BASF CORPORATION v. SNF HOLDING COMPANY
Before Lourie, Moore, and Chen. Appeal from the United States District Court for the Southern District of Georgia.
Summary: A third party’s sale of products made by a secret process may not create a bar to another inventor patenting the process under pre-AIA § 102, unless the essential features of the claimed process are embodied in a product sold or offered for sale before the critical date.
BASF Corporation (“BASF”) filed a complaint in District Court alleging infringement of its patent directed to an improved process for preparing high-molecular-weight polymers by the Defendants. Defendants filed a motion for summary judgment, arguing unpatentability under pre-AIA § 102(a) and § 102(b). Defendants asserted that a third party’s (Sanyo) process for manufacturing preparing high-molecular-weight polymers anticipated and rendered obvious claims in the BASF patent, and that Sanyo had entered into an exclusive license allowing another to make, use, and sell its polymers in the Americas. The licensee was obligated to protect the secrecy of Sanyo’s confidential information for ten years and was only allowed to disclose such information to its employees and subcontractors to the extent necessary to build and operate the plant. Based on the Sanyo License agreement, the district court granted SNF’s motion for summary judgment on all issues. BASF appealed.
On appeal, BASF argued the district court misinterpreted the phrase “known or used” in § 102(a) and erroneously disregarded the confidentiality of the licensee’s knowledge and use. The Court agreed with BASF, stating the “known or used” prong of § 102(a) means “knowledge or use which is accessible to the public.” As such, prior knowledge or use that is not accessible to the public upon reasonable inquiry confers no benefit on the public, and thus does not suffice as a defense under § 102(a). BASF next argued that the district court misinterpreted the public-use bar of § 102(b) to apply to a third party’s secret commercial use. The Court agreed with BASF, stating the public-use bar only applies to uses “not purposely hidden.” The Court also stated a third party’s sale of products made by a secret process does not create a bar to another inventor patenting the process. Finally, BASF argued that neither the Sanyo license agreement itself, nor the acquisition of the licensee by another company, is a sale of the invention within the meaning of § 102(b). The Court agreed, noting that although in certain circumstances, a process may be sold in a manner which triggers the on-sale bar, in this case, the essential features of the claimed process were not embodied in a product sold or offered for sale before the critical date. The Court ultimately determined that the record reveals genuine issues of fact as to whether the Sanyo process was “known or used” or was publicly used in accordance with the Court’s guidance and remanded for further proceedings.
Editor: Paul Stewart
