Cargill, Inc. v. Canbra Foods, Ltd.

United States Court of Appeals for the Federal Circuit

2006-1265, -1302

CARGILL, INCORPORATED,

Plaintiff-Appellant,

v.

CANBRA FOODS, LTD., DOW AGROSCIENCES, LLC,
and DOW AGROSCIENCES CANADA, INC.,

Defendants-Cross Appellants.

Allen M. Sokal, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of
Washington, DC, argued for plaintiff-appellant. With him on the brief was Jeffrey W.
Abraham.

Harry J. Roper, Jenner & Block LLP, of Chicago, Illinois, argued for defendants-
cross appellants. With him on the brief were George S. Bosy, Raymond N. Nimrod,
Patrick L. Patras, and Steven McMahon Zeller. Of counsel was Marc Goldman, of
Washington, DC. Of counsel on the brief were Guy A. Relford and Kenneth B. Ludwig,
Dow AgroSciences LLC, of Indianapolis, Indiana.

Appealed from: United States District Court for the District of Oregon

Judge Michael W. Mosman
 United States Court of Appeals for the Federal Circuit
2006-1265, -1302

CARGILL, INCORPORATED,

Plaintiff-Appellant,

v.

CANBRA FOODS, LTD., DOW AGROSCIENCES, LLC,
and DOW AGROSCIENCES CANADA, INC.,

Defendants-Cross Appellants.

__________________________

DECIDED: February 14, 2007
__________________________

Before LINN, PROST, and JORDAN,∗ Circuit Judges.

JORDAN, Circuit Judge.

Plaintiff Cargill, Incorporated (“Cargill”) appeals from a final judgment of the

United States District Court for the District of Oregon concerning four patents owned by

Cargill, namely U.S. Patents No. 5,969,169 (the “’169 patent”), No. 6,201,145 (the “’145

patent”), No. 6,270,828 (the “’828 patent”), and No. 6,680,396 (the “’396 patent”). Upon

a motion for summary judgment by Canbra Foods, Ltd., Dow Agrosciences, LLC, and

Dow Agrosciences Canada, Inc. (collectively, “Defendants”), the district court held that

the ’828 and ’396 patents are invalid because of the on-sale bar set forth in 35 U.S.C. §

102(b). The court also granted Cargill’s motion for summary judgment that Defendants

∗
Honorable Kent A. Jordan, Circuit Judge, United States Court of Appeals
for the Third Circuit, sitting by designation.
had infringed the ’169 and ’145 patents. Following trial, however, the court entered

judgment that the ’169 and ’145 patents are unenforceable due to inequitable conduct.

Defendants cross-appeal the district court’s claim construction with respect to all four

patents, as well as its grant of summary judgment of infringement of the ’169 and ’145

patents.

For the reasons discussed below, we affirm the judgment of the district court with

respect to invalidity and unenforceability, and, as a result, Defendants’ cross-appeal is

moot.

I. BACKGROUND

In the present action, Cargill alleged that Defendants infringed the ’169, ’145,

’828, and ’396 patents. The ’169 and ’145 patents relate to a non-hydrogenated canola

oil that possesses superior oxidative stability and fry stability, and is useful for food

applications. The claimed oil is referred to in the ’169 and ’145 patents by the

designation “IMC 130.” According to the patents, ordinary canola oil is unstable and

easily oxidized during cooking, which creates an off-flavor in the food. It also develops

an undesirable odor when being stored. Therefore, the superior stability of the IMC 130

oil makes that oil more acceptable for cooking and storage.

The oxidative stability of canola oil can be measured in at least two ways: in

terms of AOM (Active Oxygen Method) hours, or in terms of peroxide and para-anisidine

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values.1 Generic commercial canola oil typically has an oxidative stability of about 22

AOM hours, whereas IMC 130 has an oxidative stability of about 35 to 40 AOM hours.

Claim 1 of the ’169 patent therefore recites:

A non-hydrogenated canola oil having a polyunsaturated fatty acid content
of from about 7% to about 17%, an oleic acid content of about 74% to
about 80% and an oxidative stability of from about 35 to about 40 AOM
hours in the absence of added antioxidants.

The ’145 patent recites the same oxidative stability range, 35 to 40 AOM hours, in

dependent claim 2.

