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Sour Grapes! Unauthorized Use of Grape Plants Not Invalidating under Section 102(b): Federal Circuit
Practical Law Legal Update 2-595-5666 (Approx. 4 pages)
Sour Grapes! Unauthorized Use of Grape Plants Not Invalidating under Section 102(b): Federal Circuit
by Practical Law Intellectual Property & Technology
| Published on 13 Jan 2015 • USA (National/Federal) |
In Delano Farms Co. v. California Table Grape Commission, the US Court of Appeals for the Federal Circuit affirmed the district court's finding that the actions of two individuals who obtained later-patented plant material in an unauthorized manner, grew the unreleased plants and showed the plants to a marketer, did not constitute invalidating prior public use under 35 U.S.C. § 102(b).
On January 9, 2015, in Delano Farms Co. v. California Table Grape Commission, the US Court of Appeals for the Federal Circuit affirmed the US District Court for the Eastern District of California's judgment for the defendants finding that two individuals' actions did not constitute an invalidating prior public use of the patented plant varieties at issue (No. 2014-1030 (Fed. Cir. Jan. 9, 2014)).
The following timeline is significant for this case:
- 2001: The US Department of Agriculture (USDA) held an experimental variety open house that displayed table grape varieties, including the two varieties at issue in this case, Scarlet Royal and Autumn King. Two California grape growers, Jim Ludy and Larry Ludy, attended the open house and Jim Ludy asked Mr. Klassen, a USDA employee, for some of the plant material for the two varieties at issue.
- 2002: Mr. Klassen, without authorization, gave Jim Ludy plant material for multiple, unreleased varieties, including Scarlet Royal and Autumn King. Jim Ludy grafted fewer than 50 vines of each of the varieties and gave a few buds to Larry Ludy, who subsequently also grew plants. Both individuals knew that the material had come from Mr. Klassen and that they were supposed to keep their possession of the plant material confidential.
- Before the critical date of September 28, 2003:
- neither of the Ludys provided plant material to anyone else;
- the Ludys did not sell any grapes from their plantings; and
- Larry Ludy showed Mr. Sardini, a grape marketer, vines of the unreleased varieties at least twice.
- After the critical date of September 28, 2003:
- Larry Ludy provided Mr Sandrini with wood from which Mr. Sandrini could graft Autum King on his own property; and
- Mr. Sardini sold Larry Luddy's 2004 harvest of Autumn King, but labeled the grapes as "Thompson Seedless" to avoid detection.
- September 28, 2004: The USDA filed patent applications for Scarlet Royal and Autumn King, establishing September 28, 2003 as the critical date for the § 102(b) public use bar (35 U.S.C. § 102(b)).
- 2005: Both Scarlet Royal and Autumn King varieties were made commercially available.
The USDA licensed the resulting patents covering Scarlet Royal and Autumn King to the defendants, the California Table Grape Commission (CTGC), a California state agency that sublicenses patents to California grape growers. The licensees later sued the USDA and the CTGC in the Eastern District of California on the ground that the patents were invalid under the public use bar because of the Ludys' use of the unreleased varieties before the critical date. The district court held a bench trial, finding that the Ludys' actions did not constitute a public use and rejecting the plaintiffs' validity challenge.
On appeal, the Federal Circuit affirmed the district court's ruling. In reaching its decision, the Federal Circuit stated that the proper test for evaluating an alleged prior public use under 35 U.S.C. § 102(b) is whether the use was either:
- Accessible to the public.
- Commercially exploited.
The court explained that the relevant inquiry is whether the actions taken create a reasonable belief that the invention is available to the public. The court explained that an allegedly public use may be performed by the patent owner or an unaffiliated third party, but that the use must be publicly accessible to be invalidating. The court emphasized that secret or confidential third-party uses do not invalidate later-filed patents. The court identified the following factors as helpful in the analysis:
- The nature of the activity that occurred in public.
- The public access to and knowledge of the public use.
- Whether there was any confidentiality obligation on persons who observed the use.
The Federal Circuit rejected the plaintiffs' prior public use defense and affirmed the district court because:
- Both Ludys knew that Mr. Klassen did not have the authority to give them the unreleased varieties and that they needed to conceal their possession of the plants. The court explained that a formal confidentiality agreement was not required to establish non-public use and that the court instead considers whether other circumstances create a similar expectation of secrecy.
- Larry Ludy's disclosure of information to Mr. Sandrini was not public use because Mr. Sandrini was the Ludys' friend, business partner and mentor. The Federal Circuit agreed with the district court's conclusion that the parties' incentives to keep the information secret created an environment of confidentiality.
- Even though the plants were visible from public roads, the Federal Circuit explained that there is no public use if the public is not informed of, and cannot readily discern, the patented features of the invention. The Federal Circuit therefore affirmed the district court's findings that:
- the plants were unlabeled and not readily identifiable by simply viewing them; and
- there was no evidence that any person other than the Ludys and Mr. Sadrini had ever recognized the unreleased varieties.