# Petition for Writ of Certiorari — Evans Cooling Systems, Inc. v. General Motors Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1998
- **Citation:** 522 U.S. 1115

## Text

() FILED.

97 1038 DE 15 1997

No. OFFICE OF THE CLERK

IN THE
Supreme Court of the Gnited States

OCTOBER TERM, 1997

EVANS COOLING SYSTEMS, INC.
and PATENT ENFORCEMENT FUND, INC.,

Petitioners,
Vv.

GENERAL MOTORS CORPORATION,
Respondent.

On Petition for a Writ of Certiorari to the United
States Court of Appeals for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

KARL R. FINK
(Counsel of Record)
JOHN F. FLANNERY
FITCH, EVEN, TABIN
& FLANNERY
135 South LaSalle Street
Suite 900
Chicago, Illinois 60603-4277
(312) 372-7842

Attorneys for Petitioners

Midwest Law Printing Co., Chicago 60610, (312) 321-0220

i

QUESTION PRESENTED

Can a patent be invalidated by a party who surrepti-
tiously and fraudulently steals an invention while it is a
trade secret and puts the invention on sale more than
one year before the inventor files a patent application?

il

LIST OF PARTIES
AND RULE 29.6 STATEMENT

The parties to the proceeding are the parties shown in
the caption of this Petition. The following are parent
companies, subsidiaries and/or affiliates (except wholly
owned subsidiaries) of certain corporate petitioners:
Patent Enforcement Fund, Inc. is a subsidiary of Valu-
tron N.V.

iit

TABLE OF CONTENTS

PAGE
QUESTION PRESENTED .........-----+-+-++:: i
LIST OF PARTIES AND
RULE 29.6 STATEMENT ..........----++-- ii
TABLE OF CONTENTS ......------eeeeece> iii
CONTENT OF APPENDIX .........------+++:: Vv
TABLE OF AUTHORITIES ..........---+-++-- vi
OPINIONS BELOW ... 0.2... ccc cccccccccces 1
ee ee 1
CONSTITUTIONAL PROVISION AND
STATUTE INVOLVED ........---2eesee0e- 2
STATEMENT OF THE CASE ...........++++-: 2
I. Nature Of The Case ...........-----0-- 2
Il. The Course Of Proceedings Below......... 3
Ill. Statement Of Facts ...........---e+0-: 4

A. The Technology Involved In This Case .. 4

B. Evans’ Development And Ownership Of
The Invention As A Trade Secret ...... 5

C. GM’s Theft Of Evans’ Trade Secret ..... 5

iv

D. GM’s Alleged Sales Activities ......... 8

E. Evans’ Assertion Of His Rights Against
RRR ERR TR Mir oe Secs ee RY a 9
REASONS FOR GRANTING THE WRIT ........ 10

I. Supreme Court Precedent Precludes Invali-
dation Of A Patent By Surreptitious And
Fraudulent Theft And Use Of The Inven-

WN ee ae S eee ee oe 11

II. The Court Of Appeals Has Not Followed
The Rule Of Law Established By This
ComrOe FROGRGOEES 60 ce ccc cesses 14

III. The Decision Of The Court Of Appeals De-
feats The Goals Of Our Patent Laws Of
Fostering Technological Growth And Indus-
eee oe rrr re 18

[AE Awb4k bik 4s ORAS we eS Rae 20

Vv

CONTENT OF APPENDIX

Opinion of the Court of Appeals for the
Federal Circuit, dated September 16, 1997 . . . . App. 1

Opinion of the District Court,
dated September 30,1996 ......-.-.+-+:+:: App. 14

Judgment of the District Court,
dated November 4, 1996 ........---++e+e App. 19

vi
TABLE OF AUTHORITIES

Cases:
Anderson v. Liberty Lobby, Inc.,

BS | ee ee

Andrews v. Hovey,

pg a a eee errr

City of Elizabeth et al. v. American
Nicholson Pavement Co., 97 U.S.

EE Se ee O pew ides sees eee

Eastman v. Mayor of N.Y.,

134 F. 544 (2d Cir. 1904) ..........

Graver Tank & Mfg. Co., Inc. v. Linde Air

Products Co., 339 U.S. 605 (1949) ....

In re Martin,

74 F.2d 951 (CCPA 1935) ..........

Kendall v. Winsor,

62 U.S. (21 How.) 322 (1859) .......

Kewannee Oil Co. v. Bicron Corp.,

So ee

Lorenz v. Colgate-Palmolive-Peet Co.,

167 F.2d 423 (3d Cir. 1948) ........

Markman v. Westview,

617 U.S. 370, 116 S.Ct. 1384 (1996) ..

National Tube Co. v. Eastern Tube Co.,
3 Ohio CC NS 459 (1902), aff'd, 69

Ohio St. 560, 70 N.E. 1127 (1903)....

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

PAGE

er ee 18

a nh ae areal

Shaw v. Cooper,

39 U.S. (7 Pet.) 292 (1833) ....-----++>: 11-17
Smith v. Goodyear Dental Vulcanite Co.,

93 U.S. 486 (1876) ....--- eee e rere rr reree 18
Warner-Jenkinson Co. v. Hilton Davis

Chemical Co., 117 S.Ct. 1040 (1997) ......--- 21
Woodbury Patent Planing-Machine Co. v.

Keith, 101 U.S. 479 (1880) ...-----+-+sseee: 18
Zenith Radio Corporation v. Hazeltine

Research, Inc., 395 U.S. 100 (1969) .....---- 20

Constitutional Provisions:

U.S. Const. art. I, § 8, cl. 8 ...--- ee errr rere 2,18
Statutes:

98 U.S.C. § 1295(aX1) ...- cee eee eee rete ees 2
98 U.S.C. § 1254(1) .... eee eee r ee terreeees 1
98 U.S.C. § 1988la) .... eer r cece eeserereeees 2
95 U.S.C. § 102(D) .. cece reece reece: 2,3, 14
OR U.S.C. 6 BTUa) ..cccccccscrcrscrresosers 20
Rules:

Supreme Court Rule 10(c) ...-.----++esrerere 11

ee

a a ed

iio.

1

PETITION FOR WRIT OF CERTIORARI

Petitioners (hereinafter “Evans”) respectfully pray that
a writ of certiorari issue to review the judgment of the
United States Court of Appeals for the Federal Circuit,
entered in Case No. 97-1146 pursuant to its opinion
dated September 16, 1997.

OPINIONS BELOW

The Opinion of the Court of Appeals for the Federal
Circuit dated September 16, 1997 is reported at 125 F.3d
1448, and is reprinted in the Appendix at App. 1.

The Opinion of the United States District Court for the
District of Connecticut (Chatigny, J.) dated September
30, 1996 is reported at 939 F.Supp. 154, and is reprinted
in the Appendix at App. 14.

The judgment of the United States District Court for
the District of Connecticut dated November 4, 1996 is
reprinted in the Appendix at App. 19.

JURISDICTION

The judgment of the Court of Appeals for the Federal
Circuit was entered on September 16, 1997. This Court
has jurisdiction under 28 U.S.C. § 1254(1).

————————

2

CONSTITUTIONAL PROVISION
AND STATUTE INVOLVED

U.S. Const. art. I, § 8, cl. 8

The Congress shall have Power . . . To promote the
Progress of Science and Useful Arts, by securing for
limited Times to Authors and Inventors the exclusive
Right to their respective Writings and Discoveries... .

35 U.S.C. § 102
A person shall be entitled to a patent unless—... . (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. ...

STATEMENT OF THE CASE
I. Nature Of The Case

This a patent infringement action brought by Evans
against the Respondent, General Motors Corporation
(“GM”). The District Court had jurisdiction pursuant to
28 U.S.C. § 1338(a), and the Court of Appeals for the
Federal Circuit had jurisdiction of the appeal pursuant
to 28 U.S.C. § 1295(a)(1).

