Opinion ID: 778741
Heading Depth: 3
Heading Rank: 3

Heading: On Sale Bar

Text: 55 Bartell alleges that sales of the Red Rider more than one year prior to the July 13, 1990 filing date of the application which matured to the '220 patent constituted an on-sale bar to the issuance of that patent under 35 U.S.C. § 102(b). Bartell argues that the sales were commercial in nature, identifying evidence that Allen's customers were not informed that the Red Rider was an experimental model and that there was no record kept of any experimentation. Bartell also argues that the Red Rider was an embodiment of the invention of the '220 patent, identifying elements of the Red Rider that it alleges correspond to certain claim limitations, such as the offset torque arms, parallel lever arms, twin steering sticks and tertiary linkage, and flexible direct drive system. 56 Allen responds that the Red Rider did not incorporate the limitations of the '220 claims. Allen states that the Red Rider did not have the critical `fast steering' characteristics, nor was it operator friendly, and contends that this proves that the invention of the '220 patent was not ready for patenting when the Red Rider was sold. Furthermore, Allen argues that the Red Rider was sold primarily for reasons of experimentation, and that the representations made by Allen to its customers should have led them to believe that the machine was experimental. Allen states that the trade-in guarantees it gave to its customers establish that the Red Rider was an experimental machine made in anticipation of a new superior machine. 57 To establish an on-sale bar, it must be shown that the device sold fully anticipated the claimed invention or would have rendered the claimed invention obvious by its addition to the prior art. Tec Air, Inc. v. Denso Mfg. Mich. Inc., 192 F.3d 1353, 1358, 52 USPQ2d 1294, 1296-97 (Fed.Cir.1999) (quoting Ferag AG v. Quipp Inc., 45 F.3d 1562, 1566, 33 USPQ2d 1512, 1514-15 (Fed.Cir.1995)); see also Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 68, 119 S.Ct. 304, 142 L.Ed.2d 261, 48 USPQ2d 1641, 1647 (1998) (noting that the device contained all the elements of the invention claimed in the '377 patent). Thus, to invalidate a claim of the '220 patent, Bartell must show that the Red Rider embodied all of the limitations of that claim or would have rendered that claim obvious. In addition, Bartell must also prove the facts underlying both prongs of the Pfaff test by clear and convincing evidence. Specifically, Bartell must show that, before the critical date — which in this case is July 13, 1989 — the Red Rider was both (1) the subject of a commercial offer for sale not primarily for purposes of experimentation and (2) ready for patenting. Pfaff, 525 U.S. at 67, 48 USPQ2d at 1646-47. The first prong of this test involves a determination of whether a commercial offer for sale has occurred, applying traditional contract law principles. See Linear Tech. Corp. v. Micrel, Inc., 275 F.3d 1040, 1048, 61 USPQ2d 1225, 1229 (Fed.Cir.2001) (citing Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041,1047, 59 USPQ2d 1121, 1126 (Fed.Cir.2001)). It also involves an assessment of whether the circumstances surrounding the transaction show that the transaction was not primarily for purposes of experimentation. In assessing experimentation, this court has considered a number of factors, not all of which may apply in any particular case. These factors include: 58 (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 contacts made with potential customers. 59 EZ Dock v. Schafer Sys., Inc., 276 F.3d 1347, 1357, 61 USPQ2d 1289, 1296 (Fed. Cir.2002) (Linn, J., concurring). The second prong of the Pfaff test may be satisfied by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention. Pfaff, 525 U.S. at 67-68, 48 USPQ2d at 1647. The on-sale bar is evaluated on a claim-by-claim basis, so that some claims of a patent may be found to be barred while others are not. Lough v. Brunswick Corp., 86 F.3d 1113, 1122 n. 5, 39 USPQ2d 1100, 1107 n. 5 (Fed.Cir.1996) (Each claim of the patent must be considered individually when evaluating a public use bar.). 