BASF patent gets a second chance at the Federal Circuit

basf-corp-v-snf-holding-company, Appeal No. 2019-1243, Fed. Cir. April 8, 2020.

BASF owns US patent 5,633,329 (the “‘329 patent”), directed to an process of preparing super absorbing polymers, which have a tendancy to stick to the walls of the reactor in which they are manufactured.  The ‘329 patent claims a method of making the polymers, using a reactor having a particular conical taper at the dispensing end thereof, said to alleviate this problem.  BASF filed an action alleging infringement of the ‘329 patent by SNF, whereupon SNF filed a petition for inter partes review, and the district court action was stayed.  PTAB held that SNF failed to establish that any claim of the ‘329 was unpatentable on the ground of obviousness, and the Federal Circuit affirmed.  SNF Holding Co. v. BASF Corp., 698 F. App’x 1034 (Fed. Cir. 2017).  Undeterred, SNF filed a motion for summary judgement of invalidity in the now resumed infringement action, asserting that a prior art process anticipated and/or rendered obvious the claims of the ‘329 patent.

More specifically, the prior art process was one developed by Sanyo Chemicals and licensed to Celanese to make, use and sell Sanyo’s superabsorbent polymers in the Americas.  Like the ‘329 patent, the process developed by Sanyo polymerized the same starting materials in the presence of the same polymerization initiators.  The license agreement required that Sanyo provide extensive supporting materials and personnel to Celanese and guaranteed that Celanese’s plant would achieve the same performance as Sanyo’s plant in Japan.  For their part, Celanese was required to maintain Sanyo’s confidential information as such for 10 years, disclosing it only to those employees or subcontractors with a need to know to the extent necessary to build and operate the equipment.

The District Court sided with SNF and held that Celanese’s performance of Sanyo’s process evidenced prior art knowledge and use of the patented invention within the meaning of 35 USC §102 (a) and further constituted both a public use bar and an on-sale bar to the patented invention under 35 USC §102(b).  In its summary judgment order, the District Court held  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.”  The District Court also granted summary judgment of invalidity on both the public-use and on-sale bars of 102(b), finding no genuine dispute that Celanese commercially exploited Sanyo’s process before the critical date of the ‘319 patent and that its use was accessible to the public.  SNF’s victory was short-lived.

The Federal Circuit reversed and remanded.  With respect to prior use or knowledge and public use, the Federal Circuit held that there were genuine issues of material fact as to whether the process performed by Celanese was “known or used” within the meaning of §102.  The panel wholly rejected SNF’s argument that the license agreement between Sanyo and Celanese constituted a sale, as well as the argument that Hoescht’s acquisition of Celanese in 1987, including the plant in which the process had been conducted, constituted a sale of the process.  he Federal Circuit thus reversed and remanded for trial the District Court’s award of summary judgement for SNF on the issues of prior use or knowledge and public use, and reversed the District Court’s summary judgment on SNF’s on-sale bar defense and directed entry of partial summary judgement for BASF on that issue.