Evans” patent-in-suit, U.S. Patent No. 5,255,636 (“the
636 patent”), covers a cooling system for internal com-
bustion engines. It issued on October 26, 1993, from an
application filed on July 1, 1992. Evans alleges that GM

* Petitioners, Evans Cooling Systems, Inc. and Patent En-
forcement Fund, Inc., are co-owners of the patent-in-suit.

3

has infringed the 636 patent in the manufacture and
sale of numerous automobiles, including the Chevrolet
Corvette, Chevrolet Caprice, Chevrolet Camaro, Buick
Roadmaster and Pontiac Firebird. Evans seeks an in-
junction and/or damages resulting from the infringement.

Il. The Course Of Proceedings Below

After a period of discovery, GM moved for summary
judgment of invalidity of the 636 patent contending that
GM’s sales activities and other activities regarding the
1992 Corve’ te more than one year before Evans filed his
patent application (i.e., before the critical date of July 1,
1991) constitute on sale and public use bars under 35
U.S.C. § 102(b).

Evans responded to GM’s motion for summary judg-
ment by arguing, among other things, that GM is barred
from asserting the on sale and public use bars under 35
U.S.C. § 102(b) because GM surreptitiously and fraudu-
lently stole Evans’ invention and incorporated it into the
1992 Corvette that GM contends was on sale and in
public use before the critical date of July 1, 1991. In
reply, GM did not contest that there is sufficient evi-
dence to present a triable issue of fact as to whether it
had misappropriated Evans’ invention and used it in the
1992 Corvette. Instead, GM only argued that even if it
stole the invention and incorporated it into the 1992
Corvette, it may nevertheless assert that its activities
regarding the 1992 Corvette constitute on sale and pub-
lic use bars under § 102(b).

The District Court, in its order dated September 30,
1996 (App. 14), granted GM’s motion for summary judg-
ment based on the on sale defense (without determining

+

the applicability of the alleged public use defense). The
District Court’s opinion did not address or mention
Evans’ argument that GM should be barred from assert-
ing the on sale and public use defenses because GM stole
Evans’ invention.

In Evans’ appeal of the District Court decision, the
Court of Appeals for the Federal Circuit affirmed the
District Court decision, and declined to create an “excep-
tion” to the on sale bar based on trade secret misappro-
priation (App. 1).

Ill. Statement Of Facts
A. The Technology Involved In This Case

The subject matter of the 636 patent is a reverse flow
cooling system for an internal combustion engine. The
coolant flows from the radiator into the cylinder heads at
the top of the engine, downwardly through the engine
block, and back into the radiator. The cooling system is
“reverse flow” because the generally top-to-bottom cool-
ant flow through the engine is reversed from the general-
ly bottom-to-top coolant flow that has been the standard
in the automobile industry since the beginning of mass
production of automobiles.

Evans’ unique configuration of a reverse flow cooling
system improves cooling in the cylinder heads at the top
of the engine (the hottest area of the engine) because the
coolant flows from the radiator directly to the cylinder
heads, and is not pre-warmed in the engine block as in
conventional flow systems. As a result, Evans’ reverse
flow cooling system cools an automobile engine more effi-
ciently than a conventional flow cooling system, and pro-

5

vides significant advantages including increased horse-
power and fuel economy. GM’s widespread use of Evans’
reverse flow cooling system on GM’s automobiles, be-
ginning with the 1992 Corvette, has proven the value
and worth of Evans’ invention.

B. Evans’ Development And Ownership Of The
Invention As A Trade Secret
Evans conceived the invention of the ’636 patent in
1984. He reduced the invention to practice when he tried
it on a test car in 1986. He tested the invention on an
engine dynamometer in 1987. He further tested the in-
vention on a GM-owned Corvette in a confidential “black
box” demonstration in 1989, as discussed in detail below.

Evans recorded his activities, including the develop-
ment and testing of the invention, in an inventor's log
book. Evans preserved the secrecy of his invention at all
times by requiring all persons having contact with him
and his company to sign confidentiality agreements.

C. GM’s Theft Of Evans’ Trade Secret

In February, 1989, GM requested that Evans demon-
strate his reverse flow cooling system at GM's test fa-
cility. GM stated that the purpose of the demonstration
was to compare Evans’ reverse flow cooling system to
conventional flow systems, and further to compare it to
another cooling system (a “propylene glycol” cooling sys-
tem) that Evans had designed and applied to GM vehi-
cles over the previous several years.

Evans expressed reservations about conducting such a
demonstration because his reverse flow cooling system

6

was a proprietary trade secret that he did not wish to
disclose to GM. In response, GM stated that compliance
with GM’s request for demonstration of Evans’ reverse
flow cooling system would help “resolve” a dispute over
a large receivable owed by GM to Evans’ company.
Evans’ company, MECCA Development, Inc. (“MECCA”),
had worked with GM over the previous several years on
the propylene glycol cooling system, and GM owed over
$800,000 to MECCA for such work. As a compromise,
Evans agreed to demonstrate his reverse flow cooling
system at GM’s test facility on a confidential “black box”
basis.

Under the confidential “black box” arrangement, Evans
was to install his system on a GM Corvette at the GM
test facility, and then allow the system to be tested by
GM personnel to determine its efficacy. The hood of the
engine was to be kept closed so that the design and con-
figuration of the reverse flow cooling system would be
shielded from the view of GM test personnel, and thus
kept in a confidential “black box.” At the end of the black
box demonstration, Evans was to dismantle the reverse
flow cooling system and return the test car’s cooling
system to its previous configuration.

Unbeknownst to Evans, CM’s hidden agenda in re-
questing the black box demonstration was to provide an
opportunity for GM to steal Evans’ trade secret embodied
in the reverse flow cooling system. GM did not disclose
that, for several years, GM had been working on a secret
project to develop a reverse flow cooling system for use
in GM’s new “Gen II” engine, which was scheduled to be
introduced as the new LT1 engine in the 1992 Corvette.
However, GM was having trouble making its own reverse

7

flow cooling system work, and needed Evans’ unwitting
“help” in making it work.

The motive for theft was privately communicated to
Evans and his employee during the course of the 2-day
black box demonstration at the GM test facility. GM
technicians, who were working on the Gen II engine in
a neighboring test cell at the test facility, took Evans
and his employee aside and volunteered that GM engi-
neers were developing the Gen II engine, but they could
not make it work; they were getting scared regarding
being able to meet the due date for gearing up to pro-
duce hardware; they needed Evans to make it work; and
they are going to “take” Evans’ technology. They told
Evans that the GM engineers were going to “steal you
blind.” After the test of Evans’ system proved successful,
the technicians told Evans privately, “you just cut your
own throat,” but did not say how or why.

These startling admissions of the GM technicians are
consistent with circumstantial evidence regarding the
“black box” demonstration. The two-day demonstration
was performed on March 16-17, 1989 at the GM test fa-
cility. After Evans and his employee installed the reverse
flow cooling system on GM's test Corvette on the first
day, the Corvette was supposed to be secured in a GM
test cell overnight. No one but GM had access to the test
cell. However, when Evans arrived at the test cell the
next morning, he found that an access panel for the test
cell, which had been left closed for the night, was open,
indicating that someone had surreptitiously entered the
test cell. The Corvette was owned by GM, and GM had
access to the key codes.

8

After the black box demonstration was concluded, GM
changed the as-yet unsuccessful design of its secret re-
verse flow cooling system and incorporated Evans’ stolen
trade secret. GM did not publicly release details about
its reverse flow cooling system, as incorporated in the
LT1 engine, until it released information about the 1992
Corvette in August, 1991. Evans was unaware that GM
had incorporated his invention into a GM vehicle until
he saw a September, 1991 article in a monthly periodical
that described the cooling system for the 1992 Corvette.

