August Technology Corp. v. Camtek, Ltd.

United States Court of Appeals
for the Federal Circuit
__________________________

AUGUST TECHNOLOGY CORPORATION AND
RUDOLPH TECHNOLOGIES, INC.,
Plaintiffs-Appellees,

v.
CAMTEK, LTD.,
Defendant-Appellant.
__________________________

2010-1458
__________________________

Appeal from the United States District Court for the
District of Minnesota in case no. 05-CV-1396, Chief Judge
Michael J. Davis.
___________________________

Decided: August 22, 2011
___________________________

DANIEL W. MCDONALD, Merchant & Gould, of Minneapo-
lis, Minnesota, argued for plaintiffs-appellees. With him on
the brief were ERNEST W. GRUMBLES III, RACHEL C.
HUGHEY, and JOSEPH E. LEE.

JONATHAN S. CAPLAN, Kramer Levin Naftalis & Frankel
LLP, of New York, New York, argued for defendant-
appellant. With him on the brief were CHRISTOPHER A.
COLVIN and DONALD L. RHOADS.
__________________________
AUGUST TECH CORP v. CAMTEK LTD 2

Before DYK, MOORE and O’MALLEY, Circuit Judges.
MOORE, Circuit Judge.

Camtek, Ltd. (Camtek) appeals the district court’s final
judgment based on a jury verdict that the asserted claims of
U.S. Patent No. 6,826,298 (the ’298 patent) are infringed,
not invalid, and not unenforceable, and its award of lost
profits and grant of a permanent injunction. Camtek also
appeals the trial court’s dismissal of its inequitable conduct
defense and counterclaim. We affirm the district court’s
denials of judgment as a matter of law (JMOL) and a new
trial on invalidity. We also affirm the court’s dismissal of
Camtek’s inequitable conduct defense and counterclaim.
We conclude, however, that the district court erred in its
claim construction, and vacate the district court’s judgment
of infringement, its award of damages, and its grant of a
permanent injunction, and remand for further proceedings
consistent with this opinion.

BACKGROUND

August Technology Corporation and Rudolph Technolo-
gies, Inc. (collectively, August Tech) asserted claims 1 and 3
of the ’298 patent against Camtek in district court. The jury
returned a special verdict that Camtek and its Falcon device
literally infringed both claims, but that the infringement
was not willful, and awarded approximately $6.8 million in
lost profits. The jury’s verdict also indicated that Camtek
failed to prove that the asserted claims would have been
obvious, and that August Tech’s NSX-80 device was not on
sale prior to the ’298 patent’s critical date. The court per-
manently enjoined Camtek from making, using, selling, and
offering for sale its infringing Falcon machines, including
offers communicated entirely in the United States for sales
to occur overseas. Also, the district court previously severed
Camtek’s inequitable conduct defense based on August
3 AUGUST TECH CORP v. CAMTEK LTD

Tech’s nondisclosure of the NSX-80 to the United States
Patent and Trademark Office. Because the jury found that
the NSX-80 was not prior art, the court held that there was
no need for a separate trial on inequitable conduct. The
district court denied Camtek’s post-trial motions for JMOL
or a new trial on infringement, damages, and obviousness.
Camtek appeals, and we have jurisdiction under 28 U.S.C.
§ 1295(a)(1).

DISCUSSION

We apply the procedural law of the relevant regional
circuit when reviewing the district court’s denial of a JMOL
or a new trial. Revolution Eyewear, Inc. v. Aspex Eyewear,
Inc., 563 F.3d 1358, 1370 (Fed. Cir. 2009); Ecolab, Inc. v.
FMC Corp., 569 F.3d 1335, 1341 (Fed. Cir. 2009). In the
Eighth Circuit, the appellate court reviews de novo the
denial of a JMOL, using the same standards as the district
court. Concord Boat Corp. v. Brunswick Corp., 207 F.3d
1039, 1049 (8th Cir. 2000). We will not overturn a jury’s
factual finding so long as it is supported by substantial
evidence. Ecolab, 569 F.3d at 1346 (citing United States v.
Vertac Chem. Corp., 453 F.3d 1031, 1039 (8th Cir. 2006)).
The district court grants a new trial only to prevent a mis-
carriage of justice, and the appellate court reviews its
decision for an abuse of discretion. United States v. McClel-
lon, 578 F.3d 846, 857 (8th Cir. 2009); Bass v. Gen. Motors
Corp., 150 F.3d 842, 845 (8th Cir. 1998).

