The U.S. Court of Appeals for the Federal Circuit affirmed a finding of invalidity under the on-sale bar because the patentee did not control its customer’s field testing, and its customers were not aware they were participating in field testing. Electromotive Div. of General Motors Corp. v. Transportation Sys. Div. of General Elec. Co., Case No. 04-4412 (Fed. Cir. July 28, 2005) (Michel, C.J.).
The Electromotive Division of General Motors Corp. (EMD) developed two types of bearings. In each case, more than a year before filing a patent application, EMD contacted customers and requested the new compressor bearings be used in newly purchased locomotive turbochargers. None of the customers signed a confidentiality agreement, was provided with any design details or was restricted in the manner in which it could use the locomotives containing the patented bearings. EMD brought suit against the Transportation Systems Division of General Electric Co. and Daido Industrial Bearings, Ltd. alleging infringement of its bearings patents. The district court granted summary judgment that EMD’s patents were invalid under the on-sale bar of § 102(b).
Following the U.S. Supreme Court’s decision in Pfaff, the Federal Circuit applies a two-prong test to determine whether a patent claim is invalid due to an on-sale bar. First, the claimed invention must be the subject of a commercial sale. Second, the claimed inventions must be ready for patenting. EMD did not dispute that its bearing inventions were ready for patenting.
With respect to the first prong, the Court applied traditional contract law principles to determine that commercial sales of the patented inventions occurred prior to the critical date. Then, the Court engaged in the objective analysis that requires it to evaluate whether the circumstances of a pre-critical date sale show the sale was primarily for experimentation. The Court enumerated 13 objective indicia it may consider in determining whether a sale was primarily experimental, concluding that control and customer awareness ordinarily must be proven if experimentation is to be found. Here, the Court concluded EMD had not controlled the field testing because, among other things, it did not restrict the use of the test locomotives in any manner and did not attempt to monitor the conductions under which it customers ran the test locomotives. The Court also found criticality to the fact that EMD’s customers were not aware they were field testing the locomotive turbochargers or keeping records regarding the performance of the compressor bearings. In light of these findings, the Court affirmed summary judgment.
Practice Note: To minimize the risk of an on-sale bar, it is best to file a patent application before allowing customers to publicly test a patentable invention.
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