«011 GOTER_PROOF -SK.DOCX (DO NOT DELETE) 7/5/2012 1:24 PM The Commercial Exploitation Continuum Phillip W. Goter* I. INTRODUCTION In the realm of ...»
In support of its decision, the Invitrogen court referenced dicta from TP Laboratories, which “identif[ied] ‘commercial exploitation’ with sale of the [invention] or a charge for... use of the invention within the confidential confines of the company to generate commercial benefits.”116 The Federal Circuit distinguished dicta in Kinzenbaw v. Deere & Co. that “commercial use trumps secrecy” and noted “that Kinzenbaw is consistent with the basic principle that a confidential use is not public under § 102(b) unless there is commercial exploitation.”117 In Kinzenbaw, according to the Invitrogen court, John Deere’s “widespread commercial exploitation of the invention was ‘pubId. (internal quotation marks omitted).
115. Id. Note that the Federal Circuit, as recently as 2002 (post-Pfaff), discussed the totality-of-the-circumstances approach employed by the district court. See Netscape Commc’ns Corp. v. Konrad 295 F.3d 1315, 1320 (Fed. Cir.
2002) (“The totality of the circumstances is considered in conjunction with the policies underlying the public use bar.”). In Invitrogen, the Federal Circuit attempted to clarify its Netscape opinion by moving away from that approach but discusses factors to consider when evaluating the two prongs of the publicuse test. Invitrogen, 424 F.3d at 1380 (“The language in Netscape... should not be construed to resurrect a totality of the circumstances test....”). It is unlikely that the small difference in practical application of the two tests is material to the Federal Circuit’s decision.
116. Invitrogen, 424 F.3d at 1381–82 (citing TP Labs., Inc. v. Prof’l Positioners, Inc., 724 F.2d 965, 972–73 (Fed. Cir. 1984)) (“[A]n agreement of confidentiality, or circumstances creating a similar expectation of secrecy, may negate a ‘public use’ where there is not commercial exploitation.”).
117. Id. at 1381 n.*(citing Kinzenbaw v. Deere & Co., 741 F.2d 383, 390 (Fed. Cir. 1984)). The court also noted, “[a]s the Supreme Court pointed out in Pfaff... secrecy of use alone is not sufficient to show that existing knowledge has not been withdrawn from public use: commercial exploitation is also forbidden.” Id. at 1382.
011 GOTER_PROOF -SK.DOCX (DO NOT DELETE) 7/5/2012 1:24 PM 2012] THE COMMERCIAL EXPLOITATION CONTINUUM 815 lic,’”—not secret or confidential and so it does not help define
commercial exploitation as a prong apart from public accessibility:
Deere’s sales branch, acting through local independent dealers, made the invention available to farmers... for commercial use. Deere instructed the dealers to keep the units moving.... In 1973, the farmers used the planters for 1,000 hours in five states, and in 1974, for 500 hours in 11 states. By the end of 1974, 40,000 acres had been planted with the machines....118 Discussing Invitrogen, one district court considered a very interesting set of facts involving an inventor’s alleged public use through commercial exploitation of his trading-software invention.119 The district court noted that in Invitrogen the claimed process was used to further other projects but the inventor “never commercialized the later patented process until after the critical date.”120 However, in the case before it, the inventor was alleged to have privately “used his inventive software for personal commercial gain prior to the critical date” by placing live trades in financial markets.121 Acknowledging that an inventor’s private use of his invention is permissible, the court opined that an inventor’s secret use of his invention to “trade for profit—to garner a competitive advantage in the marketplace—” may be commercial exploitation if those trades went beyond testing in a live market to ensure the system worked for its intended purpose.122 Revisiting Invitrogen and its discussion of Kinzenbaw, questions emerge as to what extent marketing efforts, apart from uncontrolled use by others, can be considered commercial exploitation. In Moleculon, the Federal Circuit found, in addition to no public accessibility, “absolutely no evidence... of commercially motivated activity by [the inventor].”123 The court
118. Id. at 1381 n.* (quoting Kinzenbaw, 741 F.2d at 389–90).
119. Trading Techs. Int’l, Inc. v. eSpeed, Inc., 507 F. Supp. 2d 883, 898 (N.D. Ill. 2007) (denying both parties motions for summary judgment on the issue of public use due to disputed evidence regarding dates but commenting that “eSpeed may well have the better of the argument respecting public use”).
