Performance of Software Method Required to Trigger On-Sale Bar

Plumtree Software v. Datamize, LLC (06-1017) - December 18, 2006

The CAFC reviewed the N.D. Ca. grant of summary judgment, finding Datamize's patent invalid for violating the on-sale bar doctrine. Just prior to the one-year date when the patentee filed an application for a software authoring tool used to create an interactive kiosk system, the patentee gave a general presentation on features of the invention to industry members sponsoring a trade show. In exchange for waiving the sponsorship fee, the patentee agreed to provide kiosks at the trade show for other members to use. After the agreement was made, a provisional application was filed, and the patentee proceeded to provide the kiosks a week later.

During subsequent patent litigation, Plumtree successfully argued on a summary judgment motion that Datamize was barred from obtaining patent protection, since the patented subject matter (1) was the subject of a commercial sale or offer for sale, and (2) the invention was be ready for patenting, due to a reduction to practice before the critical date.

In a rather odd decision, the CAFC held that Plumtree did not meet its burden of proof on summary judgment, since it was not clear that the patentee either made a commercial offer to perform the patented method, or in fact performed the patented method for a promise of future compensation. This ruling was made despite the fact that the patentee admitted that the kiosk at the trade show embodied all the claims:

[O]n this record, we cannot sustain the district court’s conclusion that the method claims are invalid under the on sale bar rule. The district court reasoned that "the agreement with SIA embodied all of the claims of the ’040 and ’418 patents" because "the kiosk at the trade show embodied all of the claims.". . . In so holding, the district court relied on Kevin Burns’s testimony that "the network kiosk system that was demonstrated in March of 1995 at the Las Vegas show embod[ied] all the claims" of the ’040 and ’418 patents. These statements reflect confusion as to the nature of the patented product. Here the invention reflected in the method claims is a process for creating a kiosk system, not the kiosk system itself. The kiosk system itself is not patented. The court’s focus on whether the kiosk system somehow embodied the claims of the patent was misplaced, and the district court’s reasoning does not support a grant of summary judgment. Nor does the record support the ultimate result reached by the district court.

For some reason, the CAFC had trouble reconciling the difference between the kiosk, and the software that was running on it. Also, the court found it significant the the agreement did not contain express language that compelled Datamize to use the patented software methods on the kiosks:

[T]he more difficult question is whether the commercial offer was "of the patented invention." We have stated that "the invention that is the subject matter of the offer for sale must satisfy each claim limitation of the patent." . . . Datamize admits that "SkiPath [was] created with the authoring system" and that the authoring system "embodied all the claims of all three of Datamize’s patents." . . . On its face, however, the written agreement between MA [Datamize] and SIA did not unambiguously require use of the patented method. The agreement did require MA [Datamize] to "provide the software/hardware package necessary to produce the interactive touch-screen information center as presented to SIA on January 17, 1995 in McLean, Virginia." . . . This reference to the software/hardware package is ambiguous as to whether it required MA [Datamize] to provide the kiosk system software or to perform the patented method. Moreover, Plumtree has made no showing that extrinsic evidence would compel an interpretation that MA [Datamize] was bound to perform the patented method. Therefore, the record does not provide a basis for summary judgment on this issue.

Moreover, the CAFC could not find anything in the record establishing that Datamize actually performed all the patented steps before the critical date pursuant to the contract.

VACATED AND REMANDED