Recently the Federal Circuit reversed a district court’s grant of summary judgment of no invalidity of a design patent under the on-sale bar provision of 35 U.S.C. § 102. Junker v. Medical Components, Inc., No. 2021-1649 (Fed. Cir. Feb. 10, 2022). The Federal Circuit agreed with defendants-appellants (collectively, MedComp) that a pre-critical date letter, i.e., one year prior to a patent application’s filing date, constituted a commercial offer for sale since it included pricing, delivery conditions and risk allocation terms despite multiple uses of the term “quote” therein. Specifically, the Federal Circuit indicated, “the terms of the communication must be considered in their entirety to determine whether an offer was intended, or if it was merely an invitation for an offer or further negotiations.” Id. at 13.
In 2013, Larry Junker sued defendants for infringing US D450,839 (the D’839 Patent), in the U.S. District Court for the Eastern District of Pennsylvania. In 2017, after much discovery, the parties filed cross-motions for summary judgment. Arguably, the most important issue was whether a Jan. 8, 1999 letter before the D’839 Patent’s critical date, i.e., Feb. 7, 1999, was a commercial offer for sale of a product embodying the claimed design. See Detailed Timeline below for complete history. While the District Court acknowledged the Jan. 8, 1999 letter included specific commercial terms directed to payment, shipping and delivery conditions, suggesting a commercial offer for sale, it ultimately determined other language in the letter, including plural uses of the term “quotation” and an invitation to further discuss specific requirements, suggested the parties were engaged in preliminary negotiations. After a bench trial on the remaining issues in the case, the District Court found MedComp’s accused products willfully infringed the D’839 Patent and awarded Junker over $1.2 million in damages. Defendants appealed to the Federal Circuit.
Section 102(b)’s on-sale bar is triggered if, before the critical date, the claimed invention was both (i) the subject of a commercial offer for sale and (ii) ready for patenting. Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67–68 (1998). To qualify a “commercial” offer for sale, the Federal Circuit at least relies on the Uniform Commercial Code, Restatement (Second) of Contracts (1981) (the UCC). As generally accepted, offers are considered commercial offers for sale when one party can make a binding agreement simply by accepting, assuming valid consideration. The UCC indicates that “relevant factors include the terms of any previous inquiry, the completeness of the terms of the suggested bargain, and the number of persons to whom a communication is addressed.” Id. at § 26 cmt. c.
In the instant case, the Federal Circuit indicated the material facts were not in dispute since both parties agreed (i) the pre-critical date letter of Jan. 8, 1999 speaks for itself, (ii) the products described in the letter embody the claimed design and (iii) the claimed design was ready for patenting, i.e., second prong of the on-sale bar test under Pfaff. Junker v. Medical Components, Inc. at 9. The court then turned to the actual language of the letter to evaluate whether a commercial offer for sale existed. First, the court determined Xentek directly responded to a prospective purchaser’s request for a quotation, and hence, it was a specific offer to take action instead of a mere unsolicited price quote or invitation to negotiate. Id. at 10.
Second, the court reviewed the terms of the letter in view of contract principles under the UCC. Here, the letter specified various prices based on order quantities; delivery conditions, e.g., product shipped in “bulk” and will be “non-sterile”; risk allocations, e.g., free on board Athens, Texas; and a payment term of net-30-days. Id. at 10-11. While the court acknowledged the letter’s express invitation to further discuss specific customer requirements and multiple uses of the term “quote,” the court ultimately concluded the invitation did not negate the overwhelming commercial character of the express terms under current discussion between the parties. Id. Accordingly, the Federal Circuit considered the letter a commercial offer for sale sufficient to invoke the on-sale bar under § 102(b). The District Court’s summary judgment of no invalidity was reversed, and this determination rendered the sole claim of the D’839 Patent invalid.
- Plaintiff-appellee Junker started developing a new design for an introducer sheath associated with a catheter kit in the mid-1980s.
- In 1998, Junker entered into a business relationship with James Eddings (and ultimately his company, Xentek) to handle manufacturing of his design.
- Back and forth discussions and suggested modifications occurred at least through Dec. 16, 1998 based upon a fax from Junker to Eddings.
- Xentek provided Junker with a prototype in the January 1999 time frame including all of the requested design specifications.
- Junker filed a design patent application on Feb. 7, 2000, for a “Handle for Introducer Sheath,” which was ultimately granted as US D450,839.
- In early January 1999, Xentek initiated communications with a prospective purchaser regarding an introducer sheath product.
- On Jan. 8, 1999, Xentek sent a letter including pricing information, delivery conditions, risk allocations and payment terms upon receiving a “request for quotation” from the prospective purchaser.
- A subsequent letter dated Feb. 16, 1999, from Xentek to the prospective purchaser included the same commercial terms used in the Jan. 8 letter.