Opinion
07 Civ. 1306 (DLC).
January 22, 2008
For Plaintiff Select Controls: Oliver R. Chernin, Paul Howard Levinson, McLaughlin and Stern, LLP, New York, NY, Richard Barton Klar, Law Office of Richard B. Klar, Mineola, NY.
For Defendant American Electronic Components, Inc.: Deanna Lynn Keysor, Ernest Summers, III, Howrey, LLP, Chicago, Il, James Gerard McCarney, Katherine Leigh Baggett, Howrey LLP, New York, NY.
OPINION AND ORDER
Plaintiff Select Controls Inc. ("SCI") filed its Second Amended Complaint (the "Complaint") in this action on July 20, 2007, and defendant American Electronic Components, Inc. ("AEC") moved to dismiss Count I of the Complaint, which alleges patent infringement, on the ground that SCI's patent is invalid under the on-sale bar of 35 U.S.C. § 102(b). SCI filed opposition, including a declaration from the President of SCI and the inventor of the patent in question. For the reasons stated below, AEC's motion to dismiss is granted.
AEC also moved to dismiss SCI's claim under the Lanham Act. In SCI's opposition to the motion, it agreed to withdraw the Lanham Act allegation contained in paragraph 72 of the Complaint.
BACKGROUND
The following facts are undisputed or taken from the Complaint and assumed to be true for the purposes of deciding the motion to dismiss. SCI designs and markets automotive components, and has been extensively involved in the design, manufacturing, and marketing of acceleration switches. Acceleration switches are a subcomponent of Remote Tire Pressure Monitoring systems ("RTPMS") that sense the speed of tire rotation and control when the RTPMS is turned on and off, thereby preventing the depletion of the RTPMS battery.
SCI is the owner of U.S. Patent No. D470,823 (the "`823 Patent"), which was filed on April 18, 2002, and issued on February 23, 2003. The `823 Patent is a design patent that claims only "[t]he ornamental design for a[n] acceleration switch, as shown and described." The design claimed is described in the Complaint as an acceleration switch that has a cylindrical base (which looks approximately like a spindle of thread), with a lead wire that extends out of the center-top of the base, bends ninety-degrees to form a second lead portion, and then bends ninety-degrees downward and descends parallel to the surface of the cylindrical base, extending below the bottom of the base. As summarized in the Complaint, "the lead framingly encompasses a portion of the top and a side of the cylindrical base providing a symmetrical ornamental look for the switch." SCI refers to an acceleration switch with this design as a "Straight Lead Acceleration Switch."
Robert Ufer ("Ufer"), the President of SCI, invented the design claimed in the `823 Patent. The Complaint states that Ufer and SCI were not able to create a functioning Straight Lead Acceleration Switch until May 17, 2001, as evidenced by notes made by Ufer and attached as an exhibit to the Complaint, and did not ship the first such product until June 5, 2001. Prior to May 17, 2001, acceleration switches invented by Ufer and produced by SCI featured a skewed lead that descended at an angle.
In or about April of 1996, SCI was approached by Schrader Electronics Ltd. ("Schrader") — the market leader in the design and manufacture of RTPMS products and supplier to most major car markets — who requested that SCI develop and manufacture acceleration switches to be used in connection with Schrader's RTPMS products. The initial transactions between SCI and Schrader were limited in scope, but expanded dramatically in January of 2001, when Schrader engaged SCI to develop acceleration switches on a larger scale for Schrader's automated production line.
Subsequent negotiations culminated in the execution of a written agreement signed by a representative of Schrader on March 15, 2001, and by Ufer on behalf of SCI on March 30, 2001 (the "SCI-Schrader Agreement"), a copy of which is attached as an exhibit to the Complaint, in which Schrader agreed to purchase a large quantity of acceleration switches from SCI. The "Fit For Purpose Statement" in the SCI-Schrader Agreement states that the switches ordered "shall meet the specifications detailed in Select Controls Inc drawing 3098-1-000 Rev A." An SCI drawing with that number is attached as Exhibit D to the Complaint (the "3098' Drawing"), and it depicts an acceleration switch with a lead portion bent in the same manner as described and depicted in the `823 Patent. In its opposition papers, SCI concedes that the 3098' Drawing presented as Exhibit D was the drawing provided to Schrader in connection with the SCI-Schrader Agreement.
Defendant AEC also manufactures and sells acceleration switches. As described in the Complaint, while SCI and Schrader were negotiating in early 2001, Schrader informed SCI that in order to ensure that Schrader would have sufficient quantities of the product that was to be the subject of the SCI-Schrader Agreement, SCI was required to identify a second source who could also produce that product. Schrader identified AEC as a potential second source, and on February 16, 2001, Schrader and AEC executed a communication (1) that referred to an existing agreement with AEC to produce acceleration switches, and (2) provided that AEC would produce those acceleration switches exclusively for Schrader.
SCI does not appear currently to possess a copy of the underlying agreement between AEC and Schrader.
