Pfaff v. Wells Electronics Inc.

U.S. Supreme Court

November 10, 1998

525 U.S. 55, 48 USPQ2d 1641

[Editor's note: This case is discussed in Legal Protection of Digital Information in:
Chapter 4, Section V.C. (Statutory Bars).]

Syllabus By The Court

Under Section 102(b) of the Patent Act of 1952, no one can patent an “invention” that has been “on sale” more than one year before filing a patent application. In early 1981, petitioner Pfaff designed a new computer chip socket and sent detailed engineering drawings of the socket to a manufacturer. He also showed a sketch of his concept to Texas Instruments, which placed an order for the new sockets prior to April 8, 1981. In accord with his normal practice, Pfaff did not make and test a prototype before offering to sell the socket in commercial quantities. He filled the order in July 1981, and thus the evidence indicates that he first reduced his invention to practice that summer. He applied for a patent on April 19, 1982, making April 19, 1981, the critical date for Section 102(b)’s on-sale bar. After the patent issued, he lost an infringement action he filed against respondent, Wells Electronics, Inc. Subsequently, he brought this suit, alleging that a modified version of Wells’ socket infringed <48 USPQ2d 1642> six of his patent’s claims. The District Court held, inter alia, that three of the claims were infringed, rejecting Wells’ Section 102(b) defense on the ground that Pfaff had filed the patent application less than a year after reducing the invention to practice. In reversing, the Court of Appeals concluded, among other things, that Section 102(b)’s 1-year period began to run when the invention was offered for sale commercially, not when it was reduced to practice.

Held: Pfaff’s patent is invalid because the invention had been on sale for more than one year in this country before he filed his patent application.

(a) The primary meaning of “invention” in the Patent Act unquestionably refers to the inventor’s conception rather than to a physical embodiment of that idea. The statute contains no express “reduction to practice” requirement, see Sections 100, 101, 102(g), and it is well settled that an invention may be patented before it is reduced to practice. In The Telephone Cases, 126 U.S. 1, 535-536, this Court upheld a patent issued to Alexander Graham Bell even though he had filed his application before constructing a working telephone. Applying the reasoning of The Telephone Cases to the facts of this case, it is evident that Pfaff could have obtained a patent when he accepted Texas Instruments’ order, for at that time he provided the manufacturer with a description and drawings of “sufficient clearness and precision to enable those skilled in the matter” to produce the device, id.,at 536.

(b) Pfaff’s nontextual argument-that longstanding precedent, buttressed by the interest in providing inventors with a clear standard identifying the onset of the 1-year period, justifies a special interpretation of “invention” in Section 102(b) – is rejected. While reduction to practice provides sufficient evidence that an invention is complete, the facts of The Telephone Cases and this case show that such proof is not necessary in every case.

(c) The on-sale bar applies when two conditions are satisfied before the critical date. First, the product must be the subject of a commercial offer for sale. Here, the acceptance of the purchase order prior to April 8, 19 81, makes it clear that such an offer had been made, and there is no question that the sale was commercial. Second, the invention must be ready for patenting. That condition 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. This condition is satisfied here because the drawings sent to the manufacturer before the critical date fully disclosed the invention.

124 F.3d 1429 [43 USPQ2d 1928], affirmed.

Stevens, J.

<525 U.S. 57> Section 102(b) of the Patent Act of 1952 provides that no person is entitled to patent an “invention” that has been “on sale” more than one year before filing a patent application.1 We granted certiorari to determine whether the commercial marketing of a newly invented product may mark the beginning of the 1-year period even though the invention has not yet been reduced to practice.2

I

On April 19, 1982, petitioner, Wayne Pfaff, filed an application for a patent on a computer chip socket. Therefore, April 19, 1981, constitutes the critical date for purposes of the on-sale bar of 35 U.S.C. Section 102(b); if the 1-year period <525 U.S. 58> began to run before that date, Pfaff lost his right to patent his invention. <48 USPQ2d 1643>

Pfaff commenced work on the socket in November 1980, when representatives of Texas Instruments asked him to develop a new device for mounting and removing semiconductor chip carriers. In response to this request, he prepared detailed engineering drawings that described the design, the dimensions, and the materials to be used in making the socket. Pfaff sent those drawings to a manufacturer in February or March 1981.

