Ez Dock, Inc. v. Schafer Systems, Inc.

276 F.3d 1347, 61 U.S.P.Q. 2d (BNA) 1289, 2002 U.S. App. LEXIS 616, 2002 WL 47180

• Court: Court of Appeals for the Federal Circuit
• Decided: January 15, 2002
• Docket: 00-1443
• Status: Published

Opinions

RADER, Circuit Judge.

On summary judgment, the United States District Court for the District of Minnesota declared EZ Dock, Inc.’s United States Patent No. 5,281,055 (the '055 patent) invalid due to an on-sale bar. Because the district court improperly resolved issues of fact against EZ Dock on summary judgment, this court vacates and remands.

I.

This case features a polyethylene floating dock. Marinas and homeowners with waterfront properties typically use floating docks for mooring boats. Floating docks typically consist of metal or foam flotation cores. Concrete shells cover these flotation cores to form dock modules. Wood or other suitable materials generally cover the concrete shells to form the dock. Cables or springs then connect these dock sections to hold them together and to allow them to flex under stress.

This type of dock, however, deteriorates under severe weather conditions. With time, the cable or spring connections loosen and leave unsafe gaps between the dock sections. To overcome this deterioration, some manufacturers offer plastic docks. However, plastic docks often come in many pieces. These plastic docks pose difficulties in assembly.

In October 1989, Jack Neitzke and Clifton Vierus, both of Winona, Minnesota, began designing a floating dock made of polyethylene. Unlike earlier plastic docks, their design contained few parts. During this time, Mr. Neitzke ran an office supply store and a marina on the Mississippi river. Mr. Vierus operated a nightclub across the street. Neither Mr. Neitzke nor Mr. Vierus had any prior experience in dock design. After several months of collaboration, Mr. Neitzke and Mr. Vierus settled on a design. Their design featured uniform molded dock sections coupled together with rubber male-type anchors which fit into female-type receiving sockets. These couplers were shaped like a dog bone:

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After Mr. Neitzke and Mr. Vierus settled on the design, Mr. Vierus began building a mold for the dock section. In early 1991, Mr. Neitzke and Mr. Vierus entered into an agreement with Winnebago Industries to build some dock sections using Mr. Vierus’ mold. Mr. Vierus’ mold, however, would not work with polyethylene. Mr. Neitzke and Mr. Vierus thus spent several months adjusting the mold to accommodate Winnebago’s polyethylene manufacturing processes.

In May 1991, Winnebago gave Mr. Neitzke and Mr. Vierus sixty-four dock sections, produced with Mr. Neitzke’s and Mr. Vierus’ mold. Mr. Neitzke first tested some dock sections by floating them in the Mississippi river. After determining that they would float, he installed numerous dock sections at his marina sometime in late May or early June 1991.

At about the same time, Larry Greden brought a copier to Mr. Neitzke’s office supply store for repair. Mr. Neitzke was storing several dock sections near the store’s front windows at the time. Mr. Greden asked store employees about the dock. The employees directed Mr. Greden to Mr. Neitzke. Mr. Greden explained that he wished to buy one of Mr. Neitzke’s docks as a Father’s Day gift to install at his father’s residence, Bass Camp, on the other side of the Mississippi river. Bass Camp experiences heavier boat traffic and more turbulent water flow than Mr. Neitzke’s marina. Mr. Neitzke agreed to sell Mr. Greden two dock sections for $758.43, or 75% of the final retail price for the same dock system. Mr. Greden purchased the dock on June 13,1991.

Mr. Neitzke installed the dock system at Bass Camp at no charge and included a gangplank, connectors, and all hardware also at no charge. In return, Mr. Greden agreed to allow Mr. Neitzke and Mr. Vier-us to inspect the dock and replace or repair any part as needed. Mr. Neitzke visited the dock between four and six times during the summer of 1991 and made a repair at no charge to Mr. Greden. In addition, Mr. Vieras visited the dock between four to six times and made several repairs at no charge. The dock remained at Bass Camp until late 1999 when Mr. Greden sold it to Schafer Systems, Inc. (Schafer) for $1000 and two replacement docks.

