Netscape Communications Corp. v. Konrad

Last updated

Netscape Communications Corp. v. Konrad
Court United States Court of Appeals for the Federal Circuit
Full case nameNetscape Communications Corporation, Microsoft Corporation, and America Online, Inc. v. Konrad
DecidedJuly 9, 2002
Citations295 F.3d 1315; 63 U.S.P.Q.2d 1580
Case history
Prior historyFinding for plaintiff, Netscape Communications Corp. v. Konrad, No. 00-20789 (N. D. Cal. Apr. 2, 2001) (finding U.S. Patents No. 5,544,320, 5,696,901, and 5,974,444 invalid for public use and commercialization before bar date)
Subsequent historyRehearing denied, August 2, 2002
Holding
Konrad's patents are ineligible for patent protection in the United States because they were publicly used and commercialized more than one year prior to the patent filing date.
Court membership
Judges sitting Haldane Robert Mayer, Pauline Newman, Sharon Prost
Laws applied
35 U.S.C.   § 102
Keywords
On-sale bar, Patent

Netscape Communications Corp. v. Konrad, 295 F.3d 1315 (Fed. Cir. 2002), [1] was a decision of the United States Court of Appeals for the Federal Circuit. It affirmed that public use or commercialization of an invention more than one year prior to the filing date will cost the inventor his patent rights (see also 35 U.S.C.   § 100-105). The inventor in this case was Allan M. Konrad, a Lawrence Berkeley National Laboratory employee who devised and implemented a method for accessing and searching data objects stored on a remote computer (U.S. patents 5,544,320; [2] 5,696,901; [3] 5,974,444 [4] ). Netscape moved to invalidate Konrad's patents in U.S. district court immediately after Konrad filed a patent infringement suit against Netscape customers. The district court concluded that Konrad's patents were invalid because they did not meet the public-use and on-sale bar eligibility criteria of 35 U.S.C.   § 102b. In particular, the district court found that Konrad (1) placed his invention in the public domain by demonstrating it to others without a confidentiality agreement and (2) tried to sell it to other legal entities, both more than one year before he filed for the patent. The appeals court, upon review, affirmed the district court decision for the same reasons.

Contents

Background

Alan M. Konrad owns U.S patents 5,544,320; [2] 5,696,901; [3] 5,974,444; [4] all concerning a system for accessing and searching a database residing on a remote computer. On February 8, 2000, Konrad filed a patent infringement suit in U.S. District Court for the Eastern District of Texas against thirty-nine customers of Netscape Communications Corp., including Microsoft Corp. and America Online, Inc. Netscape, acting in the interest of its customer relationships, asked the U.S. District Court for the Northern District of California to invalidate Konrad's patents via a declaratory judgment. Netscape argued that Konrad's system was in public use and on-sale before Jan. 8, 1992—exactly one year before he filed the first patent for this invention. According to 35 U.S.C.   § 102b, a patent is valid unless "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". Netscape prevailed in its argument; the district court judged the patent to be invalid on June 18, 2001. Konrad then appealed the decision to the U.S Court of Appeals for the Federal Circuit.

Facts

Konrad began his employment at Lawrence Berkeley National Laboratory (LBNL) in 1977. On September 8, 1990, Konrad tested a method for searching a database residing on a remote computer. Shortly thereafter, Konrad disclosed his invention to LBNL's patent office (October 1990), [1] but filed for the first of his three patents only on January 8, 1993, thus establishing a January 8, 1992 (i.e., one year prior) bar date for public use and sale under 35 U.S.C.   § 102b. In the time between the first successful test and bar date, Konrad demonstrated his invention to University of California computing personnel without having them execute a confidentiality agreement, [1] and offered to adapt his invention for use at the University Research Association Superconducting Super Collider Laboratory and Stanford Linear Accelerator Center in exchange for money. [1]

Issues

In his appeal, Konrad argued that the district court was wrong to conclude that his patents were invalid. In particular, he argued that he did not publicly use or attempt to sell his patents before the critical date, as required by 35 U.S.C.   § 102b. By the legal precedent set in Petrolite Corp. v. Baker Hugher, Inc. , [5] an invention has been publicly used if it was used by "a person other than the inventor who is under no limitation, restriction or obligation of secrecy to the inventor". By legal precedent set in Group One, Ltd. v. Hallmark Cards, Inc. , [6] an invention has been offered for sale if "it rises to the level of a commercial offer for sale, one which the other party could make into a binding contract by simple acceptance." Furthermore, the sale must be between two separate legal entities per In re Caveney . [7]

Public use

Konrad's argument

Konrad admitted demonstrating his invention before the critical date without explicitly communicating to his audience that it was confidential. Regardless, Konrad argued that this demonstration does not meet the public use criteria for three reasons. First, he argued that because LBNL and the demonstration audience were both funded by the U.S. Department of Energy, the invention disclosure he made to the LBNL patent office before the demonstration allowed for an implicit expectation of confidentiality. Second, he argued that the demonstration was an experiment and thus cannot be considered public use under legal precedent established in Baxter v. Cobe . [8] Finally, he argued that he did not disclose every limitation of his invention.