I. Claim Construction and Infringement

On appeal, Camtek challenges the district court’s claim
construction. Specifically, Camtek asserts that the district
court erred in construing two claim limitations, “wafer” and
“strobes . . . based on velocity,” and that under the proper
construction, it does not infringe. Because the district court
AUGUST TECH CORP v. CAMTEK LTD 4

incorrectly construed the claim term “wafer,” we vacate the
judgment of infringement, and remand for further proceed-
ings consistent with this opinion.

A. A Wafer and a Plurality of Wafers

Claims 1 and 3 are directed to a system and a method
for inspecting integrated circuits printed on substrates such
as wafers. Claim 1 recites:

An automated system for inspecting a substrate
such as a wafer in any form including whole pat-
terned wafers, sawn wafers, broken wafers, and wa-
fers of any kind on film frames, dies, die in gel paks,
die in waffle paks, multi-chip modules often called
MCMs, JEDEC trays, Auer boats, and other wafer
and die package configurations for defects, the sys-
tem comprising:
a wafer test plate;
a wafer provider for providing a wafer to the
test plate;
a visual inspection device for visual inputting of
a plurality of known good quality wafers during
training and for visual inspection of other unknown
quality wafers during inspection;
at least one of
a brightfield illuminator positioned ap-
proximately above,
a darkfield illuminator positioned approxi-
mately above, and
a darkfield laser positioned approximately
about the periphery of the wafer test plate,
5 AUGUST TECH CORP v. CAMTEK LTD

all of which are for providing illumination to the
unknown quality wafers during inspection and at
least one of which strobes to provide short pulses of
light during movement of a wafer under inspection
based on a velocity of the wafer; and

a microprocessor having processing and memory
capabilities for developing a model of good quality
wafer and comparing unknown quality wafers to the
model.

The dispute in this case centers around whether “a wa-
fer” is also “a plurality of wafers.” Both parties agree that a
whole wafer is typically diced into many pieces called dies, 1
and that each die contains a complete functional circuit.
The district court construed a wafer to be “a thin slice of
semiconductor material with circuitry thereon that is ready
for electrical testing, or any part thereof. However, a ‘wafer’
is not the same as a ‘die.’ A wafer is made up of multiple
die[s].” J.A. 37, 132 (emphasis added). The district court
explained: “wafer should be construed to include a part of a
wafer. Throughout the patent, reference is made to wafers,
in whole or in part.” J.A. 131. The court further explained
that defining a wafer as “any portion of a wafer” does not
improperly give the same meaning to “die” and “wafer”
because it requires the wafer or portion of a wafer to include
multiple dies. J.A. 132 (“Thus, Plaintiffs’ construction of
wafer does not provide the same meaning as die – the
former refers to plural, while the latter refers to singular.”).

Claim 1 requires “visual inputting a plurality of known
good quality wafers during training” to teach the system a
standard for detecting defects. The district court referred to

1 Although “die” is an acceptable plural form of die,
since the claims use “dies,” we will also.
AUGUST TECH CORP v. CAMTEK LTD 6

this “plurality of known good quality wafers” limitation as
the multiple wafer limitation. This limitation requires
multiple good wafers to be used to train the system – so the
inspection device will know a flawed wafer when it sees one.
In light of the district court’s claim construction, August
Tech and its expert, Dr. Mundy, argued that the accused
Falcon device infringes the multiple wafer limitations
because “the Falcon visually inputs sections of multiple die
from different parts of a whole wafer.” J.A. 92. In its denial
of JMOL on this point, the district court explained: “the
Court’s definition of the term ‘wafer’ could refer to each of
the sections of multiple die visually inputted by the Falcon.
Therefore, the Court finds sufficient evidence to support the
jury’s conclusion that the Falcon literally infringed the
‘plurality of wafers’ limitation.” Id. Thus, under the district
court’s construction, a single wafer can be a plurality of
wafers.

On appeal, Camtek argues that the district court erred
by including the “on any part thereof” phrase in its con-
struction, asserting that such a definition “erroneously
permits a single physical wafer to have an arbitrary number
of notional ‘wafers’ within it.” Appellant’s Br. 23. Camtek
argues that wafers are physically distinct substrates that
are inspected by the claimed invention, and that a plurality
of wafers means more than one physically discrete wafer.
Camtek asserts that the partial wafers, such as sawn wafers
and broken wafers as recited in the preambles, are physi-
cally distinct substrates. Camtek also points to the ’298
patent’s specification at column 8, lines 60-64, which it
asserts discusses wafers as discrete physical objects that are
physically handled.

