761 F.2d 671 (Fed. Cir. 1985), 84-1209, In re Caveney

Docket Nº:Appeal No. 84-1209.
Citation:761 F.2d 671
Party Name:226 U.S.P.Q. 1 In re Jack E. CAVENEY and Roy A. Moody.
Case Date:May 08, 1985
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 671

761 F.2d 671 (Fed. Cir. 1985)

226 U.S.P.Q. 1

In re Jack E. CAVENEY and Roy A. Moody.

Appeal No. 84-1209.

United States Court of Appeals, Federal Circuit

May 8, 1985

Page 672

Charles F. Pigott, Jr., Pigott, Gerstman & Gilhooly, Ltd., Chicago, Ill., argued, for appellants.

Charles A. Wentzel, Tinley Park, Ill., of counsel.

John F. Pitrelli, U.S. Patent & Trademark Office, Arlington, Va., argued, for appellee.

Joseph F. Nakamura, Sol. and Jere W. Sears, Deputy Sol., U.S. Patent & Trademark Office, Arlington, Va., were on brief, for appellee.

Page 673

Before MARKEY, Chief Judge, and MILLER and SMITH, Circuit Judges.

JACK R. MILLER, Circuit Judge.

This is an appeal from the decision of the United States Patent and Trademark Office ("PTO") Board of Appeals ("board") sustaining the rejection of claims 26-28, 38-41, and 45 under 35 U.S.C. Sec. 102(b). We affirm.


The subject application, which is assigned to the Panduit Corporation, was filed on April 7, 1969, and is drawn to a one-piece cable tie adapted to be wrapped around a bundle of wires to secure them together. 1 Subsequent to filing this application, appellants presented claims 38-41 to provoke an interference with claims 1-3 and 5 of U.S. Patent No. 3,486,201 to Walter Bourne, 2 which is assigned to Bowthorpe-Hellermann, Limited ("B-H"). An interference was declared, but subsequently suspended, pursuant to 37 C.F.R. Sec. 1.292, 3 when Walter Bourne petitioned for a public use proceeding with respect to appellants' claimed invention.

Bourne's petition was granted on November 2, 1972. During 1973, appellants and Walter Bourne took depositions, filed these depositions and some exhibits in the PTO, submitted briefs, and appeared for a final hearing in the PTO. After the hearing, the examiner issued a decision holding that the claimed invention was "on sale" in this country before the April 7, 1968, critical date. The interference was dissolved on May 10, 1974, and ex parte prosecution before the examiner was resumed. On May 12, 1981, the appealed claims were finally rejected.

The basis for the rejection was that Insuloid Manufacturing Company ("Insuloid"), a British corporation wholly owned by B-H, offered to sell the claimed invention in the United States to Tyton Corporation ("Tyton") prior to the critical date. Specifically, on November 14, 1967, Insuloid sent samples of the claimed invention to Tyton for evaluation along with a catalogue and technical information. Receipt of these items was acknowledged on December 13,

Page 674

1967, in a letter from Robert Hall, a market research analyst for Tyton, who indicated that Tyton was in the process of determining the quantity for an initial order. On February 9, 1968, Tyton placed an order with Insuloid setting forth prices and quantities of the desired cable ties, but the cable ties were not shipped until May 13, 1968, when Tyton deemed them acceptable.

Tyton was formed as a joint venture company to be Insuloid's exclusive seller in the United States. B-H owned 49% of Tyton, while Ideal Industries ("Ideal") owned the balance.

A majority of the board affirmed the final rejection, because Insuloid offered to sell cable ties to Tyton within the meaning of 35 U.S.C. Sec. 102(b). Insuloid and Tyton were deemed separate entities with a relationship analogous to manufacturer and either wholesaler or retailer. The fact that appellants did not cause the statutory bar was deemed irrelevant.

The dissenting member of the board asserted that Tyton acted like the marketing group in a large corporation whose receipt of samples from another group in the corporation would not be the subject of an "on sale" bar. It was further noted that Tyton kept the claimed invention secret from the purchasing public and did not complete a pricing schedule until after the critical date.


  1. Standards of Proof and Review

    In their briefs, appellants state that the PTO, having alleged that the claimed invention was "on sale," bears a heavy burden of proof, citing Richdel, Inc. v. Sunspool Corp., 714 F.2d 1573, 219 USPQ 8 (Fed.Cir.1983), and other cases involving issued patents. We are asked to bear this burden of proof in mind in considering "a number of factual issues involved in this appeal."

    However, although patents are entitled to a presumption of validity under 35 U.S.C. Sec. 282, and the party asserting patent invalidity under 35 U.S.C. Sec. 102(b) must support the assertion by facts constituting clear and convincing evidence (American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1359-60, 220 USPQ 763, 770 (Fed.Cir.), cert. denied, --- U.S. ----, 105 S.Ct. 95, 83 L.Ed.2d 41 (1984) ), patent applications are not entitled to the procedural advantages of 35 U.S.C. Sec. 282. From In re Etter, 756 F.2d 852, 225 USPQ 1 (Fed.Cir.1984) (en banc), it is apparent that, due to 35 U.S.C. Sec. 282, the standard of proof required to properly reject the claims of a patent application is necessarily lower than that required to invalidate patent claims. The three standards of proof generally recognized are proof by a preponderance of the evidence, proof by clear and convincing evidence, and proof beyond a reasonable doubt. SSIH Equipment S.A. v. U.S. International Trade Commission, 718 F.2d 365, 380, 218 USPQ 678, 691 (Fed.Cir.1983) (Nies, J., additional views). Because it is the only standard of proof lower than clear and convincing, preponderance of the evidence is the standard that must be met by the PTO in making rejections (other than for "fraud" or "violation of the duty of disclosure" which requires clear and convincing evidence (37 C.F.R. Sec. 1.56(d) ) 4 ).

    In appeals from PTO rejections, the Federal Circuit does not find facts de novo, but, instead, reviews PTO findings under the clearly erroneous standard. See In re Wilder, 736 F.2d 1516, 1520, 222 USPQ 369, 372 (Fed.Cir.1984). Under this standard of review, PTO findings are overturned only if the court is left with the definite and firm conviction that a mistake has been made. See SSIH Equipment S.A., 718 F.2d at 381, 218 USPQ at 692. For legal conclusions, the standard of review is correctness or error as a matter of law. In re De Blauwe, 736 F.2d 699, 703, 222 USPQ 191, 195 (Fed.Cir.1984).

    Page 675

  2. "On Sale" Rejection

    The PTO met its initial burden of going forward by making a prima facie showing that the claimed invention was "on sale" in accordance with 35 U.S.C. Sec. 102(b). See In re Dybel, 524 F.2d 1393, 1400, 187 USPQ 593, 598 (CCPA 1975); In re Josserand, 188 F.2d 486, 491, 89 USPQ 371, 376 (CCPA 1951). The shipment of samples of the claimed cable ties to Tyton on November 14, 1967, Robert Hall's acknowledgement letter of December 13, 1967, indicating that an initial order of cable ties was being prepared, and Tyton's subsequent order of February 9, 1968, setting forth prices and quantities of the desired cable ties strongly indicates that Insuloid had...

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