U.S. Patent Application No. 08/425,108 (the “’108 application”), which ultimately

issued as the ’169 patent, was initially rejected by the examiner as being anticipated by

a European patent application by Wong et al. (“Wong”). The examiner’s reasoning was

that Wong disclosed a canola oil with a fatty acid composition similar to that of IMC 130.

According to the examiner, oxidative stability is based directly on fatty acid composition,

and therefore, both the oil disclosed in Wong and IMC 130 would exhibit a similar

oxidative stability. In response, the applicant argued that the test data set forth in the

specification refutes the examiner’s position. The applicant contended that the data

demonstrates that two canola oils with similar fatty acid compositions, the claimed IMC

130 oil and an oil designated as IMC 129, have strikingly different oxidative stability

values. Thus, the applicant took the position that Wong could not be found to anticipate

the claimed oil solely because it recites a canola oil with a similar fatty acid composition.

1
The oxidation of canola oil produces hydroperoxides and aldehydes.
Under the Active Oxygen Method, oxidative stability is measured by the number of
hours it takes for the oil to reach a peroxide value of 100. Alternatively, oxidative
stability can be measured by using a Schaal oven test to determine the increase in the
peroxide value, which represents the development of hydroperoxides in the oil, and the
para-anisidine value, which represents the development of aldehydes in the oil, over a
certain period of time.
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 After several office actions and responses, the examiner allowed the claims and

explained that:

IMC 129, which is one of the parent lines used to produce the instant oil
[IMC 130], reads on the fatty acid content but as shown in the examples,
does not display the required oxidative stability. As shown in the
examples, one cannot predict the oxidative stability of an oil based on the
fatty acid composition of the oil.

The ’145 patent issued from a continuation of the ’108 application, and has the same

specification as the ’169 patent.

The other two patents at issue, the ’828 and ’396 patents, relate to canola oil that

has low glucosinolate content and low α-linolenic acid content. According to those

patents, reducing the glucosinolate and α-linolenic acid content results in an oil with

desirable properties, including low sulfur content, improved sensory characteristics, and

greater oxidative stability. Claim 1 of the ’828 patent recites:

A canola oil from Brassica seeds, said oil having an α-linolenic acid
content of about 1.7% to about 7% relative to the total fatty acid content,
and a sulfur content of less than or equal to 3.0 ppm as determined by
high performance liquid chromatography.

The ’396 patent is a continuation of the application that issued as the ’828 patent. Both

patents refer to the claimed oil by the designation “IMC 01.”

As previously noted, the district court held on summary judgment that the ’828

and ’396 patents are invalid under the on-sale bar of 35 U.S.C. § 102(b), finding that the

invention, IMC 01, was reduced to practice and the subject of a sale prior to the critical

date. Also, on summary judgment, the court held that Defendants’ product infringed

claims 1, 6, and 7 of the ’169 patent, and claims 5, 6, and 8 of the ’145 patent.

However, several issues relating to the ’169 and ’145 patents remained for trial,

including validity, damages, and inequitable conduct. Following trial, the district court

4
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granted Defendants’ motion for judgment that the ’169 and ’145 patents are

unenforceable due to inequitable conduct. In reaching that decision, the court relied on

two documents that contained the applicant’s internal testing data but that were not

disclosed to the examiner during prosecution. Cargill appeals the district court’s

decisions on invalidity and unenforceability. We have jurisdiction pursuant to 28 U.S.C.

§ 1295(a)(1).

II. DISCUSSION

Cargill appeals the district court’s determination that the ’169 and ’145 patents

are unenforceable because of inequitable conduct, and the decision that the ’828 and

’396 patents are invalid due to the on-sale bar. We address those contentions in turn.

A. Inequitable Conduct

To hold a patent unenforceable due to inequitable conduct, there must be clear

and convincing evidence that the applicant (1) made an affirmative misrepresentation of

material fact, failed to disclose material information, or submitted false material

information, and (2) intended to deceive the U.S. Patent and Trademark Office (“PTO”).

Impax Labs., Inc. v. Aventis Pharm. Inc., 468 F.3d 1366, 1374 (Fed. Cir. 2006).

