Disputed Questions of Fact Concerning On-Sale Bar Cause Summary Judgment Reversal For Christmas Tree Ornament Manufacturer
Case: Gemmy Industries Corporation v. Chrisha Creations Limited and Quay Richerson, Case No. 05-1110 (Fed. Cir. 6/22/06)
The One Sentence Summary: The District Court improperly granted summary judgment of patent invalidity pursuant to the on-sale bar of 11 U.S.C. Section 102(b) where disputed fact questions existed concerning whether the prototypes shown at a trade fair more than one year before the patent application was filed were ready for patenting.
What They Were Fighting About: Gemmy and Chrisha are competitors in the business of holiday decorations. On January 9, 2002, Gemmy filed an application for a patent on an inflatable fabric Christmas-tree ornament. Gemmy's patent subsequently issued, and its broadest claim called for a fan attached to the ornament to discharge air into the hollow body of the ornament.
Gemmy filed suit in the United States District Court for the District of Kansas against Chrisha for various commercial torts, and later amended the complaint to add a count for patent infringement. In connection with its amendment, Gemmy filed an affidavit from its president in which he averred that "Gemmy has been selling its Airblow inflatable product line since at least October 2000. . ."
Chrisha, in turn, sued Gemmy in the United States District Court for the Southern District of New York for various commercial torts, and a declaration of non-infringement. The Kansas court transferred the Kansas case to the Southern District of New York where the two actions were consolidated, and in December 2003 Chrisha moved for summary judgment of invalidity based on the on-sale bar. In connection with its opposition to the motion for summary judgment, Gemmy filed a new declaration of its president in which he modified his prior affidavit statement to say that the Hong Kong prototypes on sale in October 2000 underwent several structural changes before a commercial product was available for sale, and were inflated using an external hair dryer rather than the attached box-fan used in the commercialized version of the ornament.
The District Court ruled on summary judgment that the patent was invalid for violation of the on-sale bar, finding that Gemmy "developed, displayed to customers, marketed and quoted to customers for sale in October 2000."
Chrisha then moved to amend its complaint against Gemmy to add counts for false marking and advertising based on the sale of products marked with Gemmy's patent number following the district court's invalidity ruling, and sought a preliminary injunction on its false marking and false advertising claims and demanding a recall of all marked products. The district court entered the preliminary injunction. On appeal, the Federal Circuit reversed.
Federal Circuit Holdings:
The One Sentence Summary: The District Court improperly granted summary judgment of patent invalidity pursuant to the on-sale bar of 11 U.S.C. Section 102(b) where disputed fact questions existed concerning whether the prototypes shown at a trade fair more than one year before the patent application was filed were ready for patenting.
What They Were Fighting About: Gemmy and Chrisha are competitors in the business of holiday decorations. On January 9, 2002, Gemmy filed an application for a patent on an inflatable fabric Christmas-tree ornament. Gemmy's patent subsequently issued, and its broadest claim called for a fan attached to the ornament to discharge air into the hollow body of the ornament.
Gemmy filed suit in the United States District Court for the District of Kansas against Chrisha for various commercial torts, and later amended the complaint to add a count for patent infringement. In connection with its amendment, Gemmy filed an affidavit from its president in which he averred that "Gemmy has been selling its Airblow inflatable product line since at least October 2000. . ."
Chrisha, in turn, sued Gemmy in the United States District Court for the Southern District of New York for various commercial torts, and a declaration of non-infringement. The Kansas court transferred the Kansas case to the Southern District of New York where the two actions were consolidated, and in December 2003 Chrisha moved for summary judgment of invalidity based on the on-sale bar. In connection with its opposition to the motion for summary judgment, Gemmy filed a new declaration of its president in which he modified his prior affidavit statement to say that the Hong Kong prototypes on sale in October 2000 underwent several structural changes before a commercial product was available for sale, and were inflated using an external hair dryer rather than the attached box-fan used in the commercialized version of the ornament.
The District Court ruled on summary judgment that the patent was invalid for violation of the on-sale bar, finding that Gemmy "developed, displayed to customers, marketed and quoted to customers for sale in October 2000."
Chrisha then moved to amend its complaint against Gemmy to add counts for false marking and advertising based on the sale of products marked with Gemmy's patent number following the district court's invalidity ruling, and sought a preliminary injunction on its false marking and false advertising claims and demanding a recall of all marked products. The district court entered the preliminary injunction. On appeal, the Federal Circuit reversed.
Federal Circuit Holdings:
- Although a party cannot simply contradict an earlier sworn statement in order to create a triable issue of fact in an attempt to avoid summary judgment, where there is credible evidence supporting the contradiction, a district court cannot disregard the later testimony because of an earlier account that was ambiguous, confusing, or simply incomplete.
- For the on-sale bar to arise, there must be both a commercial offer of sale and the product must be ready for patenting. The patented invention must be fully disclosed in the product that was on sale, and the product offered for sale must be the product that is claimed in the patent.
- The district court's finding of invalidity necessarily held on summary judgment that the prototype was ready for patenting, and yet the district court also found that the October 2000 display did not have a base containing a fan unit, as required by all the claims of the patent. These determinations are irreconcilable. The undisputed evidence that the product displayed was not the patented invention removes the October 2000 events from meeting the requirements of the on-sale bar.
- The district court should not have granted Chrisha summary judgment on its invalidity declaratory judgment motion, and in light of that holding, vacated the injunction against marking.
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