BASF Corp. v. SNF Holding Co.

CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit
Citation955 F.3d 958
Docket Number2019-1243
Parties BASF CORPORATION, Plaintiff-Appellant v. SNF HOLDING COMPANY, Flopam Inc., Chemtall, Inc., SNF SAS, SNF (China) Flocculant Co. Ltd., Defendants-Appellees
Decision Date08 April 2020

John C. O'Quinn, Kirkland & Ellis LLP, Washington, DC, argued for plaintiff-appellant. Also represented by Gregg Locascio, Sean M. McEldowney, Calvin Alexander Shank; James Christopher Martin, Reed Smith LLP, Pittsburgh, PA; Robert Riddle, Houston, TX.

James W. Dabney, Hughes Hubbard & Reed LLP, New York, NY, argued for defendants-appellees. Also represented by Emma L. Baratta, Stefanie Michelle Garibyan, Patrice Polyxene Jean, Richard M. Koehl, David E. Lansky, Michael M. Polka ; Khue V. Hoang, Reichman Jorgensen LLP, New York, NY.

Before Lourie, Moore, and Chen, Circuit Judges.

Lourie, Circuit Judge.

BASF Corporation appeals from a decision of the united States District Court for the Southern District of Georgia, granting summary judgment that claims 1 and 3—7 of U.S. Patent 5,633,329 (the " ’329 patent") are invalid as anticipated and that claim 2 is invalid as obvious. See BASF Corp. v. SNF Holding Co., No. 4:17-cv-00251-RSB-BWC (S.D. Ga. Oct. 4, 2018), ECF No. 355 ("Decision "). The district court concluded that a process performed by a third party, Celanese Corporation’s "Sanwet® Process," evidenced prior art knowledge and use of the patented invention within the meaning of 35 U.S.C. § 102(a), and further constituted both a public-use bar and an on-sale bar to the patented invention under 35 U.S.C. § 102(b).1

For the reasons set forth below, we disagree and hold that the Sanwet® Process does not create an on-sale bar to the ’329 patent under § 102(b). We also conclude that the district court misinterpreted § 102(a) and the public-use bar of § 102(b), and that under the proper legal standard, genuine issues of material fact preclude the entry of summary judgment on those issues. Accordingly, the judgment of the district court is reversed, and the case is remanded for further proceedings.

BACKGROUND

BASF owns the ’329 patent, which is directed to an improved process for preparing high-molecular-weight polymers, specifically those synthesized by polymerization of water-soluble, monoethylenically unsaturated monomers. These polymers are used as super-absorbers in various fields, such as waste treatment, paper manufacturing, and mining. The ’329 patent discloses that the polymers "are frequently of sticky consistency," col. 1 ll. 29—30, and adhere to the walls of the reactor. Prior art methods of discharging the reaction mixture through mechanical means, by injection of a separating liquid, or by injection of an inert gas had each proven unsatisfactory. Id. col. 1 ll. 14—64.

Mechanical means of forcibly discharging the reaction mixture, like pistons, tended to damage the reactor walls; separating liquids contaminated the reaction mixture; and inert gas was ineffective because it would blow through gaps between the polymer mixture and the reactor wall. Id. col. 1 ll. 36-41, 55-64.

To solve this problem, the ’329 patent discloses adding a conical taper with specific dimensions to the bottom end of a tubular reactor. The patent’s drawing illustrates the invention:

D1 (in red) represents the diameter of the reactor, D2 (in green) represents the diameter of the end of the conical taper, and a represents the angle between D1 and the wall of the conical taper. The conical taper starts at D1 and ends at D2. Claim 1 is representative2 :

1. A process for preparing high molecular weight polymers, which comprises polymerizing water-soluble, monoethylenically unsaturated monomers and, if desired, crosslinkers which contain at least two nonconjugated, ethylenically unsaturated double bonds in the molecule, and, if desired, water-insoluble monoethylenically unsaturated monomers in aqueous solution in the presence of polymerization initiators
in a tubular reactor which has a conical taper at the end, the ratio of the diameter of the reactor (D1) to the diameter at the end of the conical taper of the reactor (D2) being from 2:1 to 25:1 and the angle between D1 at the start of the conical taper and the inner cone wall being >45° and

In 2014, BASF filed a complaint in the United States District Court for the Southern District of Texas alleging infringement of the ’329 patent by SNF Holding Company, Flopam Inc., Chemtall Inc., SNF SAS, and SNF (China) Flocculant Co. Ltd. (collectively, "SNF"). See BASF Corp. v. SNF Holding Co., No. 4:14-cv-02733 (S.D. Tex. Sept. 23, 2014).3 SNF filed a petition in the U.S. Patent and Trademark Office for inter partes review of all claims of the ’329 patent in January 2015, and the district court stayed this action. The Patent Trial and Appeal Board then held in a final written decision that SNF failed to prove any claim unpatentable on the ground of obviousness, SNF Holding Co. v. BASF Corp., No. IPR2015-00600, 2016 WL 8944638, at *10 (P.T.A.B. Aug. 2, 2016), and we affirmed, SNF Holding Co. v. BASF Corp., 698 F. App'x 1034 (Fed. Cir. 2017).