The materiality element of inequitable conduct was recently clarified in Digital

Control Inc. v. Charles Machine Works, 437 F.3d 1309 (Fed. Cir. 2006). In that

decision, we explained that the standard for materiality set forth in the current version of

PTO Rule 56, see 37 C.F.R. § 1.56(b) (2006), did not supplant the earlier “reasonable

examiner” standard, see 37 C.F.R. § 1.56(a) (1991). Digital Control, 437 F.3d at 1316;

see also Impax Labs., 468 F.3d at 1374. Rather, “if a misstatement or omission is

material under the new Rule 56, it is material. Similarly, if a misstatement or omission is

5
2006-1265, -1302
material under the ‘reasonable examiner’ standard . . . it is also material.” Digital

Control, 437 F.3d at 1316. The present version of Rule 56 states that:

[I]nformation is material to patentability when it is not cumulative to
information already of record or being made of record in the application,
and
(1) It establishes, by itself or in combination with other information, a prima
facie case of unpatentability of a claim, or
(2) It refutes, or is inconsistent with, a position the applicant takes in:
(i) Opposing an argument of unpatentability relied on by the Office, or
(ii) Asserting an argument of patentability.
A prima facie case of unpatentability is established when the information
compels a conclusion that a claim is unpatentable under the
preponderance of evidence, burden-of-proof standard, giving each term in
the claim its broadest reasonable construction consistent with the
specification, and before any consideration is given to evidence which
may be submitted in an attempt to establish a contrary conclusion of
patentability.

37 C.F.R. § 1.56(b) (2006). Under the earlier “reasonable examiner” standard,

“information is material where there is a substantial likelihood that a reasonable

examiner would consider it important in deciding whether to allow the application to

issue as a patent.” 37 C.F.R. § 1.56(a) (1991).

The intent element of inequitable conduct requires that “the involved conduct,

viewed in light of all the evidence, including evidence indicative of good faith, must

indicate sufficient culpability to require a finding of intent to deceive.” Impax Labs., 468

F.3d at 1374-75 (quoting Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d

867, 876 (Fed. Cir. 1988)). Intent rarely can be, and need not be, proven by direct

evidence. Id. at 1375. Instead, an intent to deceive is usually inferred from the facts

and circumstances surrounding the conduct at issue. Id.

If a district court finds that the requirements of materiality and intent have been

established by clear and convincing evidence, it must then “balance the equities to

6
2006-1265, -1302
determine whether the patentee has committed inequitable conduct that warrants

holding the patent unenforceable.” Id. (quoting Monsanto Co. v. Bayer Bioscience N.V.,

363 F.3d 1235, 1239 (Fed. Cir. 2004)). Under the balancing test, “[t]he more material

the omission or the misrepresentation, the lower the level of intent required to establish

inequitable conduct, and vice versa.” Critikon, Inc. v. Becton Dickinson Vascular

Access, Inc., 120 F.3d 1253, 1256 (Fed. Cir. 1997).

We review the district court’s findings on the threshold issues of materiality and

intent for clear error. Impax Labs., 468 F.3d at 1375. Accordingly, the district court’s

determination will be reversed only if there is a “‘definite and firm conviction’ that a

mistake has been made.” Hoffmann-La Roche, Inc. v. Promega Corp., 323 F.3d 1354,

1359 (Fed. Cir. 2003) (quoting Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed.

Cir. 1995)). We review the ultimate decision regarding inequitable conduct for abuse of

discretion. Impax Labs., 468 F.3d at 1375. “An abuse of discretion occurs when (1) the

court’s decision is clearly unreasonable, arbitrary, or fanciful, (2) the court’s decision is

based on an erroneous construction of the law, (3) the court’s factual findings are

clearly erroneous, or (4) the record contains no evidence upon which the court rationally

could have based its decision.” Id.