D. GM’s Alleged Sales Activities

GM began making and selling Evans’ stolen reverse
flow cooling system when GM introduced the 1992 Cor-
vette with the LT1 engine in August and September of
1991. GM did not publicly announce or otherwise reveal
the details of Evans’ invention until then, which is after
the critical date of July 1, 1991. GM started receiving
orders for the 1992 Corvette with the LT1 engine in May
and June of 1991, with production scheduled to begin in
August, 1991.

In holding that Evans’ invention embodied in the 1992
Corvette was offered for sale before the critical date of
July 1, 1991, the Court of Appeals relied on an order
placed by a customer named Aram Najarian with a GM
dealer on June 13, 1991. It is undisputed that neither
Mr. Najarian nor the dealer knew the details of Evans’
invention in the reverse flow cooling system for the 1992
Corvette at the time Mr. Najarian placed the order.

9

E. Evans’ Assertion Of His Rights Against GM

Notwithstanding his suspicion that GM had stolen his
invention in the March, 1989 black box demonstration,
Evans did not immediately file a patent application be-
cause GM repeatedly disclaimed interest in his inven-
tion, because Evans had no hard evidence of theft, and
because he was financially broke.

Until September, 1991, Evans had no direct knowledge
of GM’s use of his reverse flow cooling system. GM had
repeatedly disclaimed any interest in Evans’ proprietary
system in response to Evans’ inquiries over a period from
1984 to May, 1989. Evans did not have any hard evi-
dence that GM had actually stolen his invention until he
read the September, 1991 article describing how his in-
vention was to be incorporated into the 1992 Corvette.

The primary cause for Evans’ financial straits from
1989 to 1992 was GM’s refusal to pay a $804,000 debt
owed to Evans’ company, MECCA, for work done for GM.
GM refused to pay the $804,000 receivable, and forced
Evans to settle for $150,000 after the black box demon-
stration. Since GM had been the only source of income
for Evans, this $654,000 compromise caused Evans and
the company to go into a financial tailspin. Evans closed
the company and laid off the employees. Creditors sent
dunning letters and filed lawsuits to collect debts. Evans’
wife pawned her engagement ring. Evans’ bank threat-
ened to foreclose on its loan and seize the assets of
Evans and his company. Evans solicited investors and
advised them of the proprietary reverse flow cooling
system, but potential investors were scared off by the
apparently imminent financial collapse of Evans and his
company.

10

After Evans learned of GM’s publication of his inven-
' tion in the September, 1991 periodical describing the
cooling system of the 1992 Corvette, he immediately
wrote to GM to advise of his impending patent applica-
tion, and to request a meeting to discuss the matter. GM
ignored Evans, and shielded from Evans any information
about its alleged sales activities before the critical date
of July 1, 1991.

Thereafter, Evans filed the application for the 636
patent on July 1, 1992, nine months after he learned
that GM had in fact stolen his invention and used it in
the 1992 Corvette. Since GM did not publicly disclose or
commercialize the 1992 Corvette with the LT1 e:gine
until after July 1, 1991, Evans believed that he had
timely filed his patent application to avoid any allegation
that GM’s sales activities would constitute an on sale
bar. It is undisputed that Evans was unaware of the pre-
July 1, 1991 sales activities until such activities were
revealed during discovery in this action.

REASONS FOR GRANTING THE WRIT

This Court’s precedent precludes invalidation of a
patent by surreptitious and fraudulent theft and use of
the invention. The Court of Appeals erroneously refused
to accept that this Court’s precedent establishes such a
rule of law. Also, the Court of Appeals’ decision errone-
ously undermines the goals of the U.S. patent laws in
fostering technological growth and industrial innovation.
To the contrary, the Court of Appeals’ decision defeats
such goals by encouraging trade secret misappropriation
as a means of destroying otherwise valid patent rights.
Therefore, this Court should grant a petition for a writ

11

of certiorari pursuant to Supreme Court Rule 10(c) to
correct the errors in the Court of Appeals’ decision.

I. Supreme Court Precedent Precludes Invalidation
Of A Patent By Surreptitious And Fraudulent
Theft And Use Of The Invention

This Court, in a series of cases decided in the 19th
century, repeatedly stated that surreptitious and fraudu-
lent use of an invention by a misappropriator of_the
invention cannot invalidate an inventor’s patent on the

invention. See Pennock v. Dialogue, 27 U.S. (2 Pet.) 1

(1829); Shaw v. Cooper, 32 U.S. (7 Pet.) 292 (1833),

Kendall v. Winsor, 62 U.S. (21 How.) 322 (1859).

In Pennock, the Patent Act of 17 93 authorized the
issuance of patents “not known or used before the [filing
of the patent] application.” In discussing the statutory
language, the Court stated,

(I]f before his application for a patent his invention
should be pirated by another, or used without his
consent; it can scarcely be supposed that the Legisla-
ture had within its contemplation such knowl “ze or
use . .. The use here referred to has always -cen
understood to be a public use, and not ap »=-2 OF
surreptitious use in fraud of the inventor.

27 US. at 19, 20.

In Shaw, the Court examined again the Patent Act of
1793, as well as the Act of 1800 extending patent rights
to foreigners with the proviso that the patent shall be
void if the invention “had been known or used previous
to such application for a patent.” The Court stated,

But there may be cases, in which a knowledge of the
invention may be surreptitiously obtained and com-

12

municated to the public, that do not affect the right
of the inventes. Under such circumstances no pre-
sumption can arise in favor of abandonment of the
right to the public by the inventor; though an acqui-
escence on his part will lay the foundation for such
a presumption .. . And if the invention, through
fraudulent means, shall be made known to the pub-
lic, he should assert his right immediately, and take
the necessary steps to legalize it. . . If the right were
asserted by him who fraudulently obtained it, per-
haps no lapse of time could give it validity.

32 US. at 319, 320.

In Kendall, the Seventh Section of the Patent Act of
1839 was at issue. It afforded immunity from suit to
prior users of a patented invention as follows,

That every person or corporation who has or shall
have purchased or constructed any newly invented
machine, manufacture, or composition of matter,
prior to the application of the inventor or discoverer
for a patent, shall be held to possess the right to use,
and vend to others to be used, the specific machine,
manufacture, or composition of matter, so made or
purchased, without liability therefor to the inventor
or any other person interested in such invention.

The Court upheld a jury instruction providing that the
defendants would have no right to continue to use the
invention after issuance of the patent if the defendants
obtained the invention by instigating a surreptitious act
in violation of a pledge of secrecy made to the plaintiff.
The Court stated,

But whilst inventors are bound to diligence and
fairness in their dealings with the public with refer-
ence to their discoveries, on the other hand, they are
by obligations equally strong entitled to protection

—————e ee

13

against frauds or wrongs practised to pirate from

them the results of thought and labor, in which near-

ly a lifetime may have been exhausted; the fruits of

more than the viginti annorum lucubrationes, which

fruits the public are ultimately to gather. The shield
ALLS : aS “< ~1F288h

: cf
nverpos ‘

DTOVECULOL J
between the inventor and fraudulent spoliator by the
courts in England, and most signally and effectually
has this been done by this court, as is seen in the
cases of Pennock & Sellers v. Dialogue, 2 Pet. 1, and
of Shaw v. Cooper, 7 Pet. 292.

62 U.S. at 329 (underlining added).

The later case of Andrews v. Hovey, 124 U.S. 694, 702-
03 (1888) touched on this issue, and confirmed that
a trade secret thief cannot invalidate a patent. In
Andrews, the Court addressed the second clause of the
Seventh Section of the Patent Act of 1839, which invali-
dated a patent if the invention had been purchased, sold
or used “more than two years prior to such application
for a patent.” The plaintiff argued that use more than
two years before the application for patent should not
invalidate the patent where such use was without the
knowledge, consent or allowance of the patentee. The
plaintiff did not allege that such use was the result of
piracy or misappropriation. To the contrary, the plaintiff
himself had installed several of the patented “driven
wells” on the property of third persons, and had publicly
exhibited the invention, more than 2 years before filing
his patent application. Thereafter, others made and used
the invention, without the inventor's “consent” after
learning about the prior installations.

