IP Law Daily, PATENT—NDCal: Factual Issues Precluded Summary Judgment as to Whether Invention was on Sale or in Public Use More Than a Year Before Application Filing Date, (Aug 9, 2012)

By Thomas Long, J.D.

Genuine issues of material fact precluded a determination on summary judgment as to whether a patented invention was offered for sale or in public use in the United States more than one year before the priority date of patent claims asserted by medical testing product manufacturer Abaxis, the federal district court in San Jose has decided (Abaxis, Inc. v. Cepheid, August 8, 2012, Koh, L.). Abaxis could go forward with patent infringement claims against competitor Cepheid.

Both parties manufactured freeze-dried chemical reagent particles that were useful in automated medical testing. Abaxis developed freeze drying technology beginning in the late 1980s and was awarded patents covering the technology. Only July 28, 2010, Abaxis filed this action accusing Cepheid of infringing its patents on freeze-dried reagent particles. Cepheid filed a motion for summary judgment on the ground that claims 1 and 3 of Abaxis’s '563 patent and claims 12 and 13 of its '684 patent were invalid under Sec. 102(b) of the Patent Act.

Patent Claims

Asserted claim 1 of the '563 Patent claimed a container holding dried chemical beads. It recited:

A container holding a dried chemical composition which dissolves in less than about 10 seconds in water, wherein said dried chemical composition comprises a pre-selected precisely measured aliquot of said dried chemical composition which chemical composition is in bead form have in a diameter between 1.5 mm and 10.0 mm.

Asserted claim 3 of the '563 Patent recited: “The container of claim 1, wherein the dried chemical composition has a diameter of between about 1.5 and 3.5 mm.”

Claim 1 of the '684 Patent, which was not asserted, claimed dried chemical beads, and recited: “A dried chemical reagent composition comprising a plurality of dried beads having a coefficient of weight variation of less than about 3%, and a diameter of between about 1.5 mm and about 10 mm or the equivalents thereof.” Asserted claim 12 of the '684 Patent recited: “The composition of claim 1, wherein the beads have a diameter of less than about 5 mm.” Asserted claim 13 of the '684 Patent recited: “The composition of claim 12, wherein the beads have a diameter of less than about 3.5 mm.”

Invalidity

Under 35 U.S.C. § 102(b), “[a] person shall be entitled to a patent unless … (b) the invention was … in public use or on sale in this country, more than one year prior to the date of application for patent in the United States.”

Cepheid contended that it was entitled to summary judgment of invalidity on two independent grounds under Sec. 102(b): (1) the on-sale bar and (2) prior public use. The '563 Patent and the '684 Patent share their specification with application No. 08/134,574, filed on October 8, 1993. Accordingly, Cepheid argued that the asserted claims were invalid if any embodiment of the asserted claims was in public use or on sale in the United States before October 8, 1992.

On-sale bar. There was a factual dispute as to whether a contract between Abaxis and a Japanese entity, Teramecs (“the Teramecs agreement”) offered to sell a product embodying the asserted claims in the United States, the court said. The Teramecs agreement did not clearly offer the claimed beads. Instead, the agreement only mentioned “reagent” without specifying that the reagent should take the form of small beads having uniform size. There also was deposition testimony that the agreement did not require use of the beads.

In addition, the court noted, it was undisputed that Abaxis did not actually sell any beads to Teramecs until six years after the agreement, four years later than the filing of the patent application. The six year gap between the Teramecs agreement’s offer to sell “reagent” and the actual bead sale to Teramecs raised a genuine dispute of material fact as to whether the Teramecs agreement offered reagent beads embodying the asserted claims for sale in 1991, the court said.

Moreover, Teramecs was a Japanese company, and it was undisputed that under the agreement Teramecs had no right to sell Abaxis products in the United States. Abraxis was based in the United States, but a United States company sometimes could export its product for sale overseas without triggering the on-sale bar, according to the court. There was a factual dispute as to whether prefatory activity related to the agreement occurred in the United States or abroad.

Prior public use. A claimed invention was in public use if a product embodying every claim limitation was shown to or used by an individual other than the inventor under no limitation, restriction, or duty of confidentiality. Genuine issues of material fact existed as to whether Abaxis publicly used embodiments of the asserted claims when Abaxis demonstrated its technology to potential investors at pre-initial public offering roadshows in January 1992, the court held. In light of the burden on Cepheid to prove invalidity by clear and convincing evidence, a reasonable jury could find that Cepheid had not met its burden of showing that beads embodying all limitations of the asserted claims were actually used during the roadshows, the court said.

The case is No. 10-CV-2840-LHK.

Ricardo Rodriguez (Cooley Godward Kronish LLP) for Abaxis, Inc. Carolyn Chang (Fenwick & West LLP) for Cepheid.

Cases: Patent CaliforniaNews