Opposition Brief — MAG Instrument, Inc. v. Commission of Patents & Trademarks

Hupreme Cour, US ~

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MAY 25 1994 |

No. 93-1461

earnest PLERK |

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In the Supreme Court of the Giuted States

OCTOBER TERM, 1993

MAG INSTRUMENT, INC., PETITIONER

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COMMISSIONER OF PATENTS AND TRADEMARKS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

DREW'S. DAYS, III

Solicitor General

FRANK W. HUNGER

Assistant Attorney General

ANTHONY J. STEINMEYER

EDWARD T. SWAINE

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 514-2217

QUESTION PRESENTED

Under 35 U.S.C. 102(b), a patent shall not be granted

for an invention that “was * * * in public use or on sale

in this country, more than one year prior to the date of

the application for patent in the United States.” The

question presented in this case is whether there is an

implied exception to this statutory bar where sales of the

invention allegedly arose from its misappropriation by

the applicant’s former employee.

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TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

Andrews v. Hovey, 123 U.S. 267 (1887), reh’g denied, 124

SII MINNIE Gesdcihichenswusecsnisteceeihicicabiosdnacdnanidenss 5-6, 7, 8, 9, 10

Electric Storage Battery Co. v. Shimadzu, 307 U.S. 5

SEES EEE ARE ee a AS Oe 6

General Electric Co. v. United States, 654 F.2d 55 (Ct. Cl.

(| OS PASE RE RCTS angi ene to, a 6

J.A. LaPorte, Inc. v. Norfolk Dredging Co., 787 F.2d 1577

(%ed. Cir.), cert. denied, 479 U.S. 884 (1986) ................ 10

Kendall v. Winsor, 62 U.S. (21 How.) $22 (1859) .......... 7, 8,9

Lorenz v. Colgate-Palmolive Peet Co., 167 F.2d 423 (3d

Eke RSE TARR RAR Me 4, 6, 10

Pennock v. Dialogue, 27 U.S. (2 Pet.) 1 (1829) .............. 5, 7

Shaw v. Cooper, 32 U.S. (7 Pet.) 292 (1883) ........c00000-.. 5,7

Sullivan v. Stroop, 496 U.S. 478 (1990) ......cccccccccccceeeeee 11

TP Laboratories, Inc. v. Professional Positioners, Inc.,

724 F.2d 965 (Fed. Cir.), cert. denied, 469 U.S. 826

Lb SEES ARERR EAR RRR DPI Ne 10

United States v. Lovasco, 431 U.S. 783 (1977) ceccccccccses- 10

Statutes:

Act of Feb. 21, 1793, ch. 11, § 1, 1 Stat. 319 .....0.......000000.. 4-5

Act of July 4, 1836, ch. 357, § 7, 5 Stat. 119 .........cccccccceee 5

Act of Mar. 3, 1839, ch. 88, § 7, 5 Stat. 354 0.0... 5, 8, 9, 10

Act of July 8, 1870, ch. 230, § 24, 16 Stat. 201 .........00...0... 5

Pp Bechet See RU 3

EIEN TERS SERS Te eR 3

IV

Statute—Continued: Page

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In the Supreme Court of the United States

OCTOBER TERM, 1993

No. 98-1461

MAG INSTRUMENT, INC., PETITIONER

Vv.

COMMISSIONER OF PATENTS AND TRADEMARKS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The judgment order of the court of appeals (Pet. App.

F'l) is unpublished, but the judgment is noted at 17 F.3d

1442 (Table). The opinion of the Board of Patent Appeals

and Interferences (Pet. App. Al-A11) is unpublished.