The Supreme Court held that the patent was invalid
based on public use more than two years before the
application for the patent, which use was without the

14

consent or allowance of the inventor. However, the Court
distinguished use “without consent or knowledge of the

inventor” from use that derives from misappropriation of
the invention, and stated,

It may well be that a fraudulent, surreptitious and
piratical purchase or construction or use of an inven- |
tion prior to the application for the patent would not
affect the rights of the patentee under either clause
of the 7th section; but the present is not such a case
as that which existed in Kendall v. Winsor. In the
use of driven wells in public, at Cortland, by others
than Green, more than two years before his applica-
tion, we see nothing in the evidence under which
such use can properly be characterized as fraudulent,
piratical, or surreptitious.

124 U.S. at 708. Therefore, Andrews reaffirms the prin-
ciples established in Pennock, Shaw and Kendall.

Thus, these U.S. Supreme Court cases clearly stand for
the principle that, under the Patent Act, a patent cannot
be invalidated by surreptitious and fraudulent theft and
use of the invention.

Ii. The Court Of Appeals Has Not Followed The Rule
Of Law Established By This Court’s Precedents

The Court of Appeals in this action did not accept that
this Court’s precedents establish such a rule of law, and
claimed that Evans was urging a “new exception” (App.
8, 13) to the on sale bar. The Court of Appeals stated
that this Court’s statements in Pennock and Shaw were
mere dicta, and stated that Kendall is not on point
because of a difference between the section of the Patent
Act of 1839 at issue therein and § 102(b) of today’s
Patent Act at issue herein. The Court of Appeals relied

—————

15

on the decisions of Eastman v. Mayor of N.Y., 134 F. 844
(2d Cir. 1904), Lorenz v. Colgate-Palmolive-Peet Co., 167
F.2d 423 (3d Cir. 1948) and In re Martin, 74 F.2d 951
(CCPA 1935) in declining to follow this Court’s prece-
dent.

This Court should issue a writ of certicrari to correct
the error of the Court of Appeals in failing to follow this
Court’s precedent. While this Court's statements in
Pennock and Shaw on the issue presented herein may
have been dicta, this Court’s decision on this issue in
Kendall is a holding that affirmed a finding of patent
infringement, and upheld a jury instruction that stated,

That if Aldridge, under a pledge of secrecy, obtained
knowledge of the plaintiff's machine—and he had not
abandoned it to the public—and thereupon, at the
instigation of the defendants, and with the knowl-
edge, on their part, of the surreptitiousness of his
acts, constructed machines for the defendants, they
would not have the right to continue to use the same
after the date of the plaintiff's letters patent.

The Court went on to expressly hold that the jury in-
struction was,

in strict conformity with the principles hereinbefore
propounded, and with the doctrines of [t]his court, as
declared in the cases of Pennock v. Dialogue and
Shaw v. Cooper.

62 U.S. at 331. Thus, notwithstanding the fact that
Kendall addressed a provision of the Patent Act permit-
ting a defendant to continue to use an invention after a
patent issues (which is no longer in the Patent Act),
rather than a statutory on sale bar, the Court, in sup-
port of its holding, resoundingly confirmed the principle
that a patent cannot be invalidated by surreptitious and

16

fraudulent theft and use of the invention. Therefore, the
Court of Appeals’ decision herein is in conflict with the
holding of Kendall.

The Court of Appeals’ reliance on Eastman, Lorenz and
Martin is unwarranted, not only because they are lower
court decisions that do not justify a failure to follow this
Court’s precedent, but also because they are factually
quite different. In Eastman, the court found that the
facts, unlike the facts here, are similar to the facts in
Andrews, i.e., it was not a case of “fraudulent and pira-
tical” theft. 134 F. at 856.

In Lorenz, unlike here, the inventor had voluntarily
disclosed his invention to a fellow employee without a
pledge of secrecy 14 years before the filing of the appli-
cation for the patent-in-suit. Further, the plaintiff in
Lorenz, unlike Evans, had abandoned an earlier timely-
filed patent application on his invention, which is con-
trary to the strictures in Shaw requiring an inventor to
not abandon his invention.

In Martin, unlike here, the inventor had disclosed the
invention te his employer more than 11 years before
filing a patent application, and there was an agreement
that he would not file any patent application except
through his employer. As stated by the court in Martin,

This, however, was appellant’s voluntary act and
affords no excuse for his not filing or causing to be
filed an application for patent in time to avoid the
bar of public use.
74 F.2d at 956. Thus, Martin is not properly relied upon
here because the claimed inventor, unlike Evans here,
failed to follow the strictures of Shaw requiring that the
inventor not abandon the invention.

17

Here, contrary to the facts in Eastman and Lorenz, it
is assumed for the purposes of this appeal that GM’s
theft and sale of Evans’ invention has been fraudulent
and piratical. Further, Evans, unlike the patentees in
Lorenz and Martin, followed the strictures of Shaw by
not abandoning his invention and by acting immediately
to assert his rights after he learned of GM’s use of the
invention.

The Court of Appeals’ decision, in relying on Martin,
focused on the fact that GM’s dealers were “innocent
users who put the invention on sale by placing orders for
innocent retail customers like Najarian” (App. 12). How-
ever, merely placing orders is not a “use” of the invention
by either the dealers or the customers. To the contrary,
there was no “use” by them of the invention during the
time frame in question because the 1992 Corvette had
not yet been built (it was built for customers for the first
time in August, 1991, after the critical date of July 1,
1991). There had been no delivery or disclosure of the
invention to dealers or customers at the time the alleged
orders were being placed. Thus, during this time frame,
GM is clearly the only party (other than Evans) with
knowledge of the invention, and is the “guilty” party
instigating the alleged offer for sale of the invention
before the critical date. Therefore, the Court of Appeals’
reliance on the “innocence” of dealers and customers who
have not gained knowledge or possession of the invention
is no basis to depart from this Court’s clear pronounce-
ments in Pennock, Shaw and Kendall.

The Court of Appeals wrongfully claims that Evans
“knew GM stole the invention at the very time it was
allegedly stolen” (App. 13). However, the District Court
made no such finding, and there is no basis for such a

18

finding by the Court of Appeals, particularly in a sum-
mary judgment motion where inferences are to be con-
strued in favor of the non-movant Evans. Anderson uv.

Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

Finally, the Court of Appeals implies that Evans im-
properly delayed in filing his patent application “two
years after the [black box] demonstration and some six
years after [the invention] was reduced to practice” (App.
13). However, under this Court’s precedent, such delay
is permitted to test and develop the invention, Kendall,
62 U.S. at 328-29; City of Elizabeth et al. v. American
Nicholson Pavement Co., 97 U.S. 126, 137 (1878), and
delay is permitted where the inventor is broke and does
not abandon the invention, Smith v. Goodyear Dental
Vulcanite Co., 93 U.S. 486, 501 (1876) and Woodbury
Patent Planing-Machine Co. v. Keith, 101 U.S. 479, 485-
86 (1880). Thus, the Court of Appeals’ decision is also in-
consistent with Supreme Court precedent in this regard.