After the Board’s decision, SNF filed a motion for summary judgment of invalidity, asserting that the Sanwet® Process anticipates claims 1 and 3-7 and renders claim 2 obvious. The Sanwet® Process was created in Japan by Sanyo Chemical Industries Ltd. to manufacture super-absorbent polymers. Like the claimed invention, the Sanwet® Process is a method for manufacturing high-molecular-weight polymers by polymerizing water-soluble, monoethylenically unsaturated monomers in aqueous solution in the presence of polymerization initiators.

In 1985, Sanyo and Celanese entered into a license agreement that provided Celanese with an exclusive license to make, use, and sell certain of Sanyo’s superabsorbent polymers in the Americas. In addition, Sanyo furnished Celanese with extensive technical information about the Sanwet® Process, dispatched technical personnel to assist Celanese with plant start-up, and guaranteed that Celanese’s Portsmouth, Virginia, plant would achieve the same performance as Sanyo’s own plant in Japan. Celanese was obligated to protect the secrecy of Sanyo’s confidential information for ten years and was only allowed to disclose such information to its employees and subcontractors to the extent necessary to build and operate the plant. These employees and subcontractors were in turn required to sign confidentiality agreements. The license was paid up as of 1995, and the agreement terminated in 1997.

In its summary judgment order, the district court agreed with SNF that "one person’s use or knowledge" is all that is required for an invention to be "known or used" by others under § 102(a), and "whether prior use is secret or confidential is immaterial." Decision, slip op. at 22-23. Under that standard, it found no genuine dispute that the Sanwet® Process was known and used in the United States by Celanese, Hoechst AG—which acquired Celanese in 1987—and agents of Celanese, Hoechst, and Sanyo, as evidenced by the technical information Sanyo provided Celanese and the extensive operation of the Portsmouth plant before the ’329 patent ’s priority date of January 31, 1995. Id. at 24-25.

The district court also granted summary judgment of invalidity on both the public-use and on-sale bars of § 102(b).4 It found no genuine dispute that Celanese commercially exploited the Sanwet® Process before the critical date, and that its use was "in many respects accessible to the public." Decision , slip op. at 28-29 (noting that Celanese and Hoechst gave tours of the Portsmouth plant and that a newspaper article depicted the plant’s interior). For the on-sale bar, the district court concluded that the license agreement, together with Sanyo’s technical information and in-person operations assistance, amounted to a sale, rather than just a license, because "the transmission of the process description to a user with the ability to perform the process constitutes putting the process ‘on-sale.’ " Id. at 30-31 (citing Minton v. Nat’l Ass’n of Sec. Dealers, Inc., 336 F.3d 1373, 1378 (Fed. Cir. 2003) ).

This appeal followed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

We review a district court’s grant of summary judgment according to the law of the regional circuit. Kaneka Corp. v. Xiamen Kingdomway Grp., 790 F.3d 1298, 1303 (Fed. Cir. 2015) (citing Halo Elecs., Inc. v. Pulse Elecs., Inc., 769 F.3d 1371, 1377 (Fed. Cir. 2014) ). In the Eleventh Circuit, summary judgment is reviewed de novo , considering all evidence in the light most favorable to the nonmoving party. Sears v. Roberts, 922 F.3d 1199, 1205 (11th Cir. 2019) (citing Hamilton v. Southland Christian School, Inc., 680 F.3d 1316, 1318 (11th Cir. 2012) ). Summary judgment must be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). But "at the summary judgment stage the judge’s function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Patent invalidity is an affirmative defense to an action for infringement. 35 U.S.C. § 282(b). The statutory presumption of patent validity imposes the burden of persuasion on the defendant, id. § 282(a), and factual propositions and inferences underlying an invalidity defense must be proven by clear and convincing evidence. Microsoft Corp. v. I4I Ltd. P’ship, 564 U.S. 91, 95, 131 S.Ct. 2238, 180 L.Ed.2d 131 (2011).

Pre-AIA 35 U.S.C. § 102 sets forth several conditions of patentability, including novelty (subsections (a), (e), (f), and (g)) and loss-of-right provisions which may, notwithstanding the novelty of an invention, bar a patent, id. (subsections (b), (c), and (d)). It provides that "[a] person shall be entitled to a patent...

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