Delano Farms v. The California Grape Commission: Secretive sale of stolen information does not qualify as prior art under 102 public sale doctrine

Category: 102 
By: Jesus Hernandez, Blog Editor/Contributor
TitleDelano Farms Co. v. The California Grape Commission, No. 2014-1030 (Fed. Cir. Jan. 9, 2015).
IssueThe question in a case such as this one is thus whether the actions taken by [a third party that stole the contents of the invention] create a reasonable belief as to the invention’s public availability.
Delano Farms Co., at *7.
HoldingThere is no public use when a third party steals secretive information without authority and endeavors to keep said information secret from the public and a sole disclosure limited to a friend/colleague is not a public use.
See, generally, id. at 11.
Procedural HistoryThis appeal involves a challenge to the validity of two plant patents for varieties of table grapes developed by the U.S. Department of Agriculture (“USDA”) and licensed to the California Table Grape Commission. The plaintiffs filed suit against the USDA and the California Table Grape Commission, seeking to invalidate the patents on the ground that the two grape varieties were in public use more than one year before the applications for both plant patents were filed, and that the patents are therefore invalid under the public use bar of 35 U.S.C. § 102(b) (2006).
Delano Farms Co., at *2.
Legal Reasoning (Prost, BRYSON, Hughes)
Jim Ludy, a California grape grower, cultivated table grapes at J&J Ludy Farms, in Delano, California, with his brother, Jack Ludy, from 1976 to 2003. […] Both Jim Ludy and Larry Ludy attended the August open house. While they were there, the Ludy cousins spoke with Rodney Klassen, who was employed by the USDA at the facility where the Scarlet Royal and Autumn King varieties were being developed. Jim Ludy asked Mr. Klassen if Mr. Klassen could give him some of the plant material for the Scarlet Royal and Autumn King varieties. Mr. Klassen had previously given Jim Ludy plant materi- al for other unreleased table grape varieties. Mr. Klassen was not authorized to provide Jim Ludy with any unre- leased plant material. Despite his lack of authority, Mr. Klassen informed Jim Ludy that he would “take care” of him. […] Ludy grafted fewer than 50 vines of each of the Scarlet Royal and Autumn King varieties in early 2002. Jim Ludy also provided “a few buds” of Scarlet Royal and Autumn King to his cousin, Larry Ludy. Larry Ludy knew that the material had originally come from a USDA facility and had not yet been released. He admitted that Jim Ludy told him that they should “keep it to ourselves.”
Delano Farms Co., at *4-5.
Most of the plantings by both Ludys prior to the pa- tents’ critical date bore no usable fruit, and the Ludys sold no grapes from those plantings prior to the critical date. Neither of the Ludys provided plant material to any other persons until after the critical date. Although the various plantings were visible from publicly accessible roads, none of the vines were marked or labeled in any way, and the evidence showed that the particular variety of the grapes could not be readily ascertained from simply viewing the vines. The only other person who was informed of the Ludys’ possession of the unreleased plant material was Richard Sandrini, who had long served as a table grape marketer for Jim and Larry Ludy.
Id. at *6.
Legal Standard, 102 Public Use
An applicant may not be granted a patent for an invention that was “in public use . . . in this country, more than one year prior to the date of the application for patent in the United States.” 35 U.S.C. § 102(b) (2006). […] Our case law defines the contours of what it means to be “accessible to the public.” The principal policy underly- ing the statutory bar is to prevent “the removal, from the public domain, of inventions that the public reasonably has come to believe are freely available.” Tone Bros. v. Sysco Corp., 28 F.3d 1192, 1198 (Fed. Cir. 1994).
Id. at *7.
Factors that we have previously identified as being helpful in analyzing that question include “the nature of the activity that occurred in public; the public access to and knowledge of the public use; [and] whether there was any confidentiality obligation imposed on persons who observed the use.” Bernhardt, L.L.C. v. Collezione Europa USA, Inc., 386 F.3d 1371, 1379 (Fed. Cir. 2004), quoting Allied Colloids Inc. v. Am. Cyanamid Co., 64 F.3d 1570, 1574 (Fed. Cir. 1995). The last factor captures “the commonsense notion that whether an invention is ‘accessible to the public’ . . . depends, at least in part, on the degree of confidentiality surrounding its use: ‘[A]n agreement of confidentiality, or circumstances creating a similar expec- tation of secrecy, may negate a public use where there is not commercial exploitation.’” Dey, L.P. v. Sunovion Pharm., Inc., 715 F.3d 1351, 1355 (Fed. Cir. 2013), quoting Invitrogen, 424 F.3d at 1382.
Id. at *7-8.
Maintaining Need to Keep Information SecretThe Supreme Court’s decision in Egbert turned on the inventor’s lack of any effort to maintain control over the use of his invention. The facts of this case, by contrast, show that Jim Ludy sought to maintain control of the plants he obtained from Mr. Klassen. Although Jim Ludy shared the plants with his cousin, the evidence showed that Larry Ludy was aware of the need to keep the plants secret, and at Jim Ludy’s urging, Larry Ludy continued to treat his possession of the unreleased varieties as confi- dential and non-public.
Delano Farms Co., at *10.
Disclosure does Not Qualify as Invalidating Public UseMr. Sandrini could not practice the inventions because he did not possess plant material until after the critical date. Instead, the appellants argue that the disclosure of the plants’ existence to Mr. Sandrini demonstrates the lack of confidentiality with which the Ludys treated the unreleased varieties.
The circumstances under which the disclosure to Mr. Sandrini occurred weigh against the application of the public use bar. […] In this case, the district court found that Mr. Sandrini was a friend, business partner, and mentor of the Ludys. The court also found that “[e]ach [of the Ludys and Mr. Sandrini] had incentives to keep the Ludys’ possession secret, creating an environment of confidentiality, [and] [e]ach maintained tight control over who knew about the Scarlet Royal and Autumn King vines and their use.” We have no reason to overturn these findings. Based on the district court’s findings and our case law, the Ludys’ disclosure to Mr. Sandrini that they were in possession of the unreleased plants does not qualify as an invalidating public use of the patented plant varieties.
Id. at *11-12.
Technology Area determines what constitutes a disclosure[T]he appellants ignore the district court’s finding that grape varieties cannot be reliably identified simply by viewing the growing vines alone. The plantings of the unreleased varieties were extremely limited in comparison to the total cultivation of the Ludys’ farms. The unreleased varieties were not labeled in any way, and the appellants introduced no evidence that any person other than the Ludys and Mr. Sandrini had ever recognized the unreleased varieties. As this court explained in the Dey case, 715 F.3d at 1359, “a reasonable jury could conclude that if members of the public are not informed of, and cannot readily discern, the claimed features of the invention in the allegedly invalidating prior art, the public has not been put in possession of those features.” In this case, the district court, sitting as the trier of fact, came to exactly that conclusion, and the evidence supports the court’s conclusion.
Id. at *12.
Accordingly, we affirm the district court’s decision rejecting the appellants’ challenge to the validity of the Scarlet Royal and Autumn King patents.
Delano Farms Co., at *13.
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