1. Materiality

In the present case, the district court found that the applicant failed to disclose

during prosecution of the ’169 and ’145 patents two documents containing material

information: a 1992 chemistry research report (the “Report”) and certain Schaal oven

data (the “Oven Data”). As is evident from the portion of the prosecution history quoted

earlier, the applicant overcame the examiner’s rejection by arguing that IMC 130 oil

7
2006-1265, -1302
demonstrated an oxidative stability of 35 to 40 AOM hours, and that those stability

values are strikingly superior to IMC 129 oil. However, the Report contains test data

indicating that three samples of IMC 129 oil exhibited oxidative stabilities of 32, 35, and

32 AOM hours, which is a range similar to and, at one point, overlapping that of IMC

130. In addition, the Oven Data shows peroxide and para-anisidine values for IMC 129

that appear to be superior to those of IMC 130.2

Although the district court did not explicitly reference the “reasonable examiner”

standard for materiality, it effectively applied that standard in finding that, by not

disclosing those two documents, the applicant “unilaterally withheld information that

unquestionably would have been viewed as worthy of serious consideration by the PTO,

and might have resulted in the patents not being issued.” Cargill, Inc. v. Canbra Foods,

Ltd., No. CV03-1209-MO, 2005 WL 3478178, at *2 (D. Or. Dec. 20, 2005). That finding

is not clearly erroneous. The undisclosed documents contain test data demonstrating

that the oxidative stability of IMC 130 is similar to that of IMC 129. Given that a crucial

issue during prosecution was whether IMC 130 possessed strikingly superior oxidative

stability, it is quite certain that a “reasonable examiner” would consider such test data to

2
The Oven Data document shows a peroxide value of 10.6 for IMC 129 and
12.7 for IMC 130, and a para-anisidine value of 3.2 for IMC 129 and 3.9 for IMC 130.
During prosecution of the ’169 patent, the applicant argued that lower peroxide and
para-anisidine values indicate greater oxidative stability. The Oven Data appears to
show that IMC 129 had lower peroxide and para-anisidine values than IMC 130, which
indicates that IMC 129 has a superior oxidative stability. That is in direct contrast with
Tables 7 and 8 in the specification of the ’169 patent, which show that IMC 130 had
lower peroxide and para-anisidine values than IMC 129.

8
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be important in deciding whether to allow the patents to issue.3

Cargill argues that the data contained in the 1992 Report is not material because

the tests underlying the Report were performed under unusual conditions and, thus, are

not comparable to the data submitted to the examiner. For example, according to

Cargill, the Report involved the testing of bench-refined IMC 129 oil, which has an

inherently higher oxidative stability than pilot-plant and commercially refined oil. Cargill

also contends that, because the Oven Data does not set forth any testing conditions, it

too cannot be compared with the data before the examiner.

Even accepting as true the factual premises of those arguments, the documents

withheld during prosecution remain material. “[M]ateriality is determined from the

viewpoint of a reasonable patent examiner, and not the subjective beliefs of the

patentee.” Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226,

1238 (Fed. Cir. 2003) (internal citations omitted). A reasonable examiner would

certainly want to consider test data that is directly related to an important issue of

patentability, along with the applicant’s interpretation of that data. Whether the

examiner would have ultimately allowed the patent to issue is irrelevant because

“[u]nder the ‘reasonable examiner’ standard, a misstatement or omission may be

material even if disclosure of that misstatement or omission would not have rendered

the invention unpatentable.” Digital Control, 437 F.3d at 1318. Therefore, the district

3
Cargill argues that the district court applied an incorrect standard for
materiality under the new Rule 56 when it stated that the applicant’s explanations for the
apparent inconsistency were not “obvious and non-debatable.” The district court’s
opinion shows that it endeavored to apply this court’s standards with fidelity, and we
therefore do not agree with Cargill that a novel and flawed approach to materiality was
applied. In any event, because we conclude that the withheld documents are plainly
material under the “reasonable examiner” standard, we need not further address
Cargill’s contention.
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court’s decision regarding the materiality of the undisclosed documents is not clearly

erroneous.

2. Intent

The district court found an intent to deceive based on several circumstantial

factors: the repeated nature of the omission, the applicant’s motive to conceal, and the

high materiality of the undisclosed information. With respect to the first factor, the court

found that there were multiple occasions that called for disclosure of the omitted data.

The district court did not elaborate on the importance of that factor, and, as a result,

Cargill questions its significance. The repeated omission, however, is relevant because

“intent may be inferred where a patent applicant knew, or should have known, that

withheld information would be material to the PTO’s consideration of the patent

application.” Critikon, 120 F.3d at 1256. An applicant should know information is

material when the examiner repeatedly raises an issue to which the information relates.

