The Software IP Report
Court Denies Motion to Reconsider Summary Judgment to Not Invalidate Under On-Sale Bar
By Nathan Smith
Categories: 35 U.S.C. §§ 102, 103, The Software IP Report
Having previously denied summary judgment of invalidity of the plaintiff’s design patent, D450,839, under the 35 U.S.C. § 102 on-sale bar, the court in Junker v. Medical Components, Inc., et al., No. 2-13-cv-04606 (E.D. Pa Oct. 8, 2019), has denied a request for reconsideration that communications between plaintiff and a prospective buyer were not a legal offer for sale. Along the way, the court demonstrated that there can be some flexibility in applying the law governing what is an “offer for sale” under § 102.
The court had denied defendant’s motion for summary judgment of invalidity, holding, based on the Restatement of Contracts, that communications between the plaintiff and a prospective buyer were preliminary negotiations and “did not trigger the on-sale bar” due to “the lack of a definite quantity term and delivery time” in the communications and “language that…establish[ed] an invitation to further negotiations.” The Defendants sought reconsideration, arguing that the court made clear errors of law in determining whether an offer for sale was made. See Max’s Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999). (A motion for reconsideration must rely upon one of the following grounds: “(1) an intervening change in controlling law; (2) the availability of new evidence… or (3) the need to correct a clear error of law or fact….”)
The Defendants argued that the court failed to analyze whether the communications were a legal offer under the U.C.C. However, the court noted that “the U.C.C. is a model code – it does not itself have the force of law.” Linear Tech. Corp. v. Micrel, Inc., 275 F.3d 1040, 1048 (Fed. Cir. 2001). Further, the court noted that “the U.C.C. does not itself define an ‘offer’,” Id. at 1050, so courts “will look to common law to determine whether a valid offer exists.” Finally, the court noted that “although the U.C.C. is a source of guidance for whether an offer for sale was made… it is not the only appropriate source.” Since “[t]he Federal Circuit has expressly relied on the Restatement, and cases interpreting it, to guide its determination of what constitutes an offer for sale,” the court held that there was no clear legal error in relying on the Restatement to determine whether an offer existed.
The Defendants also argued the court failed “to consider that, under the U.C.C.’s Statute of Frauds…, an offer for sale need not contain all of the material terms of a contract to be valid….” However, the court noted that “[t]he question before me is not whether the [communications] satisfy the Statute of Frauds – where the parties otherwise do not contest their intent to be bound – but rather whether the price quotations in these [communications] are sufficiently definite that another party could make a binding contract by simple acceptance.” Having found the price quotations not to be sufficiently definite to form a binding contract, the court found no clear legal error, and denied the request for reconsideration of its denial of summary judgment that the ‘839 patent is not invalid under the on-sale bar.
Lessons for Practice
This case illustrates that courts can rely on multiple sources of guidance, including both the U.C.C. and the Restatement of Contracts, in determining whether an offer for sale was made under § 102. This flexibility in applying the law governing what is an “offer for sale” could create additional avenues for attacking a patent’s validity under the on-sale bar of § 102. In light of Junker, it remains good practice to file for patent protection as early as reasonably possible. Additionally, Junker shows that, when possible, it is best to file for patent protection prior to communications regarding the sale of the invention to avoid unanticipated applications of the law governing what is an “offer for sale” that may trigger the on-sale bar of § 102.