Boydstun Metal Works, Inc. v. Cottrell, Inc.

District Court, D. Oregon
519 F.Supp.2d 1119, 2007 U.S. Dist. LEXIS 66957, 2007 WL 2669721 (2007)

ELI5:

Rule of Law:

Under the patent 'on-sale bar,' a patent is invalid if the invention was the subject of a commercial offer for sale more than one year before the patent application date; however, a communication is only an offer if it creates a binding contract upon acceptance under general contract law, which generally requires a specific quantity term.

Facts:

Boydstun Metal Works and Cottrell, Inc. are competitors that design and manufacture car-hauling equipment.
Boydstun developed a 'screw actuator' mechanism to raise and lower car-hauler decks and filed a patent application for this invention on March 29, 2004.
More than one year prior to that application, in early 2003, Cottrell was communicating with a customer, Jack Cooper Transport, regarding the design of a new trailer.
On March 6, 2003, Cottrell sent a document to Jack Cooper Transport explicitly labeled 'QUOTE' regarding three specific trailer models.
The March 6 document listed payment and delivery terms but did not list a specific quantity of trailers to be purchased.
The March 6 document did not explicitly list the prototype trailer (Model C-11LST) that allegedly utilized the screw actuator technology, nor did it list a price for that specific model.
Cottrell eventually delivered a trailer utilizing screw actuators to Jack Cooper Transport in October 2003.

Procedural Posture:

Boydstun sued Cottrell in the U.S. District Court for the District of Oregon for patent infringement.
Cottrell filed a Motion for Summary Judgment arguing the patent was invalid because the invention was 'on sale' more than one year before the application.
Boydstun filed a Cross-Motion for Summary Judgment arguing the 'on sale bar' defense did not apply.
Magistrate Judge Papak issued Findings and Recommendation recommending that the District Court deny Cottrell's motion and grant Boydstun's cross-motion.
Cottrell filed timely objections to the Magistrate Judge's recommendation regarding the 'on sale bar' ruling.

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Issue:

Does a price quotation sent by a manufacturer to a customer constitute a commercial 'offer for sale' sufficient to trigger the patent on-sale bar when the document is labeled as a quote and fails to specify a quantity of goods?

Opinions:

Majority - Judge Brown

No, a communication labeled as a quote that lacks essential terms like quantity is merely an invitation to negotiate, not a binding commercial offer. The court reasoned that determining whether an invention was 'on sale' requires applying the law of contracts, specifically the Uniform Commercial Code (UCC). A fundamental distinction exists between a price quotation, which invites an offer, and a binding offer, which creates a contract upon acceptance. The court found that Cottrell's March 6 communication was explicitly labeled a 'quote' and used language thanking the customer for the opportunity to 'submit these quotes,' manifesting an intent not to be bound. Furthermore, the court emphasized that under the UCC, a quantity term is the only term that must appear for a contract to be valid. Because the March 6 document was silent as to quantity, and did not qualify as a requirements contract, it could not form a binding contract. Consequently, there was no commercial offer for sale before the critical date, and the patent was not invalid under the on-sale bar.

Analysis:

This decision provides a critical clarification of the 'on-sale bar' under 35 U.S.C. § 102(b), specifically regarding what constitutes a commercial offer. By strictly applying Uniform Commercial Code (UCC) principles to patent validity challenges, the court reinforces that preliminary negotiations and price quotations do not trigger the one-year statutory clock. The ruling highlights the dispositive nature of the 'quantity' term in contract formation; without it, a communication is rarely an offer. For legal practitioners, this underscores the importance of precise language in pre-application commercial communications. It protects inventors from accidentally invalidating their patents through non-binding sales discussions, provided those discussions do not rise to the level of a contract capable of acceptance.

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