In re Kollar

• Decision Date: 11 April 2002
• Docket Number: No. 01-1640.,01-1640.
• Citation: 286 F.3d 1326
• Parties: In re John KOLLAR.
• Court: U.S. Court of Appeals — Federal Circuit

286 F.3d 1326

In re John KOLLAR.

No. 01-1640.

United States Court of Appeals, Federal Circuit.

April 11, 2002.

John Kollar, of Wyckoff, NJ, pro se.

John M. Whealan, Solicitor, of Arlington, VA, representing the Director of the United States Patent and Trademark Office. With him on the brief was Kristin L Yohannan, Associate Solicitor. Of counsel was Mark Nagumo, Associate Solicitor.

Before LOURIE, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and CLEVENGER, Circuit Judge.

LOURIE, Circuit Judge.

John Kollar appeals from the final decision of the United States Patent and Trademark Office ("PTO") Board of Patent Appeals and Interferences holding the claims in Kollar's Patent Application No. 08/657,564 to be unpatentable under the on-sale bar of 35 U.S.C. § 102(b). In re Kollar, No. 96-C-7375 (Bd. Pat.App. & Inter. July 25, 2001) ("Kollar III"). Because the Board erred in determining that the process claimed in the '564 application was on sale within the meaning of § 102(b), we vacate and remand.

BACKGROUND

The '564 application, filed on December 5, 1995, is directed to a process for preparing a dialkyl peroxide by reacting one or more alcohols and/or an olefin with a monoalkyl hydroperoxide in the presence of an effective amount of an insoluble, heterogeneous acidic catalyst and separating the reaction mixture from the catalyst. The '564 application describes the claimed process as a low-cost method of producing various dialkyl peroxides, such as di-tert-butyl peroxide, which in turn can be used to make, inter alia, ethylene glycol. Ethylene glycol is used in the manufacture of a number of commercial products, ranging from polyester fibers to mining explosives. Claim 1 of the '564 application, the only claim at issue in this appeal,¹ reads as follows:

1. A process for the preparation of a dialkyl peroxide comprising reacting one or more members selected from the group consisting of an alkylating alcohol of the formula ROH, and an olefin of the formula (R²)(R^2a)C=C(R³)(R^3a), wherein R is C₁-C₁₀ alkyl, and R², R^2a, R³, and R^3a are independently selected from hydrogen and C₁-C₁₀ alkyl; with a hydroperoxide of the formula R¹OOH, wherein is R¹ is C₁-C₁₀ alkyl; in the presence of an effective amount of a substantially solid, insoluble, heterogenous [sic] acidic catalyst; followed by separation of the reaction mixture from said catalyst.

The examiner finally rejected claims 1 through 17 under § 102(b) based upon a purported sale of the invention by Kollar's assignee, Redox Technologies, Inc., a company owned and operated by Kollar, to Celanese Corporation.² Kollar appealed that rejection to the Board.

The Board, in an exhaustive analysis, affirmed the examiner's rejection of claims 1 through 17 under the on-sale bar of § 102(b). In re Kollar, No. 96-C-7375, slip op. at 47 (BPAI July 17, 2000) ("Kollar I"). The Board determined that a July 1, 1980, agreement between Redox and Celanese entitled "DEFINITIVE AGREEMENT" ("the Celanese Agreement") constituted a firm offer to sell embodiments of the claimed process, thus triggering the bar of § 102(b). Id. In the Celanese Agreement, the parties essentially agreed to share technology and coordinate their research efforts with the ultimate goal of designing and building a commercial plant capable of implementing the claimed process to manufacture ethylene glycol. The Board determined that § 102(b) applied because Celanese received what it termed "a right to commercialize" Kollar's invention, and the necessary technical information to utilize that invention, in exchange for a series of royalty payments. Id. The Board further determined that the "sale" by Redox could not be considered to be experimental because there was no provision in the agreement obligating Celanese to experiment with the claimed process, and in any event Kollar admitted on the record that he had reduced the invention to practice prior to the execution of that agreement. Id. at 45.

Kollar thereafter filed a request for rehearing, which resulted in the Board issuing two additional opinions clarifying its rationale for affirming the examiner's rejection of claims 1 through 17. In re Kollar, No. 96-C-7375 (BPAI Feb. 28, 2001); Kollar III. In Kollar III, the Board further explained its rationale for concluding that the Celanese Agreement barred Kollar from obtaining a patent to the claimed process as follows:

[A]n embodiment of a claimed process can be physically represented by a written description in a document which not only identifies the process but also enables the practice of that chemical process by one of ordinary skill in the art.... [T]he preponderance of the evidence shows that appellant ... transferred documents containing a written description of the claimed process ... [and] thus commercially exploit[ed] the claimed chemical process....