August Tech first responds that Camtek waived this
“notional wafer” argument by failing to advance it before the
district court. We disagree. Before the district court, the
7 AUGUST TECH CORP v. CAMTEK LTD

parties simultaneously submitted proposed claim construc-
tions. Camtek’s proposed claim construction for wafer, “[a]
thin semiconductor slice . . . ,” does not permit a single
wafer to also be multiple wafers. J.A. 129-130. August
Tech, in contrast, proposed the “or any part thereof” lan-
guage. Id. In its Markman Rebuttal Brief, Camtek argued
that August Tech’s proposed construction of a plurality of
wafers would perversely encompass a single wafer with
multiple dies – thus reading out “a plurality of” from the
claims. Markman Rebuttal Br. 9-10. During the jury
instruction phase, the court heard additional argument
regarding the proper construction of wafer. And, signifi-
cantly, the court made clear in its JMOL order that it was
aware of the notional wafer issue, but “intended” to define
the “term ‘wafer’ to also refer to any part of a whole wafer
other than a single die.” J.A. 91-92. We cannot say, on this
record, that Camtek failed to preserve its notional wafer
argument for appeal. 2

With respect to the proper construction of wafer, August
Tech contends that the claims do not require wafers to be
physically separate from each other, and that Camtek’s
construction would read “dies” out of the definition of wafers
in the preambles. Accordingly, August Tech argues, the
district court correctly adopted its proposed construction,
which allows for portions of a single discrete wafer to be
wafers.

2 Although the question of whether a wafer can also
be a plurality of wafers has been a centerpiece of this ap-
peal, it was at most a peripheral issue before the district
court. In fact, it was not clearly raised during the Markman
hearing. Certainly Camtek could have more clearly ex-
plained to the district court the implications of August
Tech’s “or any part thereof” language.
AUGUST TECH CORP v. CAMTEK LTD 8

Claim construction is a matter of law we review de novo.
Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1455-56
(Fed. Cir. 1998) (en banc). The words of a claim are gener-
ally given their ordinary and customary meaning as under-
stood by a person of ordinary skill in the art at the time of
the invention when read in the context of the specification
and prosecution history. See Phillips v. AWH Corp., 415
F.3d 1303, 1313 (Fed. Cir. 2005) (en banc). A claim’s pre-
amble may limit the claim when the claim drafter uses the
preamble to define the subject matter of the claim. Allen
Eng’g Corp. v. Bartell Indus., 299 F.3d 1336, 1346 (Fed. Cir.
2002). We construe the preamble as limiting when it is
“necessary to give life, meaning and vitality” to the claim
based on the facts of the case at hand and in view of the
claim as a whole. Id. (internal quotation marks omitted).

To determine the meaning of the plurality of wafers
limitations we begin with the language of the claim itself.
In the claims’ preambles, the inventors listed example
“wafers” such as whole wafers, sawn and broken wafers, and
dies. Nothing in the preamble compels us to conclude that
wafers are not discrete objects. The claim itself, however,
distinguishes between a single wafer and multiple wafers:

a wafer provider for providing a wafer to the
test plate;
a visual inspection device for visual inputting of
a plurality of known good quality wafers during
training and for visual inspection of other unknown
quality wafers during inspection; . . .

The most logical reading of these claim limitations is that
the wafer provider provides a single object called a wafer to
the test plate, and that visual inspection and training
requires more than one of these objects. Reading this
otherwise renders any difference between the singular and
9 AUGUST TECH CORP v. CAMTEK LTD

the plural terms superfluous. See Merck & Co. v. Teva
Pharms. USA, Inc., 395 F.3d 1364, 1372 (Fed. Cir. 2005) (“A
claim construction that gives meaning to all the terms of the
claim is preferred over one that does not do so.”).

System claims 18 and 26 in the ’298 patent’s parent,
U.S. Patent No. 6,324,298 (the parent patent), further
indicate that a single wafer is not also multiple wafers. z4
Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1348 (Fed.
Cir. 2007) (“We presume, unless otherwise compelled, that
the same claim term in the same patent or related patents
carries the same construed meaning.” (internal quotation
marks omitted)). Claims 18 and 26 recite the same example
list of wafer formats in their preambles as do the asserted
claims, and they also recite a similar viewing “a plurality of
known good wafers” feature. Claims 18 and 26, however,
further recite “a wafer alignment device for aligning each
and every wafer provided to the test plate at the same x, y,
z, and θ location.” These claims require “each and every
wafer” to be aligned at the exact same location and orienta-
tion. If a wafer provided to the test plate included a plural-
ity of wafers, however, some of the wafers would not be
aligned to the exact same location.