JURISDICTION

The decision of the court of appeals was entered on

December 13, 1993. The petition for a writ of certiorari

was filed on March 14, 1994. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

(1)

2

STATEMENT

1. Anthony Maglica invented a grippable flashlight

with a recessed rubber sleeve and assigned the patent

application to petitioner. Petitioner’s director of mar-

keting, Donald A. Keller, surreptitiously marketed a

flashlight incorporating the claimed invention before he

left petitioner’s employ in April 1986. By May 1986,

Keller and his newly formed company, Lite-Tek Interna-

tional Corporation, provided samples of the flashlight to

another company, Kershaw Knives. As early as May 8,

1986, Kershaw Knives placed an order for 50,000 flash-

lights that included the recessed rubber sleeve. In

October 1986, Lite-Tek shipped 10,000 flashiizhts to

Kershaw Knives, which supplied them to a third com-

pany, Snap-On Corporation. Pet. App. A3-A4.

In March 1987, one of petitioner’s representatives ob-

tained samples of these flashlights from Snap-On and

sent them to petitioner. Pet. App. G29-G30. Later that

year, petitioner’s attorneys became aware that a flash-

light incorporating Maglica’s invention may have

already been marketed. Jd. at G24, G29.

Petitioner filed a patent application for the grippable

flashlight on January 29, 1988. Pet. App. A8. On Decem-

ber 28, 1989, the patent examiner issued a notice of al-

lowability. Jd. at Bl. Prior to the patent’s issuance,

however, petitioner withdrew the application and on

April 2, 1990, filed a second application. Jd. at Al. Peti-

tioner submitted a supplemental disclosure statement

relating information concerning Keller’s activities. The

patent examiner denied petitioner’s application, finding

that 35 U.S.C. 102(b) precluded petitioner from obtaining

a patent because “the invention was * * * in public use

or on sale in this country, more than one year prior to

3

the date of the application for patent in the United

States.” Pet. App. A2.'

2 The Board of Patent Appeals and Interferences

affirmed. Pet. App. Al-All. The Board concluded that

the invention had been “on sale” at least one year prior

to petitioner’s initial patent application on January 29,

1988.2 The Board noted that petitioner did-not contest

that the flashlights were shipped by Lite-Tek to

Kershaw Knives and then to Snap-On Tools prior to

January 29, 1987. The Board determined that under 35

U.S.C. 102(b), the prior sales barred the patentability of

petitioner’s flashlight. Pet. App. A3-A5.

The Board rejected petitioner’s argument that it

should adopt an exception to the general rule where the

prior sales were made by a third party. Pet. App. A5.

After canvassing the relevant precedents, the Board

concluded that no exception for fraudulent or piratical

sales or uses had previously been recognized. Jd. at A5-

A9. The Board reasoned that the language of the patent

statute “contains no qualification or exception,” and that

! Section 102 of Title 35 provides, in relevant part, that:

A person shall be entitled to a patent unless—

(a) the invention was known or used by others in this

country, or patented or described in a printed publication

in this or a foreign country, before the invention thereof by

the applicant for patent, or

(b) the invention was patented or described in a printed

publication in this or a foreign country or in public use or

on sale in this country, more than one year prior to the

date of the application for patent in the United States.

35 U.S.C. 102.

2 The examiner’s conclusion that the patent should also be de-

nied under 35 U.S.C. 102(a) was withdrawn on appeal. Pet. App.

A3.

4

the implied exception sought by petitioner would provide

a “fruitful field for collusion.” Jd, at A8, A9 (quoting

Lorenz v. Colgate-Palmolive Peet Co., 167 F.2d 423, 429-

430 (3d Cir. 1948)).

3. The court of appeals affirmed without opinion. Pet.

App. F1-F2.

ARGUMENT

The decision of the court of appeals is correct, and does

not conflict with the decisions of this Court or any other

court of appeals. Further review therefore is not

warranted.

1. a. The plain language of 35 U.S.C. 102(b) provides

that an invention is not eligible for patent protection if it

was “in public use or on sale in this country, more than

one year prior to the date of the application for patent in

the United States.” Thus, to fall within the statutory

bar, an invention need only meet two conditions: (1) it

must have been “on sale”; and (2) the period of sale must

have begun “more than one year” before the filing of the

application. The Board of Patent Appeals and Interfer-

ences was therefore correct in concluding that the per-

tinent statutory language “contains no qualification or

exception,” and that “[t]here is not a single word in the

statute which would tend to put an inventor, whose dis-

closures have been pirated, in any different position from

one who has permitted the use of his processes.” Pet.

