United States Court of Appeals for the Federal Circuit
03-5169
SPARTON CORPORATION,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
Steven Kreiss, of Washington, DC, argued for plaintiff-appellant.
Gary L. Hausken, Assistant Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice, of Washington, DC, argued for
defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney
General, and John J. Fargo, Director.
Appealed from: United States Court of Federal Claims
Chief Judge Edward J. Damich
United States Court of Appeals for the Federal Circuit
03-5169
SPARTON CORPORATION,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
DECIDED: February 28, 2005
__________________________
Before MICHEL, Chief Judge,∗ ARCHER, Senior Circuit Judge, and SCHALL, Circuit
Judge.
ARCHER, Senior Circuit Judge.
Sparton Corporation (“Sparton”) appeals the Court of Federal Claims’ (“Claims
Court”) grant of summary judgment of invalidity under the on-sale bar of
35 U.S.C. § 102(b). Sparton Corp. v. United States, No. 92-580C (Fed. Cl. Jul. 15,
2003). Because the invention of U.S. Patent Nos. 3,921,120 and 4,029,233 (“the ‘120
patent” and “the ‘233 patent”) was not the subject of a commercial offer for sale more
than one year prior to the effective filing date of these patents (“the critical date”), we
reverse the judgment of the Claims Court and remand for further proceedings.
∗
Paul R. Michel assumed the position of Chief Judge on December 25,
2004.
Background
In 1969, the Navy entered into a contract with Sparton for the procurement of the
AN/SSQ-53 DIFAR (Directional Frequency Analysis and Recording) sonobuoy.1 This
sonobuoy is an electroacoustic device used to detect, locate, and classify the source of
underwater sounds, such as those generated by submarines. ‘120 pat., col. 1, ll. 11-13.
In its original configuration, the SSQ-53 deployed only to a depth of 90 feet and could
detect submarines down to approximately 1000 feet.2 In response to the Soviet Union’s
development of technology that permitted its submarines to dive deep beneath the
ocean’s isothermic layers, and therefore become undetectable by the SSQ-53s, the
Navy sought to acquire a sonobuoy capable of functioning at both a shallow depth and
a deeper depth of 500 feet or 1000 feet (“dual depth”).
On March 17, 1971, Sparton submitted an Engineering Change Proposal (“ECP”)
0465-2 to the Navy under its existing contract, proposing to incorporate dual depth
operating capability into the existing SSQ-53 DIFAR sonobuoy by modifying the design
to incorporate an inverse deployment system. The sonobuoy device described in the
ECP included a multi-piece release plate for either retaining or deploying the sonobuoy
internal components within or from the sonobuoy housing. However, shortly after the
ECP was issued, Sparton developed, and later tested, a sonobuoy having a single-
piece release plate. This single-piece release plate performed better than previous
1
Other contractors were also SSQ-53 sonobuoy suppliers; however, the
facts surrounding their involvement are not relevant to this appeal.
2
This was due to the fact that submarines below 1000 feet were below the
oceanic isothermic layers, and these layers prevented or impaired the transmission of
submarine acoustic signals.
03-5169 2
release plates and was ultimately used in the modified SSQ-53s Sparton delivered to
the Navy under the contract.
On March 29, 1973, Sparton filed a patent application relating to a dual depth
sonobuoy design. The ‘120 patent issued as a result and is directed to a sonobuoy
deployment system. Sparton then filed a divisional application resulting in the ‘233
patent, which is drawn to a sonobuoy release plate. Both patents contain claim
limitations drawn to a single piece release plate for a sonobuoy.
In 1992, Sparton filed suit in the Claims Court against the United States
(“government”) to recover money damages under 28 U.S.C. § 1498(a) for the
government’s unlicensed use of its inventions protected by the ‘120 and the ‘233
patents. The government maintained that the patents were invalid under the on-sale
bar of 35 U.S.C. § 102(b) and moved for summary judgment of invalidity. The Claims
Court found that the subject matter of the ‘120 and ‘233 patents was offered for sale
before the critical date. Sparton, No. 92-580C, slip op. at 2. The court also found that
the experimental use exception did not help Sparton, as Sparton’s sale of the device at
issue was primarily for commercial, not experimental, purposes. Id. As such, the
Claims Court granted the government’s motion, ruling that the patents were invalid in
view of the on-sale bar.