Ill. The Decision Of The Court Of Appeals Defeats
The Goals Of Our Patent Laws Of Fostering
Technological Growth And Industrial Innova-
tion

The “true policy and ends of the patent laws enacted
under this government” is to “promote the Progress of

Science and Useful Arts” under U.S. CONSsT., art. I, § 8,

cl. 8. Kendall, 62 U.S. (21 How.) at 328. This is consis-

tent with the Congressional goal in creating the Court of

Appeals for the Federal Circuit of strengthening the

United States patent system “in such a way to foster

technological growth and industrial innovation.” Mark-

man v. Westview, 517 U.S. 370, 116 S.Ct. 1384 (1996)

(quoting from H.R. Rep. No. 97-312, pp. 20-23 (1981)).

ee ee

19

The goals of our patent laws are consistent with the
goals of our trade secret laws. As stated in Kewannee Oil
Co. v. Bicron Corp., 416 U.S. 470, 481-82 (1974) (quoting
from National Tube Co. v. Eastern Tube Co., 3 Ohio CC
NS 459, 462 (1902), aff'd, 69 Ohio St. 560, 70 N.E. 1127
(1903)),

The maintenance of standards of commercial ethics
and the encouragement of invention are the broadly-
stated policies behind trade secret law. “The necessi-
ty of good faith and honest, fair dealing, is the very
life and spirit of the commercial world.”

These goals are insidiously undermined by allowing a
trade secret thief to surreptitiously and fraudulently
steal an invention and then put the invention on sale so
as to invalidate any patent on the invention. There can
be no justification for allowing such wrongful activity to
undermine the goals of our patent laws.

The Court of Appeals’ decision in this case effectively
encourages such an insidious undermining of our patent
laws (and trade secret laws). This Court should reverse
the Court of Appeals’ decision to prevent such a result.
As stated in Kewannee Oil,

A most fundamental right, that of privacy, is threat-
ened when industrial espionage is condoned or made
profitable; the state interest in denying profit to such
illegal ventures is unchallengeable.

416 U.S. at 487.

The Court of Appeals, in justifying its rejection of
Evans’ contention that a trade secret thief should be
barred from invalidating Evans’ patent, and in admitting
that “such a result may not seem fair,” stated that Evans
“is not without recourse” because he “would have an ade-

20

quate remedy in state court for misappropriation of a
trade secret” (App. 13). However, Evans’ right of action
against GM for trade secret misappropriation does not
prevent erosion of the goal of promoting technological
growth and industrial innovation. Third parties, who are
not subject to liability for trade secret misappropriation,
receive a windfall in being permitted to practice the in-
vention without any restrictions—a sort of unrestricted,
royalty-free license. Such windfall, without any effort or
technological advance by such third parties, deprives the
true inventor of reaping the benefits of his own creative
efforts, and is antithetical to the policies of encouraging
technological growth and industrial innovation.

Further, contrary to the Court of Appeals’ decision,
Evans’ trade secret claim is no solace for losing powerful
patent rights. The very essence of a patent is the right
to exclude others from making, using, offering to sell, or
selling the patented invention. 35 U.S.C. §271(a); Zenith
Radio Corporation v. Hazeltine Research, Inc., 395 U.S.
100, 135 (1969) (“The heart of his legal monopoly is the
right to invoke the State’s power to prevent others from
utilizing his discovery without his consent”).

CONCLUSION

As repeatedly stated in the 19th Century cases dis-
cussed above, this Court has always interposed a “shield
of protection” between an inventor and a fraudulent
spoliator so as to foster and protect the policies of the
patent laws, and to prevent injustice. In this century,
this Court has continued to protect these policies of the
patent laws, and prevent injustice. See Graver Tank &
Mfg. Co., Inc. v. Linde Air Products Co., 339 U.S. 605,

21

607-08 (1949) and Warner-Jenkinson Co. v. Hilton Davis
Chemical Co., 117 S.Ct. 1040 (1997), where the Court
twice held that the doctrine of equivalents permits a
finding of infringement even when there is no literal
infringement, so as to prevent a “fraud on the patent”
that would “pirate an invention.” Graver Tank, 339 U.S.
at 607-08.

The Court of Appeals’ decision in this action does not
follow, and effectively guts, this Court’s above-noted
precedents. Further, it insidiously undermines the goals
of both the patent laws and the trade secret laws, and
encourages trade secret misappropriation as a means for
invalidating a patent.

Therefore, this Court should grant this Petition for a
Writ of Certiorari, and reverse the decision of the Court
of Appeals in this action.

Respectfully submitted,

KARL R. FINK
(Counsel of Record)
JOHN F. FLANNERY
FITCH, EVEN, TABIN
& FLANNERY
135 South LaSalle Street
Suite 900
Chicago, Illinois 60603-4277
(312) 372-7842

Attorneys for Petitioners

Date: December 15, 1997

Os c ple paar ares pea Poe:

APPENDIX

nom

ad

App. 1

United States Court of Appeals
for the Federal Circuit

97-1146

EVANS COOLING SYSTEMS, INC. and
PATENT ENFORCEMENT FUND, INC.

Plaintiffs-Appellants,
v.
GENERAL MOTORS CORP.
Defendant-Appellee.

Decided: September 16, 1997

Before ARCHER, Chief Judge, MICHEL and LOURIE,
Circuit Judges.

MICHEL, Circuit Judge.

Evans Cooling Systems, Inc. and Patent Enforcement
Fund, Inc. (collectively, “Evans”) appeal the September
30, 1996 order of the United States District Court for the
District of Connecticut granting summary judgment to
General Motors Corporation (“GM”) of invalidity based
on the “on sale” bar under 35 U.S.C. § 102(b). The appeal
was submitted for our decision after oral argument on
July 1, 1997. Because there were no materially disputed
questions of fact regerding whether the patented inven-
tion was offered for sale more than one year prior to the
critical date and because we decline to create an excep-
tion to the on sale bar for those instances in which a

App. 2

third party misappropriates the invention and later
places the invention on sale or causes an innocent third
party to place the invention on sale, we affirm.

BACKGROUND

United States Patent Number 5,255,636 (“the ’636 pat-
ent”) issued on October 26, 1993 and claims an aqueous
reverse flow cooling system for internal combustion en-
gines. An understanding of the technology is not neces-
sary to this appeal and we therefore do not discuss it.
John Evans, the named inventor, admits he conceived
the patented invention in 1984 and reduced it to practice
in 1986. Mr. Evans did not file a patent application,
however, until July 1, 1992.

In early 1994, Evans filed the present lawsuit alleging
that GM infringed the ’636 patent by the manufacture
and sale of cars having GM’s “LT 1” and “L99” engines.
GM counterclaimed for a declaration of invalidity and
non-infringement. GM asserted that the 636 patent was
invalid because GM and its independent dealers had
placed the patented invention on sale prior to the critical
date with the introduction of its 1992 Corvette. Specifi-
cally, GM sent an “Order Guide” for the 1992 Corvette to
its independent dealers in late April or early May, 1991
to be used for ordering the vehicle described in the Order
Guide. At about the same time, GM sent its dealers a
supplemental brochure that provided additional ordering
information for the 1992 Corvette, specifically stating
that the car had reverse flow engine cooling. A represen-
tative of GM testified that it expected the dealers would
start ordering the vehicles as soon as the Order Guide
was sent to them. A sales representative at a GM deal-

App. 3

ership also testified that it was the dealership’s common
practice to order new cars and enter into agreements to
sell new cars shortly after receiving the Guide. GM pro-
duced computer records documenting over 2000 orders
placed by dealers around the country for the 1992 Cor-
vette before the critical date. The orders, over 300 of
which were placed on behalf of specific retail customers,
were placed through a computer network and GM trans-
mitted an acknowledgment back to the dealer after re-
ceiving the order. As a specific example, GM introduced
evidence regarding a retail customer named Aram Najar-
ian who visited a Corvette dealer in West Bloomfield,
Michigan in June, 1991. Mr. Najarian entered into a con-
tract with a GM dealer on June 13, 1991 in which GM
agreed to sell and Mr. Najarian agreed to buy a Corvette
with an LT1 engine. Although a firm price was not es-
tablished at that time, Mr. Najarian was informed that
the price would be up to $2000 higher than the 1991
model and he placed a deposit on the car at that time.
The order was transmitted to GM, and GM sent back an
acknowledgment on June 14, 1991.

