Delano Farms Co. v. California Table Grape Commission
2015 WL 127317, 113 U.S.P.Q. 2d (BNA) 1420, 778 F.3d 1243 (2015)
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Rule of Law:
Use of an invention by a third party who obtained it without authorization does not constitute an invalidating 'public use' under 35 U.S.C. § 102(b) if the circumstances create an expectation of secrecy and the invention is not made accessible to the public, even without a formal confidentiality agreement.
Facts:
- The U.S. Department of Agriculture (USDA) developed two new grape varieties, Scarlet Royal and Autumn King.
- On August 22, 2001, at a USDA open house, grape grower Jim Ludy asked USDA employee Rodney Klassen for plant material from the unreleased varieties.
- In early 2002, Klassen, who was not authorized to do so, gave Jim Ludy plant material for both varieties, instructing him to keep it secret and not sell the resulting grapes until commercial release.
- Jim Ludy understood the need for secrecy, acknowledging that Klassen would be in 'big trouble' if discovered.
- Jim Ludy grafted the plants and provided a few buds to his cousin, Larry Ludy, telling him they should 'keep it to ourselves.'
- The Ludys grew the vines on their farms where they were visible from public roads, but the specific grape variety was not visually identifiable from a distance.
- Before the critical patent date of September 28, 2003, the Ludys did not sell any grapes from these vines nor provide plant material to anyone else.
- The Ludys did inform their long-time marketer, Richard Sandrini, of their possession of the unreleased varieties before the critical date.
Procedural Posture:
- Delano Farms Co. and other grape growers sued the USDA and the California Table Grape Commission in the U.S. District Court for the Eastern District of California to invalidate the patents.
- The district court (trial court) initially dismissed the suit against the USDA based on sovereign immunity.
- On a prior appeal, the U.S. Court of Appeals for the Federal Circuit (intermediate appellate court) reversed the dismissal, holding that sovereign immunity was waived.
- On remand, the district court held a bench trial on the public use issue.
- The district court found that the Ludys' actions were not a public use and entered judgment for the defendants, upholding the patents' validity.
- The plaintiffs (appellants) appealed the district court's final judgment to the U.S. Court of Appeals for the Federal Circuit.
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Issue:
Does the unauthorized cultivation of patented grape varieties by third parties, who maintain secrecy and do not commercially exploit the grapes before the critical date, constitute an invalidating 'public use' under 35 U.S.C. § 102(b)?
Opinions:
Majority - Bryson, Circuit Judge.
No. The unauthorized cultivation of the patented grape varieties did not constitute an invalidating public use because the use was not accessible to the public or commercially exploited. The court reasoned that the 'public use' bar under § 102(b) is intended to prevent the removal of inventions from the public domain that the public reasonably believes are freely available. Here, the circumstances created a clear expectation of secrecy, negating public use. Jim Ludy knew he obtained the plants improperly from Klassen and explicitly told his cousin to maintain secrecy. This situation is distinct from cases like Egbert v. Lippmann, where an inventor gives an invention to another without any restriction or injunction of secrecy. The disclosure to their marketer, Sandrini, did not constitute public use due to their close business relationship and shared incentive for confidentiality. Finally, although the vines were visible from public roads, the specific patented variety could not be identified by mere observation, meaning the invention was not truly accessible to or in the possession of the public.
Analysis:
This decision refines the 'public use' bar in patent law, particularly in the context of unauthorized third-party use. The court emphasizes that the core inquiry is whether the public would reasonably believe the invention is in the public domain. It solidifies the principle that an implicit understanding of confidentiality, inferred from the circumstances of how the invention was obtained and handled, is sufficient to negate a public use claim, even without a formal non-disclosure agreement. This ruling provides patent holders protection against invalidation challenges based on secret or controlled use by third parties who acquired the invention through improper means.