Sparton now appeals, and we have jurisdiction pursuant to
28 U.S.C. § 1295(a)(3).
Analysis
We review a Claims Court grant of summary judgment de novo, Monon Corp v.
Stoughton Trailers, Inc., 239 F.3d 1253, 1257 (Fed. Cir. 2001). Although the ultimate
03-5169 3
determination of whether a patent is invalid under 35 U.S.C. § 102’s on-sale bar is a
question of law, this determination is based upon underlying factual considerations. Id.
In order for a patent to be held invalid under the on-sale bar, two conditions must
be satisfied before the critical date:
First, the product must be the subject of a commercial [sale] or offer for
sale. . . . Second, the invention must be ready for patenting. That
condition may be satisfied in at least two ways: by proof of reduction to
practice before the critical date; or by proof that prior to the critical date 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.
Pfaff v. Wells Elec., Inc. 525 U.S. 55, 67-68 (1998). While the Supreme Court has not
explained what is necessary for a “commercial offer for sale,” we have held that two
elements are necessary. Namely, a court must find that (1) there was a “commercial
offer”; and (2) that offer was for the patented invention. Scaltech, Inc. v. Retec/Tetra,
L.L.C., 269 F.3d 1321, 1328 (Fed. Cir. 2001). Here, the Claims Court found that all the
requirements for the on-sale bar were met. We disagree. We hold that the patented
invention of neither the ‘120 nor the ‘233 patent was the subject of the admitted offer for
sale prior to the critical date.3
The alleged offer for sale in this case is Sparton’s March 17, 1971 submission of
an ECP proposing to incorporate dual depth operating capability into the existing SSQ-
53 design. The ECP included a description of the dual depth sonobuoy deployment
design, including drawings. This description and drawings contained a release plate
mechanism. The parties disagree as to what type of release plate was identified. The
3
Because we hold that the first prong of the Pfaff test was not satisfied, we
need not reach the second Pfaff prong.
03-5169 4
specific release plate mechanism proposed in the ECP is not relevant to our analysis,
because, as the Claims Court noted,
the government concedes, and the parties do not dispute, the release
plate mechanism described in the ‘120 and ‘233 patents is not the release
plate that was part of the original design proposed in the ECP; in other
words, the . . . Contract does not include a release plate that meets the
description of the release plate limitation of the claimed inventions.
Sparton, No. 92-580C, slip op. at 19. This fact is of utmost importance, as both sides
agree that what was offered in the ECP was not the patented invention. Additionally,
there is no evidence of any communication between Sparton and the government that a
release plate mechanism different from that described in the ECP was going to be used
in the sonobuoys. Accordingly, there is nothing to suggest that prior to the critical date
of March 29, 1972, Sparton made an offer for anything other than dual-depth sonobuoys
having the release plate mechanism described in the ECP. See Miller v. United States,
62 F. Supp. 327, 334 (Ct. Cl. 1945) (stating “[a]n offer is not made until it is
communicated to the offeree”).
Indeed, our precedent supports this determination. See Tec Air, Inc. v. Denso
Mfg. Mich., Inc., 192 F.3d 1353, 1358-59 (Fed. Cir. 1999). In Tec Air, the plaintiff
offered a plastic fan for sale on two separate occasions prior to the critical date. Id. at
1356-57. In its offers, Tec Air did not specify the balancing plugs to be included on the
fans. Further, Tec Air did not intend to use the patented plugs at the time it made the
offers. Based on this, we held “the jury reasonably could have found that Tec Air’s
offers . . . did not raise the on-sale bar because the subject matter of [those] offers [did]
not fully anticipate the claimed invention” under the first prong of the Pfaff test. Id. at
1358. The situation here is similar: Sparton offered a dual-depth sonobuoy for sale
03-5169 5
with the release plate described in the ECP but did not disclose the patented release
plates that were ultimately included in the device delivered under the contract. As such,
we conclude that it was not possible for Sparton’s offer under the ECP to include the
patented single part release plate and that Sparton’s offer under the ECP, therefore,
fails the first prong of the Pfaff test.