App. A8-A9 (quoting Lorenz, 167 F.2d at 429).

The history of the “on sale” bar of Section 102(b)

confirms the Board’s determination that the statute

applies even where an inventor has not consented to the

sale of his invention. Initially, the patent statute did not

contain an “on sale” bar. Congress at first provided

merely that an item could be patented if it was not

“known or used before the [patent] application,” Act of

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Feb. 21, 1793, ch. 11, $1, 1 Stat. 319, and this Court

construed that provision to mean that an invention was

unpatentable if there was prior “public use.” Shaw v.

Cooper, 32 U.S. (7 Pet.) 292, 319 (1833); Pennock v.

Dialogue, 27 U.S. (2 Pet.) 1, 19-20 (1829). In 1836,

however, Congress amended the patent statute to provide

that the Commissioner of Patents may issue a patent

only if an item was not “in public use or on sale with the

applicant’s consent or allowance prior to the appli-

cation.” Act of July 4, 1836, ch. 357, § 7, 5 Stat. 119

(emphasis added).

Of specific pertinence here, Congress modified the

“public use” and “on sale” bars in 1839 by enacting a

provision stating that no patent was invalid because of

prior “purchase, sale, or use” of an item, “except on proof

* * * that such purchase, sale, or prior use has been for

more than two years prior to such application for a

patent.” Act of Mar. 3, 1839, ch. 88, § 7, 5 Stat. 354. This

Court explained that “[t]he evident purpose of [that]

section [of the 1839 Act] was to fix a period of limitation

which should be certain, and require only a calculation of

time, and should not depend upon the uncertain question

of whether the applicant had consented to or allowed the

sale or use.” Andrews v. Hovey, 123 U.S. 267, 274 (1887),

reh’g denied, 124 U.S. 694 (1888). That apparent purpose

was made explicit in 1870, when Congress amended the

“public use” and “on sale” provisions to delete the

requirement of an inventor’s “consent or allowance” and

to require only that an item “not [have been] in public

use or on sale for more than two years prior to [the

patent] application.” Act of July 8, 1870, ch. 230, § 24, 16

Stat. 201. The 1870 legislation made clear that if an

invention is “on sale” before the critical period (now one

year), the bar to patentability applies irrespective of the

inventor’s “knowledge, consent or allowance.” Andrews

6

v. Hovey, 123 U.S. at 275; see also Electric Storage

Battery Co. v. Shimadzu, 307 U.S. 5, 19-20 (1939).

b. Applying Section 102(b) in accordance with its plain

terms, to cover unauthorized sales by persons other than

the inventor, serves important policies underlying the

“on sale” bar. In general, the “on sale” bar serves four

basic policies: (1) a policy “against removing inventions

from the public which the public has justifiably come to

believe are freely available to all”; (2) “prompt and

widespread disclosure of new inventions to the public”;

(3) “preventling] the inventor from commercially

exploiting the exclusivity of his invention substantially

beyond the statutorily authorized * * * period”; and (4)

“giv[ing] the inventor a reasonable amount of time

following sales activity * * * to determine whether a

patent is a worthwhile investment.” General Electric

Co. v. United States, 654 F.2d 55, 61 (Ct. Cl. 1981). Even

where, as here, the item was placed on sale without the

inventor’s knowledge or consent, the first two policies

are fully implicated.

Petitioner argues (Pet. 21-23) that applying Section

102(b) as written insufficiently protects inventors

against the theft of their inventions. An inventor,

however, has remedies directly against a wrongdoer.

See Lorenz, 167 F.2d at 426. In this case, for example,

petitioner has brought a trade secret action against its

former employee. Pet. App. G8, G11, G27-G28. Further,

an inventor “is master of the situation and by prompt

action can protect himself fully and render the defense of

prior public use impossible.” Lorenz, 167 F.2d at 430. In

this case, for example, a manufacturer’s representative

for petitioner was aware that the invention had been

shipped as early as March 1987. Pet. App. G29-G30.

