IP News

Federal Circuit: Agreement Between Patent Owner and Third Party Was Not Insulated from The On-Sale Bar

In Sunoco Partners Mktg. & Terminals L.P. v. U.S. Venture, Inc., 32 F.4th 1161 (Fed. Cir. 2022), the United States Court of Appeals for the Federal Circuit reversed a finding from the District Court for the Northern District of Illinois and held that a subset of asserted patent claims was not insulated from the on-sale bar. The appellate court vacated the district court's infringement judgement and remanded the case to the district court for further proceedings.

Background

Sunoco Partners Mkt. & Terminals L.P. (Sunoco) owns U.S. Patent Nos. 7,032,629; 6,679302; 9,494,948; and 9,606,548 (collectively, the Asserted Patents), which cover a "system and method for blending butane with the gasoline at a point close to the end of the distribution process." Sunoco sued U.S. Venture, Inc. (Venture) for patent infringement. Venture filed counterclaims asserting that the Asserted Patents were not infringed, are invalid, and unenforceable. Specifically, Venture argued that Sunoco had attempted to sell the invention two days prior to the critical date of the invention and was therefore barred under the on-sale bar. The district court held a bench trial which ultimately resulted in an award of $2 million in damages to Sunoco. Venture appealed and challenged the district court's: 1) rejection of its on-sale bar defense, 2) determination that Venture infringed the Asserted Patents, 3) construction of two claim terms, and 4) decision to enhance damages.

Arguments

On appeal, Venture argued that claim 2 of the '629 patent and claims 2, 3, and 16 of the '302 patent were invalid because the invention was on sale prior to the critical date of the inventions. In order to succeed under an on-sale bar defense, a defendant must establish that the invention was both "1) 'the subject of a commercial offer for sale' and 2) 'ready for patenting'" prior to the critical date of the invention.