Subsequent to AEC's agreement with Schrader, SCI and AEC exchanged information regarding the production of acceleration switches for Schrader. The Complaint contains several claims arising out of AEC's use of the information shared during this process; the only allegation relevant to the instant motion is that, following SCI's introduction of the Straight Lead Acceleration Switch into the market in the United States, AEC began to manufacture, import, and/or sell in the United States Straight Lead Acceleration Switches having the ornamental appearance of the acceleration switch claimed and described in the `823 Patent. Due to this alleged infringement of the `823 Patent, SCI requests injunctive relief and damages.
DISCUSSION
When considering a motion to dismiss, a trial court must "accept as true all factual statements alleged in the complaint and draw all reasonable inferences in favor of the non-moving party." McCarthy v. Dun Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007) (citation omitted). At the same time, "conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to defeat a motion to dismiss."Achtman v. Kirby, McInerney Squire, LLP, 464 F.3d 328, 337 (2d Cir. 2006) (citation omitted). A court must apply a "flexible `plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007) (emphasis in original). In deciding the motion, a court may consider "any written instrument attached to [the complaint] as an exhibit, materials incorporated in it by reference, and documents that, although not incorporated by reference, are `integral' to the complaint." Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004) (citation omitted). Thus, the documents attached as exhibits to the Complaint here — including the `823 Patent, the 3098' Drawing, and the SCI-Schrader Agreement — may properly be considered in deciding the instant motion.
AEC's notice of motion states that it moves to dismiss pursuant to Rule 12(b)(6), but its motion papers indicate that it moves for judgment on the pleadings under Rule 12(c). In any event, "[i]n deciding a Rule 12(c) motion, we apply the same standard as that applicable to a motion under Rule 12(b)(6)." Desiano v. Warner-Lambert Co., 467 F.3d 85, 89 (2d Cir. 2007).
Patents are presumed to be valid. 35 U.S.C. § 282. Under 35 U.S.C. § 102(b), however, a patent is not valid if "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," and thus "[a]n accused infringer may overcome a patent's presumption of validity by presenting clear and convincing evidence that the patented device was on-sale before the critical date." Honeywell Int'l. Inc. v. Universal Avionics Systems Corp., 488 F.3d 982, 996 (Fed. Cir. 2007). 35 U.S.C. § 102(b) is commonly referred to as the "on-sale bar," and the date one year prior to the filing of the patent application is commonly called the "Critical Date." In this case, there is no dispute that the Critical Date is April 18, 2001, one year before the `823 Patent was filed.
As the Supreme Court has clarified, "the on-sale bar applies when two conditions are satisfied before the critical date. First, the product must be the subject of a commercial offer for sale. . . . Second, the invention must be ready for patenting." Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 67 (1998). That an invention was "ready for patenting" before the Critical Date may be demonstrated "in at least two ways: by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention." Id. at 67-68. Thus, in Pfaff, this "second condition of the on-sale bar [was] satisfied because the drawings [the plaintiff] sent to the manufacturer before the critical date fully disclosed the invention." Id. at 68.
Both prongs of the Pfaff test are satisfied here, and AEC's motion must therefore be granted. The Complaint and its exhibits demonstrate, and SCI does not contest (1) that the SCI-Schrader Agreement was entered into, at the latest, on March 30, 2001, prior to the Critical Date of April 18, 2001; (2) that the subject of that Agreement was the sale of acceleration switches conforming to the 3098' Drawing; (3) that the 3098' Drawing referred to in the SCI-Schrader Agreement is the same drawing attached as Exhibit D to the Complaint; or (4) that the 3098' Drawing was provided to Schrader in connection with the formation of the SCI-Schrader Agreement.
SCI's contention is simply that the 3098' Drawing "did not provide sufficient information for one skilled in the art to practice the invention," by which SCI means that the 3098' Drawing did not provide "sufficient information to produce" a functioning Straight Lead Acceleration Switch containing the design claimed in the `823 Patent. As evidence of that fact, the Complaint alleges that SCI was not itself able to produce a functioning Straight Lead Acceleration Switch reflecting the ornamental design claimed in the `823 Patent until May 17, 2001 — after the Critical Date, and after the SCI-Schrader Agreement incorporating the 3098' Drawing was complete. In sum, based on these allegations, SCI argues that the invention claimed in the `823 Patent was not "ready for patenting" under Pfaff prior to the Critical Date because "one skilled in the art" could not have produced a functional Straight Lead Acceleration Switch reflecting the `823 Patent design based solely on the 3098' Drawing.