Petitioner could have protected its invention by filing a

patent application shortly thereafter, but waited until

7

January 29, 1988, to do so. Jd. at A3. Moreover,

petitioner’s proposed solution—to protect inventors

against theft of their ideas by creating an implied

exception to the plain language of Section 102(b)—is

contrary to the evident congressional purpose of

avoiding “uncertain question[s]” (Andrews, 123 US. at

274) in the application of the “on —ale” bar to inventions

that have been on sale more than one year.

2. Contrary to petitioner’s argument (Pet. 8), this

Court’s precedents do not support a judicially-crafted

“exception” to the “on sale” bar. To be sure, several of

this Court’s decisions include statements suggesting

that in some circumstances patentability might not be

defeated if an invention was procured by persons other

than the inventor through piracy or fraud. See Andrews

v. Hovey, supra; Kendall v. Winsor, 62 U.S. (21 How.)

322, 329-330 (1859); Shaw v. Cooper, supra; Pennock v.

Dialogue, 27 U.S. (2 Pet.) 1, 19, 20, 22 (1829). But those

cases involved provisions different from the “on sale”

provision now codified at 35 U.S.C. 102(b).

For example, the Court in Shaw and Pennock was

construing the pre-1836 patent statute, which merely

provided in relevant part that an item could be patented

only if there was no prior “knowledge or use” of the

invention. See Shaw, 32 U.S. (7 Pet.) at 319; Pennock, 27

U.S. (2 Pet.) at 22.* And Kendall did not involve the

3 In those cases, the Court had no occasion to determine

whether the requisite “knowledge or use” was present if the

invention came into public use through theft or piracy. In Shaw,

the Court determined that the inventor had acquiesced in the

public use of his invention for several years. 32 U.S. (7 Pet.) at

321. And in Pennock, the inventor had permitted his invention to

be known and used for seven years before obtaining a patent. 27

U.S. (2 Pet.) at 11. This Court’s discussion in those cases of the

patent implications of piracy of an invention was therefore dictum.

8

second clause of Section 7 of the 1839 Act, which modified

the “on sale” bar in the respect relevant here. Rather, it

involved the first clause of that Section, which provided

that anyone who “purchased or constructed any newly

invented * * * composition of matter, prior to the

[patent] application * * *, shall be held to possess the

right to use, and vend to others to be used, the specific

* * * composition of matter * * * without liability

therefor” (§ 7, 5 Stat. 354). 62 U.S. (21 How.) at 323.

Unlike the “on sale” bar, which is designed to limit the

rights of the inventor as against the rights of the public

at large, the statutory provision in Kendall conferred

rights only on one particular class of persons deemed to

deserve special treatment and, significantly, did not

develop through a series of enactments that made clear

Congress’s intent to eliminate any requirement of an

inventor’s knowledge of or consent to the use of the

invention.

Accordingly, this Court’s decision in Andrews leaves

no doubt that the 1839 and 1870 legislation eliminated

any such requirement of knowledge or consent as a

condition of applying the “on sale” bar. The case arose

under the second part of Section 7 of the 1839 Act, which

had modified the “public use” and “on sale” bars by

providing that “no patent shall be held to be invalid by

reason of * * * purchase, sale, or use prior to the

application of a patent as aforesaid, except on proof of

abandonment of such invention to the public; or that such

purchase, sale, or prior use has been for more than two

years prior to such application for a patent.” 5 Stat. 354.

