On-Sale Bar Applies to Report Generated by Patented Invention

The on-sale bar spelled the end for some of Quest Integrity’s patent claims against Cokebusters in a recent Federal Circuit decision. Interestingly, the on-sale bar applied not because of a sale of a claimed invention but because of a sale of a report generated by the claimed invention.

Quest Integrity and Cokebusters are competitors in the field of inspecting tubing for commercial furnaces. Quest Integrity sued Cokebusters for infringing U.S. Patent No. 7,542,874. The asserted claims include method claims, system claims, and computer-readable medium claims. Claim 24 is representative:

24. A computer-readable medium having computer-executable instructions for performing a method of displaying inspection data collected from a furnace, wherein said furnace comprises a plurality of tube segments interconnected by a plurality of bends so as to allow stacking of at least a portion of said tube segments, said method comprising:

generating a plurality of data markers each of which identifies a location of a physical feature of said furnace;

partitioning said inspection data at said data markers so as to correlate said inspection data to an appropriate one of said tube segments of said furnace;

generating a display of at least a portion of said partitioned inspection data arranged to represent said physical geometry of a plurality of said tube segments and enable visual detection of a problem area comprising one or more of said tube segments; and

wherein said inspection data is collected by one or more devices selected from the following group: an ultrasonic transducer, a laser profilometer, and combinations thereof.

Cokebusters’s defense was that a sale by Quest Integrity more than one year before applying for the patent anticipated the invention, i.e., the on-sale bar. Specifically, “Quest used its method, computer-readable medium, and system commercially to perform furnace inspection services and produce the Norco Reports for its customer.”

The panel began its discussion by explaining that this type of transaction is a commercial offer for sale, potentially triggering the on-sale bar. Prior Federal Circuit precedent holds that selling a product produced by a claimed method triggers the on-sale bar, as well as performing a claimed method for compensation even without generating a product. “The same approach necessarily applies where a service (here, furnace tube inspection) is performed for compensation using a claimed computer-readable medium or system that generates a ‘product’ (here, the Norco Reports).”

The parties did not contest whether the transaction counted as a commercial offer for sale. Instead, the fight was over whether the report met the “Display Limitation,” the parties’ term for the third clause in claim 24 above. In the report, “[t]he inspection data is plotted across a plurality of horizontal strips as a function of time ‘from left-to-right and bottom-to-top.’” This arrangement is the same as Example 1 in the description of the patent. Quest Integrity argued that the claims had been narrowed during prosecution to exclude all time-based arrangements, but the panel decided that there had been no “clear and unmistakable disclaimer” of that scope. The report thus still met the Display Limitation and invalidated some of the claims. (Two claims were remanded to decide whether the reports met a different limitation.)

Lessons for Practice

Do not mess around with the on-sale bar. The law does not leave room for fine distinctions about whether a sale really involves an invention. If a commercial transaction somehow involves the invention, the invention should be docketed to have an application filed within a year.