Sonoscan, Inc. v. Sonotek, Inc.

Citations: 936 F.2d 1261; 19 U.S.P.Q. 2d (BNA) 1156; 1991 U.S. App. LEXIS 11831; 1991 WL 100535Docket: 91-1017

Court: Court of Appeals for the Federal Circuit; June 12, 1991; Federal Appellate Court

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The United States Court of Appeals for the Federal Circuit upheld the August 30, 1990, decision of the Eastern District of Virginia, which declared Sonoscan, Inc.'s U.S. Patent 4,866,986 invalid under 35 U.S.C. § 102(b). The court found that the patented scanning acoustic microscope had been placed on sale more than one year before Sonoscan's patent application was filed on September 15, 1988. Sonoscan had previously provided price quotations for its System 3100 microscope to IBM and Amdahl Corporation in 1986 and 1987, which constituted the sale. The patent describes a display system for a scanning acoustic microscope, detailing the components involved in generating and displaying an image based on ultrasonic pulse echoes. Sonotek, Inc. successfully argued the patent's invalidity, leading to a bifurcated trial on the 'on sale' defense, culminating in a final judgment favoring Sonotek. Sonoscan subsequently appealed the decision.

The district court's determination that Sonoscan placed its patented invention on sale more than one year prior to its patent application is under review. The legal standard for this review is de novo, while factual findings are assessed under the clearly erroneous standard. Sonoscan contends that the quotations it provided to IBM did not constitute an offer for the patented invention and claims that as of the critical date, September 15, 1987, the invention was not sufficiently developed for sale.

Sonoscan's patent application was filed on September 15, 1988, establishing the critical date of September 15, 1987. A quotation to Amdahl dated September 18, 1987, occurred after this critical date and does not affect the patent's validity. However, the September 10, 1987, quotation to IBM described a scanning acoustic microscope with various components but failed to mention the unified image feature specified in the patent's claims. Conflicting testimonies regarding this quotation also existed, which did not provide clear and convincing evidence of an offer for the patented invention.

The court noted that establishing whether the offered product is the claimed invention can rely on various forms of evidence, such as documentation and witness testimony. Ultimately, the court found that the totality of evidence supported its conclusion that the invention was on sale. Key testimony indicated that by March 10, 1986, the inventor had knowledge of specific circuitry capable of displaying amplitude differences and that a schematic dated September 9, 1987, demonstrated circuitry for a unified image display. This schematic was based on a working prototype that existed at Sonoscan prior to the schematic date and included the unified image display of the claimed invention.

Dr. Lawrence W. Kessler, President of Sonoscan, testified about the invention's development status as of the critical date, detailing the working prototype's capabilities based on a September 9 schematic. Sonoscan's counsel acknowledged that if IBM had ordered based on a September 10 quotation, Sonoscan would have delivered a machine capable of displaying polarity and amplitude together. The court concluded that such a machine, utilizing the schematic's circuitry, would have been shipped had an order been placed. The trial judge, having assessed the credibility of the testimony, found no clear error in these factual determinations. Consequently, the court ruled that the patented invention was sufficiently developed, rendering the September 10 quotation a legitimate offer.

The court highlighted that the model no. 3100, offered to Amdahl three days post-critical date, included all features of the claimed microscope, and noted that Dr. Kessler did not clarify any changes made to the invention between September 10 and 18. The court reasonably concluded that the device offered to IBM prior to the critical date was identical to the one later offered to Amdahl. Sonoscan contested the relevance of the September 18 quotation, asserting it was after the critical date; however, the court did not view it as a bar. Instead, it examined whether the invention was adequately developed by the 18th, inferring that it was sufficiently developed by the 10th as well. Sonoscan conceded that the Amdahl quotation matched the September 10 price, indicating no significant changes occurred during that period. The September 10 quotation remained valid until December 10, further supporting the court's finding of no substantial modifications.

Sonoscan also claimed that the quotes to IBM were for internal budgeting purposes rather than indicative of a completed device. The court rejected this argument due to the lack of documentary or testimonial evidence to support it.

Appellant contends that it has complied with the on sale bar policies and that its patent should not be invalidated under 35 U.S.C. § 102(b). However, the court disagrees, stating that any invention placed on sale more than a year before a patent application renders the patent invalid. The court found credible evidence supporting the conclusion that the device was indeed on sale, which aligns with the intent of the on sale bar. Additionally, Sonoscan claims the district court improperly referenced Dr. Kessler's deposition, which was not formally submitted as evidence. The court's focus on parts of the deposition used during cross-examination was deemed appropriate since Dr. Kessler did not recant his prior testimony regarding Sonoscan's capability to supply the device by the critical date. Sonoscan failed to demonstrate any clearly erroneous factual findings or reversible legal errors by the district court. Consequently, the district court's judgment is affirmed.