Evans asserted before the trial court that GM should
not be allowed to invalidate the ’636 patent because GM,
in fact, stole the invention from Evans. Specifically, GM
allegedly requested that Evans demonstrate its aqueous
reverse flow cooling system at GM’s test facility in the
spring of 1989, and Evans alleges that GM stole the
invention during this demonstration.

The district court granted summary judgment in favor
of GM on September 30, 1996, because the record estab-
lished that GM and its dealers placed the 1992 Corvette
with the LT1 engine on sale prior to the critical date.
The district court relied on the facts that Mr. Najarian

App. 4

entered into a contract with a GM dealer, the dealer
agreed to sell and Mr. Najarian agreed to buy a 1992
Corvette, and Mr. Najarian paid a deposit and the dealer
transmitted the order to GM. The court also noted that
even an offer to sell will raise the on sale bar and that
this transaction went beyond mere indefinite discussions
about a possible sale. Turning to the policies underlying
the on sale bar, the district court noted that John Evans
claimed he reduced the invention to practice in 1986 but
failed to file an application for some six years.

DISCUSSION

We review the district court’s grant of summary judg-
ment de novo. Petrolite Corp. v. Baker Hughes, Inc., 96
F.3d 1423, 1425, 40 USPQ2d 1201, 1203 (Fed. Cir. 1996).
A person is not entitled to a patent if “the invention was
... 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(b)(1994). In order for a patent to
be invalid under this statute, the claimed invention as-
serted to have been on sale must be substantially com-
pleted with reason to expect it would work for its intend-
ed purpose, Micro Chem.., Inc. v. Great Plains Chem. Co.,
103 F.3d 1538, 1545, 41 USPQ2d 1238, 1244 (Fed. Cir.
1997), must have been embodied in or obvious from the
device offered for sale, and the sale must have been pri-
marily for profit, id. at 1544, 41 USPQ2d 1243; Keystone
Retaining Wall Sys., Inc. v. Westrock, Inc., 997 F.2d
1444, 1451, 27 USPQ2d 1297, 1303 (Fed. Cir. 1993).
Whether an invention was placed on sale prior to the
critical date is ultimately a conclusion of law that we
review de novo, although it is based on underlying facts.

App. 5

Micro Chem., 103 F.3d at 1544, 41 USPQ2d at 1249:
Ferag AG v. Quipp, Inc., 45 F.3d 1562, 1566, 33 USPQ2d
1512, 1514-15 (Fed. Cir. 1995), cert. denied, 116 S. Ct. 71
(1995).

I.

GM argues, and the trial court held, that the 636
patent is invalid because the independent dealers placed
the accused engine on sale to retail customers. As dis-
cussed more fully in the fact section, this argument in-
volves the contract for sale entered into on June 13, 1991
between Mr. Najarian and Jack Cauley Chevrolet, Inc.,
which had received the 1992 Corvette Order Guide and
a brochure containing ordering information for the 1992
Corvette and the LT1 engine around April 30, 1991.

Evans makes no argument that the LT1 engine in the
1992 Corvette was not substantially complete. Nor does
Evans argue that the pre-critical date sales were for a
non-commercial purpose.

Evans does, however, argue that summary judgment
was inappropriate because GM did not meet its burden
of proving by clear and convincing evidence that the
engine of the 1992 Corvette anticipated the claims of the
’636 patent. Although GM conceded infringement for pur-
poses of the summary judgment motion, it denied in-
fringement in its answer and stated in sworn answers to
interrogatories that the claims of the ’636 patent were
not infringed because the LT1 engine lacked certain ele-
ments of the claims. Evans argues, therefore, that GM
has necessarily admitted, or at least created a genuine
issue of material fact, that the engine of the 1992 Cor-
vette does not anticipate any of the asserted claims.

App. 6

We do not agree. This is not the typical case where the
patentee has placed some device on sale prior to the
critical date and the accused infringer must demonstrate
that this device actually embodied or rendered obvious
the patented invention. Here, the entire basis of the law-
suit is Evans’—the patentee’s—contention that the LT1
engine—the device that was put on sale—contains a cool-
ing system that infringes. GM denied that the LTi en-
gine infringed the ’636 patent but, by conceding infringe-
ment for purposes of the summary judgment and its on
sale defense, properly pled in the alternative. See Fed.
R.Civ.P. 8(e) (1997) (“A party may set forth two or more
statements of a claim or defense alternatively or hypo-
thetically, either in one count or defense or in separate
counts or defenses.”). Although GM bore the burden of
proving that the LT1 engine embodied the patented in-
vention or rendered it obvious for purposes of the sum-
mary judgment motion, this burden is met by Evans’
allegation, forming the sole basis for the complaint, that
the LT1 engine infringes. Indeed, even on appeal, Evans
states in its brief, directed only to the on sale issue, that
“GM uses an aqueous reverse flow cooling system in its
LT1 engine.”

Evans also argues, in effect, that there was no “sale” or
offer for sale of the LT1 engine. Evans argues that,
based on the totality of the circumstances, a reasonable
jury could conclude that “the Najarian ‘order’ was an ad-
vance, non-binding order, cancelable by either party, that
was not finalized until after July 1, 1991” and that it
was void to the extent that it was an offer for sale. We
have often stated that the totality of the circumstances
and the policies underlying the bar must be considered
in determining whether a definite offer for sale trigger-

App. 7

ing section 102(b) has been made. See, e.g., Envirotech
Corp. v. Westech Eng’g Inc., 904 F.2d 1571, 1574, 15
USPQ2d 1230, 1232 (Fed. Cir. 1990). However, where
there is a specific and definite offer for sale of a success-
fully tested device, such as that evidenced by a com-
pleted contract for sale, that embodies every limitation
of the later patented invention as claimed prior to the
critical date and that sale is clearly for commercial pur-
poses, the analysis need not go any further. It is not that
the totality of the circumstances test is not to be applied
in such a case, but that there are then no circumstances,
short of fraud or duress, that could turn such an offer
into something other than a barring event.

Even if we were otherwise to consider the totality of
the circumstances, Evans’ relevant arguments on this
point are easily discarded. Evans argues that Mr. Najar-
ian’s order is ineffective as a sale because it stated that
“{alny provisions of this order prohibited by Michigan or
Federal law shall be ineffective to the extent of such
prohibition” and the Federal Fuel Economy Regulations
and the Clean Air Act prohibited any offer for sale as of
this date because GM had not yet received fuel economy
labels or a Certificate of Conformity from the EPA. Even
assuming this to be the case, the mere fact that the offer
for sale was illegal or ineffective does not remove it from
the purview of the section 102(b) bar. Jack Cauley Chev-
rolet thought it was offering to sell a 1992 Corvette to
Mr. Najarian and Mr. Najarian thought he was agreeing
to buy such a car. Moreover, there is no evidence that
Mr. Najarian did not receive the car or that the offer was
actually invalidated. Likewise, neither the fact that the
price was not firm nor that the color had not been chosen
avoids the section 102(b) bar. Mr. Najarian was given an

App. 8

estimated price range and it is not uncommon for car
buyers to change their minds about the desired color.
Similarly, the fact that the contract was cancelable or
changeable under certain circumstances does not mean
that it does not evidence a definite offer for sale. Finally,
even if the independent dealership violated internal
procedures by offering the 1992 Corvette for sale prior to
the model announcement date GM had set, this does not
make the offer for sale any less an offer.

