Affirming the district court’s judgment, the U.S. Court of Appeals for the Federal Circuit cleared Facebook of allegations of patent infringement, finding that that the patent in suit was invalid under 35 U.S.C. § 102(b) because the patentee’s product which embodied the patented subject matter was on sale and in public use more than one year before the filing of the patent.  Leader Tech., Inc. v. Facebook, Inc., Case No. 11-1366 (Fed. Cir., May 8, 2012) (Lourie, J.).

Leader filed the application for the asserted patent in December 2003.  However, the relevant history of the development that led to the patent application began in August 1999, when the inventors conceived of the invention claimed in the asserted patent.  Immediately after conceiving the idea, the inventors began developing software based on that idea with the goal of building a commercial product.  That development led to a product referred to as the Leader2Leader®.  Starting in 2002, more than one year before Leader filed its patent application, Leader began offering Leader2Leader® for sale, demonstrating the product to a number of companies.  The company also presented a white paper that described the functionality of Leader2Leader® and stated that Leader was commercializing the product.

In 2008, Leader sued Facebook for infringement of its patent.  During the discovery phase of the litigation, Facebook asked Leader to identify all product and services that practice the claims of the asserted patent.  In response, Leader provided written responses stating that Leader2Leader® is the only product provided by Leader that embodies any claims of the asserted patent.  In addition, during the deposition of one of the inventors, the inventor could not identify any iteration of Leader2Leader® that did not fall within the scope of the claims.  Based on these admissions, Facebook alleged that the asserted patent was invalid under § 102(b) because a product embodying the claims of the asserted patent (i.e., Leader2Leader®) was on sale and in public use more than a year before the patent application leading to the asserted patent was filed.

Attempting to deflect Facebook’s allegation, Leader changed its story at trial.  During the trial, Leader argued that its written responses were directed to whether Leader2Leader® practiced the asserted claims in 2009, and not anytime prior to 2009.  The inventor also changed his story, now testifying that Leader2Leader® was covered by the asserted patent in 2007 and 2009, but not prior to December 2002.  On cross-examination, Facebook played the inventor’s inconsistent deposition testimony in which he said that he did not remember a time that Leader2Leader® did not practice the claims of the asserted patent.  After the parties argued their positions to the jury, the jury returned a verdict in favor of Facebook finding that the patent was subject to an invalidating sale and public use.  The district court thereafter denied Leader’s post-trial motions for judgment as a matter of law and a new trial, finding that the inventors discredited testimony coupled with the written discovery responses and Leaders’ offer of the Leader2Leader® in 2001 and 2002 as evidence sufficient to support the jury’s verdict of invalidity.  Leader appealed.

On appeal, Leader argued that Facebook failed to offer any evidence, such as expert testimony, source code or schematics, showing that the version of Leader2Leader® offered for sale and in public use prior to December, 2002 fell within the scope of the asserted claims.  Facebook responded by pointing to Leader’s internal document and correspondence to potential customers, Leader’s written discovery responses and testimony from the inventors.  Facebook also argued that the jury was permitted to weigh the inventor’s lack of credibility against Leader in rendering a verdict.

Agreeing with Facebook, the Federal Circuit held that legally sufficient evidence supported the jury’s verdict that the version of Leader2Leader® demonstrated and offered for sale in 2002 was an embodiment of the asserted claims.  First, the Court found that Leader admitted in its written discovery responses and during the inventor’s deposition that Leader2Leader® embodied the asserted patent.  The Federal Circuit squarely rejected Leader’s argument that the written discovery responses and deposition testimony were limited to the present time period because neither Leader nor the inventor included any such qualifying language in their answers.  Second, the Court found that coupled with Leader’s admissions, the record contained sufficient documents and inventor testimony that Leader offered for sale and publicly demonstrated a product that fell within the scope of the asserted claims.  Third, the Court found that the jury was permitted to discredit the inventor’s trial testimony and conclude based on the documentary evidence that Leader2Leader® was on sale and publicly demonstrated in 2002.  Finally, the Court noted that Leader failed to provide any documents showing that the Leader2Leader® version existing in 2002 was substantially different from versions after 2002.  Taking the evidence in totality of the evidence into account, the Court affirmed the district court and sustained the jury verdict.