120. Id. at 893.
122. Id. at 893–97. As the litigation progressed, the public-use challenge became less important due to insufficient facts to prove it, and so the Federal Circuit unfortunately did not have a real opportunity to consider the commercial exploitation issue. Trading Techs. Int’l, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1362 (Fed. Cir. 2010) (discussing the inventor’s failure to disclose personal uses of the software before the critical date to the PTO).
123. Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1265–66 (Fed.
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commented that “[d]iscussion between employer and employee does not by itself convert an employee’s private pursuit into commercial enterprise with the employer.”124 Further, a simple inquiry into the process of submitting a puzzle to Parker Brothers’ for consideration was not commercial exploitation.125 However, one district court has found that publishing an article in a scientific journal—touting the success of implanting the medical device invention and the subsequent benefit to patients—where there was “no indication from the article that the purpose of the implantations was experimental,” likely rises to the level of commercial exploitation such that the invention was in public use.126 In sum, the question remains as to how directly coupled the challenged commercial activity must be to the claimed method. In both Metallizing and Plumtree, performance of the claimed method produced a product that could be marketed for sale.127 But, what about ancillary processes? Recall the example of a source-control and change-control system offered above.
This system does not “produce” source code, but it does increase productivity and save the source-code developers time and development cost. Further, the use of such a system is undetectable by the public, and the system itself is not offered for sale to the public. However, the system “further[s] the institution’s legitimate business objectives”128 and provides a competitive advantage—but isn’t every action of a company performed for this purpose? Section 102(b) requires that the invention be in public use or on sale, and therefore a product that would not exist but for the claimed process should not invalidate that process, lest we stray too far down the slippery slope from the statutory text.
Cir. 1986) (quoting Moleculon Research Corp. v. CBS, Inc., 594 F. Supp. 1420, 1427 (D. Del. 1984)).
124. Id. at 1267.
126. Arrow Int’l, Inc. v. Spire Biomedical, Inc., 635 F. Supp. 2d 46, 76–77 (D. Mass. 2009) (noting that the article “characterizes the procedures as tests to evaluate the new product’s advantages and disadvantages”).
127. See Plumtree Software, Inc. v. Datamize, L.L.C., 473 F.3d 1152, 1162 (Fed. Cir. 2006); Metallizing Eng’g Co. v Kenyon Bearing & Auto Parts Co., 153 F.2d 516, 520 (2d Cir. 1946).
128. Madey v. Duke Univ., 307 F.3d 1351, 1362–63 (Fed. Cir. 2002) (explaining that this is especially true where the activity increases the institution’s status or aids in talent acquisition).
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C. THE EXPERIMENTAL-USE EXCEPTIONThe federal circuit clarified that “[t]he experimental use exception is not a doctrine separate or apart from the public use bar[;]... something that would otherwise be a public use may not be invalidating if it qualifies as an experimental use.”129 In addition, experimental use also negates application of the on-sale bar.130 The Federal Circuit enumerated several factors that assist the determination of commercial uses versus “bona fide” experimentation,131 including: (1) “necessity for public testing,” (2) inventor retention of control over the experiment, (3) length of testing, (4) payment, (5) “whether there was a secrecy obligation,” (6) identity of the person conducting the experiment, (7) “degree of commercial exploitation during testing,” (8) “whether the inventor continually monitored the invention during testing,” and (9) “the nature of contacts made with potential customers.”132 The “list is not exhaustive” and not all of the factors will apply in a particular case.133 Notice that commercial exploitation is among the factors, but here again, no meaningful definition emerges.