In Critikon, a factor in our finding of intent was that the examiner reiterated, on at least

two occasions, the importance of a specific point of novelty in the application. Id. We

concluded that the applicant should have known that any information related to that

point of novelty would be material to the examiner. Id. In this case, each of the

examiner’s five rejections involved the issue of whether the oxidative stability of IMC

130 was superior to that of oil with a similar fatty acid composition. The repeated nature

of that rejection demonstrates that the applicant should have been aware of the

materiality of the omitted test data, and, therefore, the district court properly considered

it as significant circumstantial evidence of an intent to deceive the PTO about the

evidence relevant to the application.

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 The district court also based its finding of intent on the applicant’s motive to

deceive the PTO. Cargill contends that an applicant’s motive to obtain a patent is

insufficient grounds for inferring an intent to deceive. That argument, however, whether

sound or not, is not pertinent to this case because the district court did not rely solely on

the applicant’s motive in drawing an inference of intent. The court’s opinion addressed

three circumstantial factors, motive being only one of them. Furthermore, in its

discussion of motive, the district court was not referring to some general desire to obtain

a patent. The court explained the applicant’s specific motive to conceal the two specific

documents at issue in this case:

[P]roducing a better, longer lasting strain of oil, one that would be more
attractive to customers, would not have gotten Cargill a patent. A patent
required something more than an incremental improvement. But the
omitted data stood in the way of portraying IMC 130 as something more
than an incremental improvement.

There is no error either in that observation or in the district court’s relying on it as part of

the basis for finding intent.

The district court found the high degree of materiality of the undisclosed test data

to be the most potent evidence of intent. The court explained that, “[m]ore than

anything else, it is the omitted data’s high degree of relevance that points toward an

intent to conceal it from the PTO.” Cargill challenges the court’s reasoning on the

ground that “[i]ntent to deceive cannot be inferred simply from the decision to withhold

the reference where the reasons given for the withholding are plausible.” We need not

assess whether that proposition accurately states the law because, once more, the

argument is inapposite. The district court did not rely simply on the applicant’s decision

to withhold the information. It relied on an assessment of all the evidence, which

11
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included an analysis of the particular materiality of the withheld information. We have

never held that materiality is irrelevant to the question of intent. To the contrary, we

have recognized that “a patentee facing a high level of materiality and clear proof that it

knew or should have known of that materiality, can expect to find it difficult to establish

‘subjective good faith’ sufficient to prevent the drawing of an inference of intent to

mislead.” Critikon, 120 F.3d at 1257. Here, the district court found that the omitted test

data was related to “the heart of the question that bedeviled the examiner: the nature of

the difference between IMC 129 and IMC 130.” Such a high degree of materiality,

coupled with evidence that the applicant should have known of that materiality, creates

a strong inference of an intent to deceive.

Cargill argues that any inference of intent is negated by the district court’s finding

that the applicant had a good faith belief that the withheld test data did not need to be

disclosed to the examiner. That assertion misreads the district court’s factual

determination about the applicant’s state of mind. While gently suggesting that the

applicant perhaps honestly believed IMC 130 to be a patentable invention, the court

nevertheless expressly held that the applicant knowingly misled the PTO about the

available evidence. Even if there were a mitigating explanation for the withheld data, it

was no excuse for the applicant’s purposeful omissions in this case. “Close cases

should be resolved by disclosure, not unilaterally by the applicant.” LaBounty Mfg., Inc.

v. U.S. Int’l Trade Comm’n, 958 F.2d 1066, 1076 (Fed. Cir. 1992). That rule is drawn

from the policy that “applicants [should] continue to submit information for consideration

by the Office in applications rather than making and relying on their own determinations

of materiality.” Critikon, 120 F.3d at 1257.

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 While we have recognized that subjective good faith can support a defense to

inequitable conduct, see Allen Archery, Inc. v. Browning Mfg. Co., 819 F.2d 1087, 1095

(Fed. Cir. 1987) (“To the extent that Browning is arguing that . . . subjective good faith is

never a defense to a claim of inequitable conduct, we rejected that contention . . . .”)

(internal quotations omitted), there is no such thing as a good faith intent to deceive.

