Prefiling Offer by Business Partner Dooms Patent

by Dennis Crouch

Larry Junker v. Medical Components, Inc. (Fed. Cir. 2022)

Junker’s U.S. Design Patent No. D450,839 looks like a set of clown feet (image below), but, in actuality it covers “the ornamental design for a handle for introducer sheath” and is used as part of a medical catheter kit.  Junker designed the handle with “large, rounded Mickey-Mouse-shaped ears” to make it easier to handle.

The appeal focuses on whether the design patent should be found invalid based upon Junker’s pre-filing sales. Here is the timeline:

• 1998: Junker entered into an NDA with Eddings and disclosed the invention in some general form.  The collaborative idea was that Eddings would manufacture the sheaths because Junker did not have that capability.
• January 1999: Eddings made a prototype of the product and provided it to Junker, the prototype included all the features found in the design patent.
• January 1999: Eddings sent Boston Scientific a letter with pricing information for its Peelable Sheath Set.  The parties agree that the products described in the letter embody the design that was later patented.
• February 2000: Junker filed his patent application that led to the D’839 patent.

Later Junker sued MedComp for infringement, and the question here is whether the January 1999 letter from Eddings constituted an offer to sell the invention that triggered the on sale bar of 35 U.S.C. 102(b) (pre-AIA).

A person shall be entitled to a patent unless … (b) the invention was … on sale in this country, more than one year prior to the date of the application for patent in the United States

Section 102(b). The district court says sided with the patentee and a jury awarded $1.2 million.  On appeal, however, the Federal Circuit has reversed–holding that the Eddings letter constituted a “commercial offer for sale of the claimed design” and therefore created a bar to patentability under the statute.

The “on sale” bar is triggered both by pre-filing sales and pre-filing offers-to-sell.  The Federal Circuit relies upon traditional contract law principles to determine whether a particular communication constitutes such an offer.  Remember the contract foundational trio: Offer, Acceptance, Consideration.  We’re talking about the same offer, and a communication only constitutes an offer if the other party could create a binding contract “by simple acceptance.”  Of course, not just any offer works — it needs to be an offer to sell.  Thus, the court has held that an offer-to-manufacture doesn’t count.

In reviewing the letter, the court noted that the terms appeared quite complete.  It included specific pricing (excerpt above), including quantity discounts, and information on shipping (bulk; non-sterile; FOB Athens, TX) and payment (due in 30 days).  Sometimes an unsolicited letter such as this may be seen as merely an advertisement.  This letter, however, was a response to a “request for quotation” from Boston Scientific, and addressed particularly to that company. Both of these facts balance toward a finding that the letter constitutes an offer.  [Read the Letter – Offer]

That said, the letter also included a statement requesting further discussions.  “I appreciate the opportunity to provide this quotation and look forward to discussing your requirements in person.”  Although the appellate court acknowledged that statement, it concluded that the completeness of the terms weighed in favor of finding an offer sufficient to bind the parties.

Junker also notes that “simple acceptance” is not enough here. Rather, the buyer must specify both the catheter size and quantity.  On appeal, the Federal Circuit found that those various options should be seen as “multiple offers.”

[T]he letter comprises multiple different offers that Boston Scientific could have accepted by simply stating, for example, “We’ll take 5,000 sets of the 4F-6F Medi-Tech Peelable Sheath” or “10,000 sets of the 11F Medi-Tech Peelable Sheath.”

Slip Op.  Since its an offer prior to the critical date (1-year before filing), the patent claim is invalid and $1 million verdict is gone.

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 Section 102 was rewritten as part of the America Invents Act. The revised statute continues to include the same “on sale” language and so a repeat of the same facts today would likewise lead to the invention being unpatentable.

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Although not discussed in the appellate court decision, it turns out that Junker had originally filed a utility patent application back in 1998 that issued as U.S. Patent No. 6,645,178.  The drawings appear similar enough to me that the 1998 utility application could have (but did not) served as a priority document for the later design application. (Image below).  In 2003, Junker filed a reissue application seeking to claim that benefit.  Junker’s attorney withdrew from that representation following a really simple rejection, and the reissue application was abandoned. Around the same time, the corresponding utility patent was also allowed to expire for failure to pay the maintenance fees due.