In Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc., No. 12-1581 (Fed. Cir. Aug. 14, 2013), the Federal Circuit affirmed the district court's ruling that the asserted claims of Hamilton Beach Brands, Inc.'s ("Hamilton Beach") U.S. Patent No. 7,947,928 ("the '928 patent") were invalid under the on-sale bar of 35 U.S.C. § 102(b).
Hamilton Beach's '928 patent claimed priority to an application filed in March 2006. On February 8, 2005, more than one year prior to the filing date of the priority application, Hamilton Beach issued a purchase order for 2,000 slow cookers from a foreign supplier for delivery to Hamilton Beach's U.S. warehouse. The supplier replied via e-mail on February 25, 2005, noting it would begin production after receiving Hamilton Beach's release. Hamilton Beach subsequently sued Sunbeam Products, Inc. ("Sunbeam"), alleging that Sunbeam's slow cooker, Cook & Carry®, infringed the same '928 patent. Under these facts, the district court concluded the '928 patent was invalid under the on-sale bar of 35 U.S.C. § 102(b). Hamilton Beach appealed.
"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." Slip op. at 12-13.
On appeal, the Federal Circuit affirmed the district court's
invalidity ruling. The Court explained that
"[t]he on-sale bar applies when two conditions are satisfied
before the critical date: (1) the claimed invention must
be the subject of a commercial offer for sale; and (2) the
invention must be ready for patenting." Slip op. at 8
(citing Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67
(1998)). The Court found both conditions satisfied.
With respect to the first condition, a commercial offer, the Court held that Hamilton Beach's transaction with its foreign supplier in early 2005 was an offer for sale of a product that anticipated the asserted claims. The Court first explained that there is no "supplier exception" to the on-sale bar, and thus it was of no consequence that the "commercial offer for sale" was made by Hamilton Beach's own supplier and was made to Hamilton Beach itself. Focusing on the supplier's response prior to the critical date that it was ready to fulfill the order, the Court stated that "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." Id. at 12-13. As a result, even if the parties had not entered into a binding contract when the supplier responded to the purchase order, the response nevertheless was a commercial offer for sale that Hamilton Beach could have made into a binding contract by simple acceptance. The Court found this was sufficient to satisfy Pfaff's first condition.
For the second condition, that the invention was ready for patenting prior to the critical date, the Court found no error in the district court's conclusion that the product was ready for patenting. The Court noted that Hamilton Beach showed and distributed product descriptions and Computer Aided Design ("CAD") drawings at meetings with many of its retail customers' buying agents depicting Hamilton Beach's slow cooker. The Court held these descriptions and drawings were sufficiently precise to enable a person of ordinary skill to build the invention. In addition, the Court noted that Hamilton Beach created a working prototype that was subjected to testing and was successful. The fact that the prototype required "fine-tuning" after the critical date did not mean that the invention was not ready for patenting. Thus, the invention was ready for patenting, and the Court held the '928 patent was invalid under the on-sale bar.
Judge Reyna dissented, arguing the majority overlooked the Supreme Court's requirement that the offer be a "commercial" one. In Judge Reyna's view, the majority applied the "no-supplier-exception rule" without considering whether the purchase order was placed for purely experimental purposes. In support of his view that the order was placed for purely experimental purposes, Judge Reyna cited the purchase order, which the supplier delivered in the midst of a series of design failures, and explained that it was not the result of customer demand or projections. According to Judge Reyna, "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." Reyna Dissent at 6.
Judges: O'Malley (author), Bryson, Reyna (dissenting)
[Appealed from E.D. Va., Judge Spencer]
This article previously appeared in Last Month at the Federal Circuit, September 2013
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