Center for Advanced Study & Research on Innovation Policy


CASRIP Newsletter - Fall 1997, Volume 4, Issue 3

Federal Circuit Rules that §102(f) is Generally Considered Prior Art in §103 Analysis

The Court of Appeals for the Federal Circuit ("Federal Circuit") affirmed the Northern California District Court's ruling that "subject matter encompassed by § 102(f)1 is prior art for purposes of an obviousness inquiry under § 1032" in OddzOn Products, Inc. v. Just Toys, Inc.3 The question of whether § 102(f) served as a prior art provision for purposes of §103 was last considered in the "waffle-fry case" of Lamb-Weston, Inc. v. McCain Foods, Ltd.4

In Lamb-Weston, the Federal Circuit affirmed the district court's finding of the invalidity of a patent for lattice-shaped fries ("waffle fries"). However, unlike the district court, the Federal Circuit refrained from determining whether confidentially disclosed waffle-fry machines constituted prior art for purposes of an obviousness inquiry.5 The Federal Circuit made clear that it was settling the issue of whether § 102(f) prior art constituted a prior art provision for § 103 in OddzOn Products.6

Both OddzOn Products, Inc. ("OddzOn") and Just Toys, Inc. ("Just Toys") manufactured football-shaped balls with tail and fin structures. OddzOn held a design patent on its "Vortex" ball and claimed that Just Toys' "Ultra Pass" ball infringed OddzOn's patent and trade dress, and violated state unfair competition laws. Just Toys counterclaimed that OddzOn's patent was invalid. The District Court found OddzOn's patent valid, but granted summary judgment in favor of Just Toys on the infringement and unfair competition issues. The Federal Circuit affirmed the District Court's rulings.

Regarding the § 102(f)/§ 103 prior art issue, Just Toys claimed that the OddzOn patent was invalid because two confidential designs had been disclosed to the inventor of the OddzOn "Vortex" ball. Just Toys argued that these divulgences rendered the "Vortex" ball obvious, and that the inventor had derived the invention from another. Moreover, because the disclosures were material to patentability, Just Toys alleged that OddzOn acted with deceptive intent by failing to disclose the confidential information to the United States Patent and Trademark Office ("PTO") during the prosecution of the patent application.

The Federal Circuit began its § 102(f)/§ 103 analysis by noting that the Court of Customs and Patent Appeals ("CCPA") had declared in the dictum of In re Bass7 that § 102(f) and § 103 were unrelated, and that § 102(f) had no relevancy to a § 103 prior art analysis.8 The court further admitted that "[t]he patent laws have not generally recognized as prior art that which is not accessible to the public."9 The court also acknowledged that, as between a first and subsequent inventor, policy dictated that the subsequent inventor should prevail if the first inventor failed to give the public the benefit of the invention, and the subsequent inventor had made the benefits of the invention available to the public.10

However, the Federal Circuit emphasized that Congress' 1984 amendment of § 103 by the addition of § 103(c)11 changed the Bass reasoning. Although the statutory language failed to explicitly state that § 102(f) constituted proper prior art subject matter in a § 103-obviousness analysis, the language negatively implied that §102(f) did indeed qualify as § 103 prior art.12 The new language exculpated § 102(f) from § 103 prior art where the derived information and the claimed invention were commonly owned at the time the invention was made. Therefore, aside from the case of common ownership, § 102(f) seemed to be appropriate subject matter for § 103 prior art.

In its final consideration of the §102(f)/§103 obviousness question, the Federal Circuit stated that it settled the issue "in a manner that best comports with the voice of Congress."13 Judge Lourie, writing for the three-panel court, was careful to point out that the issue would be "subject of course to any later intervention by Congress or review by the Supreme Court."14

The court's interpretation of the statute harmonized with the interpretation already adopted by the PTO,15 and the court stated that the PTO's reading of the statute was reasonable, although not conclusive.16 The Federal Circuit thus affirmed the ongoing practice of the PTO. In fact, the PTO had been rejecting applications on the basis of §102(f)/§103 obviousness for years.17

The judges declined Just Toys' motion to remand the case to determine whether OddzOn acted with deceptive intent by failing to disclose the confidential information to the PTO. The court reasoned that the statute and case law were too ambiguous regarding the prior art status of § 102(f) subject matter up "until this point."18

Thus, patent professionals should note that the courts and the PTO are in accordance regarding §102(f)/§103 obviousness, and that § 102(f) subject matter is properly considered prior art for § 103 obviousness. Furthermore, from this case forward, practitioners must be careful to consider §102(f)/§103 obviousness and confidential disclosures when notifying the PTO of prior art; otherwise, they may be subject to inequitable conduct allegations.

