Declining to extend the public-use bar to third-party commercial uses of secret processes, the US Court of Appeals for the Federal Circuit reversed a summary judgment ruling that found a patent invalid under the “known or used by others,” “on-sale” and “public-use” bars of 35 U.S.C. § 102. BASF Corp. v. SNF Holding Co. et al., Case No. 19-1243 (Fed. Cir. Apr. 8, 2020) (Lourie, J.).

BASF owns a patent on a process for preparing certain polymers. The claimed polymerization process allows easy removal of “sticky” polymers from walls of the tubular reaction vessel by including a conical taper with specific dimensions at the bottom of the vessel. BASF filed a patent infringement suit against SNF, who in turn alleged that the prior art “Sanwet” process invalidated the patent. The Sanwet process was developed in Japan by Sanyo and licensed to third-party Celanese for use in the US prior to the patent’s critical date. Sanyo provided substantial technical support to help Celanese with the process. Celanese was required to keep the Sanwet process confidential and could only disclose information to employees on a need-to-know basis. Employees were also required to sign confidentiality agreements.

The district court granted summary judgment that the patent was invalid under the pre-AIA version of §102. Specifically, the court found the patent invalid under the §102(b) public-use bar because Celanese used the process in the US and gave public tours of the facility where the process was used. It found the patent invalid under the §102(a) “known or used by others” bar because Celanese knew about the process in the US. Finally, it found the patent invalid under the §102(b) on-sale bar because the license to Celanese and technical information provided by Sanyo was found to be a sale of the patented process. BASF appealed.

The Federal Circuit reversed and remanded after thoroughly analyzing the doctrinal history and competing interpretations of §102. Regarding the public-use bar, the Court acknowledged that an inventor’s commercial use of a secret process prior to the critical date is a bar under §102(b); however, the Court declined to extend the public-use bar to a third-party’s use of a secret process, stating that it “is simply wrong.” The Court noted that patent law favors the later inventor, BASF, which shares its knowledge with the public, over the prior user, Celanese, which conceals the invention. The Court found the record insufficient to determine if Celanese’s use of the Sanwet process was secret, noting that Celanese was required to keep the Sanwet process confidential, but also that the public toured the plant where the process was used.

The §102(a) “known or used by others” bar also turned on confidentiality. While a single person’s knowledge or use of the patented process is sufficient to anticipate a patent, secret knowledge or use is not sufficient. Prior knowledge that is not accessible to the public confers no benefit to the public, and therefore is not a bar to patentability under §102(a). The Federal Circuit found the record insufficient to determine whether Celanese’s confidentiality obligations were followed and, therefore, whether its use of the Sanwet process was prior art.

Turning to the on-sale bar, the Federal Circuit held that the license to Celanese is not a sale, regardless of the amount of technical support provided. The acquisition of Celanese is also not a sale of the claimed process, because there is no product sold that embodies the essential features of the process.