The Federal Circuit’s opinion in Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc. reminds practitioners to be explicit in identifying the defenses that they will be relying upon. Specifically, the majority did not address an experimental use defense to an on-sale bar allegation. Despite references to facts supporting an experimental use defense, the patentee did not use the catchphrase “experimental use” in presenting its defense, and the majority declared that the defense had not been raised.
Under the pre-Leahy-Smith America Invents Act (AIA), a patent can be held invalid based on an on-sale bar. In Pfaff v. Wells Elecs., Inc., the Supreme Court set forth a two-prong test for an on-sale bar: (1) more than one year prior to the date of patent application in the United States, the invention was the subject of a commercial offer for sale; and (2) the invention was ready for patenting before the critical date. An experimental use defense, however, negates any sale or offer for sale if the primary purpose of the transaction was experimental or developmental, e.g., EZ Dock v. Schafer Systems, Inc, Federal Circuit, 2002.
In Hamilton Beach, the patentee requested that its supplier manufacture nearly 2,000 units of the patented slow cooker. According to the Federal Circuit, the supplier’s agreement to fulfill that order constituted a commercial offer for sale meeting the first prong of the Pfaff test. The Federal Circuit also held that the second prong was met in light of the patentee’s descriptions, drawings and specifications of the patented cooker. Notwithstanding the “relative simplicity of the invention,” the Court took into account the fact that a working prototype of the patented slow cooker had been tested successfully before the critical date in reaching its ready for patenting conclusion.
Circuit Judge Reyna dissented from the majority opinion for overlooking the experimental nature of the alleged offer for sale: “While [patentee] did not use the phrase ‘experimental use,’ it argued at length that its offer for sale was non-commercial and that its engineers were attempting to overcome serious shortcomings when the offer was made.” For example, around the time of the order, the patentee was repeatedly changing its product specifications because of design flaws, and the design remained “unstable” past the critical date. According to the dissent, the circumstances indicated that the cookers were being tested under the experimental use exception when the offer was made.
In criticizing the majority opinion, the dissent expressed concern over how the majority opinion may affect important practical and policy considerations behind the experimental use exception, such as the relative position of small enterprises and individual inventors vis-à-vis large corporations in the inventive process. The dissent noted that patentees lacking in-house prototyping and fabricating capabilities may have little choice but to engage third parties in the development and testing process. As support, the dissent cited long-standing Supreme Court precedent (Elizabeth v. Pavement Co.) that distinguished experimental use from commercial sales and applied the experimental use exception to an inventor’s good-faith testing of an invention.
Hamilton Beach reminds practitioners to be explicit in identifying the legal doctrines they intend to rely upon. While some courts may be willing assume that certain legal doctrines are being asserted based on the substance of the arguments being made, others may not. To the extent that an experimental use defense was implicitly asserted, the majority in Hamilton Beach did not appear to consider arguments supporting that defense. While the majority opinion does not speculate how the case would have turned out if the experimental use defense had been considered, the dissenting opinion strongly suggests that the on-sale bar issue would have at least been a closer one for the patentee. On a related tangent, it is worth noting that the post-AIA version of 35 U.S.C. § 102 indicates that non-public sales and offer for sales will no longer be a bar to patentability. (“The claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.”) Thus, while the significance of explicitly articulating an experimental use defense may become less prevalent, it is still important for practitioners to set forth their defenses explicitly as a general practice.