United States: Secret Third-Party Use Does Not Constitute A Public Use

In Delano Farms Co. v. California Table Grape Commission, No. 14-1030 (Fed. Cir. Jan. 9, 2015), the Federal Circuit affirmed the district court's finding that a secret third-party use did not constitute an invalidating public use under the public use bar of 35 U.S.C. § 102(b).

The U.S. Department of Agriculture ("USDA") owns two plant patents—U.S. Patent Nos. PP16,229 ("the '229 patent") and PP16,284 ("the '284 patent")—that claim table grape varieties. The California Table Grape Commission ("Commission") is the exclusive licensee of both plant patents, and the Commission sublicenses the patents to grape growers in California. Plaintiffs, a group of California grape growers, sued the USDA and the Commission, challenging the validity and enforceability of the patents, and arguing that the two grape varieties were in public use more than one year before the applications for the patents were filed, and that the plant patents are thus invalid under the public use bar of 35 U.S.C. § 102(b). Following a bench trial, the district court held that the actions of two individuals who obtained the two plant varieties from an unauthorized source and cultivated them in their own fields did not constitute an invalidating public use. Plaintiffs appealed.

On appeal, the Federal Circuit affirmed the district court's finding that a secret third-party use did not constitute an invaliding public use. The Court considered "whether the actions taken by the inventor (or, as in this case, a third party) create a reasonable belief as to the invention's public availability."
Slip op. at 7. The Court identified three factors to guide its analysis: "the nature of the activity that occurred in public; the public access to and knowledge of the public use; [and] whether there was any confidentiality obligation imposed on persons who observed the use." Id. at 7-8 (alteration in original) (quoting Bernhardt, L.L.C. v. Collezione Europa USA, Inc., 386 F.3d 1371, 1379 (Fed. Cir. 2004)). The analysis, the Court stated, "is similar when the allegedly public use is performed by an unaffiliated third party rather than the inventor." Id. at 8.

Turning to the facts of the case, the Court relied on the district court's factual findings to conclude that no public use of the unreleased varieties occurred. First, the Court rejected Plaintiffs' argument that the individuals' provision and subsequent cultivation of the unreleased plant varieties were "without limitation or restriction, or injunction of secrecy." Id. at 9. The Court held that Plaintiffs' arguments were "squarely contrary to the district court's findings of fact." Id. The Court found that the district court's findings "clearly establish[ed] . . . that both [individuals] knew that they were not authorized to have the plants and that they needed to conceal their possession of the plants." Id. at 10. Further, the Court found that an explicit confidentiality agreement was not required to show non-public use. Instead, the Court stated that it evaluated "whether there were 'circumstances creating a similar expectation of secrecy.'" Id. (quoting Invitrogen Corp. v. Biocrest Mfg., L.P., 424 F.3d 1374, 1382 (Fed. Cir. 2005)).

The Court also found the facts of the case to be "wholly different" from the Supreme Court's decision in Egbert v. Lippmann, 104 U.S. 333 (1881), "where the inventor himself gave the invention to a third party with no understanding or expectation that the third party would maintain secrecy." Slip op. at 10-11. The Court stated that, unlike in Egbert, each individual in the case "sought to maintain control of the plants he obtained," keeping his possession "confidential and non-public." Id.

The Court next addressed whether the individuals' disclosure of the existence of the unreleased plant varieties to another third party demonstrated a lack of confidentiality sufficient to constitute a public use. In doing so, the Court considered the circumstances under which the disclosure occurred and found that the nature of the disclosure "weigh[ed] against the application of the public use bar." Id. at 11. The Court pointed to similar cases, finding no public use where disclosure was to "friends and colleagues" with "a general understanding of confidentiality." Id. (quoting Am. Seating Co. v. USSC Grp., Inc., 514 F.3d 1262, 1267-68 (Fed. Cir. 2008)). Similarly, the Court highlighted that public use did not apply where "access was tightly controlled," "there was an industry-wide understanding [of confidentiality]," "a breach of confidence could have serious consequences for an attendee," and "there was no effective means for the attendees to divulge the designs they viewed." Id. at 11 (alteration in original) (quoting Bernhardt, 386 F.3d at 1380-81). The Court relied on the district court's finding that the disclosure of the plant varieties' existence to a friend and business partner did not qualify as a public use where there existed incentives to keep the disclosures secret, which created an environment of confidentiality, and each maintained tight control over who knew about the unreleased plant varieties and their use.

Finally, the Court rejected appellant's argument that "the lack of secrecy with which the [individuals] cultivated the unreleased varieties mandates a finding of public use." Id. at 12. The Court relied on the district court's finding that "grape varieties cannot be reliably identified simply by viewing the growing vines alone." Id. The Court also relied on the fact that the varieties were unlabeled, and no member of the public other than the individuals involved recognized the unreleased varieties. The Court recited its reasoning from Dey, L.P. v. Sunovion Pharmaceuticals, Inc., 715 F.3d 1351, 1359 (Fed. Cir. 2013), in which it found that "a reasonable jury could conclude that if members of the public are not informed of, and cannot readily discern, the claimed features of the invention in the allegedly invalidating prior art, the public has not been put in possession of those features." Slip op. at 12.

Having affirmed the district court's determination that no public use occurred, the Court declined to address "whether use of invention by one who has misappropriated that invention (or obtained it through other improper means) can ever qualify as an invalidating public use." Id. at 13.

Judges: Prost, Bryson (author), Hughes

[Appealed from E.D. Cal., Judge Haddon]

This article previously appeared in Last Month at the Federal Circuit - February 2015

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