Pfaff v. Wells Electronics, Inc. | |
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Argued October 6, 1998 Decided November 10, 1998 | |
Full case name | Wayne K. Pfaff v. Wells Electronics, Incorporated |
Citations | 525 U.S. 55 ( more ) 119 S. Ct. 304; 142 L. Ed. 2d 261; 1998 U.S. LEXIS 7268; 67 U.S.L.W. 4009; 48 U.S.P.Q.2d (BNA) 1641; 98 Cal. Daily Op. Service 8319; 98 Daily Journal DAR 11535; 1998 Colo. J. C.A.R. 5775 |
Prior history | Summary judgment granted to defendant, 1992 U.S. Dist. LEXIS 22592 (N.D. Tex. 1992); reversed and remanded, 5 F.3d 514 (Fed. Cir. 1993); partial judgment granted to plaintiff, 995 U.S. Dist. LEXIS 21747 (N.D. Tex. 1995); affirmed in part, reversed in part, 124 F.3d 1429 (Fed. Cir. 1997); rehearing denied, 1997 U.S. App. LEXIS 28585 (Fed. Cir. 1997); certiorari granted in part, 523 U.S. 1003(1998) |
Subsequent history | Rehearing denied, 525 U.S. 1003(1094) |
Holding | |
An invention is "on sale" within the meaning of the statutory bar of | , if it is 1) the subject of a commercial transaction, and 2) capable of being patented because at that time, either because it had in fact been reduced to practice, or because it was sufficiently well described for another person skilled in the art to build the invention from the designs. Federal Circuit affirmed.|
Court membership | |
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Case opinions | |
Majority | Stevens, joined by unanimous |
Laws applied | |
Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), was a decision by the Supreme Court of the United States that determined what constituted being "on sale" for the purposes of barring the grant of a patent for an invention. [1]
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. Established pursuant to Article III of the U.S. Constitution in 1789, it has original jurisdiction over a narrow range of cases, including suits between two or more states and those involving ambassadors. It also has ultimate appellate jurisdiction over all federal court and state court cases that involve a point of federal constitutional or statutory law. The Court has the power of judicial review, the ability to invalidate a statute for violating a provision of the Constitution or an executive act for being unlawful. However, it may act only within the context of a case in an area of law over which it has jurisdiction. The court may decide cases having political overtones, but it has ruled that it does not have power to decide nonjusticiable political questions.
A patent is a form of intellectual property. A patent gives its owner the right to exclude others from making, using, selling, and importing an invention for a limited period of time, usually twenty years. The patent rights are granted in exchange for an enabling public disclosure of the invention. In most countries patent rights fall under civil law and the patent holder needs to sue someone infringing the patent in order to enforce his or her rights. In some industries patents are an essential form of competitive advantage; in others they are irrelevant.
An invention is a unique or novel device, method, composition or process. The invention process is a process within an overall engineering and product development process. It may be an improvement upon a machine or product or a new process for creating an object or a result. An invention that achieves a completely unique function or result may be a radical breakthrough. Such works are novel and not obvious to others skilled in the same field. An inventor may be taking a big step in success or failure.
In November 1980, the plaintiff, engineer Wayne Pfaff, was asked by Texas Instruments to design for them a socket for the mounting and removal of semiconductor chip carriers. Pfaff proceeded to draw designs for the socket, which he showed to Texas Instruments in March 1981. On April 8, 1981, Texas Instruments provided a written purchase order to buy over 30,000 of the sockets. The sockets were not actually built, however, until July 1981.
A plaintiff is the party who initiates a lawsuit before a court. By doing so, the plaintiff seeks a legal remedy; if this search is successful, the court will issue judgment in favor of the plaintiff and make the appropriate court order. "Plaintiff" is the term used in civil cases in most English-speaking jurisdictions, the notable exception being England and Wales, where a plaintiff has, since the introduction of the Civil Procedure Rules in 1999, been known as a "claimant", but that term also has other meanings. In criminal cases, the prosecutor brings the case against the defendant, but the key complaining party is often called the "complainant".
Engineers, as practitioners of engineering, are professionals who invent, design, analyze, build, and test machines, systems, structures and materials to fulfill objectives and requirements while considering the limitations imposed by practicality, regulation, safety, and cost. The word engineer is derived from the Latin words ingeniare and ingenium ("cleverness"). The foundational qualifications of an engineer typically include a four-year bachelor's degree in an engineering discipline, or in some jurisdictions, a master's degree in an engineering discipline plus four to six years of peer-reviewed professional practice and passage of engineering board examinations.
Texas Instruments Inc. (TI) is an American technology company that designs and manufactures semiconductors and various integrated circuits, which it sells to electronics designers and manufacturers globally. Its headquarters are in Dallas, Texas, United States. TI is one of the top ten semiconductor companies worldwide, based on sales volume. Texas Instruments's focus is on developing analog chips and embedded processors, which accounts for more than 80% of their revenue. TI also produces TI digital light processing (DLP) technology and education technology products including calculators, microcontrollers and multi-core processors. To date, TI has more than 43,000 patents worldwide.
