The United States Court of Appeals for the Federal Circuit has reversed the decision of the US District Court for the Eastern District of Pennsylvania and determined that US Design Patent No. D450,839, filed on February 7, 2000, for a “peel away” or “tearaway” introducer sheath used to insert a catheter into a patient, was invalid because it was “on sale” more than one year before filing, contrary to 35 USC § 102(b) as it read prior to the Leahy-Smith America Invents Act:
A person shall be entitled to a patent unless —
(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States, […]
On January 8, 1999, in response to a request from Boston Scientific, a business associate of the patentee sent a letter to Boston Scientific “detailing bulk pricing information for variously sized peelable introducer sheath products”:
Thank you for the opportunity to provide this quotation for the Medi-Tech Peelable Sheath Set. When we first received this request for quotation we were under the mistaken impression that you wanted the exact configuration as the drawing that was provided which would have required extensive tooling expense. Subsequently, we have learned that this is not the case and are pleased to submit this quotation for a product of our design.
The principals of Xentek Medical have extensive experience in the design, development and manufacture of this type of medical device. If you should have any specific dimensional requirements this product could generally be tailored to your specifications.
The January 8 Letter included a price chart with sizes, order quantities, and unit prices, noting that “prices are for shipment in bulk, non-sterile, FOB Athens Texas on a net 30-day basis.” The associate concluded with his appreciation for “the opportunity to provide this quotation.”
The District Court for the Eastern District of Pennsylvania, deciding cross-motions for summary judgment, held the January 8 Letter was not a “commercial offer for sale of a product embodying the claimed design,” but rather a “preliminary negotiation.” The District Court highlighted the repetition of “quotation” and the conclusion inviting further discussion about specific requirements. A copy of the district court’s summary judgment can be found here, and its subsequent decision on the merits can be found here.
On appeal of both decisions, the Federal Circuit noted that “Section 102(b)’s on-sale bar is triggered if, before the critical date, the claimed invention was both (1) the subject of a commercial offer for sale and (2) ready for patenting,” citing Pfaff v. Wells Elecs.
Both parties agreed that the products described in the January 8 Letter embodied the claimed design, and the claimed design was ready for patenting by that date. The sole issue was whether the January 8 Letter constituted a commercial offer for sale.
Since the January 8 Letter was a response to a request for quotation from Boston Scientific and addressed to Boston Scientific alone, the Court found “the letter was not an unsolicited price quotation or invitation to negotiate, but rather a specific offer to Boston Scientific to take further action.” The Court also emphasized the “number of necessary terms typical for a commercial contract” like delivery conditions (prices for shipment in bulk, non-sterile), shipment terms (FOB Athens, Texas), and payment terms (net 30-day basis).
Addressing the invitation for further discussion, the Federal Circuit noted “expressing a desire to do business in the future does not negate the commercial character of the transaction then under discussion,” citing Cargill, Inc. v. Canbra Foods, Ltd. Instead, the Court held the January 8 Letter presented “multiple offers for sale, any one or more of which Boston Scientific could have simply accepted to bind the parties in a contract.” It rejected Mr. Junker’s proposed standard—that the offer must specify the exact amount of product the buyer desires—as too stringent. The Court also rejected that labelling the January 8 Letter a quotation was sufficient to render it so, considering the terms of the letter in their entirety.
Overall, the “specificity and completeness of commercial terms in the letter outweigh[ed] the three references to ‘quotation’ and mention of possible future discussion.”
A copy of the decision can be found here.