The ’298 patent’s specification consistently treats wafers
as discrete objects. For example, the inventors describe
“creating a new recipe” which entails “defining how many
wafers W are selected from cassettes or other storage recep-
tacles” and “defining how the dies on each wafer W are to be
selected for defect inspection.” ’298 patent col.7 ll.36-40.
The specification proceeds to explain that the wafer provider
provides wafers to the test plate from cassettes, in which
“multiple wafers are stacked,” and magazines:

[T]he wafer providing means 14 includes a robotic
arm that pivots from a first position where a wafer
AUGUST TECH CORP v. CAMTEK LTD 10

W is initially grasped from a magazine or cassette to
a second position where the wafer W is positioned
on the wafer test plate 12 for inspection. After in-
spection, the robotic arm pivots the wafer W from
the second position at the test plate 12 back to the
first position where the wafer W is placed back in or
on the magazine or cassette.

’298 patent col.8 ll.61-67. Based on the claim language as
read in light of the specification, we conclude that a wafer is
a discrete object, and thus a single wafer, even though it
may later be diced into hundreds of separate dies, is not
itself also a plurality of wafers. Contrary to August Tech’s
arguments, this construction does not read “die” out of the
definition of wafer. On the contrary, the claims neatly
accommodate a wafer in any discrete format, such as a
whole wafer, a discrete portion of a wafer (a sawn wafer or a
broken wafer), and even a discrete physical substrate that
includes only an individual die.

We reject August Tech’s assertions that a claim con-
struction requiring wafers to be discrete objects is incorrect
because it excludes the preferred embodiment which August
Tech argues trains on and inspects multiple dies on a single
wafer. Appellee’s Br. 33-36 (citing ’298 patent figs.3 & 5;
col.6 ll.65-67; col.7 ll.20-25). August Tech argues that a
claim construction “that excludes a preferred embodiment
from the scope of the claim is rarely, if ever, correct.” Appel-
lee’s Br. 35 (quoting MBO Labs., Inc. v. Becton, Dickinson &
Co., 474 F.3d 1323, 1333 (Fed. Cir. 2007)).

The Description of the Preferred Embodiment states
that the good die model can be created by repeating the
visual inputting process for “a plurality of known good die or
wafers as viewing a pool of wafers is necessary to form a
model of a good die.” ’298 patent col.14 ll.15-17; see also
11 AUGUST TECH CORP v. CAMTEK LTD

col.16 ll.1-8 (discussing “align[ing] the known good wafers to
form the good die model.” (emphases added)); col.6 ll.65-66
(disclosing “a camera 20 or other visual inspection device for
visually inputting good die during training”); col.7 ll.11-34
(discussing training by viewing a plurality of known good
die). The disclosure therefore teaches both using multiple
die and multiple wafers to train.

The fact that the claims at issue cover only the latter – a
plurality of known good wafers – is little cause for concern.
“The mere fact that there is an alternative embodiment
disclosed in the [asserted patent] that is not encompassed
by [our] claim construction does not outweigh the language
of the claim, especially when the court’s construction is
supported by the intrinsic evidence.” TIP Sys., LLC v.
Phillips & Brooks/Gladwin, Inc., 529 F.3d 1364, 1373 (Fed.
Cir. 2008). This is especially true where, as here, other
unasserted claims in the parent patent cover the excluded
embodiments. See PSN Ill., LLC v. Ivoclar Vivadent, Inc.,
525 F.3d 1159, 1166 (Fed. Cir. 2008) (“[C]ourts must recog-
nize that disclosed embodiments may be within the scope of
other allowed but unasserted claims.”). Unasserted claim
10 of the parent patent recites a method of “inspecting a die
on a substrate such as a wafer in any form including [the
same list of examples],” and comprises the steps of training
a model as to a good die by viewing multiple known good
dies, and then inspecting unknown quality dies. Claim 10,
like the specification sections cited by August Tech, does not
recite whether the viewed or inspected dies are on one or
more wafers.

