Invention Conceived After Offer for Sale Still Can Meet On-Sale Bar as Prior Art

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An offer for sale, even for a product not yet developed to the point of being ready for patenting, can still meet the Patent Act's on-sale bar to patentability so long as the patentable conception occurs more than one year before application and the offer for sale remains open, the U.S. Court of Appeals for the Federal Circuit ruled Aug. 22 (August Technology Corp. v. Camtek Ltd., Fed. Cir., No. 10-1458, 8/22/11).

The appeals court interpreted the two prongs of the U.S. Supreme Court's 1998 Pfaff v. Wellsruling on 35 U.S.C. §102(b) to preclude any reading that would mean the conception must be complete at the time of the offer for sale.

The court thus determined that a district court's jury instruction on the statute was an erroneous statement of law, but the offer for sale at issue was for a product that, even had it been considered as prior art, would not help the defendant's case for invalidity. The alleged infringer did succeed, however, in convincing the court that the lower court erred in construing one claim limitation, and the case was therefore remanded for a retrial on infringement as to that one limitation.

Integrated Circuit Inspection Patent Infringed

August Technology Corp. and Rudolph Technologies Inc. own a patent (6,826,298) directed to a system and method for inspecting integrated circuits printed on substrates such as wafers.

Claim 1 recites a system that trains itself to identify flawed wafers via “a visual inspection device for visual inputting of a plurality of known good quality wafers during training and for visual inspection of other unknown qualify wafers during inspection.” Inspection is performed by “strobing” the wafers with “short pulses of light during movement of a wafer under inspection based on a velocity of the wafer.”

The critical date for assessing prior art to the patent was July 15, 1997. August Tech was approached by ICS Inc. in 1996 to develop a wafer inspection machine, and the companies agreed on a purchase order no later than the end of the first quarter of 1997. However, the first “NSX-80” unit was not shipped to ICS for acceptance until September 1977.

Camtek Ltd. makes the Falcon inspection machine, and August Tech sued Camtek for patent infringement in the U.S. District Court for the District of Minnesota.

Chief Judge Michael J. Davis construed a “wafer” to be either a whole wafer or any portion of a wafer, thus allowing that the “plurality of … wafers” limitation could be met by a single wafer. Davis also instructed the jury, as to the Section 102(b) on-sale bar, that “In order to be on ‘sale' the NSX-80 must also have been ready for patenting at the time the alleged offer for sale is made.”

The jury returned a special verdict finding that August Tech's NSX-80 device was not on sale prior to the ‘298 patent's critical date, the Falcon device literally infringed Claims 1 and 3 of the patent, and the claims were not shown to be obvious.

The district court denied Camtek's motions for judgment as a matter of law, and Camtek appealed.

Remanded for Limited Infringement Trial

Judge Kimberly A. Moore first overturned the district court's “wafer” claim construction.

The court reviewed the preamble of Claim 1 and found nothing to compel the conclusion that a wafer was anything but a single, discrete object. The claim itself referred to the singular “wafer” in one limitation and the “plurality of … wafers” in the contested limitation, the court noted, such that the difference would be superfluous within the same claim unless multiple whole wafers were intended in the latter. Other, unasserted claims provided further indications that the lower court's construction was in error, the court explained, and it added, “The ‘298 patent's specification consistently treats wafers as discrete objects.”

Because of the flawed claim construction, therefore, the court vacated the verdict of infringement and remanded “for a limited trial on infringement with respect to this claim element.”

A second disputed claim construction involved the “strobing” limitation. The court saw no error in the district court's analysis of that term, however, and noted that in the retrial for infringement, the district court need not address that limitation.

Camtek also contested the finding of no invalidity for obviousness, citing one prior art patent that disclosed all but the strobing limitation and another that described strobing, but was unrelated to inspecting patterns on wafers. The court deferred to the lower court's proceedings, though, finding substantial evidence supporting the jury's finding given the expert testimony in the case.

On-Sale Bar Even if Patent-Ready After Offer

In effect, the court's ruling as to the prior art made the court's on-sale bar analysis moot, since the NSX-80 did not include strobing either. The court nevertheless analyzed the jury instruction—taken from the American Intellectual Property Law Association's “Model Patent Jury Instructions”—and determined that it was in error.

“The Supreme Court has explained that the §102(b) on-sale bar applies when two conditions are met before the critical date: (1) the product is the subject of a commercial offer for sale, and (2) the invention is ready for patenting,” the court said, citing Pfaff v. Wells Electronics Inc., 525 U.S. 55, 67, 48 USPQ2d 1641 (U.S. 1998).

“The issue presented in this case is whether the invention must be ready for patenting at the time the alleged offer is made,” the court said, and it concluded that it does not. “Under Pfaff, the invention must be ready for patenting prior to the critical date. But to conclude that it must also be ready for patenting at the time of the offer would render the second prong of the Pfaff test superfluous.”

The court then cited its own precedent, Robotic Vision Systems Inc. v. View Engineering Inc., 249 F.3d 1307, 58 USPQ2d 1723 (Fed. Cir. 2001) (93 PTD, 05/14/01), as “expressly hold[ing] that completion of the invention prior to the critical date pursuant to an offer to sell would create a bar.”

The court provided more detail as to the timing of the offer for sale and patent readiness:

While the invention need not be ready for patenting at the time of the offer, consistent with our cases, we hold that there is no offer for sale until such time as the invention is conceived. Pfaff states that the “word ‘invention' in the Patent Act unquestionably refers to the inventor's conception.” 525 U.S. at 60. Therefore, we conclude that an invention cannot be offered for sale until its conception date. Hence, if an offer for sale is made and retracted prior to conception, there has been no offer for sale of the invention. In contrast, if an offer for sale is extended and remains open, a subsequent conception will cause it to become an offer for sale of the invention as of the conception date. In such a case, the seller is offering to sell the invention once he has conceived of it. Before that time, he was merely offering to sell an idea for a product.

Because the record on appeal was not clear as to when—between the early 1997 purchase order “offer for sale” and the September 1977 first shipment—August Tech's design and development of the NSX-80 actually was “ready for patenting,” the court could not determine whether the on-sale bar would apply in the instant case.

However, again, since Camtek still could not provide a strobing reference that could combine with the NSX-80 to suggest obviousness, the court ruled that even if the ready-for-patenting date preceded the July 15, 1997, critical date and thus could be used as prior art, Camtek could not show invalidity.

The court therefore affirmed the lower court's denial of JMOL as to obviousness.

Judges Timothy B. Dyk and Kathleen M. O'Malley joined the opinion.

Daniel W. McDonald of Merchant & Gould, Minneapolis, represented August Tech. Camtek was represented by Jonathan S. Caplan of Kramer Levin Naftalis & Frankel, New York.

By Tony Dutra

Opinion at  


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