Inventor control and monitoring of the experimental use are important because “the experimental use exception only concerns the actions of the inventors and their agents.”134 SimiClock Spring, L.P. v. Wrapmaster, Inc., 560 F.3d 1317, 1326 (Fed. Cir.
2009) (citations omitted); see generally, Andrew S. Baluch, Note, Relating the Two Experimental Uses in Patent Law: Inventor’s Negation and Infringer’s Defense, 87 B.U. L. REV. 213, 220–28 (2007) (providing a historical overview of the experimental use exception to the public-use bar).
130. See Electromotive Div. of Gen. Motors Corp. v. Transp. Sys. Div. of Gen. Elec. Co., 417 F.3d 1203, 1213 (Fed. Cir. 2005) (noting the factors “simply represent various kinds of evidence relevant to the question of whether precritical date activities involving the patented invention—either public use or sale were primarily experimental and not commercial”); infra Part II.A.
131. City of Elizabeth v. Am. Nicholson Pavement Co., 97 U.S. 126, 137 (1877) (noting that experimentation consists of a “bona fide effort to bring [an] invention to perfection, or to ascertain whether it will answer the purpose intended”).
132. Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1353 (Fed.
Cir. 2002) (quoting EZ Dock v. Schafer Sys., Inc., 276 F.3d 1347, 1357 (Fed.
Cir. 2002) (Linn, J., concurring)). Other factors identified include “the nature of the invention,... whether records of the experiment were kept,...whether the invention reasonably requires evaluation under actual conditions of use,..
. [and] whether testing was systematically performed.” Id. (quoting EZ Dock, 276 F.3d at 1357).
133. Electromotive Div. of Gen. Motors Corp., 417 F.3d at 1213.
134. Atlanta Attachment Co. v. Leggett & Platt, Inc., 516 F.3d 1361, 1366 (Fed. Cir. 2008).
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lar to its application in the public accessibility context, whether the inventor retains control over the experimental use may be dispositive in some instances, especially where an inventor claims a sale for experimental use but does not “perform the testing... [or] have control over the alleged testing.”135 Additionally, an inventor’s failure to maintain records related to testing of the invention weighs against a finding of experimental use.136 When considering the nature of contacts with potential customers and the nature of the payment for experimental use of an invention, notifying customers of the experimental nature of the product being sold is critical. Applying these factors, the court has noted that “[w]hether payment is made for the device is an important factual consideration, but the fact that a company paid for the use of patentee’s device is not dispositive.”137 However, “[i]f an inventor fails to communicate to a customer that the sale of the invention was made in pursuit of experimentation, then the customer, as well as the general public, can only view the sale as a normal commercial transaction.”138 Thus, as experimentation factors, control and customer awareness are “critical” and “ordinarily must be proven if experimentation is to be found.”139 Not on the list but critical nonetheless, the Federal Circuit has made clear “that experimental use cannot negate a public use when it is shown that the invention was reduced to practice before the experimental use.”140 As discussed in Part II.B, reduction to practice occurs at the point when an inventor “construct[s] an embodiment or perform[s] a process that [meets] all the limitations” and “determine[s] that the invention [will] work for its intended purpose.”141 Therefore, evidence of experimentation includes “tests needed to convince [an inventor] that the invention is capable of performing its intended purpose in
135. Id. (“While we have held that control may not be the lodestar test in all cases, we have also said that it is important, and sometimes dispositive.”).
136. Netscape Commc’ns Corp. v. Konrad, 295 F.3d 1315, 1321–22 (Fed.
137. Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1260 (Fed.
Cir. 2001); see also Atlanta Attachment Co., 516 F.3d at 1365.
138. Electromotive Div. of Gen. Motors Corp., 417 F.3d at 1214.
139. Id. at 14–15.
140. In re Omeprazole Patent Litig., 536 F.3d 1361, 1372 (Fed. Cir. 2008).
141. Id. at 1373.