Court's decision

The appeals court rejected all three of Konrad's arguments. First, the court noted that even though Konrad disclosed his invention to LBNL, a common funding source is not sufficient to carry an expectation of confidentiality. In particular, the contract between LBNL and the U.S. Department of Energy requires that LBNL "provides for the protection of government property", [1] "safeguard restricted data" [1] and to "provide written disclosures", [1] but says nothing about the confidentiality of U.S. Department of Energy funded projects. [1]

Second, the court concluded that Konrad's demonstration cannot be considered an experiment because he provided "no objective evidence to support experimental use." [1] Namely, Konrad failed to "maintain records of testing" [1] and, in some cases, was not in full control of his invention—he let people try it out without monitoring them. [1] In fact, the court used Konrad's own testimony that the purpose of the demonstration "was to convince the people that...there was a viable project" [1] to conclude that his intent was to gain endorsements rather than experimentation. [1]

Finally, the court concluded that, even though Konrad may not have revealed every limitation, the difference between what was revealed and the actual invention would have been obvious to a person with reasonable technical skills. This, the court claimed, was supported by the legal precedent of Lough v. Brunswick Corp. [9] Here the court leveraged Konrad's own testimony that the starter client used in the actual invention "is very similar to, if not the same as, software program icons created to quickly initiate a program", [1] and hence can be easily derived from the demonstration, which featured initialization via a terminal. [1]

On-sale bar

Konrad's argument

Konrad admitted offering to adapt his invention for use at the University Research Association Superconducting Super Collider Laborator and Stanford Linear Accelerator Center in return for compensation. However, Konrad argued that this was not a sale because those labs, just like his employer LBNL, were funded by the Department of Energy and hence are the same legal entity. Then by precedent established in In re Caveney , [7] he argued, the offer is not a sale, but a mere "accounting instrument used to track the transfer of research funds between two Department of Energy laboratories." [1]

Court's decision

The appeals court rejected Konrad's argument. Legal precedent requires that in the case where seller and buyer are funded by the same entity, the existence of a sale depends on whether the funding agency can prohibit public disclosure. [10] In this case, however, the court concluded that the Department of Energy doesn't exercise enough control over the labs to prevent them from leaking the invention to the public: "All indications are that the DoE funded specific projects at Lawrence Berkeley Laboratory, the Superconducting Super Collider Laboratory, and Stanford Linear Accelerator Center, but never exercised such control over them, as to render all part of the same entity." [1]

Impact

Separate entities

The application of the on-sale bar requires that the buyer and seller be "separate entities". [7] However, prior to this case, what constitutes separate entities was considered by courts to be very vague. [11] In fact, courts had traditionally used a "totality of circumstances" test [12] (one in which all the facts are examined) to determine whether buyer and seller are indeed separate entities. A major impact of this case was that it clarified what it means to be separate entities. [11] In particular, the Netscape appeals court formulated a test to determine whether buyer and seller are in fact two separate entities as follows: [1]

Where, as in this case, both parties to an alleged commercial offer for sale receive research funds from the same entity, it may be more difficult to determine whether the inventor is attempting to commercialize his invention. Accordingly, in such cases whether there is a bar depends on whether the seller so controls the purchaser that the invention remains out of the public's hands.

Despite the clarification, the test still requires a fact-based analysis of the degree to which one entity "controls" the other. [11] In Netscape, the fact that the Department of Energy does not hold the national labs to a confidentiality agreement (at least, not to non-funded projects) was deemed a lack of control. [1]

Related Research Articles

Neither software nor computer programs are explicitly mentioned in statutory United States patent law. Patent law has changed to address new technologies, and decisions of the United States Supreme Court and United States Court of Appeals for the Federal Circuit (CAFC) beginning in the latter part of the 20th century have sought to clarify the boundary between patent-eligible and patent-ineligible subject matter for a number of new technologies including computers and software. The first computer software case in the Supreme Court was Gottschalk v. Benson in 1972. Since then, the Supreme Court has decided about a half dozen cases touching on the patent eligibility of software-related inventions.

State Street Bank and Trust Company v. Signature Financial Group, Inc., 149 F.3d 1368, also referred to as State Street or State Street Bank, was a 1998 decision of the United States Court of Appeals for the Federal Circuit concerning the patentability of business methods. State Street for a time established the principle that a claimed invention was eligible for protection by a patent in the United States if it involved some practical application and, in the words of the State Street opinion, "it produces a useful, concrete and tangible result."

