816 F.2d 647 (Fed. Cir. 1987), 86-522, UMC Electronics Co. v. United States

Docket Nº:Appeal Nos. 86-522, 86-559.
Citation:816 F.2d 647
Party Name:2 U.S.P.Q.2d 1465 UMC ELECTRONICS COMPANY, Appellant, v. The UNITED STATES, Cross-Appellant.
Case Date:April 15, 1987
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 647

816 F.2d 647 (Fed. Cir. 1987)

2 U.S.P.Q.2d 1465



The UNITED STATES, Cross-Appellant.

Appeal Nos. 86-522, 86-559.

United States Court of Appeals, Federal Circuit

April 15, 1987

Page 648

Robert H. Montgomery, Costas, Montgomery & Dorman, P.C., New Haven, Conn., argued for appellant. With him on brief was Peter L. Costas.

John Fargo, Asst. Director, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued for cross-appellant. With him on brief were Richard K. Willard, Asst. Atty. Gen. and Vito J. DiPietro, Director.

Before SMITH, NIES, and ARCHER, Circuit Judges.

NIES, Circuit Judge.

UMC Electronics Company brought this action, pursuant to 28 U.S.C. Sec. 1498(a), to recover compensation for use of its patented invention by the United States. UMC is the owner of Patent No. 3,643,513, issued February 22, 1972, by assignment from the inventor Preston Weaver. The United States Claims Court, 8 Cl.Ct. 604, 228 USPQ 396 (1985), upheld the validity of all claims (1-4) but dismissed the complaint on the ground of no infringement or, more accurately, no use of the patented invention by the United States. Both parties appeal.

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We reverse the Claims Court's holding that the patented invention was not on sale within the meaning of 35 U.S.C. Sec. 102(b). 1 Accordingly, we affirm the judgment in favor of the government, but on different grounds.



The claimed invention is an aviation counting accelerometer (ACA), a device for sensing and for recording the number of times an aircraft has been subjected to predetermined levels of acceleration. 2 The sensor component is mounted on the aircraft in a direction to measure acceleration loading and is connected electrically to the recorder component. Records produced by an ACA can indicate an aircraft's remaining useful life and show the need for structural inspection, overhaul, or rotation to less demanding service.

The patent application which became the patent in this suit ('513) was filed on August 1, 1968. Under 35 U.S.C. Sec. 102(b) the commercial exploitation and the state of development of the invention one year before the filing of the application for the subject invention are critical to resolution of the on-sale issue.

Prior to the late 1960's when UMC first entered this field, the U.S. Navy had procured ACA's from Maxson Electronics Company and from Giannini Controls Corporation. The Navy was dissatisfied with these ACA's because they sometimes recorded data that defied common sense, failed to count accelerations, or counted accelerations that never occurred. In 1966 the Navy contacted Preston Weaver, an employee of UMC, told him of the problems with existing ACA's and informed him of the Navy's interest in buying improved devices. Weaver designed an accelerometer, model UMC-A, and in late 1966, UMC was awarded a contract to supply the Navy with approximately 1600 units.

In early 1967, UMC concluded that its model UMC-A would not meet the Navy's performance specification required by its contract. Like the Maxson and Giannini ACA's, the UMC-A accelerometer utilized, as part of its sensor, an electromechanical transducer to mechanically generate signals that indicate levels of acceleration. 3 Like the Maxson and Giannini devices, the

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UMC-A device sometimes counted and sometimes did not count the same acceleration load. The problem lay in the inherent frequency of the mass-spring system in the transducer. The devices could not distinguish between acceleration due to inflight maneuvers, which determines actual stress, and acceleration from other sources, e.g., windgusts or weapons release.

To prevent UMC from losing the ACA contract, Weaver began work to improve the sensor portion of an ACA and conceived his invention which uses an analog transducer in the sensor. An analog transducer electrically generates a varying signal (in contrast to the mechanically produced signal of prior devices) which can be filtered electronically to selectively remove the effects of superimposed vibrations. The Claims Court found that in April-May of 1967 Weaver built and tested an engineering prototype of his ACA containing a commercial analog transducer, a filter, a timing circuit and a voltage sensor that measured one load level. UMC sought to modify the existing contract for ACA's to substitute an analog transducer for the electro-mechanical transducer specified in the contract, but was unsuccessful in negotiating a modification.