Prior to March 17, 1981, Pfaff showed a sketch of his concept to representatives of Texas Instruments. On April 8, 1981, they provided Pfaff with a written confirmation of a previously placed oral purchase order for 30,100 of his new sockets for a total price of $91,155. In accord with his normal practice, Pfaff did not make and test a prototype of the new device before offering to sell it in commercial quantities.3

The manufacturer took several months to develop the customized tooling necessary to produce the device, and Pfaff did not fill the order until July 1981. The evidence therefore indicates that Pfaff first reduced his invention to practice in the summer of 1981. The socket achieved substantial commercial <525 U.S. 59> success before Patent No. 4,491,377 (the ‘377 patent) issued to Pfaff on January 1, 1985.4

After the patent issued, petitioner brought an infringement action against respondent, Wells Electronics, Inc., the manufacturer of a competing socket. Wells prevailed on the basis of a finding of no infringement.5 When respondent began to market a modified device, petitioner brought this suit, alleging that the modifications infringed six of the claims in the ‘377 patent.

After a full evidentiary hearing before a Special Master,6 the District Court held that two of those claims (1 and 6) were invalid because they had been anticipated in the prior art. Nevertheless, the court concluded that four other claims (7, 10, 11, and 19) were valid and three (7, 10, and 11) were infringed by various models of respondent’s sockets. App. to Pet. for Cert. 21a-22a. Adopting the Special Master’s findings, the District Court rejected respondent’s Section 102(b) defense because Pfaff had filed the application for the ‘377 patent less than a year after reducing the invention to practice.

The Court of Appeals reversed, finding all six claims invalid. 124 F.3d 1429 [43 USPQ2d 1928] (CA Fed. 1997). Four of the claims (1, 6, 7, and 10) described the socket that Pfaff had sold to Texas Instruments prior to April 8, 1981. Because that device had been offered for sale on a commercial basis more than one <525 U.S. 60> year before the patent application was filed on April 19, 1982, the court concluded that those claims were invalid under Section 102(b). That conclusion rested on the court’s view that as long as the invention was “substantially complete at the time of sale,” the 1-year period began to run, even though the invention had not yet been reduced to practice. Id., at 1434. The other two claims (11 and 19) described a feature that had not been included in Pfaff’s initial design, but the Court of Appeals concluded as a matter of law that the additional feature was not itself patentable because it was an obvious addition to the prior art.7 Given the <48 USPQ2d 1644> court’s Section 102(b) holding, the prior art included Pfaff’s first four claims.

Because other courts have held or assumed that an invention cannot be “on sale” within the meaning of Section 102(b) unless and until it has been reduced to practice, see, e.g., Timely Products Corp. v. Arron, 523 F.2d 288, 299-302 [187 USPQ 257] (CA2 1975); Dart Industries, Inc. v.E.I. DuPont de Nemours & Co., 489 F.2d 1359, 1365, n.11 [179 USPQ 392] (CA7 1973), cert. denied, 417 U.S. 933 [182 USPQ 1] (1974), and because the text of Section 102(b) makes no reference to “substantial completion” of an invention, we granted certiorari. 523 U.S. ___ (1998).

II

The primary meaning of the word “invention” in the Patent Act unquestionably refers to the inventor’s conception rather than to a physical embodiment of that idea. The statute does not contain any express requirement that an invention must be reduced to practice before it can be patented. <525 U.S. 61> Neither the statutory definition of the term in Section 1008 nor the basic conditions for obtaining a patent set forth in Section 1019 make any mention of “reduction to practice.” The statute’s only specific reference to that term is found in Section 102(g), which sets forth the standard for resolving priority contests between two competing claimants to a patent. That subsection provides:

“In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.”

Thus, assuming diligence on the part of the applicant, it is normally the first inventor to conceive, rather than the first to reduce to practice, who establishes the right to the patent.