Thus, we hold that the order entered into by Mr.
Najarian and Jack Cauley Chevrolet on June 13, 1991—
nearly a month prior to the critical date—evidences an
effective offer for sale that invalidates the 636 patent.
Although GM also argues that the ’636 patent is invalid
because GM placed the reverse flow cooling system in its
engines on sale when it sent the Order Guide and
supplemental information brochure to its dealers across
the country in late April or early May of 1991, we do not
reach or decide that issue here. See Intel Corp. v. Inter-
national Trade Comm’n, 946 F.2d 821, 829, 20 USPQ2d
1161, 1169 (Fed. Cir. 1991) (“A single sale or offer to sell
is enough to bar patentability.”).

Il.

Although our analysis would normally be complete
once we had concluded there was an invalidating offer
for sale, Evans urges this court to create a new exception
to the on sale bar. Specifically, Evans asks us to rule
that an otherwise invalidating offer for sale does not
invalidate a patent “where a third party surreptitiously
steals an invention while it is a trade secret and then,
unbeknownst to the inventor, allegedly puts the inven-

|

App. 9

tion on sale [more than one year] before the inventor
files a patent application covering the stolen invention.”

Evans cited three Supreme Court cases and asserts
that they state that prior use of an invention by one who
misappropriates the invention cannot invalidate a pat-
ent. See Pennock v. Dialogue, 27 U.S. (2 Pet.) 1, 19-20
(1829) (“[I}f before his application for a patent his inven-
tion should be pirated by another, or used without his
consent; it can scarcely be supposed, that the legislature
had within its contemplation such knowledge or use . . .
The use here referred to has always been understood to
be a public use, and not a private or surreptitious use in
fraud of the inventor.”); Shaw v. Cooper, 32 U.S. (7 Pet.)
292, 319-20 (1833) (“But there may be cases, in which a
knowledge of the invention may be surreptitiously ob-
tained, and communicated to the public, that do not
affect the right of the inventor. . . . If the right were
asserted by him who fraudulently obtained it, perhaps no
lapse of time could give it validity.”); Kendall v. Winsor,
62 U.S. (21 How.) 322, 329 (1859) (affording immunity
from suit to prior third party users of a patented inven-
tion but refusing to extend such immunity to those who
received knowledge of the patented invention through
fraud). Evans argues that these Supreme Court cases
have never been expressly overruled and, in fact, the one
time the Court of Customs and Patent Appeals ad-
dressed the issue it expressly left it open, stating:

We do not find it here necessary to decide whether a
fraudulent use of an invention for more than two
years [then the bar period] prior to an application for
a patent therefor bars the issue of the patent upon
such application . .. . It may be that . . . said Miner-
als Separation should have been held to be estopped

App. 10

to bring a public use proceeding. But even so, as to
this we express no opinion... .

In re Martin, 74 F.2d 951, 955-56 (CCPA 1935).

We, however, do not find any of these cases dispositive
of the issue presented by this case. In Pennock, the
Supreme Court actually invalidated the patents in suit
under the public use bar, and in that case the use had
been with the permission of the patentee, thereby ren-
dering any statements regarding piracy mere dicta.
Likewise, the statements relied on by Evans in Shaw are
dicta, as there too the patent was invalidated because
the innocent public had come to know and use the in-
vention, although there was some evidence that the in-
vention had first become known to the public by fraudu-
lent means. The statutory on sale bar wasn’t even in
issue in Kendall. Rather, the issue was whether the de-
fendant had the right to continue to use the invention
after the patent issued. See also Eastman v. Mayor of
N.Y., 134 F. 844, 852-55 (2d Cir. 1904) (discussing
whether “fraudulent, surreptitious, or piratical” use of an
invention could raise the public use bar and rejecting
statements in above Supreme Court cases as dicta).

We note as well that the one other court that has ad-
dressed this precise issue has rejected arguments similar
to Evans’ arguments. See Lorenz v. Colgate-Palmolive-
Peet Co., 167 F.2d 423, 77 USPQ 138 (3d Cir. 1947).
There, the court addressed the following question: “Was
it the intention of Congress that public use by one who
employs a process in breach of a fiduciary relationship,
who tortiously appropriates it or who pirates it, should
bar the inventor from the fruits of his monopoly?” 167
F.2d at 426, 77 USPQ at 141. Lorenz had disclosed his
invention to Colgate. Although Colgate told Lorenz the

App. 11

idea was rejected, it later made substantial commercial
use of Lorenz’s invention and then sought to invalidate
Lorenz’s patent based on this use. Jd. at 424-25, 77
USPQ at 140-41. After reviewing the Supreme Court and
other relevant case law, the court rejected an exception
to the statutory bar, stating:

The prior-public use proviso . . . contains no qualifi-
cation or exception which limits the nature of the
public use. We think that Congress intended that if
an inventor does not protect his discovery by an
application for patent within the period prescribed by
the Act, and an intervening public use arises from
any source whatsoever, the inventor must be barred
from a patent or from the fruits of his monopoly, if a
patent has issued to him. There is not a single word
in the statute which would tend to put an inventor,
whose disclosures have been pirated, in any different
position from one who has permitted the use of his
process. . . [I]solated instances of injustice may result
if the law be strictly applied, but the inventor’s
remedy is sure. He is master of the situation and by
prompt action [in filing a patent application] can
protect himself fully and render the defense of prior
public use impossible.

Id. at 429-30, 77 USPQ at 144 (footnote omitted). Al-
though this decision is not binding on this court, it is
persuasive.

Even if we were to create an exception to the on sale
bar such that third parties accused of misappropriating
an invention could not invalidate a patent based upon
sales by the guilty third party, GM correctly asserts that
Martin squarely holds that activities of third parties
uninvolved in the alleged misappropriation raise the
statutory bar, even if those activities are instigated by

App. 12

the one who allegedly misappropriated the invention. In
Martin, Martin’s employer stole Martin’s invention and
filed an application on it and disclosed it to a third party.
74 F.2d at 952-53. After learning of his employer's ac-
tivities, Martin filed his own application. After an in-
terference was declared, the employer argued Martin’s
application was barred based on the activities of the
third party. Martin conceded his invention had been in
public use, but argued that the bar should not apply
because the third party’s use was “instigated by [his]
employer and was a surreptitious and fraudulent public
use against him” Jd. at 953. After reviewing the Supreme
Court and other relevant case law, the Court of Customs
and Patent Appeals noted it had “been unable to find
any authoritative decisions upon the question of whether
a fraudulent public use of an invention . . . prior to the
filing of an application . . ., or such public use of an
invention instigated by fraud, bars the issuance of a
patent .. .” Id. at 955. Although the Court of Customs
and Patent Appeals did not address that precise issue,
the Court of Customs and Patent Appeals did hold that
allowance of the application was barred because the
third party’s public use had been innocent, even though
it had obtained the technology from the employer. Jd.

As discussed below, this holding is dispositive here
because, although Evans has charged GM with misap-
propriation, it has never contended that the independent
dealers had any participation in or knowledge of the al-
leged theft; nor is there any indication that Mr. Najarian
had such knowledge. Thus, the independent dealers are
innocent users who put the invention on sale by placing
orders for innocent retail customers like Najarian.

icant ilaidalaidiiaiaaiit |

App. 13

While such a result may not seem fair, Evans is not
without recourse if GM in fact misappropriated his
invention. Evans would have an appropriate remedy in
state court for misappropriation of a trade secret. We
note as well that the facts Evans alleges in support of its
misappropriation claim demonstrate that Evans knew
GM stole the invention at the very time it was allegedly
stolen because during the demonstration GM employees
allegedly told Mr. Evans they intended to steal the in-
vention and a sealed room was unsealed during the night
between the tests. Evans’ patent rights would have nev-
ertheless been protected if Mr. Evans had filed a patent
application no more than one year from the date of the
demonstration. This he did not do; instead Mr. Evans
waited for more than two years after the demonstration
and some six years after it was reduced to practice.

