DORMAN PRODUCTS, INC. v. PACCAR, INC.

Filing 184

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE JAN E. DUBOIS ON 12/20/2016. 12/21/2016 ENTERED AND COPIES E-MAILED.(kp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
PACCAR, INC.,

CIVIL ACTION
Plaintiff,

v.
DORMAN PRODUCTS, INC.,
Defendant.

NO. 13-6383

DuBois, J.

December 20, 2016
MEMORANDUM

I.

INTRODUCTION
This case involves the alleged infringement of three design patents for truck headlights

owned by PACCAR, Inc. (“PACCAR”) by aftermarket replacement headlights sold by Dorman
Products, Inc. (“Dorman”). Presently before the Court is Dorman’s Motion for Certification
Pursuant to 28 U.S.C. § 1292(b). For the reasons that follow, Dorman’s Motion is denied.
II.

BACKGROUND
The pertinent facts and procedural history are summarized as follows. In its

Memorandum and Order dated August 22, 2016, the Court granted PACCAR’s Motion for
Summary Judgment with respect to Dorman’s affirmative defense of invalidity of the three
patents based on the on-sale bar under 35 U.S.C. § 102(b) and denied Dorman’s Motion for
Summary Judgment on the same issue. See Dorman Products, Inc. v. PACCAR, Inc., --- F.
Supp. 3d ----, 2016 WL 4440322 (E.D. Pa. Aug. 23, 2016). That Memorandum contains
additional factual background, procedural history, and details of the underlying patents in the
case. Dorman filed this Motion for Certification Pursuant to 28 U.S.C. § 1292(b) on September
1, 2016, seeking certification for interlocutory review by the United States Court of Appeals for

the Federal Circuit of this Court’s Order of August 22, 2016. PACCAR filed its Response
opposing certification on September 19, 2016.
A. The on-sale bar of 35 U.S.C. § 102(b) as clarified in Medicines, 827 F.3d 1363
(Fed. Cir. 2016)
In concluding in its Memorandum dated August 22, 2016, that the on-sale bar did not
apply to the three patents at issue in this case, this Court relied on the recent decision of the
United States Court of Appeals for the Federal Circuit in The Medicines Company v. Hospira,
Inc., 827 F.3d 1363 (Fed. Cir. 2016) (en banc) (“Medicines”). The Medicines opinion clarified
the first prong of the two-prong test for applicability of the on-sale bar: whether the claimed
invention “was the subject of a commercial sale” before the critical date. Medicines, 827 F.3d at
1372 (citing Pfaff v. Wells, Inc., 525 U.S. 55, 67-68 (1998); see Pfaff, 525 U.S. at 67-68 (“[T]he
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.”). The Federal Circuit stated that “the transaction at issue must be a sale in a
commercial law sense,” and clarified that “the mere sale of manufacturing services by a contract
manufacturer to an inventor to create embodiments of a patented product for the inventor does
not constitute a commercial sale of the invention.” Id. at 1373 (internal quotation marks and
citations omitted). Medicines “explain[ed] that commercial benefit—even to both parties in a
transaction—is not enough to trigger the on-sale bar of § 102(b); the transaction must be one in
which the product is ‘on-sale’ in the sense that it is ‘commercially marketed.’” Id.
The Federal Circuit concluded that the sale at issue in Medicines was not a commercial
sale because “(1) only manufacturing services were sold to the inventor—the invention was not;
(2) the inventor maintained control of the invention, as shown by the retention of title to the
embodiments and the absence of authorization to [the manufacturer] to sell the product to others;
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and (3) ‘stockpiling,’ standing alone, does not trigger the on-sale bar.’” Id. at 1373-74.
Additionally, the Federal Circuit stated that, while “not disqualifying in all instances,” “the
confidential nature of the transactions is a factor which weighs against the conclusion that the
transactions were commercial in nature.” Id. at 1376. While Medicines did not recognize a
“blanket supplier exception,” the Federal Circuit stated that “[t]he focus must be on the
commercial character of the transaction, not solely on the identity of the participants.” Id. at
1380.
B. This Court’s Memorandum dated August 22, 2016
This Court relied on Medicines’ clarification of the commercial limitation on Pfaff’s first
prong in concluding that the offers for sale in this case were not commercial transactions and
thus did not trigger the on-sale bar. Dorman Products, 2016 WL 4440322, at *5-6. Specifically,
this Court analyzed whether the nature of the two transactions at issue—price quotations from
two headlight manufacturers—were commercial. With respect to one quotation, the Court
concluded that while the quotation was an offer for sale because it would have created a binding
contract upon acceptance, it was not commercial because “it was a transaction between the
patentee . . . and a supplier,” the terms were “consistent with a contract for manufacturing
services, rather than the sale of a product at market value,” “PACCAR retained title to the
headlights,” the manufacturer “was not free to market the headlights or the design of said to third
parties,” the offer was confidential, and “the headlights were not produced in commercial
amounts until after the critical date.” Id. at *5-6. With respect to the other quotation, the Court
likewise concluded that it was an offer for sale, but that it was not commercial because PACCAR
retained control of the invention and the manufacturer was “not free to market the headlights or
claimed designs to third parties,” the offer was confidential, the “quotation has other terms
characteristic of a manufacturing contract . . . and was not a sale of a commercial embodiment of
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the patented design at full price,” and “the headlights were not produced in commercial
quantities until after the critical date.” Id. at *6.
III.