The dock that Mr. Neitzke sold to Mr. Greden on June 13, 1991, had rectangular shaped pylons within its structure. Pylons are basically pockets formed in the underside of the dock. On the water, these pylons trap air to keep the dock afloat even when damage to the dock allows water to enter the molded cavities.

Several months after selling the dock to Mr. Greden, Mr. Vieras and Mr. Neitzke evaluated several docks with rectangular shaped pylons after testing them in the Mississippi river. They discovered that the rectangular shaped pylons did not mold properly and eventually caused leaks. Mr. Vieras and Mr. Neitzke thus changed the pylon shape from rectangular to fras-toconical as recited and claimed in the '055 patent.

On July 17, 1992, Mr. Vieras and Mr. Neitzke applied for a patent on their polyethylene dock. Mr. Vieras and Mr. Neitzke also formed EZ Dock and assigned all patent rights to their company. The United States Patent and Trademark Office issued the '055 patent January 25, 1994. Claims 1 and 8 recite:

1. A floating dock, comprising: at least two docking members having top and bottom surfaces, each docking member containing a plurality of female-type receiving sockets spaced along the perimeter of the top and bottom surfaces of the docking member; and, a generally symmetrical male-type anchor with a pair of flanges, each flange being positionable within a receiving socket of one of the docking members for securing the docking members together in a flexible manner.

8. A floating dock, comprising: a docking member with top, bottom and side surfaces defining a hollow cavity and a generally frustoconically shaped pylon within the cavity extending from the top surface to the bottom surface.

In 1997, Schafer made several unsuccessful attempts to negotiate a license under the '055 patent from EZ Dock. Schafer then began selling its own floating dock system, “Conneeb-a-Dock.” On November 2, 1998, EZ Dock filed suit against Schafer for, inter alia, infringement of the '055 patent. Schafer counterclaimed for summary judgment of invalidity, nonin-fringement, and unenforceability due to alleged inequitable conduct during prosecution of the '055 patent.

The district court granted Schafer summary judgment of invalidity. The district court determined that the dock claimed in the '055 patent was on sale in this country more than one year before July 17, 1992, the date on which Mr. Neitzke and Mr. Vieras filed their patent application. EZ Dock, Inc. v. Schafer Systems, Inc., No. 98-2364 (D.Minn. May 8, 2000). EZ Dock appeals. This court has jurisdiction under 28 U.S.C. § 1295(a)(1).

II.

This court reviews a district court’s grant of summary judgment without deference. Conroy v. Reebok Int’l, Ltd., 14 F.3d 1570, 1575, 29 USPQ2d 1373, 1377 (Fed.Cir.1994). Summary judgment requires a determination that the record contains “no genuine issue as to any material fact” and “the moving party is entitled to a judgment as a matter of law.” Fed. R.Civ.P. 56(c). In other words, after reviewing all the facts in a light most favorable to the nonmoving party, this court will only affirm a grant of summary judgment if no “reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The Patent Act endows patents with a presumption of validity. 35 U.S.C. § 282 (1994). The Act also prevents issuance of any patent for an invention that was publicly used or on-sale in the United States more than one year before the date on which the patent application was filed. 35 U.S.C. § 102(b) (1994). Thus, an accused infringer may overcome a patent’s presumption of validity by presenting clear and convincing evidence of facts showing that the patented device was on-sale before such critical date. Massey v. Del Lab., 118 F.3d 1568, 1573, 43 USPQ2d 1367, 1370 (Fed.Cir.1997).

In Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 119 S.Ct. 304, 142 L.Ed.2d 261 (1998), the Supreme Court recently set forth a two-part test for application of the on-sale bar. The bar applies when an invention is both the subject of a commercial offer for sale and ready for patenting before the critical date. Pfaff, 525 U.S. at 67, 119 S.Ct. 304. The Supreme Court also explained that the second condition ready for patenting “may be satisfied in at least two ways: by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention.” Id. at 59, 119 S.Ct. 304.