CONCLUSION

The ’636 patent is invalid due to the pre-critical date
contract entered into between the independent GM
dealership and Mr. Najarian whereby the dealership
offered to sell and Mr. Najarian agreed to buy a 1992
Corvette containing the LT1 engine. Even if GM mis-
appropriated the idea behind the LT1 engine cooling
system from Mr. Evans, the invention was nevertheless
on sale and we decline to create the suggested new
exception to the 102(b) bar which has no basis in the
language of the statute. The trial court’s decision is
therefore affirmed.

AFFIRMED

App. 14

~ [Dated September 30, 1996]

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

EVANS COOLING SYSTEMS, INC. and :
PATENT ENFORCEMENT FUND, INC., :

: CASE NO.
Plaintiffs, : $:94CV35 (RNC)

GENERAL MOTORS CORPORATION,
Defendant.

ENDORSEMENT RULING AND ORDER

This is a patent infringement case. The patent at issue,
U.S. Patent No, 5,255,636 (the “636 patent”) claims an
apparatus and method for cooling an internal combustion
engine. Plaintiffs allege that General Motors Corporation
has infringed the patent by making and selling cars,
such as the 1992 Corvette, that contain an “LT1 engine
cooling system.”’ GM has moved for summary judgment
[doc. #117] on the ground that it placed the 1992 Cor-
vette with its LT1 engine cooling system “on sale” more
than one year before July 1, 1992, the day the applica-
tion for the 636 patent was filed. After careful consider-
ation of the parties’ briefs and oral arguments, GM’s
motion for summary judgment is granted.

' Plaintiffs contend that GM stole the “technology” from the
named inventor, John W. Evans. Evans has sued GM in a
separate action for misappropriation of trade secrets.

App. 15

An inventor who does not promptly seek a patent runs
the risk of losing the right to obtain a patent. Under 35
U.S.C. § 102(b), an inventor loses his or her right to ob-
tain a patent if the invention was “on sale” more than
one year prior to the date of the patent application. The
on sale bar “is not limited to sales by the inventor or one
under his control, but may result from activities of a
third party.” J.A. LaPorte, Inc. v. Norfolk Dredging Co
787 F.2d 1577, 1581 (Fed. Cir.), cert. denied, 479 U.S.
884 (1986); In re Caveney, 761 F.2d 671, 675 (Fed. Cir.
1985).

In this case, summary judgment is appropriate because
the record establishes that GM and its dealers placed the
1992 Corvette with its LT1 engine cooling system on sale
more than a year before the patent application was filed.
It is undisputed that on June 13, 1991, a retail customer
named Najarian entered into a contract with a GM
dealer relating to the purchase of a 1992 Corvette with
the LT1 engine cooling system. in executing the contract,
the dealer “agree[d] to sell” and the customer “agree[d]
to purchase” a 1992 Corvette with an “LT1” engine. The
customer paid a deposit of $500 and the dealer transmit-
ted the order to GM.?

* GM contends that the Najarian transaction is typical of
hundreds of orders for 1992 Corvettes with the LT1 engine
cooling system that were placed by retail customers prior to
the critical date of July 1, 1991. Computer records show that
as of June 30, 1991, GM received from its dealers a total of
2,078 orders for 1992 Corvettes with the LT1 engine cooling
system. Of those, 318 were placed for specifically identified
retail customers and marked “sold.” Under § 102(b), a single
offer to sell is enough to bar patentability. A.B. Chance Co. v.
RTE Corp., 854 F.2d 1307, 1311 (Fed. Cir. 1988).

App. 16

Plaintiffs contend that the on sale bar does not apply
to the Najarian transaction because the dealer’s agree-
ment to sell was merely a step in preparation for a sale
and not an offer to sell. See Intel Corp. v. U.S. Int'l
Trade Comm'n, 946 F.2d 821, 830 (Fed. Cir. 1991). How-
ever, an offer to sell will raise the on sale bar even
though the product is not on hand and ready for deliv-
ery. See Barmag Barmer Maschinefabrik AG v. Murata
Mach., Ltd., 731 F.2d 831, 837 (Fed. Cir. 1984). More-
over, the dealer’s agreement to sell went beyond the level
of merely indefinite or nebulous discussions about a
possible sale. TRW Fin. Sys., Inc. v. Unisys Corp., 835 F.
Supp. 994, 1003 (E.D. Mich. 1993). It is undisputed that
the dealer, in entering into the transaction, intended to
deliver the car to the customer when it became available.
See Transcript of Oral Argument of May 10, 1996, at 61.

Though this case involves sales activities by third
parties, rather than the inventor or someone under his
control, the policies underlying the on sale bar justify its
application here.’ Plaintiff Evans, the inventor named in
the 636 patent, claims that he reduced the patented
cooling system to practice by July 1986. However, he did

° In determining whether the on sale bar applies, it is neces-
sary to consider the policies underlying the bar. Manville Sales
Corp. v. Paramount Sys., Inc., 917 F.2d 544, 549 (Fed. Cir.
1990). They are: (1) a policy against removing inventions from
the public domain that the public has justifiably come to be-
lieve are freely available due to commercialization by the in-
ventor or others; (2) a policy favoring prompt and widespread
disclosure of inventions to the public; (3) a policy against
allowing an inventor to extend the patent period; and (4) a
policy of giving an inventor a reasonable time following sales
activity to determine whether a patent would be worthwhile.

App. 17

not file an application for a patent until approximately
six years later.* By the time Evans filed his application,
GM’s dealers and retail customers had come to believe
that the 1992 Corvette and its LT1 engine cooling sys-
tem were freely available.* In these circumstances, appli-
cation of the on sale bar serves the important policy of
encouraging early filing of patent applications as well as
the policy against removing inventions from the public
domain. See J.A. LaPorte, Inc., 787 F.2d at 1583; In re
Caveney, 761 F.2d at 676.

GM argues that summary judgment is also appropriate
because the claimed invention was in “public use” more
than a year before the patent application was filed. 35
U.S.C. § 102(b). It is undisputed that in May and June
1991, numerous 1992 Corvettes with the LT1 engine
cooling system were driven by test drivers on public
highways and roads. Because summary judgment is ap-
propriate based on the on sale bar, it is unnecessary to
address this question whether summary judgment would
also be appropriate based on the public use bar.

Accordingly, defendant’s motion for summary judgment
is hereby granted.

* Plaintiffs contend that Evans did not attempt to commer-
cialize or file a patent application on his invention because he
was testing the technology, working on related technology, was
in poor financial condition and could not obtain financial back-
ing.

* At his deposition, Evans testified that he was prompted to
file the application after learning in September 1991 that GM
had disclosed his “technology” to the public.

App. 18

So ordered.

Dated at Hartford, Connecticut this 30th day of Sep-
tember 1996.

Robert N. Chatigny
United States District Judge

App. 19

[Dated November 4, 1996]
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

EVANS COOLING SYSTEMS, INC. AND :
PATENT ENFORCEMENT FUND, INC.
CASE NO.

Vv. : 3:94CV-35(RNC)
GENERAL MOTORS CORPORATION

JUDGMENT

This action having come on for consideration of the
defendant’s motion for summary judgment before the
Honorable Robert N. Chatigny, United States District
Judge and,

The Court having considered the full record of the case
including applicable principles of law, and having filed
an Endorsement Ruling and Order granting the motion,
it is therefore,

ORDERED, ADJUDGED, and DECREED that judg-
ment be and is hereby entered in favor of the defendant.

Dated at Hartford, Connecticut, this 4th day of Novem-
ber, 1996.

KEVIN F. ROWE, Clerk

By:

Robin D. Tabora
Deputy in Charge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_1948%3A1. Public record. Not legal advice.