Experimental Use Exception to the On-Sale Bar of 35 U.S.C. § 102(b) Is Unavailable After An Invention Has Been Reduced To Practice

In In re Cygnus Telecommunications Technology, LLC, Patent Litigation (Nos. 2007-1328, -1329, -1330, -1331, -1332, -1333, -1354, -1361, 08-1023; August 19, 2008), the Federal Circuit affirms a summary judgment of patent invalidity under the on-sale bar of 35 U.S.C. § 102(b). In doing so, the Federal Circuit reaffirms its prior rulings that the experimental use exception is not available after an invention has been reduced to practice.

The Federal Circuit relies on an inventor's sworn declaration submitted to the Patent and Trademark Office during prosecution of the asserted patents to prove that the claimed invention was ready for patenting under the § 102(b) analysis. In the declaration, the inventor claimed to have "reduced to practice" the invention prior to the critical date of the asserted patents. According to the Federal Circuit, a patentee is bound by such a declaration, regardless of whether it was necessary for the issuance of the patent. In light of the unavailability of the experimental use exception, the fact that "beta testers" paid to use the patented system constituted invalidating commercial sales under 35 U.S.C. § 102(b).

The Federal Circuit also holds that because a consolidated MDL proceeding is treated as a single multi-defendant action with respect to common issues, it is proper to treat it as a single action for a collateral estoppel analysis. In doing so the Court rejects defendants' argument that because the patentee appealed the district court's judgment of patent invalidity against fewer than all of the MDL defendants, collateral estoppel was invoked based on the final judgment in favor of the defendant against whom patentee did not appeal. According to the Court, the fact that plaintiff elected not to pursue its appellate rights against all of the MDL defendants should not be a basis for holding that it may not pursue those rights against any of the defendants.