The US Court of Appeals for the Federal Circuit affirmed a district court finding that three patent claims were invalid under the on-sale bar but remanded two other patent claims for trial, explaining that the district court abused its discretion in excluding inventor declarations at the summary judgment stage under the sham affidavit doctrine. Quest Integrity USA, LLC v. Cokebusters USA Inc., Case No. 17-2423 (Fed. Cir. May 21, 2019) (Dyk, J).

Quest Integrity owns a patent directed to a system and method for displaying inspection data collected from commercial furnaces. Quest sued Cokebusters for offering furnace cleaning and inspection services that allegedly infringed the patent. Cokebusters filed a motion for summary judgment, arguing that all of the asserted claims were invalid under pre-America Invents Act 35 USC § 102(b) because there was a commercial sale of services prior to the patent’s critical date of June 1, 2003. Cokebusters pointed to a sale of services to Orion Norco Refinery around March 2003 (Norco Sale). Cokebusters argued that in those services, Quest used its claimed commercial furnace tube inspection method and generated two inspection reports (Norco Reports), which contained two-dimensional, color-coded strip charts displaying the collected furnace inspection data (Norco Strip Charts). After the district court granted Cokebusters’ summary judgment motion, Quest appealed.

The Federal Circuit found that the Norco Sale, which included the Norco Strip Charts, was “a commercial offer for sale” under § 102(b). The Court explained that the sale of the Norco Reports, which were produced by performing a claimed furnace tube inspection services process, invoked the on-sale bar. Rejecting Quest’s argument, the Court determined that the asserted claims were not narrowed to exclude the Norco Strip Charts because there was not “clear and unmistakable disclaimer” of the claim scope. In light of these findings, the Court found that three of the asserted claims were invalid.

The next issue was whether the Norco Sale disclosed the additional claim limitations in two dependent claims that required generating “composite data markers” and analyzing “sensor data.” The district court relied on deposition testimony of Robert De Lorenzo and his co-inventor. Initially, De Lorenzo testified at his deposition that the claimed composite data marker and sensor data features were used in the Norco Sale. Later, De Lorenzo and his co-inventor submitted a declaration to the contrary, stating that the Norco Sale did not actually use these features in the Norco Reports. Relying on the sham affidavit doctrine, which precludes a party from creating a genuine dispute of material fact (to survive summary judgement) “by filing an affidavit disputing his or her own sworn testimony without demonstrating a plausible explanation for the conflict,” the district court concluded that the declarations were sham affidavits and granted summary judgment on that basis.

As to the dependent claims, the Federal Circuit reversed and remanded, finding that the inventors’ declarations could not be dismissed as sham affidavits. Specifically, the Court noted:

• The sham affidavit doctrine does not apply to another witness’s (e., the co-inventor’s) testimony.

• There was independent, corroborating evidence in record that bolstered the inventors’ declarations.

• It was inappropriate and inconsistent with the sham affidavit doctrine for the lower court to disregard the declarations because they contradicted an earlier invention disclosure drafted by the co-inventor in 2002.

Accordingly, the Court reversed the judgment as to the two dependent claims and remanded for a trial.

Practice Note: Both the sale of a product and the performance of claimed processes (services) before the critical date are subject to the on-sale bar. To avoid on-sale bar issues, entrepreneurs are well advised to file at least a provisional patent prior to engaging in any early “testing” for which they receive compensation.