In late May, 1967, the Navy issued new specifications and in July, 1967, requested proposals from contractors to deliver ACA's built to the new specification (Mil-A-22145B). Technically, the request for proposals called separately for a certain number of sensor components of an ACA system and a certain number of recorders, the two units being compatible in combination. UMC responded to the request on July 27, 1967, the final date for making a proposal, with an offer to supply $1,668,743 worth of its improved ACA (hereinafter model UMC-B). UMC represented as part of its proposal that the sensor portion "has been constructed and tested in conjunction with voltage sensing and time controlled circuitry." In response to a Navy inquiry, on August 2, 1967, after the critical date, UMC submitted a technical proposal which described the model UMC-B in detail and included test results and schematic drawings. On August 9, 1967, UMC gave a demonstration of its device to the Navy at the UMC facility.

In early 1968 the Navy canceled the request to which the above submission of UMC was directed, and in July 1968, it issued another. The latter request eventually led to a contract with Systron-Donner Corporation, which company has been providing the Navy with ACA's utilizing analog transducers since 1970.

In June, 1980, UMC filed the instant action against the United States seeking compensation (after attempting for a number of years to obtain compensation directly from the Navy) by reason of the Navy's alleged use of its invention in the Systron-Donner ACA's. The Claims Court upheld the validity of the patent claims, which were challenged by the government on a number of grounds, but found that the Systron-Donner ACA's did not fall within the scope of the claims. Both parties appeal: UMC asking for reversal of the Claims Court's finding of no infringement; the government seeking to have the claims in suit held invalid. Since we conclude that the Claims Court erred as a matter of law in holding that the claims of the '513 patent were not invalid under section 102(b), we need discuss only that issue in detail.


The Claims Court Decision

The Claims Court analyzed the on-sale bar under the following three-part test set out in In re Corcoran, 640 F.2d 1331, 1333-34, 208 USPQ 867, 870 (CCPA 1981), taken from Timely Prods. Corp. v. Arron, 523 F.2d 288, 302, 187 USPQ 257, 267-68 (2d Cir.1975) 4:

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(1) The complete invention claimed must have been embodied in or obvious in view of the thing offered for sale.... Complete readability of the claim on the thing offered is not required because whatever is published (or on sale) more than one year prior to the filing of a patent application becomes part of the prior art over which the claim must be patentable....

(2) The invention must have been tested sufficiently to verify that it is operable and commercially marketable. This is simply another way of expressing the principle that an invention cannot be offered for sale until it is completed, which requires not merely its conception but its reduction to practice....

(3) Finally, the sale must be primarily for profit rather than for experimental purposes.... [Citations omitted.]

Proceeding through the Timely Products requirements in reverse order, the Claims Court first noted that UMC had admitted that its offer to the Navy was for profit, not for experimentation. The court then found that the invention of the '513 patent had been reduced to practice before the critical date by Weaver's tests of the engineering prototype of the ACA in April-May, 1967, because Weaver admitted that as a result of those tests he was satisfied that his invention would serve its intended purpose. 8 Cl.Ct. at 620, 228 USPQ at 403-04. However, the court found the first requirement that the complete invention must be embodied in the thing offered for sale was not met because the engineering prototype did not include all elements of the claims. The court found that the evidence established that the inventor had not built a physical embodiment of the invention including all limitations of the claims before the critical date.

The court then construed the decision of this court in Barmag Barmer Maschinenfabrik AG v. Murata Mach., Ltd., 731 F.2d 831, 221 USPQ 561 (Fed.Cir.1984). It interpreted Barmag as making an exception to the physical embodiment requirement where "commercial benefits outside the allowed time have been great." Because UMC "never produced its ACA," the court found it "reaped no commercial benefits." Based on those findings, the court held that the invention of the '513 patent was not on sale within the meaning of section 102(b). The court also held that the invention would not have been obvious from the prototype, which the court considered to be the thing offered for sale. 8 Cl.Ct. at 620, 228 USPQ at 404. This was error in the court's analysis, the prototype not being the thing offered for sale. The subject matter of the offer for sale is admittedly the claimed invention.

The government maintains that, properly interpreted, all three Timely Products requirements had been met, namely, (1) there was an offer to sell model UMC-B accelerometers which embodied the invention of the...

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