Before the Supreme Court’s decision in Pfajf, this court used a multifactor, “totality of the circumstances” test to enforce the on-sale bar. See, e.g., Micro Chem., Inc. v. Great Plains Chem. Co., 103 F.3d 1538, 1544, 41 USPQQ 2d 1238, 1243 (Fed.Cir. 1997) (“all of the circumstances surrounding the sale or offer to sell, including the stage of development of the invention and the nature of the invention, must be considered and weighed against the policies underlying section 102(b)”). In Pfajf, the Supreme Court determined that the “totality of circumstances” test was unnecessarily vague and “seriously undermine[d] the interest in certainty.” Pfaff, 525 U.S. at 66 & n. 11, 119 S.Ct. 304. Therefore, this court now “follows the Supreme Court’s two-part test without balancing various policies according to the totality of the circumstances.” Weatherchem Corp. v. J.L. Clark, Inc., 163 F.3d 1326, 1333, 49 USPQ2d 1001, 1006 (Fed.Cir.1998).

This court has repeatedly stressed that evidence of experimental use does not give rise to a free-standing doctrinal exception to statutory bars, but instead operates to negate application of section 102(b): TP Labs., Inc. v. Prof'l Positioners, Inc., 724 F.2d 965, 971-72, 220 USPQ 577, 582 (Fed.Cir.1984); Monon Corp. v. Stoughton Trailers Inc., 239 F.3d 1253, 1258, 57 USPQ2d 1699, 1703 (Fed.Cir.2001). Because adequate proof of experimentation negates a statutory bar, the focus remains throughout the inquiry on application of the statutory bar itself.

[I]t is incorrect to impose on the patent owner, as the trial court in this case did, the burden of proving that a “public use” was “experimental.” These are not two separable issues. It is incorrect to ask: “Was it a public use?” and then “Was it experimental?” Rather the court is faced with a single issue: Was it a public use under 102(b)?

This focus on the requirements for a statutory bar, however, could raise questions about the effect of the Supreme Court’s recent clarifications of the standards for a statutory bar on the proof of experimentation adequate to negate the bar. In Pfaff, the Supreme Court expressly preserved the experimental use or sale negation of the section 102 bars: “Nevertheless, an inventor who seeks to perfect his discovery may conduct extensive testing without losing his right to obtain a patent for his invention—even if such testing occurs in the public eye. The law has long recognized the distinction between inventions put to experimental use and products sold commercially.” Pfaff, 525 U.S. at 64, 119 S.Ct. 304. Experimentation evidence includes “tests needed to convince [the inventor] that the invention is capable of performing its intended purpose in its intended environment.” Gould Inc. v. United States, 217 Ct.Cl. 167, 579 F.2d 571, 583, 198 USPQ 156, 167 (1978); Kolmes v. World Fibers Corp., 107 F.3d 1534, 1540, 41 USPQ2d 1829, 1833 (Fed.Cir.1997) (“testing was ... required in such an environment in order to ensure that the invention would work for its intended purpose”). Indeed in Pfaff, the Supreme Court reiterated its guidance in City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126, 137, 24 L.Ed. 1000 (1877), that an inventor does not inappropriately delay filing “by a bona fide effort to bring his invention to perfection, or to ascertain whether it will answer the purpose intended.” Pfaff, 525 U.S. at 64-65, 119 S.Ct. 304. Thus, the Supreme Court and this court apply the experimental use negation without conflict with the “ready for patenting” prong of the new on-sale bar test. Indeed as noted earlier, the Supreme Court acknowledged that a litigant may show readiness for patenting with evidence of reduction to practice. Like evidence of experimentation sufficient to negate a bar, reduction to practice involves proof that an invention will work for its intended purpose. Scott v. Finney, 34 F.3d 1058, 1061, 32 USPQ2d 1115 (Fed.Cir.1994). Even beyond this overlap of the experimental use negation and the ready for patenting standard, however, the Supreme Court explicitly preserved proof of experimentation as a negation of statutory bars.