The inventors chose to draft claims directed to training
on and inspecting multiple discrete wafers. The district
court’s construction is in error so far as it defines a wafer as
any portion of a wafer having two or more dies. We con-
strue a wafer as recited in the claims at issue as a thin,
AUGUST TECH CORP v. CAMTEK LTD 12

discrete slice of semiconductor material with circuitry
thereon that is ready for electrical testing having one or
more dies. A plurality of wafers means more than one
physically distinct wafer.

Because the jury was given a flawed claim construction,
the verdict of infringement must be vacated. August Tech
also argues that even under this construction, Camtek and
its Falcon inspection machine infringe the asserted claims.
We decline to make this factual finding in the first instance,
and instead remand to the district court for a limited trial
on infringement with respect to this claim element.

B. Strobes or Flashes Based on Velocity

Claim 1 of the ’298 patent recites a strobing feature
where an illuminator strobes as the wafer is moving “based
on a velocity of the wafer.” Method claim 3 similarly recites
that an illumination source is flashed “at a sequence corre-
lating to a velocity of the wafer.” The district court con-
strued these limitations to require strobing 3 based at least
in part on “the rate of change of the position of the wafer.”
J.A. 38, 136-40. The district court further explained that so
long as the accused system strobes based on the wafer’s
velocity, it does not matter whether the strobing also de-
pends upon the wafer’s position.

No party disputes on appeal that the claimed invention
periodically strobes a light source based on a wafer’s velocity
to help a camera capture a still image of the constantly-
moving wafer. Camtek argues instead that the asserted
claims preclude strobing that is also based on the wafer’s

3 For simplicity, we will use the term strobing to refer
to both strobing and flashing as each is recited in the as-
serted claims.
13 AUGUST TECH CORP v. CAMTEK LTD

position. Camtek concedes that the claims do not recite any
limitation prohibiting strobing based on position. Camtek’s
position on appeal is that during prosecution August Tech
disclaimed strobing based on the wafer’s position.

“Absent a clear disavowal or contrary definition in the
specification or the prosecution history, the patentee is
entitled to the full scope of its claim language.” Home
Diagnostics, Inc. v. Lifescan, Inc., 381 F.3d 1352, 1358 (Fed.
Cir. 2004). During prosecution, the inventors twice
amended their claims to overcome U.S. Patent No. 4,644,172
(Sandland). As described by the examiner, Sandland dis-
closes a start-and-stop system that moves the wafer, stops
the wafer to capture a still image, and then moves the wafer
again. After the first rejection, the inventors amended the
claimed strobing feature from “strobes during inspection” to
“strobes based on a velocity of a wafer during inspection,”
and explained that Sandland does not teach strobing, but
instead provides constant illumination. J.A. 7532, 7598,
7601. The examiner then rejected the inventors’ claims
again, and noted that Sandland’s light could be switched on
and off by the computer “to [e]nsure that [one lamp] is
turned on and [the other lamps] are turned off [when] the
image is grabbed.” J.A. 6730. In response, the inventors
amended the claim to recite “strobes to provide short pulses
of light during movement of a wafer under inspection based
on the velocity of the wafer,” and explained that Sandland
does not teach flashing the lights on and off, flashing or
strobing based on velocity, or emitting short pulses of light
during movement of the wafer. J.A. 7644, 7647-49. Because
we see no clear disavowal of strobing according to position,
we agree with the district court’s construction of strobing
based on velocity – the strobing must be based at least in
part on the wafer’s velocity, i.e., on the rate of change of the
position of the wafer.
AUGUST TECH CORP v. CAMTEK LTD 14

Camtek also argues on appeal that, under the district
court’s claim construction, there is no evidence supporting
the jury’s verdict of infringement with respect to this strob-
ing limitation. The parties apparently agree that the evi-
dence shows that the Falcon strobes as a moving wafer
passes certain preset positions. Camtek argues that this
proves that the Falcon strobes based on position, but not
velocity as required by the claims. August Tech responds
that the evidence shows that the Falcon strobes based on
the rate of change of the wafer’s position: as shown by
timing evidence and admitted by Camtek’s witness, as the
wafer moves faster, the strobes occur more frequently.
August Tech also notes that the Falcon’s position circuit is
disabled unless the wafer is moving. Accordingly, we con-
clude that the jury was presented with substantial evidence
that the Falcon strobes based on the rate of change of the
position of the wafer. We see no error in the district court’s
analysis of this issue. As such, the district court need not
include the strobing limitation in its retrial on infringement.