It is well settled that an invention may be patented before it is reduced to practice. In 1888, this Court upheld a patent issued to Alexander Graham Bell even though he had filed his application before constructing a working telephone. Chief Justice Waite’s reasoning in that case merits quoting at length:

“It is quite true that when Bell applied for his patent he had never actually transmitted telegraphically spoken words so that they could be distinctly heard and understood at the receiving end of his line, but in his specification he did describe accurately and with admirable clearness his process, that is to say, the exact <525 U.S. 62> electrical condition that must be created to accomplish his purpose, and he also described, with sufficient precision to enable one of ordinary skill in such matters to make it, a form of apparatus which, if used in the way pointed out, would produce the required effect, receive the words, and carry them to and deliver them at the appointed place. The particular instrument which he had, and which he used in his experiments, did not, under the circumstances in which it was tried, reproduce the words spoken, so that they could be clearly understood, but the proof is abundant and of the most convincing character, that other instruments, carefully constructed and made exactly in accordance with the specification, without any additions whatever, have operated and will operate successfully. A good mechanic of proper skill in matters of the kind can take the patent and, by following the specification strictly, can, without more, construct an apparatus which, when used in the way pointed out, will do all that it is claimed the method or process will do . . .

“The law does not require that a discoverer or inventor, in order to get a patent for a process, must have succeeded in bringing his art to the highest degree of perfection. It is enough if he describes his method with sufficient clearness and precision to enable those skilled in the matter to understand what the process is, and if he points out some practicable way of putting it into operation.” The Telephone Cases, 126 U.S. 1, 535-536 (1888).10 <48 USPQ2d 1645>

When we apply the reasoning of The Telephone Cases to the facts of the case before us today, it is evident that Pfaff <525 U.S. 63> could have obtained a patent on his novel socket when he accepted the purchase order from Texas Instruments for 30,100 units. At that time he provided the manufacturer with a description and drawings that had “sufficient clearness and precision to enable those skilled in the matter” to produce the device. The parties agree that the sockets manufactured to fill that order embody Pfaff’s conception as set forth in claims 1, 6, 7, and 10 of the ‘377 patent. We can find no basis in the text of Section 102(b) or in the facts of this case for concluding that Pfaff’s invention was not “on sale” within the meaning of the statute until after it had been reduced to practice.

III

Pfaff nevertheless argues that longstanding precedent, buttressed by the strong interest in providing inventors with a clear standard identifying the onset of the 1-year period, justifies a special interpretation of the word “invention” as used in Section 102(b). We are persuaded that this nontextual argument should be rejected.

As we have often explained, most recently in Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 151 [9 USPQ2d 1847] (1989), the patent system represents a carefully crafted bargain that encourages both the creation and the public disclosure of new and useful advances in technology, in return for an exclusive monopoly for a limited period of time. The balance between the interest in motivating innovation and enlightenment by rewarding invention with patent protection on the one hand, and the interest in avoiding monopolies that unnecessarily stifle competition on the other, has been a feature of the federal patent laws since their inception. As this Court explained in 1871:

“Letters patent are not to be regarded as monopolies . . . but as public franchises granted to the inventors of new and useful improvements for the purpose of securing to them, as such inventors, for the limited term therein <525 U.S. 64> mentioned, the exclusive right and liberty to make and use and vend to others to be used their own inventions, as tending to promote the progress of science and the useful arts, and as matter of compensation to the inventors for their labor, toil, and expense in making the inventions, and reducing the same to practice for the public benefit, as contemplated by the Constitution and sanctioned by the laws of Congress.” Seymour v. Osborne, 11 Wall. 516, 533-534.

Consistent with these ends, Section 102 of the Patent Act serves as a limiting provision, both excluding ideas that are in the public domain from patent protection and confining the duration of the monopoly to the statutory term. See, e.g., Frantz Mfg. Co. v. Phenix Mfg. Co., 457 F.2d 314, 320 [173 USPQ 266] (CA7 1972).

We originally held that an inventor loses his right to a patent if he puts his invention into public use before filing a patent application. “His voluntary act or acquiescence in the public sale and use is an abandonment of his right” Pennock v. Dialogue, 2 Pet. 1, 24 (1829) (Story, J.). A similar reluctance to allow an inventor to remove existing knowledge from public use undergirds the on-sale bar.

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. In 1878, we explained why patentability may turn on an inventor’s use of his product.