SCI fundamentally misunderstands the meaning of "ready for patenting" as applicable to the `823 Patent. The `823 Patent is adesign patent, and, "[a] design patent protects the nonfunctional aspects of an ornamental design as shown in the patent." Arminak Assocs., Inc. v. Saint-Gobain Calmar, Inc., 501 F.3d 1314, 1319 (Fed. Cir. 2007) (emphasis added); see also 35 U.S.C. § 171. "There is no functionality requirement in obtaining a design patent," Continental Plastic Containers v. Owens Brockway Plastic Products, Inc., 141 F.3d 1073, 1079 (Fed. Cir. 1998), and "[t]he subject of a design patent need not have any practical utility." In re Nuijten, 500 F.3d 1346, 1357 n. 9 (Fed. Cir. 2007). Indeed, to be patentable, a design "must be primarily ornamental in character," and "[i]f the design is dictated by performance of the article, then it is judged to be functional and ineligible for design patent protection." Arminak Assocs., 501 F.3d at 1319. Thus, the "invention" claimed in and purportedly protected by the `823 Patent is not a functioning Straight Lead Acceleration Switch, but simply — as the `823 Patent itself states — "[t]he ornamental design for" such an acceleration switch, and nothing more.
Having placed the `823 Patent in this context, it is apparent that the 3098' Drawing — which, prior to the Critical Date, was sent to Schrader and was the subject of the SCI-Schrader Agreement — "fully disclosed the invention" later claimed in the `823 Patent. Pfaff, 525 U.S. at 68. The 3098' Drawing depicts precisely the same "ornamental design" for an acceleration switch with a straight (rather than a skewed) lead that is reflected in the description and drawings contained in the `823 Patent, and thus the invention claimed in the `823 Patent was "ready for patenting" prior to the critical date under Pfaff, as one skilled in the art would certainly have been able to produce, based on the disclosure made in the 3098' Drawing, an acceleration switch that — functional or not — had the appearance of a Straight Lead Acceleration Switch. The fact that SCI was not able to produce or ship, based on the 3098' Drawing alone, a functioning Straight Lead Acceleration Switch conforming to the design covered by the `823 Patent until after the Critical Date is thus irrelevant. (It also follows that, contrary to SCI's assertions, any factual dispute relevant to the question of when SCI was able to produce a working Straight Lead Acceleration Switch does not defeat the instant motion.)
SCI states that such a holding would indicate that the "ready for patenting" standard is different for design and utility patents. This is mistaken; the standard is the same, but the nature of the "invention" at issue is different, and thus what qualifies as a "drawing . . . of the invention that [was] sufficiently specific to enable a person skilled in the art to practice the invention," Pfaff, 525 U.S. at 67-68, is likewise different. In other words, although the 3098' Drawing may not have been sufficient to enable one skilled in the art to produce a functional Straight Lead Acceleration Switch, it was sufficient to enable one skilled in the art to produce an acceleration switch that, functional or not, looked like a Straight Lead Acceleration Switch.
In Continental Plastic Containers, the Federal Circuit considered and rejected arguments nearly identical to those offered by SCI here. In that case, the plaintiff Continental claimed that its design patent for a plastic fruit juice bottle (the "`905 patent") was "not subject to the `on-sale' bar because, as manufacturer, it was unable to produce a functionally operable article embodying the design prior to the critical date." 141 F.3d at 1078. As the Federal Circuit stated in that case, the
premise that the "on-sale" bar should not apply because the ornamental design for an article of manufacture is merely a conception until the underlying article is functionally operable is fundamentally flawed for several policy reasons. First, the specific functions of the article of manufacture are not necessarily disclosed in the design patent. There is, for example, nothing in the `905 patent which indicates that the article of manufacture should not rock or should be suitable for mass production. . . .
Second, Continental's interpretation improperly imbues the patented design with additional limitations taken from a commercial embodiment. There is nothing in the `905 patent which restricts size, volume, weight, wall thickness, manufacturing materials or labels. The claim is solely directed to the ornamental or appearance aspects of the article of manufacture as depicted in the patent drawings. We conclude that it was irrelevant to triggering the "on-sale" bar that Continental had not yet manufactured a "functionally acceptable container."Id. at 1079 (citation omitted). Finally, as AEC notes, in light of the fact that the 3098' Drawing depicts a Straight Line Acceleration Switch identical to that depicted in the `823 Patent, if it were to be found that the 3098' Drawing was not "sufficiently specific to enable a person skilled in the art to practice the invention" claimed in the `823 Patent, Pfaff, 525 U.S. at 67-68, the `823 Patent itself would likely be invalid for lack of enablement. See 35 U.S.C. §§ 112, 171; In re Daniels, 144 F.3d 1452, 1456 (Fed. Cir. 1998).
Although Continental Plastic Containers was decided a few months prior to Pfaff, the reasoning on this point was in no way undermined by that latter case, despite the adjustment made to conditions necessary for finding that a patent is subject to the on-sale bar.
In sum, the Complaint and the exhibits attached thereto reveal unequivocally that the design covered by the `823 Patent was both "the subject of a commercial offer for sale" and "ready for patenting" prior to the Critical Date of April 18, 2001, Pfaff, 525 U.S. at 67. The `823 is therefore invalid as a matter of law,id. at 68; 35 U.S.C. § 120(b), and SCI's Claim I, alleging infringement of the `823 Patent, must be dismissed.
CONCLUSION
AEC's motion for judgment on the pleadings, filed on August 28, 2007, is granted and Claim I of the Second Amended Complaint is dismissed.
SO ORDERED: