By Brian Craig, J.D.
The district court erred in its public-use bar and on-sale bar analysis involving third party’s secret commercial use.
In a patent infringement suit relating to a patent for super-absorbent polymers owned by BASF Corporation against SNF Holding Company, the federal district court in Georgia erred in granting summary judgment that BASF’s patent is invalid, the U.S. Court of Appeals for the Federal Circuit has held. In reversing the district court’s conclusion that the patent claims are invalid as anticipated and obvious, the Federal Circuit held that a process performed by a third party, Celanese Corporation’s "Sanwet® Process" also used in connection with super-absorbent polymers, does not create an on-sale bar to the patent. The Federal Circuit also held that the district court misinterpreted the public-use bar and whether the process performed by a third party was "known or used" before the invention (BASF Corp. v. SNF Holding Co., April 8, 2020, Lourie, A.).
BASF owns U.S. Patent 5,633,329 (the "’329 patent") which is directed to an improved process for preparing high-molecular-weight polymers. The polymers are used as super-absorbers in various fields, such as waste treatment, paper manufacturing, and mining. BASF filed a complaint against SNF Holding Company alleging infringement of the ’329 patent. In 1985, Sanyo Chemical Industries Ltd. and Celanese Corporation entered into a license agreement that provided Celanese with an exclusive license to make, use, and sell certain of Sanyo’s super-absorbent polymers in the Americas. The Sanwet® Process was created in Japan by Sanyo to manufacture super-absorbent polymers. In addition, Sanyo furnished Celanese with extensive technical information about the Sanwet® Process, and dispatched technical personnel to assist Celanese with plant start-up. The federal district court in Georgia granted summary judgment in favor of SNF concluding that a process performed by a third party, Celanese’s Sanwet® Process, evidenced prior art knowledge and use of the patented invention within the meaning of 35 U.S.C. § 102(a), and further constituted both a public-use bar and an on-sale bar to the patented invention. BASF appealed.
Prior knowledge or use. The Federal Circuit first held that genuine issues of material fact exist as to whether the Sanwet® Process was "known or used" within the meaning of 35 U.S.C. § 102(a). The Patent Act in 35 U.S.C. § 102 sets forth several conditions of patentability and states that a person shall not be granted a patent is the patent was "known or used" by others in this country before the applicant’s invention. The Federal Circuit has uniformly interpreted the "known or used" prong to mean "knowledge or use which is accessible to the public." The parties dispute the extent to which Sanyo’s technical information and the performance of the Sanwet® Process at a plant in Virginia were actually subject to confidentiality restrictions. The appeals court found that the record reveals genuine issues of material fact as to whether the Sanwet® Process was "known or used" within the meaning of § 102(a). Therefore, the district court improperly granted summary judgment.
Public-use bar. The Federal Circuit also concluded that the district court erred in granting summary judgment of invalidity based on the public-use bar. The public-use bar applies to uses of the invention "not purposely hidden" and held that the use of a process in the ordinary course of business—where the process was "well known to the employees" and no "efforts were made to conceal" it from anyone else—is a public use. If the use identified by the defendant was not successfully concealed or hidden from those who lack any "limitation or restriction, or injunction of secrecy," then it is a public use within the meaning of § 102(b). The Federal Circuit held that the district court misinterpreted the public-use bar to apply to a third party’s secret commercial use. The primary reasons for the statutory bars are to prevent the public from being deprived of that which it has come to rely on as publicly avail-able, to encourage prompt disclosure of inventions, and to prevent effective extension of patent term by gamesmanship. The Federal Circuit reversed the district court’s summary judgment of invalidity and remanded for determination of SNF’s public-use defense at trial.
On-sale bar. Finally, the Federal Circuit reversed the district court’s summary judgment on SNF’s on-sale bar defense. An invention is "on sale" when it is the subject of a commercial offer for sale and is ready for patenting. The invention itself must be sold or offered for sale, and the mere existence of a commercial benefit is not enough to trigger the on-sale bar on its own. The Sanyo-Celanese agreement provided Celanese with a license to practice the Sanwet® Process, exhaustive technical information about performing it, and the in-person assistance of Sanyo’s employees. On-sale bar does not turn on whether or not the patentee’s process information and assistance are helpful to the licensee or whether the licensee is capable of performing the licensed process. The essential features of the claimed process here were not embodied in a product sold or offered for sale before the critical date. Additionally, the court rejected SNF’s argument for its alternative ground of affirmance.
Accordingly, the Federal Circuit reversed and remanded the judgment of the district court and awarded costs to BASF.
This case is No. 19-1243.
Attorneys: John C. O'Quinn (Kirkland & Ellis LLP) for BASF Corp. James W. Dabney (Hughes Hubbard & Reed LLP) for SNF Holding Co., Flopam Inc. and Chemtall, Inc.
Companies: BASF Corp.; SNF Holding Co.; Flopam Inc.; Chemtall, Inc.
MainStory: TopStory Patent GCNNews FedCirNews
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