60 We have described the assessment of whether a device sold was an embodiment of a claimed invention as the first determination in the on-sale bar analysis. Scaltech, 178 F.3d at 1383, 51 USPQ2d at 1058. However, in some cases, it may be more efficient to first assess experimental use negation of sales allegedly made, as adequate proof of experimentation negates a statutory bar. EZ Dock, 276 F.3d at 1352, 61 USPQ2d at 1292. If there is adequate proof that a device was sold primarily for experimentation, the first prong of Pfaff would not be met and it would be unnecessary to consider either whether the device was an embodiment of the claimed invention or whether the invention was ready for patenting at the time of the sales. 61 The district court in this case chose to focus its analysis on the experimental character of the Red Rider. It found that the Red Rider was essentially an experimental prototype ... which was under constant modifications, Allen Engineering, slip op. at 4, and stated that [p]ublic use under section 102(b) does not start the one-year period until after the invention has left the experimental stage. Id. at 15. The court made the additional findings of fact that, if the users of the Red Rider had problems with the machine, Allen would repair, replace, or substitute a usable product, id. at 3, and that it would have been impossible to conduct adequate research and development on the Red Rider in a factory environment, id. at 4. The district court concluded from this alone that the Red Rider sales did not create an on-sale bar to the issuance of the '220 patent. 62 The district court erred, however, in concluding that sales of the Red Rider did not trigger an on-sale bar simply because the Red Rider was in an experimental stage. The court made the findings that the Red Rider was an experimental prototype that never reached completion, based on its findings that Allen's customers received a guarantee of repair or replacement of the Red Rider, and that it was necessary to test the devices on job sites. By themselves, however, these findings are insufficient to determine whether sales of the Red Rider constituted a commercial offer for sale under the test set forth in Pfaff. 63 [W]hat is important to an assessment of the commercial versus experimental significance of a sale is not necessarily the posture of the invention's overall development, but the nature or purpose of the particular use to which the invention that is the subject of that sale is to be put. See Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 550, 16 USPQ2d 1587, 1592 (Fed.Cir.1990) (a sale that is primarily for experimental purposes, as opposed to commercial exploitation, does not raise an on sale bar); U.S. Envt'l Prods., Inc. v. Westall, 911 F.2d 713, 716, 15 USPQ2d 1898, 1901 (Fed.Cir.1990) ([a] section 102(b) bar is avoided if the primary purpose of the sale was experimental); Barmag Barmer Maschinenfabrik AG v. Murata Mach., Ltd., 731 F.2d 831, 839, 221 USPQ 561, 567 (Fed.Cir.1984) (quoting In re Theis, 610 F.2d 786, 793, 204 USPQ 188, 194 (CCPA 1979) ([t]he experimental exception applies only if the commercial exploitation is merely incidental to the primary purpose of experimentation to perfect the invention)). 64 Thus, the question posed by the experimental use doctrine, assessed under the first prong of the two-part on-sale bar test of Pfaff, is not whether the invention was under development, subject to testing, or otherwise still in its experimental stage at the time of the asserted sale. Instead, the question is whether the transaction constituting the sale was not incidental to the primary purpose of experimentation, i.e., whether the primary purpose of the inventor at the time of the sale, as determined from an objective evaluation of the facts surrounding the transaction, was to conduct experimentation. Scaltech, Inc. v. Retec/Tetra, L.L.C., 178 F.3d 1378, 1384 n. 1, 51 USPQ2d 1055, 1059 n. 1 (Fed. Cir.1999). As noted, once the invention is reduced to practice, there can be no experimental use negation. Zacharin v. United States, 213 F.3d 1366, 1369, 55 USPQ2d 1047, 1050 (Fed.Cir.2000); RCA Corp., 887 F.2d at 1061, 12 USPQ2d at 1453. But up to that point, regardless of the stage of development of the invention, and quite apart from the possible satisfaction of the second prong of the Pfaff test, the inventor is free to experiment, test, and otherwise engage in activities to determine if the invention is suitable for its intended purpose and thus satisfactorily complete. 65 EZ Dock, 276 F.3d at 1356-57, 61 USPQ2d at 1295-96 (Linn, J., concurring). 