When an applicant knows or obviously should know that information would be material

to the examiner, as was true here, but the applicant decides to withhold that information,

“good faith” does not negate an intent to manipulate the evidence.4 Indeed, self-serving

manipulation of highly material evidence can hardly be called “good faith.” Cf. Laitram

Corp. v. Cambridge Wire Cloth Co., 785 F.2d 292, 294 (Fed. Cir. 1986) (explaining that,

in Argus Chemical Corp. v. Fibre Glass-Evercoat Co., 759 F.2d 10 (Fed. Cir. 1985),

good faith did not negate inequitable conduct because the withheld information “was

known by counsel and counsel should have known that it was material to the

examiner”). Therefore, we hold that the district court’s finding of an intent to deceive

was not clearly erroneous.

3. Balancing

After finding that the elements of materiality and intent had been established by

clear and convincing evidence, the district court evaluated all the circumstances of the

4
The district court found that Defendants had met their burden of proof with
respect to the applicant’s knowledge of the Oven Data because “[t]he document
containing the data bore [the] name [of the applicant’s head of R&D], which he admitted
would indicate it was his copy.” Cargill contends that his name appeared on one page
containing flavor stability data, and not oxidative stability data. Cargill is correct with
respect to that limited assertion. But the consecutive handwritten numbers in the upper
right-hand corner of each page indicate that all of the test results are part of a single
report. Since the name of the applicant’s head of R&D appears on the first page of that
document, the district court did not err in concluding that he had knowledge of all the
test data contained in that report.
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applicant’s conduct and decided that the ’169 and ’145 patents are unenforceable. In

particular, the judge considered Cargill’s evidence regarding the rationale for

withholding the test data and concluded that, “in light of my own observations of [the

applicant’s head of R&D] and all the other evidence, I think it highly likely he omitted the

information because he concluded it could be explained away.” However, the court

determined that such evidence did not overcome the weight of evidence proving

inequitable conduct. It was within the district court’s discretion to weigh its findings of

materiality and intent against other evidence, including what Cargill offered as the

reasons for withholding highly material information. See Impax Labs., 468 F.3d at 1375.

Given the high materiality of the undisclosed information and the strong circumstantial

evidence of an intent to mislead, we cannot say that the court abused its discretion.

Accordingly, we affirm the district court’s decision that the ’169 and ’145 patents are

unenforceable.

B. On-Sale Bar

A patent is invalid under the on-sale bar of 35 U.S.C. § 102(b) if, more than one

year before the application was filed, two conditions are satisfied: first, the claimed

invention must be the subject of a commercial sale or offer for sale, and, second, it must

be ready for patenting. Sparton Corp. v. United States, 399 F.3d 1321, 1323 (Fed. Cir.

2005). An invention can be found to be “ready for patenting” in at least the following

ways: by proof that it was reduced to practice, or by proof that the inventor had

prepared drawings or other descriptions of the invention that were sufficiently specific to

enable a person skilled in the art to practice the invention. Id.

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 The district court held, on summary judgment, that the ’828 and ’396 patents are

invalid. We review a district court’s grant of summary judgment of invalidity de novo.

Medrad, Inc. v. Tyco Healthcare Group LP, 466 F.3d 1047, 1050 (Fed. Cir. 2006).

Summary judgment is only appropriate when there are no genuine issues of material

fact, and the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P.

56(c); Medrad, 466 F.3d at 1050.

1. Sale/Offer for Sale

In considering Defendants’ motion for summary judgment, the district court

focused on a transaction between Cargill’s predecessor in interest, DNA Plant

Technology Corporation (“DNAP”), and Proctor & Gamble (“P&G”). The court

concluded that there was “no real dispute” that the transaction with P&G “was a sale

and not a giveaway.” That decision was based primarily on a letter sent by Mr. Chan

Atchley5 of DNAP to Mr. John Hunter6 of P&G on June 7, 1990 (the “June 7 letter”),

which reads as follows:

This is to confirm your verbal request for 400 pounds of our low (<3%)
alpha linolenic (18:3) RBD canola oil. The oil is scheduled to be shipped
from the POS pilot plant in Saskatoon, Canada, October 1, 1990 and
should be in your hands by the end of the following week. The oil will be
shipped in a 55 gallon plastic container and will cost $1.50 per pound FOB
Saskatoon.