In United States patent law, the on-sale bar is a limitation on patentability codified at 35 U.S.C. § 102. It provides that an invention cannot be patented if it has been for sale for over one year prior to the patent filing.

The exhaustion doctrine, also referred to as the first sale doctrine, is a U.S. common law patent doctrine that limits the extent to which patent holders can control an individual article of a patented product after a so-called authorized sale. Under the doctrine, once an authorized sale of a patented article occurs, the patent holder's exclusive rights to control the use and sale of that article are said to be "exhausted," and the purchaser is free to use or resell that article without further restraint from patent law. However, under the repair and reconstruction doctrine, the patent owner retains the right to exclude purchasers of the articles from making the patented invention anew, unless it is specifically authorized by the patentee to do so.

KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007), is a decision by the Supreme Court of the United States concerning the issue of obviousness as applied to patent claims.

<i>In re Bilski</i>

In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385, was an en banc decision of the United States Court of Appeals for the Federal Circuit (CAFC) on the patenting of method claims, particularly business methods. The court affirmed the rejection of the patent claims involving a method of hedging risks in commodities trading, as non-patentable subject matter. Most importantly, the Court concluded, that machine-or-transformation test "was proper test to apply to determine patent-eligibility of process", and that the “useful, concrete and tangible result” of State Street Bank v. Signature Financial Group and AT&T Corp. v. Excel Communications, Inc. should no longer be relied upon.

<i>Mallinckrodt, Inc. v. Medipart, Inc.</i>

Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, is a decision of the United States Court of Appeals for the Federal Circuit, in which the court appeared to overrule or drastically limit many years of U.S. Supreme Court precedent affirming the patent exhaustion doctrine, for example in Bauer & Cie. v. O'Donnell.

Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), is a case decided by the United States Supreme Court in which the Court reaffirmed the validity of the patent exhaustion doctrine. The decision made uncertain the continuing precedential value of a line of decisions in the Federal Circuit that had sought to limit Supreme Court exhaustion doctrine decisions to their facts and to require a so-called "rule of reason" analysis of all post-sale restrictions other than tie-ins and price fixes. In the course of restating the patent exhaustion doctrine, the Court held that it is triggered by, among other things, an authorized sale of a component when the only reasonable and intended use of the component is to engage the patent and the component substantially embodies the patented invention by embodying its essential features. The Court also overturned, in passing, that the exhaustion doctrine was limited to product claims and did not apply to method claims.

Anderson's-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57 (1969), is a 1969 decision of the United States Supreme Court on the legal standard governing the obviousness of claimed inventions. It stands for the proposition that, when old elements are combined in a way such that they do not interact in a novel, unobvious way, then the resulting combination is obvious and therefore unpatentable.

<span class="mw-page-title-main">Piano roll blues</span>

The Piano Roll Blues or Old Piano Roll Blues is a figure of speech designating a legal argument made in US patent law relating to computer software. The argument is that a newly programmed general-purpose digital computer is a "new" machine and, accordingly, properly the subject of a US patent.

<i>Jazz Photo Corp. v. United States International Trade Commission</i>

Jazz Photo Corp. v. United States International Trade Commission, 264 F.3d 1094, was a case in which the United States Court of Appeals for the Federal Circuit clarified the law of repair and reconstruction, holding that it was not a patent infringement for one party to restore another party's patented "one-use" camera to be used a second time.

Bilski v. Kappos, 561 U.S. 593 (2010), was a case decided by the Supreme Court of the United States holding that the machine-or-transformation test is not the sole test for determining the patent eligibility of a process, but rather "a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101." In so doing, the Supreme Court affirmed the rejection of an application for a patent on a method of hedging losses in one segment of the energy industry by making investments in other segments of that industry, on the basis that the abstract investment strategy set forth in the application was not patentable subject matter.

<i>Bowers v. Baystate Technologies, Inc.</i>

Bowers v. Baystate Technologies, 320 F.3d 1317, was a U.S. Court of Appeals Federal Circuit case involving Harold L. Bowers and Baystate Technologies over patent infringement, copyright infringement, and breach of contract. In the case, the court found that Baystate had breached their contract by reverse engineering Bower's program, something expressly prohibited by a shrink wrap license that Baystate entered into upon purchasing a copy of Bower's software. This case is notable for establishing that license agreements can preempt fair use rights as well as expand the rights of copyright holders beyond those codified in US federal law.

Fujifilm Corp v. Benun, 605 F.3d 1366 was a case in which the United States Court of Appeals for the Federal Circuit affirmed the judgment made by the United States District Court for the District of New Jersey that the defendants infringed patents owned by Fujifilm Corporation.

AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 was a case in which the United States Court of Appeals for the Federal Circuit reversed the decision of the United States District Court for the District of Delaware, which had granted summary judgment to Excel Communications, Inc. and decided that AT&T Corp. had failed to claim statutory subject matter with U.S. Patent No. 5,333,184 under 35 U.S.C. § 101. The United States Court of Appeals for the Federal Circuit remanded the case for further proceedings.

<span class="mw-page-title-main">Trademark infringement</span> Violation of trademark rights

Trademark infringement is a violation of the exclusive rights attached to a trademark without the authorization of the trademark owner or any licensees. Infringement may occur when one party, the "infringer", uses a trademark which is identical or confusingly similar to a trademark owned by another party, especially in relation to products or services which are identical or similar to the products or services which the registration covers. An owner of a trademark may commence civil legal proceedings against a party which infringes its registered trademark. In the United States, the Trademark Counterfeiting Act of 1984 criminalized the intentional trade in counterfeit goods and services.

Bowman v. Monsanto Co., 569 U.S. 278 (2013), was a United States Supreme Court patent decision in which the Court unanimously affirmed the decision of the Federal Circuit that the patent exhaustion doctrine does not permit a farmer to plant and grow saved, patented seeds without the patent owner's permission. The case arose after Vernon Hugh Bowman, an Indiana farmer, bought transgenic soybean crop seeds from a local grain elevator for his second crop of the season. Monsanto originally sold the seed from which these soybeans were grown to farmers under a limited use license that prohibited the farmer-buyer from using the seeds for more than a single season or from saving any seed produced from the crop for replanting. The farmers sold their soybean crops to the local grain elevator, from which Bowman then bought them. After Bowman replanted the crop seeds for his second harvest, Monsanto filed a lawsuit claiming that he infringed on their patents by replanting soybeans without a license. In response, Bowman argued that Monsanto's claims were barred under the doctrine of patent exhaustion, because all future generations of soybeans were embodied in the first generation that was originally sold.

<i>In re Alappat</i>

In re Alappat, 33 F.3d 1526, along with In re Lowry and the State Street Bank case, form an important mid-to-late-1990s trilogy of Federal Circuit opinions because in these cases, that court changed course by abandoning the Freeman-Walter-Abele Test that it had previously used to determine patent eligibility of software patents and patent applications. The result was to open a floodgate of software and business-method patent applications, many or most of which later became invalid patents as a result of Supreme Court opinions in the early part of the following century in Bilski v. Kappos and Alice v. CLS Bank.

The reverse doctrine of equivalents is a legal doctrine of United States patent law, according to which a device that appears to literally infringe a patent claim, by including elements or limitations that correspond to each element or limitation of the patent claim, nonetheless does not infringe the patent, because the accused device operates on a different principle. That is, "it performs the same or a similar function in a substantially different way." It has been said that "the purpose of the 'reverse' doctrine is to prevent unwarranted extension of the claims beyond a fair scope of the patentee's invention."

<i>Amazon.com, Inc. v. Barnesandnoble.com, Inc.</i> 2001 U.S. Federal Court Case

Amazon. com, Inc. v. Barnesandnoble. com, Inc., 337 F.3d 1024, was a court ruling at the United States Court of Appeals for the Federal Circuit. The ruling was an important early cyberlaw precedent on the matter of the technologies that enable e-commerce and whether such technologies are eligible for patent protection.

References

  1. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Netscape Communications Corp. v. Konrad, 295F.3d1315 (Fed. Cir.2002).
  2. 1 2 US 5,544,320
  3. 1 2 US 5,696,901
  4. 1 2 US 5,974,444
  5. ↑ Petrolite Corp. v. Baker Hughes Inc., 96F.3d1423 , 1425(Fed. Cir.1996).
  6. ↑ Group One, Ltd. v. Hallmark Cards, Inc., 254F.3d1041 , 1048(Fed. Cir.2001).
  7. 1 2 3 In re Caveney, 761F.2d671 , 676(Fed. Cir.1985).
  8. ↑ Baxter Int'l, Inc. v. Cobe Labs., Inc., 88F.3d1054 , 1059(Fed. Cir.1996).
  9. ↑ Lough v. Brunswick Corp., 86F.3d1113 , 1122 n.5(Fed. Cir.1996).
  10. ↑ Ferrag v. Quipp, Inc., 45F.3d1562 , 1567(Fed. Cir.1995).
  11. 1 2 3 The Commercial Offer Prong of the On-Sale Bar, After Pfaff. IP Litigator. September 2002
  12. ↑ Sinskey v. Pharmacia Ophthalmics Inc., 982F.2d494 , 498(Fed. Cir.1992).
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.