OddzOn's holding that confidential information disclosed to inventors constitutes prior art for a § 103 obviousness analysis has the curious effect of both aligning the United States more closely with the rest of the world, and moving the United States away from the rest of the world. Other countries do not define prior art in the complicated way that the United States does by discriminating between an inventor's knowledge/activities and publicly available information.19OddzOn therefore aligns the United States with the rest of the world in considering all sources of information to determine state of the art.

However, regarding whether or not confidential information constitutes prior art, information disclosed through confidentiality agreements - regardless of source - typically does not constitute prior art under the patent laws of most other countries.20 As the law stands in the United States now, barring the exceptional case of common ownership, OddzOn makes confidential information fair game as prior art.

-- Laraine Morse Ward

135 U.S.C. § 102(f) states "A person shall not be entitled to a patent unless he did not himself invent the subject matter sought to be patented."
235 U.S.C. § 103 discusses conditions for patentability and what constitutes non-obvious subject matter.
3__ F.3d __ (Fed. Cir. 1997), 43 U.S.P.Q.2d 1641 (Fed. Cir. 1997), 1997 WL 451021 (Fed. Cir. (Cal.)).
478 F.3d 540 (Fed. Cir. 1996), 37 U.S.P.Q.2d 1856 (Fed. Cir. 1996). For a more detailed discussion of Lamb-Weston, see Toshiko Takenaka, Current Developments: United States, CASRIP Newsletter 3 (CASRIP, U.Wash. Seattle, WA) Spring/Summer 1996.
6"The prior art status under § 103 of subject matter derived by an applicant for patent within the meaning of § 102(f) has never been expressly decided by the court. We now take the opportunity to settle the persistent question whether § 102(f) is a prior art provision for purposes of § 103. As will be discussed, although there is a basis to suggest that § 102(f) should not be considered as a prior art provision, we hold that a fair reading of § 103, as amended in 1984, leads to the conclusion that § 102(f) is a prior art provision for purposes of § 103." __ F.3d at __, 43 U.S.P.Q.2d at 1643, 1997 WL 451021 at 2-3.
759 C.C.P.A. 1342, 474 F.2d 1276, 177 U.S.P.Q. 178 (CCPA 1973).
859 C.C.P.A. at __, 474 F.2d at 1290, 177 U.S.P.Q. at 189.
9__ F.3d at __, 43 U.S.P.Q.2d at 1644, 1997 WL 451021 at 3.
10__ F.3d at __, 43 U.S.P.Q.2d at 1643, 1997 WL 451021 at 3 (citing W.L. Gore & Associates, Inc. v. Garlock, Inc., 721 F.2d 1540, 220 U.S.P.Q. 303 (Fed. Cir. 1983).
1135 U.S.C. § 103(c) provides: "Subject matter developed by another person, which qualifies as prior art only under subsection (f) or (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the invention was made, owned by the same person or subject to an obligation of assignment to the same person."
12__ F.3d at __, 43 U.S.P.Q.2d at 1645, 1997 WL 451021 at 4.
13__ F.3d at __, 43 U.S.P.Q.2d at 1646, 1997 WL 451021 at 5.
1537 C.F.R. § 1.106(d) (1996) states "Subject matter which is developed by another person which qualifies as prior art only under 35 U.S.C. § 102(f) or (g) may be used as prior art under 35 U.S.C. § 103."
16__ F.3d at __, 43 U.S.P.Q.2d at 1646, 1997 WL 451021 at 5.
17See e.g., Ex parte Yoshino, 227 U.S.P.Q. 52 (Pat. Off. Bd. App. & Int. 1985), Ex Parte Stalego, 154 U.S.P.Q. 52 (Pat. Off. Bd. App. 1966), Ex Parte Thelin 152 U.S.P.Q. 624 (Pat. Off. Bd. App. & Int. 1966).
18Id. (emphasis added).
19Takenaka, supra note 4 at 3.

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