The court explained that it could not “find any way to interpret the language linking a

buck fifty with FOB to be anything other than a sale.” On appeal, Cargill does not

dispute that the June 7 letter involved the canola oil claimed in the ’828 and ’396

5
At the time the letter was sent, Mr. Chan Atchley was the General
Manager of Oils at DNAP.
6
At the time the letter was sent, Mr. John Hunter was in charge of product
development at P&G’s Miami Valley Laboratories in Ohio.
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patents. Nor does Cargill dispute that the June 7 letter was sent before the critical date

of September 30, 1990. The issue regarding the first prong of the on-sale bar test thus

becomes whether the P&G transaction qualifies as either a sale or an offer for sale.

The material facts are not in dispute on this point. The dispute is over the legal

conclusion to be drawn from the facts. The June 7 letter explicitly sets forth an amount

of oil to be delivered to P&G, at a specified unit price, and under a standard contract

designation, FOB (free on board), which allocates the risks and responsibilities of a

buyer and a seller. See Black’s Law Dictionary 690 (8th ed. 2004) (defining “free on

board”). As recognized by the district court, that is powerful evidence of a sales

transaction.

Cargill’s position is that DNAP was providing P&G with a sample of the claimed

oil for testing purposes. Cargill attempts to reconcile its position with the price term

recited in the June 7 letter by arguing that the $1.50 was actually DNAP’s cost of

processing the oil. In particular, Cargill asserts that the $1.50 could not be a sales price

because it is much higher than the normal price for canola oil, which is $0.20 to $0.40

per pound. Cargill explains that the cost of processing the 400-pound “sample” was so

high because it was such a low quantity that it needed to be produced at a pilot plant,

and thus could not benefit from economies of scale. Assuming that factual recitation is

correct, Cargill’s argument only serves to prove the district court’s conclusion. If

production costs rise for smaller quantities, then $1.50 may indeed be a reasonable

sales price for 400 pounds of oil, even though it is much higher than the normal price for

much larger quantities.

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 Cargill also argues that P&G had previously expressed concern about production

expenses, and, therefore, it makes sense that DNAP would include cost figures in the

June 7 letter. Again, Cargill’s explanation is problematic. If the 400 pounds of oil was

really a “free sample” so that P&G could determine whether it wanted to order larger

commercial quantities, P&G would not be concerned about the inflated cost of

processing the sample at a pilot plant. Rather, P&G would only be interested in the cost

of producing the much larger quantities that it ultimately would be purchasing.

Moreover, Cargill never explains the contract delivery terminology “FOB” as anything

but the commercial provision it is typically understood to be.

Cargill tries to recast its offer for sale as merely a ramp up to a business

relationship, pointing out that the June 7 letter suggested that DNAP wanted “very much

to do business” with P&G and that the parties should discuss a purchase agreement.

However, expressing a desire to do business in the future does not negate the

commercial character of the transaction then under discussion. Cargill also argues that

DNAP never invoiced the P&G transaction, and P&G never paid for the 400 pounds of

oil. Even if true, evidence of an offer to sell is sufficient to trigger the on-sale bar under

35 U.S.C. § 102(b). There is no requirement that the sale be completed.

Finally, Cargill offers the declaration of Mr. Atchley in which he explains that

DNAP did not view the June 7 letter as an offer for a sale. Since we agree with the

district court that the language of the letter itself is unambiguous, we also conclude that

the subsequent testimony of Mr. Atchley about the intended purpose of the letter is, for

practical purposes, irrelevant. Cargill contends that it has, at least, established a

genuine issue of material fact, and that, therefore, the district court should not have

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granted summary judgment. However, “the mere existence of some alleged factual

dispute between the parties will not defeat an otherwise properly supported motion for

summary judgment; the requirement is that there be no genuine issue of material fact.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (original emphasis

omitted). Cargill’s post hoc effort to say DNAP did not intend what is abundantly plain

from the price, quantity, and delivery terms on the face of the June 7 letter does not

raise a genuine issue of fact. Furthermore, as already noted, Cargill’s explanations for

including such terms in the letter actually support the district court’s conclusion that the

$1.50 figure was what it appears to be, a sales price in an offer for sale. Accordingly,

there is no genuine dispute that the June 7 letter constituted an offer to sell the oil

claimed in the ’828 and ’396 patents.