Kollar III, slip op. at 8, 9 (emphases added).

Kollar appeals from the Board's final decision. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(4)(A).

DISCUSSION

Section 102(b) provides in relevant part that "[a] person shall be entitled to a patent unless ... the invention was... on sale in this country, more than one year prior to the date of the application for patent in the United States...." 35 U.S.C. § 102(b) (1994). The Supreme Court established a two-prong test governing the application of the on-sale bar: "First, the product must be the subject of a commercial offer for sale.... Second, the invention must be ready for patenting." Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67, 119 S.Ct. 304, 142 L.Ed.2d 261 (1998). The PTO bears the initial burden of demonstrating that the preponderance of the evidence establishes, prima facie, facts supporting the conclusion that the claimed invention was on sale within the meaning of § 102(b). In re Brigance, 792 F.2d 1103, 1107, 229 USPQ 988, 990 (Fed.Cir.1986). Whether an invention is "on sale" within the meaning of § 102(b) is a question of law based on underlying factual findings. Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1257, 57 USPQ2d 1699, 1702 (Fed.Cir.2001). We review legal determinations of the Board, including whether an invention was on sale before the critical date, without deference. In re Roemer, 258 F.3d 1303, 1307, 59 USPQ2d 1527, 1529 (Fed.Cir.2001). We review the factual findings underlying that determination for substantial evidence. In re Gartside, 203 F.3d 1305, 1316, 53 USPQ2d 1769, 1776 (Fed.Cir.2000).

On appeal, Kollar primarily argues that Redox's and Celanese's intended activities, as called for by the Celanese Agreement, were experimental in nature and thus do not fall within the purview of the on-sale bar of § 102(b). Kollar also contends that the invention was not ready for patenting because it had not been determined whether a commercial plant meeting the quality specifications necessary to carry out the claimed process could be built. Finally, Kollar argues that the Celanese Agreement was merely a license and therefore did not involve the sale of a commercial embodiment of the invention.

The PTO responds that Kollar failed to carry his burden of proving that the Celanese Agreement falls within the experimental use exception to § 102(b). The PTO also contends that the claimed process was ready for patenting because Kollar admitted that it was reduced to practice at the time the Celanese Agreement was signed. Finally, the PTO argues that the Celanese Agreement constitutes a sale of the process disclosed in claim 1 because Kollar received royalty payments and licensing rights in certain Celanese technology as consideration for disclosing his process and granting Celanese the "right to commercialize" the invention.

We conclude that the Board erred in determining that the Celanese Agreement constituted a "sale" of the claimed invention within the meaning of § 102(b). Although the Board correctly determined that Kollar's reduction to practice of the invention rendered it "ready for patenting" under the test set forth in Pfaff, see 525 U.S. at 67-68, 119 S.Ct. 304, it incorrectly concluded that the invention was the subject of a "commercial offer for sale." The Celanese Agreement was entered into for the purpose of "conduct[ing] research and development [`R&D'] in the Field [which the Board properly determined includes Kollar's inventive process] ... with a goal to achieving, by the end of 5 R&D years, Celanese approval for a commercial plant in the Field." In order to facilitate that goal, the parties agreed upon a number of provisions, the relevant portions of which are as follows: Redox agreed to disclose technical information concerning the claimed process that was to be utilized by both parties during the "R&D Phase" in exchange for a series of annual royalty payments. Celanese had the discretion to terminate the agreement at any time by giving sixty days notice to Redox, at which time Celanese would be entitled to a nonexclusive license to practice the claimed process. If, however, Celanese opted to continue the joint research effort until the "Commercial Phase" was reached, Celanese would receive an exclusive license under any issued patent "to design, engineer, construct and operate a pilot plant and one or more commercial plants, to sell the resultant products, and to sublicense others." (Emphasis added.) In either case, in exchange for the license, Redox was entitled to receive running royalties for products that Celanese sold that were manufactured using the claimed process, the rate of which would depend upon whether and when Celanese terminated the agreement.

Although the Celanese Agreement specifically contemplates that "resultant products" manufactured using the claimed process could potentially be sold, nowhere in the Celanese Agreement is there an indication that a product of the claimed process was actually offered for sale. Rather, that agreement constitutes a license³ to Celanese under any future patents relating to Kollar's...