Merck & Cie v. Watson Laboratories, Inc.
822 F.3d 1347
Fed. Cir.2016Background
- The sole asserted claim (claim 4) of U.S. Patent No. 6,441,168 covers a crystalline calcium salt form of 5‑methyltetrahydrofolic acid (MTHF); application filed Apr 17, 2000 (critical date Apr 17, 1999).
- In 1997–1998 Merck and Weider discussed a joint venture to market MTHF; they executed a Confidentiality Agreement in Feb 1998 containing §5.2 requiring any "definitive agreement" to be signed by both parties.
- Weider declined the joint venture in Aug 1998 but asked to buy 2 kg of MTHF. On Sept 9, 1998 Merck manager Roland Martin faxed Weider price ($25,000/kg), payment (60 days net), delivery (free to Utah facility), and invited Weider to send an order to him.
- Weider responded Sept 16 that it would order 2 kg and requested spec sheets and insurance; Merck provided specs Sept 25 and confirmed a "first order" Oct 8, 1998, but no delivery was ever made and the order was later canceled.
- District Court found MTHF was ready for patenting by Sept 1998 but held Martin’s fax was not a commercial offer because it lacked certain safety/liability terms and the Confidentiality Agreement required signed definitive agreements.
- The Federal Circuit reversed, holding Martin’s Sept 9 fax constituted a commercial offer for sale that triggered the pre‑AIA §102(b) on‑sale bar, invalidating claim 4.
Issues
| Issue | Plaintiff's Argument (Merck) | Defendant's Argument (Watson) | Held |
|---|---|---|---|
| Whether a commercial offer for sale occurred before the critical date | Martin’s fax was not a binding offer because it lacked safety/liability terms and §5.2 of the Confidentiality Agreement required signed definitive agreements | The fax contained definite price, quantity, delivery, and payment terms in response to Weider’s request and thus was an offer | The fax was a commercial offer for sale triggering the on‑sale bar |
| Whether later testimony can overcome contemporaneous documents | Merck relied on expert testimony that industry standard safety/apportionment terms were missing and thus no offer | Watson relied on documentary record (fax, emails, specs, confirmation) showing both parties treated communication as an offer | Court gave priority to contemporaneous documentary evidence over post hoc testimony; testimony insufficient to negate the offer |
| Effect of Confidentiality Agreement §5.2 on formation of an offer | §5.2 made any transaction nonbinding until a signed definitive agreement existed, so the fax could not be an offer | The Confidentiality Agreement governed joint venture talks, did not require that offers be signed to be valid, and did not prevent a separate stand‑alone sales offer | §5.2 did not prevent the fax from being a commercial offer; offers and signed contracts need not be in same document |
| Whether failure to consummate a sale defeats the on‑sale bar | Merck suggested that lack of delivery and later cancellation meant no commercial exploitation | Watson argued an offer alone is sufficient to trigger the on‑sale bar even if sale not completed | The on‑sale bar is triggered by a commercial offer irrespective of whether the sale was completed |
Key Cases Cited
- Pfaff v. Wells Elecs., Inc., 525 U.S. 55 (defines "ready for patenting" and on‑sale bar elements)
- Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041 (contract‑law standard for what constitutes an offer for sale)
- Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359 (price, quantity, and delivery terms can constitute invalidating offer)
- Linear Tech. Corp. v. Micrel, Inc., 275 F.3d 1040 (objective expressed intent controls offer analysis)
- Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321 (critical date and on‑sale bar principles)
- Robotic Vision Sys., Inc. v. View Eng’g, Inc., 249 F.3d 1307 (invalidity under on‑sale bar is legal question based on facts)
- Lacks Indus., Inc. v. McKechnie Vehicle Components USA, Inc., 322 F.3d 1335 (insufficient conclusory testimony about industry practice cannot defeat documentary evidence)
- Hamilton Beach Brands, Inc. v. Sunbeam Prods., Inc., 726 F.3d 1370 (on‑sale bar applies to offers even if sale not executed)
- Atlanta Attachment Co. v. Leggett & Platt, Inc., 516 F.3d 1361 (on‑sale bar purpose and precedent)
- City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126 (historical basis for denying patents after public commercialization)
- Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (public sale of unpatented article bars patent protection)
- Abbott Labs. v. Geneva Pharm., Inc., 182 F.3d 1315 (on‑sale bar as a policy to prevent withdrawing inventions from public domain)
- In re Giannelli, 739 F.3d 1375 (application of pre‑AIA §102(b) timing)