APPLICABLE LAW
A district court has discretion to certify an order that would otherwise not be appealable

for interlocutory appeal when the district court is “of the opinion that such order [(1)] involves a
controlling question of law as to which [(2)] there is substantial ground for difference of opinion
and [(3)] that an immediate appeal from the order may materially advance the termination of the
litigation.” 28 U.S.C. § 1292(b); see Morgan v. Ford Motor Co., Civ. No. 06-1080, 2007 WL
269806, at *2 (D.N.J. Jan. 25, 2007) (“[E]ven if all three criteria . . . are met, the district court
may still deny certification, as the decision is entirely within the district court’s discretion.”).
In order to certify an order under § 1292(b), the district court must conclude that all three
requirements have been met. Katz v. Carte Blanche Corp., 496 F.2d 747, 754 (3d Cir. 1974)
(citations omitted); see also Interwave Tech., Inc. v. Rockwell Automation, Inc., Civ. No. 050398, 2006 WL 401843, at *5 (E.D. Pa. Feb. 16, 2006) (“When there is no substantial ground
for a difference of opinion, certification for appeal can be denied on this ground alone.” (citation
omitted)). The party moving for certification bears the burden of establishing that all three
requirements of § 1292(b) have been met. Litgo N.J., Inc. v. Martin, Civ. No. 06-2891, 2011
WL 1134676, at *2 (D.N.J. Mar. 25, 2011) (citations omitted).
IV.

DISCUSSION
The Court concludes that Dorman has not met its burden of showing that all three criteria

for certification have been met. The Court’s decision is based on the second criteria for
certification, which requires that there be substantial grounds for difference of opinion on the
issue presented. “Substantial grounds for difference of opinion exist where there is genuine
doubt or conflicting precedent as to the correct legal standard.” Hall v. Wyeth, Civ. No. 10-738,
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2010 WL 4925258, at *2 (E.D. Pa. Dec. 2, 2010). “The clearest evidence of substantial grounds
for difference of opinion is where there are conflicting interpretations from numerous courts.”
Knopnick v. Downey, 963 F. Supp. 2d 378, 398 (M.D. Pa. 2013). While a lack of controlling
authority on a specific issue may constitute substantial grounds, Hall, 2010 WL 49225258, at *2,
it does not necessarily do so. Keystone Tobacco Co., Inc. v. U.S. Tobacco Co., 217 F.R.D. 235,
239 (D.D.C. 2003) (citation omitted).
Dorman argues that there are substantial grounds for difference of opinion with respect to
“the correct interpretation and application” of the commercial requirement articulated in
Medicines to offers for sale. Specifically, Dorman contends that there are substantial grounds for
difference of opinion because (1) no cases apply Medicines, the facts of which involved a sale, to
circumstances involving offers for sale; (2) Medicines “is not squarely on point” for cases
involving offers for sale, and (3) this Court’s application of Medicines is inconsistent with the
Federal Circuit’s holding in Hamilton Beach Brands, Inc. v. Sunbeam Products, 726 F.3d 1370
(Fed. Cir. 2013), that there is no blanket supplier exception to the on-sale bar. Dorman Mem.
Supp. Mot. 5-6. The Court addresses each of these arguments in turn.
First, the lack of other cases applying Medicines to circumstances involving offers for
sale does not support a conclusion that there are substantial grounds for difference of opinion
with respect to its application to offers for sale. The Medicines opinion is relatively recent—it
was decided on July 11, 2016—and the lack of reliance on the Medicines opinion by other courts
does not in and of itself create substantial grounds for a difference of opinion. See Ryan v.
Flowserve Corp., 444 F. Supp. 2d 718, 724 (N.D. Tex. 2006) (“[S]imply because a court is the
first to rule on a question or counsel disagrees on applicable precedent does not qualify the issue
as one over which there is substantial disagreement.”) (citation omitted).