2. Ready for Patenting

The district court found that the invention disclosed in the ’828 and ’396 patents

was ready for patenting prior to the critical date because there was proof of reduction to

practice. More specifically, the court concluded that the claimed oil was reduced to

practice because “when it’s composed or made, it’s reduced to practice.”

Cargill argues that the district court made an error of law because an invention is

only reduced to practice when it is shown to work for its intended purpose. However,

the district court’s decision is not inconsistent with that statement of the law. The court

based its decision on Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d

1315 (Fed. Cir. 1999). In Abbott Laboratories, we held that “[t]he fact that the claimed

material was sold under circumstances in which no question existed that it was useful

means that it was reduced to practice.” 182 F.3d at 1318. In this case, the evidence

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demonstrates that DNAP was aware of the utility of the claimed oil prior to its offer to

sell the oil to P&G on June 7, 1990.

For example, on February 9, 1990, a letter was sent from DNAP to the

Biotechnology Director at another company, Du Pont, stating that: “Oil extracted from a

one acre grow-out from line 336 seed was analyzed and found to be superior to that of

our competitors. The oil is light colored, has good stability in high heat applications and

develops no off odors.”7 Furthermore, in a discussion with Mr. Hunter of P&G on March

6, 1990, Mr. Atchley of DNAP8 noted that the oil performed very well in P&G’s fry tests,

and that P&G’s results were consistent with those DNAP reported.9

Cargill also contends that the invention could not have been reduced to practice

before the June 7 letter because the district court found that the P&G transaction was

for experimental purposes. Although the district court concluded that the transaction

was experimental, that does not mean that the invention had not been reduced to

practice. In Abbott Laboratories, we explained that “[i]t is well settled in the law that

there is no requirement that a sales offer specifically identify all the characteristics of an

7
Canola oil grown from the line 336 seed is the canola oil that was the
subject of the June 7 letter.
8
It is not clear from the document itself that the notes were taken by
Mr. Atchley. However, Cargill confirms that the document contains Mr. Atchley’s notes:
“In March 1990, Mr. Atchley and Mr. Hunter again discussed P&G’s testing of DNAP’s
oils. Mr. Hunter reported results from initial fry tests, and Mr. Atchley’s notes indicate
that DNAP oil ‘[p]erformed very well.’”
9
Mr. Atchley’s notes do not mention the specific oil being tested by P&G.
However, the notes do state that P&G “would want one 55 gal. drum” of the oil,
suggesting that Mr. Atchley was discussing the same type of oil on March 6 that DNAP
later formally agreed to sell to P&G in that quantity. Furthermore, Cargill does not
dispute that Mr. Atchley’s notes refer to the same oil as was specified in the June 7
letter.

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invention offered for sale or that the parties recognize the significance of all of these

characteristics at the time of the offer.” 182 F.3d at 1319. Since DNAP knew of the

general utility of the claimed oil, it was reduced to practice. DNAP did not need to be

aware of the specific characteristics that made the oil useful. As a result, even if DNAP

offered to sell the oil to P&G for the purpose of continued testing, it does not prevent a

finding that the oil had already been reduced to practice.10 Therefore, we hold that

there is no genuine issue of material fact that the oil claimed in ’828 and ’396 patents

was the subject of an offer for sale and was reduced to practice before the critical date

of September 30, 1990.

Accordingly, because the oil claimed in those patents was the subject of at least

an offer for sale before the critical date, and because the claimed oil had already been

reduced to practice, we affirm the district court’s decision that the ’828 and ’396 patents

are invalid under 35 U.S.C. § 102(b).

III. CONCLUSION

For the aforementioned reasons, we affirm the judgment of the district court as to

the invalidity of the ’828 and ’396 patents and as to the unenforceability of the ’169 and

’145 patents. The remaining aspects of the appeal are dismissed as moot.

AFFIRMED

COSTS

Each party shall bear its own costs.

10
Because the district court found, and we agree, that the claimed invention
was reduced to practice before the June 7 letter, it is irrelevant whether the P&G
transaction was for experimental purposes. “[O]nce the invention is reduced to practice,
there can be no experimental use negation.” Allen Eng’g Corp. v. Bartell Indus., Inc.,
299 F.3d 1336, 1354 (Fed. Cir. 2002).
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