II. Nonobviousness In View of Chau and Moriya

The jury returned a special verdict that Camtek failed
to show that the asserted claims would have been obvious
by clear and convincing evidence over U.S. Patent No.
5,859,698 (Chau) and U.S. Patent No. 5,298,963 (Moriya),
which were not before the examiner during prosecution.
The court entered judgment in accordance with that verdict,
and in denying Camtek’s motion for JMOL. In particular,
the court held that there was substantial evidence that the
cited prior art failed to teach the strobing limitation, which
the court construed to require that the “illuminator freezes
the patterns of the moving wafer onto the visual inspection
device.” J.A. 101, 135-39.
15 AUGUST TECH CORP v. CAMTEK LTD

On appeal, Camtek argues that Chau teaches all of the
elements of the asserted claims except strobing, which is
taught by Moriya. August Tech disagrees and argues that
Moriya does not relate to inspecting patterns on wafers.
August Tech asserts that Moriya is instead directed to
inspecting bare, unfinished wafers before any dies are
fabricated thereon. According to August Tech’s expert,
Moriya does not contemplate inspecting dies or patterns on
wafers, and never even mentions dies or patterns. J.A.
7029, 7033-36. August Tech also asserts that Moriya dis-
closes an embodiment where the wafer is rotated, Moriya
col.5 ll.38; col.7 ll.18-37, and that Camtek’s expert admitted
that rotating was not suitable for inspecting patterned
wafers. J.A. 6673-74. Camtek argues, however, that strob-
ing as taught by Moriya will freeze whatever patterns are
on the wafer for the camera, and points to an embodiment
illustrated in Fig. 20A and discussed at column 6, lines 12-
65; where the wafer is moved back and forth in adjacent
straight lines, like mowing a lawn.

Although Camtek’s arguments are not without merit,
there was substantial evidence supporting the jury’s fact-
finding given the expert testimony that Moriya does not
contemplate strobing a moving wafer to freeze die patterns
for the camera as required by the asserted claims. There-
fore, we affirm the trial court’s denial of a JMOL and a new
trial on this issue.

III. The NSX-80

During trial, Camtek also argued that August Tech’s
NSX-80 wafer inspection machine was prior art. The jury
concluded in its special verdict that the NSX-80 was not on
sale prior to the ’298 patent’s critical date, July 15, 1997.
Because the jury found that the NSX-80 was not on sale
before the critical date and thus was not § 102(b) prior art,
AUGUST TECH CORP v. CAMTEK LTD 16

the district court dismissed as moot Camtek’s inequitable
conduct charges which were based on non-disclosure of the
NSX-80. On appeal, Camtek argues that the district court
erred as a matter of law in Jury Instruction 23 and that this
error caused the jury to wrongly find that the NSX-80 was
not prior art. In particular, Camtek argues that Jury In-
struction 23 wrongly instructed the jury that: “In order to be
on ‘sale’ the NSX-80 must also have been ready for patent-
ing at the time the alleged offer for sale is made.” J.A. 56. 4
Had the jury considered the NSX-80 in combination with
the other prior art, it could have found the claims obvious,
Camtek contends.

Before determining whether the NSX-80 would have
rendered the claims obvious, we first consider whether the
device could qualify as 102(b) prior art. Based on Jury
Instruction 23, the jury concluded that it does not. We
agree with Camtek, however, that this instruction contains
an erroneous statement of law.

Section 102(b) requires that “the invention was . . . on
sale in this country” before the critical date. The Supreme
Court has explained that the § 102(b) on-sale bar applies
when two conditions are met before the critical date: (1) the
product is the subject of a commercial offer for sale, and (2)
the invention is ready for patenting. Pfaff v. Wells Elecs.,
Inc., 525 U.S. 55, 67 (1998). Disclosure of inventions is one
of the primary objectives behind the limited time patent
grant. Aronson v. Quick Point Pencil Co., 440 U.S. 257, 262
(1979) (Among the “purposes of the federal patent system” is
to “promote[] disclosure of inventions to stimulate further
innovation and to permit the public to practice the invention

