Patent Protection for Processes: How Dippin’ Dots may make it more difficult to secure process patents after prior sales.

February 20, 2009 | By: Thomas F. Zuber and Spyros J. Lazaris

Does the sale of a product made using a new and useful process more than a year before a patent application is filed render that process “prior art” and therefore unpatentable? According to 35 U.S.C. § 101, any person who “invents or discovers” a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” is eligible for patent protection. Whether it is a product or a process, the new invention or discovery must be “new.” For that reason, an invention (product or process) that was “known or used by others in this country, or patented or described in a printed publication” is ineligible for patent protection, since such an invention cannot be described as “new.” 35 U.S.C. § 102(a). Similarly, an invention “in public use or on sale in this country, more than one year prior to the date of the application for [US] patent” is ineligible for patent protection, since such an invention could not be considered “new.” 35 U.S.C. § 102(b). Instead, these inventions are considered “prior art.” An exception is made for sales that are made for experimentation purposes, which allows the inventor “to refine his or her invention or to assess its value relative to the time and expense of prosecuting a patent application.” Baxter Intern., Inc. v. COBE Laboratories Inc., 88 F.3d 1054, 1060 (Fed.Cir.1996).

The patent laws include a second requirement that the subject matter of the patent be more than an obvious elaboration on prior art. According to 35 U.S.C. § 103(a), “if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious…to a person having ordinary skill in the art to which said subject matter pertains” that subject matter is ineligible for patent protection.  Since it is simply not practical to grant a new patent for every minor elaboration to the public art, only non-obvious elaborations can be eligible for patenting.

Accordingly, a new product that is sold more than a year before a patent application is filed (i.e., before the “critical date”) for that product is ineligible for  patenting by virtue of its on-sale date and the fact that it has become known to the  public. The same logic holds true for a new process that is revealed before its critical date. Such a process is considered prior art when “sufficient information is available to enable members of the public to learn the process, if they so choose.” Chemithon Corp. v. Procter & Gamble Co., 287 F.Supp. 291 (D.C.Md. 1968) (citing 35 U.S.C.A. § 102(b)). This is known as the forfeiture theory.

But what results when a product using a new process is sold more than a year prior to filing a patent application for both product and process? Clearly, the product has become known to the public and is ineligible for patenting, but what about the process used in conjunction with that product? In D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144 (C.A.Fed.,1983) the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”) stated that the sale of a product prior to the critical date not only forfeits the product, but also forfeits the underlying process. If the process remains secret, however, the sale will not bar another inventor from patenting that process, but will continue to bar the seller. 714 F.2d 1144 at 1148 (See also Invitrogen Corp. v. Biocrest Mfg., 424 F.3d 1374, 1382 (Fed.Cir.2005) (citing Metallizing Eng’g Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516, 520 (2d Cir.1946) (Learned Hand, J.))). The Federal Circuit pushed this reasoning one step further in Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337, (C.A.Fed. (Tex.), 2007), declaring that an obvious elaboration on the forfeited process will also be ineligible for patent protection.

In Dippin’ Dots, plaintiffs Dippin’ Dots, Inc. and Curt D. Jones (“DDI”) invented a process for flash-freezing novelty ice cream that became popular in amusement parks and shopping malls. DDI first filed a patent application for this process in March 1989 and eventually obtained patent protection in 1992. Between July 24 and 29, 1987, and more than a year before the March 1989 filing of the patent application which resulted in the patented process claim, however, DDI sold a product manufactured by this patented process to roughly 800 customers. Customers were permitted to leave with the product and confidentiality agreements were not used. According to Jones’ testimony, the purpose of the sale was to determine the marketability of the product. Jones failed to disclose the sales to the United States Patent and Trademark Office and secured the patent. DDI enjoyed considerable success before DDI’s distributors eventually broke off and found new manufacturers. DDI responded by filing patent infringement lawsuits against both the manufacturers and distributors.

The defendants argued that DDI’s 1992 patent was invalid by asserting that, among other problems, the process was obvious and should be disqualified under §103(a). In this case, the source of the prior art was DDI’s own sale before the critical date of a product using the later-patented process. The defendants argued that because DDI’s product was sold prior to the critical date, it should be deemed prior art under § 102(b). Having established that the product was in the public domain, the defendants argued that the process was likewise forfeited. Finally, although the process used was not identical to the process later patented, the defendants argued that it was an obvious elaboration on the prior art and therefore not entitled to patent protection.

The jury agreed with the defendants and the District Court for the Northern District of Texas entered judgment in favor of the defendants, finding the patent obvious and invalid. DDI filed a motion for judgment as a matter of law, requesting that the court vacate the jury’s findings. The court denied the motion and DDI appealed to the Federal Circuit . The court affirmed.

On the question of the patent’s validity, the Court of Appeals noted that two conclusions were required to find the patent invalid. First, that DDI’s prior sales were part of the prior art, and second, that the patented process was an obvious elaboration on this prior art, and therefore not entitled to patent protection. The court reviewed the District Court’s finding of obviousness as a question of law, and was therefore entitled to withhold deference and review the underlying findings of fact for substantial evidence. 476 F.3d 1337 as 1343 (citing LNP Eng’g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1353 (Fed.Cir.2001)).