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Second, Dorman’s argument that Medicines is not “squarely on point” to cases involving
offers for sale fails because the en banc Medicines opinion makes clear that the transaction at
issue must be commercial in order for on-sale bar to apply. Medicines, 827 F.3d at 1373, 1378.
The commercial requirement clarified by Medicines is not limited to sales; rather, the opinion
discusses both sales and offers for sale in its clarification of Pfaff’s first prong. See, e.g.,
Medicines, 827 F.3d at 1373 (“[A]s a general proposition, we will look to the Uniform
Commercial Code to define whether . . . a communication or series of communications rises to
the level of a commercial offer for sale.”). The opinion reiterates that, “to be true to Pfaff when
assessing prong one of § 102(b), [a court] must focus on those activities that would be
understood to be commercial sales and offers for sale ‘in the commercial community.’”
Medicines, 827 F.3d at 1373 (citing Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041,
1047) (Fed. Cir. 2001)) (emphasis added). While the Medicines opinion specifically clarifies
that “the mere sale of manufacturing services by a contract manufacturer to an inventor to create
embodiments of a patented product for the inventor does not constitute a ‘commercial sale’ of
the invention,” it also states that “[i]t is well-settled that mere preparations for commercial sales
are not themselves ‘commercial sales’ or ‘commercial offers for sale’ under the on-sale bar.” Id.
at 1373, 1377 (citation omitted).
Medicines thus articulates controlling law that is directly applicable to this case—in order
to trigger the on-sale bar, “there must be a commercial sale or offer for sale,” and there was none
in this case. Id. at 1378. As required by Medicines, this Court examined the characteristics of
the transactions in this case—offers for sale—to determine whether they were commercial and
concluded that they were not.
Finally, this Court’s Order of August 22, 2016, is not inconsistent with the Federal
Circuit’s holdings in Hamilton Beach and Medicines that there is no blanket supplier exception
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to the on-sale bar. Medicines, 827 F.3d at 1379-80. This Court did not rely on a blanket supplier
exception in its Memorandum; instead, it did as the Medicines opinion instructed and focused on
the “character of the transaction [and] not solely on the identity of the participants,” and
concluded that the offers for sale in this case were not commercial transactions. Medicines, 827
F.3d at 1380; see Dorman Products, 2016 WL 4440322, at *5. Furthermore, this Court reached
a question that the Hamilton Beach decision did not—whether the transaction at issue was
commercial in nature. Relying on the reasoning of Hamilton Beach, this Court found that the
transactions at issue were sufficiently definite to constitute offers for sale. Id. at *5-6. However,
unlike Hamilton Beach, the Court went on to analyze whether the offers for sale were
commercial and concluded that, under Medicines, they were not. Id. Medicines distinguished
Hamilton Beach on this point, stating that the inventor in Hamilton Beach only argued that the
offer was insufficiently firm to constitute a commercial offer for sale and did not argue “that no
commercial sale of the patented product would occur if the inventor purchased it from its
supplier.” Medicines, 827 F.2d at 1380.
The Court concludes that Dorman has not met its burden of showing that substantial
grounds for difference of opinion exists with respect to the application of Medicines to situations
involving offers for sale. Dorman’s Motion for Certification Pursuant to 28 U.S.C. § 1292(b) is
denied on this ground alone. The Court thus does not address the remaining requirements for
certification—whether the challenged ruling involves a controlling question of law or whether an
immediate appeal would materially advance the termination of the litigation.
V.

CONCLUSION
For the foregoing reasons, Dorman’s Motion for Certification Pursuant to 28 U.S.C.

§ 1292(b) is denied. An appropriate order follows.

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