4 We note that Jury Instruction 23 was patterned on
the American Intellectual Property Law Association model
jury instruction.
17 AUGUST TECH CORP v. CAMTEK LTD

once the patent expires.”); Kewanee Oil v. Bicron, 416 U.S.
470, 481 (1974) (“When . . . the information contained in [a
patent] is circulated to the general public and those espe-
cially skilled in the trade, such additions to the general
store of knowledge are of such importance to the public weal
that the Federal Government is willing to pay the high price
. . . of exclusive use for its disclosure, which disclosure, it is
assumed, will stimulate ideas and the eventual development
of further significant advances in the art.”); see also Re-
becca S. Eisenberg & Arti K. Rai, Harnessing and Sharing
the Benefits of State-Sponsored Research: Intellectual Prop-
erty Rights and Data Sharing in California’s Stem Cell
Initiative, 21 Berkeley Tech. L.J. 1187, 1194-95 (2006).
Section 102(b) encourages prompt disclosure of new inven-
tions and in particular limits commercial exploitation of an
invention prior to filing for a patent application. Timothy R.
Holbrook, The More Things Change, The More They Stay
The Same: Implications of Pfaff v. Wells Electronics, Inc.
and the Quest for Predictability in the On-Sale Bar, 15
Berkeley Tech. L.J. 933, 938 (2000). The issue presented
in this case is whether the invention must be ready for
patenting at the time the alleged offer is made. We con-
clude that it does not. Under Pfaff, the invention must be
ready for patenting prior to the critical date. But to con-
clude that it must also be ready for patenting at the time of
the offer would render the second prong of the Pfaff test
superfluous. Our decision in Robotic Vision Sys. v. View
Eng’g, Inc., 249 F.3d 1307, 1313 (Fed. Cir. 2001) expressly
holds that completion of the invention prior to the critical
date pursuant to an offer to sell would create a bar. As we
explained in Robotic Vision, the on-sale bar was “triggered
by a prior commercial offer for sale and a subsequent ena-
bling disclosure that demonstrated that the invention was
ready for patenting prior to the critical date.” Id. (emphasis
in original). Robotic Vision would have to be overturned for
us to hold, as the district court did, that the invention must
AUGUST TECH CORP v. CAMTEK LTD 18

be ready for patenting at the time of the offer for sale. 5 This
we cannot do. While the invention need not be ready for
patenting at the time of the offer, consistent with our cases,
we hold that there is no offer for sale until such time as the
invention is conceived. Pfaff states that the “word ‘inven-
tion’ in the Patent Act unquestionably refers to the inven-
tor’s conception.” 525 U.S. at 60. Therefore, we conclude
that an invention cannot be offered for sale until its concep-
tion date. Hence, if an offer for sale is made and retracted
prior to conception, there has been no offer for sale of the
invention. In contrast, if an offer for sale is extended and
remains open, a subsequent conception will cause it to
become an offer for sale of the invention as of the conception
date. In such a case, the seller is offering to sell the inven-
tion once he has conceived of it. Before that time, he was
merely offering to sell an idea for a product. As our court
explained in Sparton Corp. v. United States, 399 F.3d 1321,
1324 (Fed. Cir. 2005): “Under the Claims Court’s analysis,
the patented single part release plate was the subject of a
commercial offer for sale before it was even conceived. Such
a result is illogical.” Sparton entered a contract with the
Navy to sell sonobuoys incorporating dual-depth operating
capability into an existing SSQ-53 design. Id. at 1323.
There was no dispute that the product which was the sub-
ject of the contract was not the patented invention – the
specified release plate was a different design than the
patented release plate. Id. The fact that the patented
release plates were ultimately included in the delivered
devices after the critical date does not change the result.

5 August Tech argues that our decisions in Atlanta At-
tachment Co. v. Legget & Platt, Inc., 516 F.3d 1361 (Fed.
Circ. 2008) and Allen Engineering Corp. v. Bartell Indus-
tries, 299 F.3d 1355 (Fed. Cir. 2002) stand for the proposi-
tion that an invention must be ready for patenting at the
time of the offer for sale. We do not read those cases as
establishing such a requirement.
19 AUGUST TECH CORP v. CAMTEK LTD

Sparton offered and contracted to sell the Navy something
entirely different than the patented design. Sparton failed
to establish the first prong of the Pfaff test – offer for sale of
the invention.

