Patent Invalidation Under Section102(b)'s On-Sale Bar Based on a Letter Including Commercial Terms Sent Before the Critical Date

March 28, 2022

Mr. Junker, the named inventor of U.S. Design Patent No. D450,839, sued Medical Components, Inc. and Martech Medical Products, Inc. (“MedComp”) for infringement of the D’839 patent. The parties filed cross-motions for summary judgment, debating whether a letter sent before the critical date was a commercial offer for sale of the claimed design, rendering the claim invalid under the on-sale bar, 35 U.S.C. § 102(b). The district court granted Mr. Junker’s motion for summary judgment of no invalidity under the on-sale bar. MedComp appeals the district court’s summary judgment of no invalidity under the on-sale bar, the judgment of infringement, and the damages award.

The D’839 patent is titled “Handle for Introducer Sheath,” and includes a single claim for “[t]he ornamental design for a handle for introducer sheath, as shown and described.” The application that led to the D’839 patent was filed on February 7, 2000. In the mid-1980s, Mr. Junker began developing a new design for the introducer sheath’s handle, rounded Mickey-Mouse-shaped ears, to grasp the introducer sheath during catheter-insertion procedures. Mr. Junker did not have the proper machinery to manufacture the product. He began reaching out to other companies to handle the actual manufacture of his new design. In 1998, Mr. Junker developed a business relationship with Mr. Eddings, the founder of Galt Medical. In August 1998, Mr. Junker and Mr. Eddings entered into a non-disclosure agreement after which Mr. Junker told Mr. Eddings about his new design for the introducer sheath handle. Around September 1998, Mr. Eddings also founded a new company, Xentek Medical, to develop, manufacture, and sell the introducer sheath products. In January 1999, Mr. Eddings’ company, Xentek, developed and provided to Mr. Junker a prototype of the product that included all of the features of his design, including a handle with Mickey Mouse ears.

In January 1999, Mr. Eddings, through Xentek, began communicating with Boston Scientific Corporation regarding a peelable introducer sheath product. In response to a request from Boston Scientific, on January 8, 1999, Xentek sent Boston Scientific a letter detailing bulk pricing information for variously sized peelable introducer sheath products. The January 8, 1999 letter also included a price chart, and specified that the “prices are for shipment in bulk, non-sterile, FOB Athens, Texas on a net 30-day basis.” The letter noted appreciation for “the opportunity to provide this quotation” and that the sender of the letter “look[ed] forward to discussing [Boston Scientific’s] requirements in person.” Additional letters were sent to Boston Scientific by Xentek in January and February 1999.

In 2013, Mr. Junker sued MedComp, accusing four of MedComp’s products of infringing the claimed design. MedComp, in response, raised affirmative defenses of invalidity, unenforceability, and noninfringement. The crux of the parties’ dispute was whether the January 8, 1999 letter from Xentek to Boston Scientific—which was sent before the critical date—was a commercial offer for sale of a product embodying the claimed design. The district court held that it was not as a matter of law. The district court determined that the letter was a preliminary negotiation, not a definite offer. The court specifically focused on the fact that the letter thrice uses the word “quotation” and concluded with an invitation to further discuss specific requirements. The court acknowledged that the letter included numerous, specific, commercial terms (such as payment terms, shipment terms, and delivery conditions), supporting a conclusion that the letter was a commercial offer for sale. The court determined, however, that the presence of these terms did not outweigh the other language in the letter suggesting that Xentek and Boston Scientific were engaged in preliminary negotiations and granted Mr. Junker’s motion for summary judgment of no invalidity under the on-sale bar.

The Federal Circuit reminded that Section 102(b)’s on-sale bar was triggered if, before the critical date, the claimed invention was both (1) the subject of a commercial offer for sale and (2) ready for patenting. The question before the Federal Circuit was “[w]hether the January 8, 1999 letter is a commercial offer for sale of the claimed design, or merely a quotation signaling the parties were engaged in preliminary negotiations.” As stated on the face of the letter, Xentek was directly responding to a “request for quotation” from Boston Scientific, and the letter was addressed to Boston Scientific alone. This signaled that the letter was not an unsolicited price quotation or invitation to negotiate, but rather a specific offer to Boston Scientific to take further action. The letter also contained a number of necessary terms typical for a commercial contract, e.g., that the prices provided were for “shipment in bulk, non-sterile.”  Thus, the letter provided specific delivery conditions—the product will be shipped in “bulk” and will be “non-sterile.” The letter further specifies that shipment will be “FOB Athens, Texas.” “FOB is a standard commercial term used to allocate the risks and responsibilities of the buyer and seller with respect to delivery, payment, and loss of the product.”

Also, Xentek’s letter specifies multiple different purchase options for its peelable sheath products, e.g., the letter offers 5,000 sets of size 4F-6F Medi-Tech Peelable Sheath at a price of $4.45 per set and offers discounted prices if the purchase quantity is increased (e.g., the price per set decreases to $4.25 for 10,000 sets of the same size sheath, $4.05 for 25,000, and $3.95 for 50,000). The letter also offered Boston Scientific the option to purchase two additional sizes of Xentek’s Medi-Tech Peelable Sheath Set—7F-8F and 11F—with similarly discounted pricing as the purchase quantity increases.

The Federal Circuit noted that “[w]hile the letter concludes with an invitation to further discuss Boston Scientific’s specific requirements in person, ‘expressing a desire to do business in the future does not negate the commercial character of the transaction then under discussion.’” The Court determined that “the relevant commercial sale terms in the letter itself signals that this letter was not merely an invitation to further negotiate, but rather multiple offers for sale, any one or more of which Boston Scientific could have simply accepted to bind the parties in a contract.” The Court relied on multiple examples where the Court determined “that communications with similarly complete and definite commercial terminology were commercial offers for sale within the meaning of § 102(b).” The Court pointed out that the fact that there were multiple offers does not mean that there was no offer to be accepted. “And that the letter does not specify the exact amount Boston Scientific desires likewise does not mean that there is no offer to be accepted. Rather, the letter comprises multiple different offers that Boston Scientific could have accepted.” The Court concluded that “the specificity and completeness of the commercial terms in the letter outweigh the three references to ‘quotation’ and mention of possible future discussions. Taken as a whole, the overall language of the letter signals Xentek’s intent to make a commitment and invite Boston Scientific to act rather than merely negotiate.”

The Court agreed with MedComp that the January 8, 1999 letter was a commercial offer for sale of the claimed design. “Because the parties do not dispute that the invention was ready for patenting, we reverse the district court’s summary judgment of no invalidity. The effect of our determination renders the sole claim of the D’839 patent invalid.”