Pfaff applied for a patent for the socket on April 19, 1982, and received the patent in 1985. He then proceeded to sue the defendant, Wells Electronics, Inc., for patent infringement when Wells made a socket that was too similar to Pfaff's design. Wells, in defense, claimed that Pfaff's patent was invalid. In support of this assertion, Wells pointed to 35 U.S.C. § 102(b), which states that an inventor shall not be entitled to a patent if:
A defendant is a person accused of committing a crime in criminal prosecution or a person against whom some type of civil relief is being sought in a civil case.
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or selling the patented invention. In many countries, a use is required to be commercial to constitute patent infringement.
An inventor is a person who creates or discovers a new method, form, device or other useful means that becomes known as an invention. The word inventor comes from the Latin verb invenire, invent-, to find. The system of patents was established to encourage inventors by granting limited-term, limited monopoly on inventions determined to be sufficiently novel, non-obvious, and useful. Although inventing is closely associated with science and engineering, inventors are not necessarily engineers nor scientists.
Wells asserted that by accepting the purchase order from Texas Instruments, Pfaff had placed the invention "on sale" one year and one week before applying for the patent, which would make it invalid under § 102(b). Pfaff countered that the invention had not been reduced to practice, meaning that a working model had not yet been made. Pfaff's contention was that the invention was not complete at the time of the purchase order, and therefore could not have been "on sale" yet.
The District Court for the Northern District of Texas upheld Pfaff's patent, but the Court of Appeals for the Federal Circuit reversed, finding the patent invalid because the invention was "substantially complete" at the time of the sale. Pfaff then appealed to the Supreme Court.
The Supreme Court noted that lower courts had offered different opinions on the question of whether an invention could be "on sale" within the meaning of the statute before it had actually reduced to practice. The Court therefore had to set a standard for when an invention would be considered complete enough to be "on sale".
The Court, in a unanimous opinion written by Justice John Paul Stevens, noted that an invention can actually be patented before it is reduced to practice, because the "invention" occurs when the inventor has a fully formed idea of how the invention will be made. Pfaff could have patented his idea based on the drawings that he had shown to Texas Instruments, because they were complete enough to allow another engineer to build the invention from the designs.
John Paul Stevens is an American lawyer and jurist who served as an Associate Justice of the United States Supreme Court from 1975 until his retirement in 2010. At the time of his retirement, he was the second-oldest serving justice in the history of the Court, the third-longest serving Supreme Court Justice in history. Stevens was considered to have been on the liberal side of the Court at the time of his retirement.
Furthermore, if an invention could be sold before it was reduced to practice without any consequence, then inventors would be able to evade the time limits placed on the patent itself by simply delaying the construction of a working model. This would, in turn, delay new inventions from reaching the public, undermining the primary goal of the patent system, "[t]o promote the Progress of Science and useful Arts..."
Based on these considerations, the Court concluded that the "on sale" bar applies if two conditions are met:
Because these conditions were satisfied, the Court held that Pfaff's patent was invalid.
In a patent or patent application, the claims define, in technical terms, the extent, i.e. the scope, of the protection conferred by a patent, or the protection sought in a patent application. In other words, the purpose of the claims is to define which subject-matter is protected by the patent. This is termed as the "notice function" of a patent claim—to warn others of what they must not do if they are to avoid infringement liability. The claims are of the utmost importance both during prosecution and litigation alike.
The inventive step and non-obviousness reflect a general patentability requirement present in most patent laws, according to which an invention should be sufficiently inventive—i.e., non-obvious—in order to be patented. In other words, "[the] nonobviousness principle asks whether the invention is an adequate distance beyond or above the state of the art".
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.
Graham v. John Deere Co., 383 U.S. 1 (1966), was a case in which the United States Supreme Court clarified the nonobviousness requirement in United States patent law, set forth in 35 U.S.C. § 103.
City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126 (1878), was a case in which the Supreme Court of the United States held that while the public use of an invention more than one year prior to the inventor's application for a patent normally causes the inventor to lose his right to a patent, there is an exception to this rule for public uses for experimental purposes.
Egbert v. Lippmann, 104 U.S. 333 (1881), was a case in which the Supreme Court of the United States held that public use of an invention bars the patenting of it. The Court's ruling was colored by its view that the inventor had forfeited his right to patent the invention by "sleeping on his rights" while others commercialized the technology.
General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175 (1938), was a case that the Supreme Court of the United States decided in 1938. The decision upheld so-called field-of-use limitations in patent licenses: it held that the limitations were enforceable in a patent infringement suit in federal court against the licensee and those acting in concert with it—for example, a customer that knowingly buys a patented product from the licensee that is outside the scope of the license.
Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), is a decision of the United States Supreme Court in which the Court reaffirmed the validity of the patent exhaustion doctrine, and in doing so 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 the exhaustion doctrine is triggered by, among other things, an authorized sale of a component when the only reasonable and intended use of the component is to practice the patent and the component substantially embodies the patented invention by embodying its essential features. The Court also overturned, in passing, the part of decision below that held that the exhaustion doctrine was limited to product claims and did not apply to method claims.
The exhausted combination doctrine, also referred to as the doctrine of theLincoln Engineeringcase, is the doctrine of U.S. patent law that when an inventor invents a new, unobvious device and seeks to patent not merely the new device but also the combination of the new device with a known, conventional device with which the new device cooperates in the conventional and predictable way in which devices of those types have previously cooperated, the combination is unpatentable as an "exhausted combination" or "old combination". The doctrine is also termed the doctrine of the Lincoln Engineering case because the United States Supreme Court explained the doctrine in its decision in Lincoln Engineering Co. v. Stewart-Warner Corp.
United States v. Univis Lens Co., 316 U.S. 241 (1942), is a decision of the United States Supreme Court explaining the exhaustion doctrine and applying it to find an antitrust violation because Univis's ownership of patents did not exclude its restrictive practices from the antitrust laws. The Univis case stands for the proposition that when an article sold by a patent holder or one whom it has authorized to sell it embodies the essential features of a patented invention, the effect of the sale is to terminate any right of the patent holder under patent law to control the purchaser's further disposition or use of the article itself and of articles into which it is incorporated as a component or precursor.
Netscape Communications Corp. v. Konrad, 295 F.3d 1315, 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. 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. 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.
Stanford University v. Roche Molecular Systems, Inc., 563 U.S. 776 (2011), was a United States Supreme Court case in which the Court held that title in a patented invention vests first in the inventor, even if the inventor is a researcher at a federally funded lab subject to the 1980 Bayh–Dole Act. The judges affirmed the common understanding of U.S. constitutional law that inventors originally own inventions they make, and contractual obligations to assign those rights to third parties are secondary.
Ex parte Wood, 22 U.S. 603 (1824), was a United States Supreme Court case in which the Court held that a patent could not be repealed based on summary proceedings without the opportunity for a jury trial. The case exemplifies a tradition in early 19th century United States patent caselaw in which patents were regarded specifically as an absolute property right to exclusive use of the invention, rather than requiring a balancing between public and private interests.
United States v. Bell Telephone Co., 167 U.S. 224 (1897), is an 1897 decision of the United States Supreme Court that held that the United States lacked standing to challenge the validity of its issued patents “on the mere ground of error of judgment” in issuing them. The United States had standing to seek to invalidate patents, however, on grounds of fraudulent procurement and also as a defense to a charge of patent infringement. The decision operated for many decades as a bar to government efforts to seek invalidation of patents that it considered spurious until the Supreme Court limited Bell Telephone, first to a limited extent in United States v. United States Gypsum Co., and then more broadly in United States v. Glaxo Group Ltd.
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, was a controversial decision of the Federal Circuit in which the court applied the Mayo v. Prometheus test to invalidate as patent-ineligible a patent said to "solve[ ] a very practical problem accessing fetal DNA without creating a major health risk for the unborn child." In December 2015, the Federal Circuit denied a motion for en banc rehearing, with several members of the court filing opinions urging Supreme Court review. On June 27, 2016, the Supreme Court of the United States denied Sequenom's petition for a writ of certiorari.
Impression Products, Inc. v. Lexmark International, Inc., 581 U.S. ___ (2017), is a decision of the Supreme Court of the United States on the exhaustion doctrine in patent law in which the Court held that after the sale of a patented item, the patent holder cannot sue for patent infringement relating to further use of that item, even when in violation of a contract with a customer or imported from outside the United States. The case concerned a patent infringement lawsuit brought by Lexmark against Impression Products, Inc., which bought used ink cartridges, refilled them, replaced a microchip on the cartridge to circumvent a digital rights management scheme, and then resold them. Lexmark argued that as they own several patents related to the ink cartridges, Impression Products was violating their patent rights. The U.S. Supreme Court, reversing a 2016 decision of the Federal Circuit, held that the exhaustion doctrine prevented Lexmark's patent infringement lawsuit, although Lexmark could enforce restrictions on use or resale of its contracts with direct purchasers under regular contract law. Besides printer and ink manufacturers, the decision of the case could affect the markets of high tech consumer goods and prescription drugs.
Pennock v. Dialogue, 27 U.S. 1 (1829), was a United States Supreme Court decision in which the Court held invalid a patent on a method of making hose, because the inventor had commercially exploited the invention for years before filing the patent application. The case has been cited many times for the proposition that the U.S. patent system was not established for the purpose of enriching inventors or their financiers but rather for the purpose of furthering the public interest by stimulating technological progress.