In this case, August Tech was approached by ICS to de-
velop a wafer inspection machine that would meet their
needs. J.A. 4845. In late 1996, with “a concept of what the
machine would be,” August Tech issued ICS and a second
customer, Eastman Kodak, separate purchase orders for a
NSX-80 automated wafer inspection machine. J.A. 4982.
ICS agreed to pay 15% of the purchase price on order, 20%
on design review, 50% upon acceptance at August Tech’s
factory, and 15% after acceptance at the ICS’s site. J.A.
4866, 5029, 14494, 14498. Once it received an initial pay-
ment, August Tech began preliminary hardware design for
the NSX-80 in the first quarter of 1997. J.A. 4866, 4872.
Design and development proceeded at August Tech’s facili-
ties, and the first NSX-80 unit was shipped to ICS for on-
site acceptance in September of 1997, after the July 15,
1997 critical date. J.A. 4867-77, 14500. August Tech argues
that at the time of the contracting “August had not con-
ceived of the software or hardware components that would
be necessary for the machine.” Appellee’s Br. 58. While
August Tech admits that there was a partial prototype prior
to the critical date, the record on appeal is not clear as to
whether August Tech had conceived of the NSX-80 prior to
the critical date. And we believe this question of fact must
be decided by the fact finder in the first instance with a
proper statement of the law regarding the first prong of the
Pfaff test.

As an alternative ground for affirmance of this issue,
August Tech argues that even if Jury Instruction 23 is
incorrect, the jury could have arrived at its determination
that the NSX-80 was not on sale for purposes of § 102(b)
AUGUST TECH CORP v. CAMTEK LTD 20

based on the experimental use exception. Even if there is
substantial evidence to support a determination of experi-
mental use (a decision we do not reach), we could not affirm
on this basis in light of the error in the jury instruction.
The special verdict form asked the jury: “Has Camtek
proven by clear and convincing evidence that August’s NSX-
80 was ‘on sale’ before July 15, 1997?” J.A. 18. The jury
answered NO. We do not know upon which basis the jury
made its decision. The jury may well have rejected August
Tech’s arguments regarding experimental use, but agreed
that the invention was not ready for patenting at the time of
the offer. Because we cannot peek inside the black box, we
cannot affirm even if there is substantial evidence to sup-
port this alternative argument.

Even if the NSX-80 was on sale, however, it does not
disclose the claimed strobing and therefore does not supply
the missing element for purposes of the obviousness analy-
sis. As discussed above, substantial evidence supports the
jury’s implied factual determination that Chau and Moriya
failed to teach the claims’ strobing elements. Camtek does
not argue that the NSX-80 teaches this feature. Indeed, it is
undisputed that NSX-80 units are non-strobing, start-and-
stop inspection machines. See Appellant’s Br. 16 (“[T]he
NSX-80 . . . was a start-and-stop system for inspecting
patterned wafers that did not use strobing.” (citing J.A.
4980:14-16)). Thus, we conclude that even if the jury were
to decide that the NSX-80 was on sale and therefore prior
art, as a matter of law based on the undisputed facts, it
would not render the asserted claims obvious in view of the
other cited prior art, including Chau, Moriya, and Sandland.
Accordingly, we affirm the court’s denial of JMOL and a
new trial on invalidity for obviousness – there is no need for
a retrial on the issue of whether the NSX-80 was on sale.
21 AUGUST TECH CORP v. CAMTEK LTD

For the same reasons, the NSX-80 is not material prior
art. Therasense, Inc. v. Becton, Dickinson & Co., __ F.3d __,
2011 WL 2028255 at *11 (Fed. Cir. May 25, 2011) (requiring
but-for materiality or egregious misconduct). Accordingly,
we affirm the district court’s dismissal of Camtek’s inequi-
table conduct counterclaim.

IV. Remedies

Because we vacate and remand for further proceedings
under the correct claim construction, we do not reach the
parties’ contentions regarding damages and the injunction.
We note, however, that after the district court enjoined
Camtek from communicating with third parties in the
United States for the purpose of offering to sell accused
devices for use outside the United States, we issued Trans-
ocean Offshore Deepwater Drilling, Inc. v. Maersk Contrac-
tors USA, Inc., 617 F.3d 1296, 1309 (Fed. Cir. 2010). We
have no opinion at this time regarding the effect of Trans-
ocean on the now-vacated injunction. Should the trial court
find that Camtek and its Falcon inspection machine infringe
under our claim construction, however, it should take into
account the effect, if any, Transocean has when crafting an
appropriate injunction.

CONCLUSION

For the foregoing reasons, we affirm-in-part, vacate-in-
part, and remand for further proceedings consistent with
this opinion.

AFFIRMED-IN-PART, VACATED-IN-PART, and
REMANDED
AUGUST TECH CORP v. CAMTEK LTD 22

COSTS

No costs.