethylene floating dock, much less earn a profit from the sale, as evidenced by the fact he charged only 75 percent of the final retail price. In contrast, there is no evidence to suggest that EMD discounted the price of the locomotive Union Pacific ordered to offset the risk that the new planetary bearings might fail. Therefore, the record suggests that EMD made the substitution as part of a commercial sale to make money, not primarily to experiment. 77 Finally, the inventors in EZ Dock had not tested the polyethylene floating dock in turbulent water for any length of time. They had only floated it in the Mississippi River on occasion and installed several at a marina where the water conditions were fairly stable. They did not know whether their polyethylene floating dock would be durable under heavier water flow conditions, thus establishing a need for the turbulent water testing. EMD, in comparison, had tested the new planetary bearings in the in-house program and already knew they were durable. In light of these significant factual differences, it is clear that EMD's reliance on EZ Dock is misplaced. 78 Turning to Manville, the plaintiff's employees invented a new, self-centering lightpole luminaire and installed one in a rest area being built along an interstate highway in Wyoming, but not yet open to the public. The Manville plaintiff directly controlled the testing by installing the luminaire in the fall, removing it in the spring, and thoroughly examining it following this testing period. By contrast, EMD did not control or systematize Union Pacific's use of the subject locomotives. Union Pacific was not placed under any restrictions or obligations concerning its use of the new planetary bearings; it was free to use the subject locomotives daily or not at all, in hot, dry climates or cold, wet climates, with maximum loads or load-free. 79 Also, the State of Wyoming knew of the experimental and confidential nature of Manville's installation of the luminaire. Indeed, Manville specifically informed a Wyoming official that its use of one luminaire on one pole at one site in Wyoming was experimental. The State of Wyoming likewise received a drawing of the luminaire containing a confidentiality notice. Here, the situation was quite the reverse. Mr. Blase gave only vague, conclusory, and uncorroborated testimony regarding Union Pacific's possible awareness of the experimentation. Such testimony, however, cannot establish what Union Pacific really knew about the purpose of the sale, especially without correspondence with Union Pacific or other documentation. 80 In addition, Manville lacked confidence that the luminaire would perform in its intended environment because Manville only tested a single luminaire on a pole in the backyard of its Ohio factory for a few days, not under Wyoming winter conditions of high wind and ice for any extended period of time. In contrast, EMD subjected its new planetary bearings to the in-house program, which simulated actual use conditions over extended periods of time. EMD also failed to point to any evidence, like the internal memo written by a Manville employee, objectively explaining why actual conditions were impossible to replicate through its in-house program. 81 Finally, the State of Wyoming agreed to purchase the luminaire only if it proved operable after the winter. As a result, the State of Wyoming withheld payment until the results of the weather-related testing were known. Here, Union Pacific neither conditioned its purchase of the locomotive on the operability of the new planetary bearings nor withheld payment in an amount corresponding to the cost of the new planetary bearings pending the results of the field program. Viewing all of the differences between the facts in Manville and those implicated here, we conclude that EMD's reliance on Manville, like its reliance on EZ Dock, is misplaced. 82 Because the facts do not show the existence of control or customer awareness, we do not consider the other experimentation factors. We conclude, as a matter of law, that EMD's sale to Union Pacific of the new planetary bearings was not made primarily for experimentation. We, therefore, conclude that Daido's sale to EMD could not have been made primarily for experimentation, since the purpose for the upstream sale was to make the downstream sale possible. Accordingly, the district court did not err in holding the '056 patent invalid under the on-sale bar of § 102(b).