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[T]here is no "supplier exception" to the on-sale bar, [and] it is of no consequence that the "commercial offer for sale" [was] made by [the patentee's] own supplier and was made to [the patentee] itself.

On August 14, 2013, in Hamilton Beach Brands, Inc. v. Sunbeam Prods., Inc., the U.S. Court of Appeals for the Federal Circuit (O'Malley,* Bryson, Reyna) affirmed the district court's summary judgment that claims 1 and 3-7 of U.S. Patent No. 7,947,928, which related to a portable slow cooker, were invalid as anticipated. The Federal Circuit stated:
<blockquote>The 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. An actual sale is not required for the activity to be an invalidating commercial offer for sale. An attempt to sell is sufficient so long as it is "sufficiently definite that another party could make a binding contract by simple acceptance." "In determining such definiteness, we review the language of the proposal in accordance with the principles of general contract law." An invention is "ready for patenting" when prior to the critical date: (1) the invention is reduced to practice; or (2) the invention is depicted in drawings or described in writings of sufficient nature to enable a person of ordinary skill in the art to practice the invention. The on-sale bar is a question of law based on underlying factual findings.

Sunbeam contended that Hamilton Beach's foreign supplier offered to sell the Stay or Go® slow cooker, a commercial embodiment of [U.S. Patent No. 7,485,831] and '928 patents, to Hamilton Beach prior to the relevant critical date of March 1, 2005. The district court agreed and found that the claimed invention in the '831 and '928 patents was offered for sale and was ready for patenting before the critical date. [T]here is no "supplier exception" to the on-sale bar. Thus, it is of no consequence that the "commercial offer for sale" at issue in this case was made by Hamilton Beach's own supplier and was made to Hamilton Beach itself. Finally, a commercial offer for sale made by a foreign entity that is directed to a United States customer at its place of business in the United States may serve as an invaliding activity. It is undisputed that Hamilton's Beach's foreign supplier directed its activity to Hamilton Beach within the United States.

The district court found that Hamilton Beach's interaction with its supplier was dispositive regarding whether the patented invention was the subject of a commercial offer for sale. We agree, albeit on slightly different grounds. On February 8, 2005, Hamilton Beach issued a purchase order to its supplier for manufacture of its Stay or Go® slow cookers. Hamilton Beach listed on the purchase order its facility in Tennessee as the shipping address and its office in Virginia as the billing address. Hamilton Beach also listed the specific quantity-almost 2000 units, part number, unit price, and requested delivery date for the slow cookers. On February 25, 2005, the supplier, via email, confirmed that it had received the purchase order and noted that it would begin production of the slow cookers after receiving Hamilton Beach's release. [I]n the small kitchen appliance industry, such a purchase order is a typical transaction. The transaction involves a manufacturer transmitting a purchase order to a vendor or supplier, with the supplier fulfilling that order by manufacturing the requested items. In that scenario, the manufacturer makes the initial contact, which is an offer to buy. The district court [found] that an offer to buy a patented invention prior to the critical date amounts to an invalidating sale under § 102(b) as long as the offer is accepted and a binding contract to sell is formed. [E]ven 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. This was enough to satisfy Pfaff's first prong without the need for a binding contract.

A product is "ready for patenting" for purposes of the on-sale bar under § 102(b) if the claimed invention is: (1) reduced to practice; or (2) depicted in drawings or other descriptions "that were sufficiently specific to enable a person skilled in the art to practice the invention." The district court explained that Hamilton Beach held pre-critical date meetings with many of its retail customers' buying agents and presented detailed descriptions and depictions of the Stay or Go® slow cooker. At these meetings and presentations, Hamilton Beach showed and distributed Computer Aided Design ("CAD") drawings depicting the Stay or Go® slow cooker. The district court found that these detailed drawings and descriptions from Hamilton Beach's meetings, coupled with the communications with its supplier, demonstrated that the invention was ready for patenting.

Hamilton Beach contends that the district court erred in finding that the product that was the subject of the purchase order was ready for patenting because the district court failed to conduct an element-by-element analysis of the precise product that was the subject of the purchase order. Hamilton Beach's argument is misplaced. First, the Stay or Go® slow cooker is a commercial embodiment of the '928 patent, a fact that Hamilton Beach does not, and cannot, dispute. And, the Stay or Go® slow cooker is the same product that Hamilton Beach both ordered from its foreign supplier and marketed to its retail customers before the critical date. This marketing included presentations that depicted and described the patentable features of the invention, such as the side clips and lid gasket used to keep the lid in place and seal the food inside. The district court found as much. [W]e perceive no error in the district court's conclusion that the product was ready for patenting prior to the critical date. Sunbeam proffered what the district court described as a "veritable tome" of evidence from Hamilton Beach's meeting with its retail customers that provided specific descriptions of the Stay or Go® slow cooker, as well as CAD drawings depicting the Stay or Go®, that contained all the limitations of the '831 and '928 patents. Under the "ready for patenting" prong, so long as the descriptions and depictions of the slow cooker are sufficiently precise to enable a person of ordinary skill to build the invention, the district court properly concluded that the invention was "ready for patenting." The CAD drawings and descriptions from these presentations-containing the same specifications provided to Hamilton Beach's supplier-are more than enough to enable a person of ordinary skill in the art to practice the claimed invention. Many of the presentations disclosed that the Stay or Go® slow cooker used clips and a gasket to hold the lid in place. A person of skill in the art, viewing these presentations, would understand that, if the lid is held in place by a gasket, it would be retained in such a way to prevent food from leaking from the container. Given the relative simplicity of the invention, the descriptions and drawings Hamilton Beach showed to its retail customers and the specifications provided to its supplier are sufficiently enabling and, as an admitted commercial embodiment of the patent-in-suit, would meet every limitation of the asserted claims. No reasonable juror could conclude otherwise.

Based on the foregoing, we affirm the district court's finding that claims 1 and 3-7 of the '928 patent are invalid under 35 U.S.C. § 102(b) because the claimed invention was the subject of a commercial offer for sale prior to the critical date. Accordingly, we need not reach the other issues addressed by the district court and addressed by the parties in the briefing before this court.</blockquote>
If you have questions about the material presented above, please contact <a href="http://www.bakerlaw.com/LawrenceMSung">Dr. Lawrence M. Sung</a> (<a href="mailto:lsung@bakerlaw.com">lsung@bakerlaw.com</a> or 202.861.1537) or any member of our Intellectual Property Team.

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Patent Watch: Hamilton Beach Brands, Inc. v. Sunbeam Prods., Inc.