“It is sometimes said that an inventor acquires an undue advantage over the public by delaying to take out a patent, inasmuch as he thereby preserves the monopoly to himself for a longer period than is allowed by the policy of the law; but this cannot be said with justice when the <525 U.S. 65> delay is occasioned by a bona fide effort to bring his invention to perfection, or to ascertain whether it will answer the purpose intended. His monopoly only continues for the allotted period, in any event; and it is the interest of the public, as well as himself, that the invention should be perfect and properly tested, before a patent is granted for it. Any attempt to use it for a profit, <48 USPQ2d 1646> and not by way of experiment, for a longer period than two years before the application, would deprive the inventor of his right to a patent.” Elizabethv. Pavement Co., 97 U.S. 126, 137 (emphasis added).

The patent laws therefore seek both to protect the public’s right to retain knowledge already in the public domain and the inventor’s right to control whether and when he may patent his invention. The Patent Act of 1836, 5 Stat. 117, was the first statute that expressly included an on-sale bar to the issuance of a patent. Like the earlier holding in Pennock, that provision precluded patentability if the invention had been placed on sale at any time before the patent application was filed. In 1839, Congress ameliorated that requirement by enacting a 2-year grace period in which the inventor could file an application. 5 Stat. 353.

In Andrews v. Hovey, 123 U.S. 267, 274 (1887), we noted that the purpose of that amendment was “to fix a period of limitation which should be certain”; it required the inventor to make sure that a patent application was filed “within two years from the completion of his invention,” ibid.In 1939, Congress reduced the grace period from two years to one year. 53 Stat. 1212.

Petitioner correctly argues that these provisions identify an interest in providing inventors with a definite standard for determining when a patent application must be filed. A rule that makes the timeliness of an application depend on the date when an invention is “substantially complete” seriously <525 U.S. 66> undermines the interest in certainty.11 Moreover, such a rule finds no support in the text of the statute. Thus, petitioner’s argument calls into question the standard applied by the Court of Appeals, but it does not persuade us that it is necessary to engraft a reduction to practice element into the meaning of the term “invention” as used in Section 102(b).

The word “invention” must refer to a concept that is complete, rather than merely one that is “substantially complete.” It is true that reduction to practice ordinarily provides the best evidence that an invention is complete. But just because reduction to practice is sufficient evidence of completion, it does not follow that proof of reduction to practice is necessary in every case. Indeed, both the facts of the Telephone Cases and the facts of this case demonstrate that one can prove that an invention is complete and ready for patenting before it has actually been reduced to practice.12

<525 U.S. 67> We conclude, therefore, that the on-sale bar applies when two conditions are satisfied before the critical date. First, the product must be the subject of a commercial offer for sale. An inventor can both understand and control the timing of the first commercial marketing of his invention. The experimental use doctrine, for example, has not generated concerns about indefiniteness,13 and we perceive no reason why unmanageable <48 USPQ2d 1647> uncertainty should attend a rule that measures the application of the on-sale bar of Section 102(b) against the date when an invention that is ready for patenting is first marketed commercially. In this case the acceptance of the purchase order prior to April 8, 1981, makes it clear that such an offer had been made, and there is no question that the sale was commercial rather than experimental in character.

Second, the invention must be ready for patenting. That condition 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 <525 U.S. 68> practice the invention.14 In this case the second condition of the on-sale bar is satisfied because the drawings Pfaff sent to the manufacturer before the critical date fully disclosed the invention.

The evidence in this case thus fulfills the two essential conditions of the on-sale bar. As succinctly stated by Learned Hand:

“ [I]t is a condition upon an inventor’s right to a patent that he shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy, or legal monopoly.” Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516, 520 [68 USPQ 54] (CA2 1946).

The judgment of the Court of Appeals finds support not only in the text of the statute but also in the basic policies underlying the statutory scheme, including Section 102(b). When Pfaff accepted the purchase order for his new sockets prior to April 8, 1981, his invention was ready for patenting. The fact that the manufacturer was able to produce the socket using his detailed drawings and specifications demonstrates this fact. Furthermore, those sockets contained all the elements of the invention claimed in the ‘377 patent. Therefore, Pfaff’s ‘377 patent is invalid because the invention <525 U.S. 69> had been on sale for more than one year in this country before he filed his patent application. Accordingly, the judgment of the Court of Appeals is affirmed.

It is so ordered.