Sanho Corp. v. Kaijet Technology International Limited Inc., Appeal No. 2023-1336 (Fed. Cir. July 31, 2024)

In our Case of the Week, the Federal Circuit held that the private but non-confidential sale of thousands of laptop ports did not count as a “public disclosure” of the inventions embodied therein.

Sanho Corporation owns U.S. Patent No. 10,572,429, concerning a port extension apparatus for extending ports of end-user devices, such as laptops. Kaijet Technology International Limited Inc. filed for inter partes review of the ’429 patent, and challenged most of the claims as obvious. Each obviousness challenge relied on combinations of prior art that included U.S. Patent Application Publication no. 2018/0165053, known as Kuo.

Kuo had an effective filing date prior to the ’429 patent’s priority date. However, before Kuo’s priority date, Sanho had placed an order with Kuo’s inventor for 15,000 laptop ports that embodied the Kuo invention. Sanho argued this private sale of laptop ports was a “public disclosure” of the Kuo invention prior to Kuo’s priority date, such that Kuo could not be prior art to the ’429 patent. There were no confidentiality restrictions on Sanho with regard to the private sale, but there was also no evidence that the sale was publicized in any way, that other sales of the Kuo invention occurred, that Sanho’s order was fulfilled, or of what became of the laptop ports (e.g., whether they were ultimately distributed to the public). Based on this record, the Board held that Sanho had failed to show the private sale was a public disclosure, that Kuo did qualify as prior art to the ’429 patent, and that over combinations of prior art that included Kuo, all challenged claims of the ’429 patent were unpatentable.

The Federal Circuit had to determine whether a non-confidential but otherwise private sale resulted in the invention’s subject matter being “publicly disclosed.” Section 102(b)(2)(B) contains an exception to what counts as prior art, which provides that a disclosure will not be prior art if “the subject matter disclosed had . . . been publicly disclosed by the inventor.” Sanho argued that—because under section 102(a)(1), placing a device “on sale” meant inventions in the device were “disclosed”—placing a device “on sale” also meant under section 102(b)(2)(B) that any inventions in that device were “publicly disclosed.” The Federal Circuit rejected this argument. First, because 102(b)(2)(B) says “publicly disclosed” but 102(a)(1) only says “disclosed,” “disclosed” and “publicly disclosed” must have two different standards, such that everything “disclosed” under 102(a)(1) is not necessarily “publicly disclosed” under 102(b)(2)(B).

Second, turning to the legislative intent behind 102(b)(1)(B)—namely, of encouraging public disclosures of new inventions by ensuring that the inventors don’t miss out on patentability as a result of those public disclosures—the Federal Circuit found that “publicly disclosed” must mean that the subject matter of the invention was made available to the public, and that when the subject matter of the invention was kept secret, that could not count as the invention having been “publicly disclosed.”

Finally, legislative history supported requiring a higher standard for “publicly disclosed.” Sanho argued that a “public use” of a device is a “public disclosure” of inventions embodied in that device, so long as the recipient is not subject to secrecy obligations. The Federal Circuit disagreed, finding that “public use” and “public disclosure” are used in a different part of the Patent Act, serve different purposes, and do not have the same standards, and that the Supreme Court was clear in Egbert v. Lippmann that “public use” is not the same as “public disclosure.”

Turning to the facts of the case: the sale of the 15,000 laptop ports was arranged via private message between two individuals, a sample of the ports was exchanged between buyer and seller via private courier, and there was no evidence as to whether the order was fulfilled, or as to what became of the ports. Even though Sanho was not subject to confidentiality obligations, the Federal Circuit found it was not even a close question, and that the Kuo invention was not publicly disclosed as a result of this private sale. The evidence showed nothing but a private sale between two individuals, and there was no evidence the inventive subject matter of Kuo had been disclosed to the public.

The Federal Circuit expressly did not decide what is necessary for a sale to qualify as a “public disclosure,” or whether to apply the prevailing standard for when a printed publication is sufficiently public to qualify as prior art. The Federal Circuit merely affirmed the Board’s decision that Kuo could be prior art to the ’429 patent.

The opinion can be found here.

By Tyler Hall

ALSO THIS WEEK

Voice Tech Corp. v. Unified Patents, LLC, Appeal No. 2022-2163 (Fed. Cir. Aug. 1, 2024)

On appeal from an inter partes review, the Court clarified that a party does not forfeit an argument on appeal merely for failing to raise it in a request for rehearing under 37 C.F.R. § 42.71(d). The Patent Trial and Appeal Board had found all challenged claims of Voice Tech’s voice recognition patent invalid as obvious, and Voice Tech argued that the Board had erred in its construction of certain limitations. The Federal Circuit rejected petitioner Unified Patents’ argument that, because Section 42.71(d) requires a requestor to “identify all matters the party believes the Board misapprehended or overlooked” in a final written decision, Voice Tech had forfeited its arguments by failing to include them in that request. Instead, the Court explained that a request for rehearing itself is optional; that the set of matters the Board may have “misapprehended or overlooked” did not necessarily include all matters presented for consideration; and that it would make little sense to find that a party filing an optional request for rehearing must then reiterate all arguments rejected by the Board or risk waiving them on appeal.

Because Voice Tech’s claim construction arguments had been presented below and addressed by the Board in its final written decision, the Federal Circuit found them adequately preserved for appeal. However, because Voice Tech failed on appeal to demonstrate how the conclusion of obviousness would have differed under its proposed constructions, the Court found it had failed to carry its burden of showing any prejudice, and so declined to consider its arguments. The Court went on to affirm the Board’s obviousness findings regarding all challenged claims.

The opinion can be found here.

By Jason A. Wrubleski

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.