66 Because the district court erred as a matter of law in not considering or properly applying the first or second prongs of Pfaff, we are forced to vacate the determination of no on-sale bar and remand for further findings consistent with this opinion. To assist the court in this determination, we note that in its consideration of the first prong of Pfaff, the court must investigate all of the circumstances regarding the sales in question to assess whether Bartell has proved, by clear and convincing evidence, facts sufficient to establish that the sales made prior to the critical date were commercial sales not incidental to the primary purpose of experimentation. The court should be guided by the factors that were set forth in EZ Dock and quoted above, and should pay particular attention to the circumstances of the alleged testing of the Red Rider. Specifically, it should assess the amount of control over the experiments retained by the inventor, the length of the test period, whether records of the experiments were kept, who conducted the experiment, the degree of commercial exploitation during testing, whether testing was systematically performed, and whether the inventor continually monitored the invention during testing. Experimentation conducted to determine whether the Red Rider would suit a particular customer's purposes does not fall within the experimental use exception. In re Theis, 610 F.2d 786, 792, 204 USPQ 188, 193 (CCPA 1979). 67 The court should also inquire into the nature of the relationship between Allen and its customers; for example, whether the amounts paid to Allen suggest a purely commercial transaction, whether there was a secrecy obligation, and the nature of the contacts made with potential customers. Useful in this determination is record evidence such as the testimony of Allen's president that we wanted to get [the Red Rider] in the marketplace, Trial Tr. at 335, and that we did not [tell buyers] this was a test machine or experimental, id. at 332. A showing that Allen did not clearly communicate to the users of the Red Rider that the use was to be for experimental purposes makes recourse to experimental negation questionable. In re Dybel, 524 F.2d 1393, 1401, 187 USPQ 593, 599 (CCPA 1975) (Appellant'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.). Typical commercial sales provisions such as Allen's trade-in guarantees by themselves are insufficient to establish an experimental relationship. LaBounty Mfg., Inc. v. U.S. Int'l Trade Comm'n, 958 F.2d 1066, 1074, 22 USPQ2d 1025, 1031 (Fed.Cir.1992). 68 Should the district court conclude from a closer examination of the circumstances of the sales of the Red Rider that at least some of the sales were commercial in nature and not incidental to the primary purpose of experimentation, thus satisfying the first prong of the Pfaff test, it must then assess: 1) whether the Red Rider is an embodiment of the invention recited in at least one of the claims of the '220 patent or would have rendered that claim obvious, and 2) whether the second prong of the Pfaff test, the ready for patenting prong, was met at the time the sales were made. 69 In making the first of these determinations, the court must both construe the claims of the '220 patent and make specific findings linking elements of the Red Rider to claim limitations of the '220 patent. In the court's consideration of these limitations, it is immaterial whether the Red Rider was considered to be a fast-steering trowel, in view of our holding above that the fast-steering language of the claim preamble is not a limitation of any of the claims. See STX LLC v. Brine Inc., 54 USPQ2d 1347, 1349 (Fed.Cir.2000) (The fact that the first squeezes that formed the basis of the commercial offer to sell might not have exhibited the desired degree of `improved playing and handling' characteristics... is irrelevant, not least because the preamble to claim 1 is not a limitation.). Nor should the court consider things like the alleged operator friendly characteristics of the '220 trowel that do not appear in the claims. Finally, the court should appreciate that experimentation and modification of non-claimed features of the Red Rider will not necessarily preclude the finding of an on-sale bar. See Theis, 610 F.2d at 793, 204 USPQ at 194 (holding that experimental [use] ... does not apply to experiments performed with respect to non-claimed features of an invention).