08/22/13

Hamilton Beach v. Sunbeam: Purchase Order to Supplier = Offer for Sale

Category: 102
 
By: Jesus Hernandez, Blog Editor/Contributor   
 
TitleHamilton Beach Brands, Inc. v. Sunbeam Prod., Inc., No. 2012-1581 (Fed. Cir. Aug. 14, 2013).
Issue"The district court found that Hamilton Beach’s purchase order with its foreign supplier for the Stay or Go® amounted to an invalidating commercial offer for sale under the on-sale bar of 35 U.S.C. § 102(b)." Hamilton Beach, at *7.
Holding"We agree with the district court that Hamilton Beach’s transaction with its foreign supplier in early 2005 was an offer for sale of a product that anticipated the asserted claims and that the invention was ready for patenting prior to the critical date. [...] [T]herefore, we hold the asserted claims of the ’928 patent invalid under § 102(b)." Id. at *7.
 


Procedural History"Hamilton Beach Brands, Inc. (“Hamilton Beach”) appeals from the decision of the United States District Court for the Eastern District of Virginia granting in part Sunbeam Products, Inc.’s (“Sunbeam”) motion for sum- mary judgment finding claims 1 and 3–7 (“asserted claims”) of U.S. Patent No. 7,947,928 (“the ’928 patent”) invalid as anticipated. The district court also found that Sunbeam did not literally infringe the asserted claims of the ’928 patent." Hamilton Beach, at *2.
 
Legal Reasoning (J. O'Malley, J. Bryson)
On-Sale Bar Standard“The on-sale bar applies when two conditions are satisfied before the critical date: (1) the claimed invention must be the subject of a commercial offer for sale; and (2) the invention must be ready for patenting. Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998). An actual sale is not required for the activity to be an invalidating commercial offer for sale. Atlanta Attachment Co. v. Leggett & Platt, Inc., 516 F.3d 1361, 1365 (Fed. Cir. 2008). An attempt to sell is sufficient so long as it is 'sufficiently definite that another party could make a binding contract by simple acceptance.' Id. (citing Netscape Commc’ns Corp. v. Konrad, 295 F.3d 1315, 1323 (Fed. Cir. 2002)). ‘In determining such definiteness, we review the language of the proposal in accordance with the principles of general contract law.’” Hamilton Beach, at *8.
1.Commercial Offer for Sale
FACTS“On February 8, 2005, Hamilton Beach issued a purchase order to its supplier for manufacture of its Stay or Go® slow cookers. Hamilton Beach listed on the purchase order its facility in Tennessee as the shipping address and its office in Virginia as the billing address. Hamilton Beach also listed the specific quantity—almost 2000 units, part number, unit price, and requested delivery date for the slow cookers. On February 25, 2005, the supplier, via email, confirmed that it had received the purchase order and noted that it would begin production of the slow cookers after receiving Hamilton Beach’s release.” Hamilton Beach, at *10.
Purchase Order to Supplier a Commercial Offer for Sale“Hamilton Beach’s supplier responded prior to the critical date that it was ready to fulfill the order. In other words, the supplier made an offer to sell the slow cookers to Hamilton Beach. At that point, the commercial offer for sale was made and, under the governing corporate purchase agreement, Hamilton Beach could accept the offer when it so pleased. And, Hamilton Beach concedes, as it must, that, had it provided a 'release' any time after it received that email, a binding contract would have been formed. […]. As such, even if the parties had not entered into a binding contract when the supplier responded to the purchase order, the response, nevertheless, was a commercial offer for sale that Hamilton Beach could have made into a binding contract by simple acceptance. This was enough to satisfy Pfaff’s first prong without the need for a binding contract.” Id. at *12-13.
2.Ready for Patenting
Conditions for Patenting Readiness“A product is 'ready for patenting' for purposes of the on-sale bar under § 102(b) if the claimed invention is: (1) reduced to practice; or (2) depicted in drawings or other descriptions 'that were sufficiently specific to enable a person skilled in the art to practice the invention.' [...]” Hamilton Beach, at *14.
Meeting Descriptions/CAD Drawings Evidence of Readiness“Sunbeam proffered what the district court described as a ‘veritable tome’ of evidence from Hamilton Beach’s meeting with its retail customers that provided specific descriptions of the Stay or Go® slow cooker, as well as CAD drawings depicting the Stay or Go®, that contained all the limitations of the ’831 and ’928 patents. Under the 'ready for patenting' prong, so long as the descriptions and depictions of the slow cooker are sufficiently precise to enable a person of ordinary skill to build the invention, the district court properly concluded that the invention was ‘ready for patenting.’ Pfaff, 525 U.S. at 67–68. The CAD drawings and descriptions from these presentations—containing the same specifications provided to Hamilton Beach’s supplier—are more than enough to enable a person of ordinary skill in the art to practice the claimed invention." Id. at *15-16.
Conclusion
"Based on the foregoing, we affirm the district court’s finding that claims 1 and 3–7 of the ’928 patent are invalid under 35 U.S.C. § 102(b) because the claimed invention was the subject of a commercial offer for sale prior to the critical date." Hamilton Beach, at *17.

 
 
REYNA, Circuit Judge, dissenting. Hamilton Beach Brands, Reyna Op., at *1.
Purchase Order without final design falls under Experimental Design Exception“The purchase order ‘was not the result of customer demand or projections,’ Appellant’s Br. 6 (citing Joint App’x 4975), and, at the time the order was placed, Hamilton Beach was repeatedly changing the product specification due to a series of design failures, most notably, foodstuffs leaking through the lid. The design remained unstable for nearly three months after the purchase order was placed. Just as the Supreme Court applied the experimental-use exception when Mr. Nicholson, the patentee in City of Elizabeth, tested and perfected his pavement on a busy toll road in Boston—inspecting and tapping it with his cane almost daily—for more than six years before filing for a patent, 97 U.S. at 133-37, Hamilton Beach was similarly entitled to test and perfect its slow cooker under the experimental-use exception.” Hamilton Beach Brands, Reyna Op., at *4.
 
 
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