Much of the litigation in District Court concerned whether the July 1987 sales should be deemed prior sales under § 102(b). Since the sales were made prior to the critical date, DDI had to argue that the sales were merely experimental and subject to exception. The question of experimental use is determined by examining a list of factors, including: whether testing was necessary to demonstrate the efficacy of the invention; whether records of the experimentation were kept; whether the testing was systematic; the length of the evaluation period; the presence of confidentiality agreements; whether the inventor was compensated; the control maintained over the experiment, and other relevant circumstances. Lough v. Brunswick Corp., 86 F.3d 1113, 1120 (Fed.Cir.1996). The jury found that the sale was not experimental.

The Federal Circuit held that the jury’s findings were appropriate. Given Jones’ admission that the purpose of the sale was to determine the marketability of his product, said the court, the jury could have found that the sale was not experimental. 476 F.3d 1337 at 1344 (referring to In re Smith, 714 F.2d 1127, 1135 (Fed.Cir.1983) (“The experimental use exception ... does not include market testing where the inventor is attempting to gauge consumer demand for his claimed invention.”)).

Relying on the forfeiture theory, the court incorporated the process that produced the product into the prior art as well. As the court stated: “[t]he public sale of goods produced by a process more than one year before a patent is filed places that process in the § 102(b) prior art.” 476 F.3d 1337 at 1344. In this way, the court concluded that there was sufficient evidence for the jury to conclude that the process was in the public domain. The final question was whether the patent was an obvious elaboration, not meriting patent protection.

According to the court, the inquiry into obviousness requires that the party urging obviousness demonstrate that the prior art contained a teaching, suggestion, or motivation to combine components in the way that was done by the inventor. 476 F.3d 1337 at 1343 (citing C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340, 1351 (Fed.Cir.1998). The motivation to combine component “can be found in the knowledge of one skilled in the art or in the nature of the problem to be solved.” Id. at 1344 (citing Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286, 1291 (Fed.Cir.2006). The court may also consider secondary indicia of nonobviousness, such as commercial success, long-felt need, or the failure of others. Id. (citing Graham v. John Deere Co., 383 U.S. 1, 17 (1966)).

Applying the test above, the Federal Circuit found no error in the jury’s findings. According to the court, the first three steps (preparing the composition, dripping composition into a freezing chamber, freezing) of the six-step patented process were admittedly practiced during the prior sale. The last two steps (warming the product and serving it at a temperature where the product is “free-flowing”), the court held, while not practiced exactly, were closely approximated. That is, instead of warming the product mechanically, customers were asked to wait for the smoke to evaporate, which indicated a temperature proper for consumption.  Although no evidence of the exact temperature of the served product was presented, the court held that “it would have been obvious in light of the activity there to measure that temperature and serve the product within an easily determined range of palatability.” 476 F.3d 1337 at 1344. The fourth step, storing the beads at subzero temperature for an extended period of time, though not practiced at the time of sale was, in the court’s view, an obvious elaboration on the prior sale needed in order to distribute and retail the product. Since someone of ordinary skill in the art of ice cream retailing would seek to solve the problem of melting ice cream by freezing it at suitable temperatures, the act of storage could not be considered nonobvious. Id.

The court also examined the main secondary indicia of nonobviousness proffered by DDI, the commercial success of the product. The court found that the jury could have determined that the commercial success was obviated by the prior sales. The court reasoned that if the ingredients for success were present at the prior sale, modification to the process and subsequent patent need not account for the commercial success of the patent.

The court concluded that the jury findings were reasonable in light of the evidence presented and affirmed in relevant part.

This case raises several troubling issues. First, it signals to inventors the need to be very cautious during the development of new products. Individuals selling new products more than a year before filing for patent protection should take precautions to ensure that their sale resembles an experiment whose goal is to refine the product, rather than marketing or advertisement. The need for this precaution is even greater after Dippin Dots, since even modified products are liable to be subsumed within the prior art as merely obvious elaborations of that prior art. Whether the invention is a product or process is of little avail to the inventor, as divulging a product also divulges the underlying process.

This case also brings up the question of how a court is to properly assess whether a process has become publicly known and part of the public domain. According to Chemithon, a process is not considered prior art until “sufficient information is available to enable members of the public to learn the process, if they so choose.” 287 F.Supp. 291 at 308. Yet cases such as Dippin’ Dots that follow the forfeiture theory as cited in Chroma Graphics, Invitrogen, and Metallizing imply that the sale of product before the critical date automatically forfeits the underlying process. Are these two lines of case contradictory or can they be reconciled in some way? One possibility might be that Chemithon only applies when a process is revealed as opposed to a product using that process.

Third, this case (and its aforementioned lineage) leads to the odd conclusion that the invention of a process by a person who previously discloses a similar process embedded in a product sold before the critical date should be treated differently than another person who creates the same process. Consider the following scenario. Inventor discovers a process. He designs a product using that process and sells it for non-experimental purposes, but keeps the process secret. A year and a day later (after the critical date) he files a patent application on the process, since the product is clearly within the prior art. Unless the process in the patent application is more than an obvious elaboration on the prior process used, the inventor will be unable to secure a patent. However, if another person discovers the same process and files  a patent application, according to Metallizing, and as relied upon by Dippin’ Dots, the process is eligible for patent protection, despite being the same invention. In other words, the case seems to imply the prior art is only “public for the inventor,” but not “public for the public.” This absurd result will surely have to be reconciled in future litigation.

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