After Schafer established its prima facie case that the '055 patent was invalid due to an on-sale bar, EZ Dock put forth evidence to negate that evidence by showing that its sale to Mr. Greden was experimental. When Mr. Greden purchased his dock, EZ Dock was not yet selling any docks. Mr. Neitzke did not have a “for sale” sign, brochure, or any other markings to indicate that the docks he had in his office supply store were for sale. Rather, Mr. Greden initiated the purchase of the dock. Mr. Greden did not pay full market price for the dock. Moreover Mr. Neitzke added free equipment and free installation to the price he did charge Mr. Greden. This evidence creates a genuine issue regarding the factual support for whether the inventors offered their invention for a commercial sale under market conditions in accordance with the first part of the Pfaff test.

By other actions, the inventors showed that their sale was experimental rather than premature commercial exploitation of their invention. Conti Plastic Containers v. Owens Brockway Plastic Prods., 141 F.3d 1073, 1080, 46 USPQ 1277, 1280 (Fed. Cir.1998) (the on sale bar prevents commercial exploitation of the invention beyond the statutory term). For • instance, this court has often consulted evidence of monitoring to discern the distinction between experimental and commercial sales. TP Lab., 724 F.2d at 972; Grain Processing Corp. v. Am. Maize-Prods. Co., 840 F.2d 902, 906, 5 USPQ2d 1788, 1792 (Fed. Cir.1988). In this case, Mr. Neitzke and Mr. Vierus both visited the dock that Mr. Greden purchased on several occasions. Moreover they made repairs for free. These facts show that the inventors were still working to detect and correct flaws in their invention.

This court and its predecessor have noted that experimentation negates a bar1 when the inventor tests claimed features of the invention. In re Theis, 610 F.2d 786, 793, 204 USPQ 188, 194 (CCPA 1979) (“It is settled law that ... experimental use ... does not apply to experiments performed with respect to non-claimed features of an invention.”); In re Brigance, 792 F.2d 1103,1109, 229 USPQ 988, 991-92 (Fed.Cir.1986). In Manville Sales Corp. v. Paramount Sys. Inc., 917 F.2d 544, 550,16 USPQ2d 1587, 1592 (Fed.Cir.1990), this court permitted the inventor to test the' invention for durability during winter although claims did not expressly mention durability or severe weather conditions. Instead this court reasoned that the nature of the invention (luminaires) required durability so that the claims’ reference to the subject matter placed that topic within the proper frame of experimentation. In this case, the '055 patent claims a floating dock. These floating docks, by their nature, must endure all kinds of water conditions, including choppy water created by weather and boating. The waters at Bass Camp, the location of Mr. Greden’s dock, were much rougher than the waters in Mr. Neitzke’s marina where he was testing other dock sections. Mr. Neitzke testified that he sold the dock to Mr. Greden to test how it would hold up under these more turbulent water conditions. In other words, Mr. Neitzke testified that he sold the dock to Mr. Greden to determine whether it was “capable of performing its intended purpose in its intended environment.” Gould, 579 F.2d at 583.

Moreover, the dock that Mr. Greden purchased had rectangular shaped pylons. Mr. Neitzke and Mr. Vierus later changed the pylon shape of their dock design to frustoconical based on the results of their dock testing. EZ Dock claimed this frustoconical shape in claim 8 of the '055 patent. When an inventor can show changes during experimentation that result in features later claimed in the patent application, this evidence is a strong indication that the activities of the inventor negated any evidence of premature commercial exploitation of an invention ready for patenting. Again this evidence creates a genuine issue regarding whether the material facts support that the invention claimed in the '055 patent was ready for patenting at the time of the sale to Mr. Greden and regarding whether its sale was commercial or experimental.

In sum, during summary judgment, the trial court must weigh all evidence in the record in favor of the nonmovant. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. When viewed through this prism, EZ Dock has presented adequate evidence for a reasonable jury to find satisfied the factual predicate for experimental use and that the '055 patent thus is not invalid. The district court’s grant of summary judgment that the '055 patent is invalid due to an on-sale bar was, therefore, improper.

CONCLUSION

This court vacates the district court’s grant of summary judgment that the '055 patent is invalid due to an on-sale bar and remands for trial.

COSTS

Each party shall bear its own costs.

VACATED AND REMANDED.