Further, we are not persuaded by the government and the Claims Court’s
invocation of contract principles in this instance. The Claims Court adopted the
government’s position that because the ECP did not preclude a different design of the
release plate, the U.C.C. permitted Sparton to substitute any release plate capable of
performing the function recited in the ECP. As such, the court concluded that the
sonobuoys would be considered conforming goods under the contract.
See U.C.C. §§ 2-106, 2-311. The court further concluded that the ECP was a contract
for future goods under U.C.C. § 2-106(1) and that when the Navy accepted the
sonobuoys with the single part release plate upon delivery, Sparton’s duty was
discharged under the terms of the ECP.
As the Claims Court pointed out, our precedent encourages reference to contract
principles to resolve the question of whether there was a commercial offer for sale. See
Group One v. Hallmark Cards, Inc, 254 F.3d 1041, 1047 (Fed. Cir. 2001) (stating “we
hold that the question of whether an invention is the subject of a commercial offer for
sale is a matter of Federal Circuit law, to be analyzed under the law of contracts as
generally understood.”). However, the Claims Court improperly applied the U.C.C. to
the facts of this case. Specifically, the court read the ECP as including the single part
03-5169 6
release plate based upon the Navy’s acceptance of the dual depth DIFAR sonobuoys
with a single part release plate.
Under the Claims Court’s analysis, the patented single part release plate was the
subject of an offer for sale before it was even conceived. Such a result is illogical. The
court even noted that such an outcome would defy logic at the outset of its opinion.
Sparton, No. 92-580C, slip op. at 18 (“Logic dictates, however, that a device that does
not completely exist cannot be the subject of an offer for sale.”). The court thus
improperly reached an unwarranted result by relying on contract principles.
The court and government work to lessen the blow of this outcome by using our
Robotics cases to argue that any incipient on-sale bar was solidified by the
development of the claimed sonobuoys prior to the critical date. In Robotics Vision
Systems, Inc. v. View Engineering, Inc., 112 F.3d 1163, 1168 (Fed. Cir. 1997)
(“Robotics II”), we explained that “[c]ompletion of the invention prior to the crucial date,
pursuant to an offer to sell that invention would validate what had been theretofore an
inchoate, but not yet established bar.” While Robotics II was a pre-Pfaff case, in
Robotics Vision Systems, Inc. v. View Engineering, Inc., 249 F.3d 1307, 1313 (Fed. Cir.
2001) (“Robotics IV”), we cited this language favorably. However, Robotics IV dealt
only with the second prong of the Pfaff on-sale bar test, because the district court had
previously determined that a commercial offer for sale had taken place more than one
year before the critical date. As such, Robotics IV’s relevance, if any, is greatly
diminished. Additionally, there is a significant factual difference between the present
case and the Robotics cases. In the Robotics cases, the invention had already been
conceived prior to the offer for sale, but the invention “was still in a developmental
03-5169 7
stage.” Robotics II, 112 F.3d at 1164. Here the patented invention had not yet been
conceived when the alleged offer for sale took place. “Plaintiff asserts that conception
of the patented release plate did not occur until after Mod. 4 was adopted, and this fact
is not disputed by Defendant for purposes of summary judgment,” Sparton, No. 92-
580C, slip op. at 16. In the Robotics cases, there was the potential that an on-sale bar
could develop, because the invention had at least been conceived. That is not the case
here. With no conception of an invention, there cannot be an offer for sale or a sale of
that invention. Finally, the language used in the Robotics cases is “pursuant to an offer
to sell that invention.” Robotics IV, 249 F.3d at 1313 (quoting Robotics II, 112 F.3d at
1168). As we have explained above, absent any communication between Sparton and
the Navy after the issuance of the ECP, the only offer for sale was of the unpatented
release plate and not that claimed in the ‘120 and ‘233 patents. Accordingly, the
Robotics cases are inapposite.
Conclusion
Because we hold that the March 17, 1971 ECP was not an offer for sale of the
patented device, we reverse the Claims Court’s judgment and remand the case for
further proceedings.4
REVERSED and REMANDED.
4
Our reversal of the applicability of the on sale bar of § 102 does not,
however, settle all issues as to the validity of the ‘120 and ‘233 patents. Under the
March 30, 1998 order by the Claims Court, no findings have been made as to whether
the release plate described in the ECP would have rendered the claimed invention
obvious by its addition to the prior art. This is still an open issue before the Claims
Court.
03-5169 8