In holding the appeilee’s patent invalid—even though it

had come into public use without the owner’s “knowl-

edge, consent, or allowance” (123 U.S. at 268)—the Court

in Andrews explained:

9

The evident purpose of [the second clause of Section

7] was to fix a period of limitation which would be

certain, and require only a calculation of time, and

should not depend upon the uncertain question of

whether the applicant had consented to or allowed the

sale or use. Its object was to require the inventor to

see to it that he filed his application within two years

from the completion of his invention, so as to cut off

all question of the defeat of his patent by a use or sale

of it by others more than two years prior to his

application, and thus leave open only the question of

priority of invention. The evident intention of

Congress was to take away the right (which existed

under the act of 1836) to obtain a patent after an

invention had for a long period of time been in public

use without the consent or allowance of the inventor;

it limited that period to two years, whether the

inventor had or had not consented to or allowed the

public use. The right of an inventor to obtain a

patent was in this respect narrowed, and the rights of

the public as against him were enlarged, by the act of

1839. The language of § 24 of the act of 1870 * * * is

to the same effect, and carries out the policy

inaugurated by the act of 1839.

123 U.S. at 274; see also Andrews, 124 U.S. at 719

(denying rehearing) (“The second clause of the 7th

section [of the 1839 Act] seems to us to clearly intend,

that, where the purchase, sale, or prior use referred to in

it has been for more than two years prior to the

application, the patent shall be held invalid, without

regard to the consent or allowance of the inventor.”)."

4 Although the Court in Andrews acknowledged that Kendall v.

Winsor, supra, had held that inventors were entitled to protection

against piracy of their inventions, the Court emphasized that “(t]he

10

The lower courts have therefore properly understood

Andrews to mean that the availability of an invention for

sale beyond the statutorily prescribed period bars

patentability, irrespective of the inventor’s knowledge or

consent. See, e.g., Lorenz, 167 F.2d at 426-429; J.A.

LaPorte, Inc. v. Norfolk Dredging Co., 787 F.2d 1577,

1581-1583 (Fed. Cir.), cert. denied, 479 U.S. 884 (1986).

Petitioner has not cited, nor are we aware of, any

decision of a court of appeals holding to the contrary.®

Further review is not warranted.®

first clause of the 7th section [of the 1839 Act] was the only one

involved” in the earlier case. Andrews, 124 U.S. at 707 (emphasis

added). The Court in Andrews also reserved in dictum the

possibility that a “fraudulent, surreptitious, and piratical” use of

an item might leave its patentability undisturbed under the second

clause of Section 7. 124 U.S. at 708. The Court concluded,

however, that use of the invention in public by someone other than

the inventor for the then-applicable two-year period could not be

regarded as a “fraudulent, piratical, or surreptitious” use. /bid.

5 Petitioner argues (Pet. 8) that the requested “piratical use”

exception is supported by the exception for experimental use. The

experimental-use exception, however, is not regarded as an

exception to 35 U.S.C. 102(b), but rather a means of determining

whether there has been a “public use.” See 7P Laboratories, Inc.

v. Professional Positioners, Inc., 724 F.2d 965, 971 (Fed. Cir.),

cert. denied, 469 U.S. 826 (1984).

6 Petitioner argues (Pet. 25-30) for the first time in this Court

that the exclusion of evidence concerning third-party piracy of his

invention violates his right to due process of law. This Court

generally does not consider issues raised for the first time in this

Court. See, e.g., United States v. Lovasco, 431 U.S. 783, 788 n.7

(1977). In any case, petitioner’s claim is without merit. The Board

of Patent Appeals and Interferences does not exclude relevant

evidence of piracy of inventions; rather, Section 102(b) makes that

evidence irrelevant because the “on sale” bar does not depend on

the inventor’s knowledge of or consent to the sale of his product.

Thus, petitioner’s contention reduces to the substantive due

11

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

Drew S. Days, III

Solicitor General

FRANK W. HUNGER

Assistant Attorney General

ANTHONY J. STEINMEYER

EDWARD T. SWAINE

Attorneys

MAY 1994

process claim that there is no rational basis for applying the “on

sale” bar in cases where an invention has been placed on sale

through the piracy of a third party. Because there is a conceivable

rational basis for applying the bar even in those circumstances (see

p. 6, supra), petitioner’s due process claim must fail. See Sullivan

v. Stroop, 496 U.S. 478, 485 (1990).

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