EZ Dock, Inc. v. Schafer Systems, Inc.

On summary judgment, the United States District Court for the District of Minnesota declared EZ Dock, Inc.'s United States Patent No. 5,281,055 (the '055 patent) invalid due to an on-sale bar. Because the district court improperly resolved issues of fact against EZ Dock on summary judgment, this court vacates and remands.

I.

This case features a polyethylene floating dock. Marinas and homeowners with waterfront properties typically use floating docks for mooring boats. Floating docks typically consist of metal or foam flotation cores. Concrete shells cover these flotation cores to form dock modules. Wood or other suitable materials generally cover the concrete shells to form the dock. Cables or springs then connect these dock sections to hold them together and to allow them to flex under stress.

This type of dock, however, deteriorates under severe weather conditions. With time, the cable or spring connections loosen and leave unsafe gaps between the dock sections. To overcome this deterioration, some manufacturers offer plastic docks. However, plastic docks often come in many pieces. These plastic docks pose difficulties in assembly.

In October 1989, Jack Neitzke and Clifton Vierus, both of Winona, Minnesota, began designing a floating dock made of polyethylene. Unlike earlier plastic docks, their design contained few parts. During this time, Mr. Neitzke ran an office supply store and a marina on the Mississippi river. Mr. Vierus operated a nightclub across the street. Neither Mr. Neitzke nor Mr. Vierus had any prior experience in dock design. After several months of collaboration, Mr. Neitzke and Mr. Vierus settled on a design. Their design featured uniform molded dock sections coupled together with rubber male-type anchors which fit into female-type receiving sockets. These couplers were shaped like a dog bone:

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After Mr. Neitzke and Mr. Vierus settled on the design, Mr. Vierus began building a mold for the dock section. In early 1991, Mr. Neitzke and Mr. Vierus entered into an agreement with Winnebago Industries to build some dock sections using Mr. Vierus’ mold. Mr. Vierus’ mold, however, would not work with polyethylene. Mr. Neitzke and Mr. Vierus thus spent several months adjusting the mold to accommodate Winnebago’s polyethylene manufacturing processes.

In May 1991, Winnebago gave Mr. Neitzke and Mr. Vierus sixty-four dock sections, produced with Mr. Neitzke's and Mr. Vierus’ mold. Mr. Neitzke first tested some dock sections by floating them in the Mississippi river. After determining that they would float, he installed numerous dock sections at his marina sometime in late May or early June 1991.

At about the same time, Larry Greden brought a copier to Mr. Neitzke’s office supply store for repair. Mr. Neitzke was storing several dock sections near the store’s front windows at the time. Mr. Greden asked store employees about the dock. The employees directed Mr. Greden to Mr. Neitzke. Mr. Greden explained that he wished to buy one of Mr. Neitzke’s docks as a Father’s Day gift to install at his father’s residence, Bass Camp, on the other side of the Mississippi river. Bass Camp experiences heavier boat traffic and more turbulent water flow than Mr. Neitzke’s marina. Mr. Neitzke agreed to sell Mr. Greden two dock sections for $758.43, or 75% of the final retail price for the same dock system. Mr. Greden purchased the dock on June 13, 1991.

Mr. Neitzke installed the dock system at Bass Camp at no charge and included a gangplank, connectors, and all hardware also at no charge. In return, Mr. Greden agreed to allow Mr. Neitzke and Mr. Vierus to inspect the dock and replace or repair any part as needed. Mr. Neitzke visited the dock between four and six times during the summer of 1991 and made a repair at no charge to Mr. Greden. In addition, Mr. Vierus visited the dock between four to six times and made several repairs at no charge. The dock remained at Bass Camp until late 1999 when Mr. Greden sold it to Schafer Systems, Inc. (Schafer) for $1000 and two replacement docks.

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Several months after selling the dock to Mr. Greden, Mr. Vierus and Mr. Neitzke evaluated several docks with rectangular shaped pylons after testing them in the Mississippi river. They discovered that the rectangular shaped pylons did not mold properly and eventually caused leaks. Mr. Vierus and Mr. Neitzke thus changed the pylon shape from rectangular to frustoconical as recited and claimed in the '055 patent.

On July 17, 1992, Mr. Vierus and Mr. Neitzke applied for a patent on their polyethylene dock. Mr. Vierus and Mr. Neitzke also formed EZ Dock and assigned all patent rights to their company. The United States Patent and Trademark Office issued the ‘055 patent January 25, 1994.

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In 1997, Schafer made several unsuccessful attempts to negotiate a license under the ‘055 patent from EZ Dock. Schafer then began selling its own floating dock system, “Connect-a-Dock.” On November 2, 1998, EZ Dock filed suit against Schafer for, inter alia, infringement of the ‘055 patent. Schafer counterclaimed for summary judgment of invalidity, noninfringement, and unenforceability due to alleged inequitable conduct during prosecution of the ‘055 patent.

The district court granted Schafer summary judgment of invalidity. The district court determined that the dock claimed in the ‘055 patent was on sale in this country more than one year before July 17, 1992, the date on which Mr. Neitzke and Mr. Vierus filed their patent application. EZ Dock, Inc. v. Schafer Systems, Inc., No. 98-2364 (D. Minn. May 8, 2000). EZ Dock appeals. This court has jurisdiction under 28 U.S.C. § 1295(a)(1).

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The Patent Act endows patents with a presumption of validity. 35 U.S.C. § 282 (1994). The Act also prevents issuance of any patent for an invention that was publicly used or on-sale in the United States more than one year before the date on which the patent application was filed. 35 U.S.C. § 102(b) (1994). Thus, an accused infringer may overcome a patent's presumption of validity by presenting clear and convincing evidence of facts showing that the patented device was on-sale before such critical date. Massey v. Del Lab., 118 F.3d 1568, 1573, 43 USPQ2d 1367, 1370 (Fed. Cir. 1997).

In Pfaff v. Wells Elecs., Inc., 525 U.S. 55 (1998), the Supreme Court recently set forth a two-part test for application of the on-sale bar. The bar applies when an invention is both the subject of a commercial offer for sale and ready for patenting before the critical date. Pfaff, 525 U.S. at 67. The Supreme Court also explained that the second condition – ready for patenting – “may be satisfied 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 59.

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[I]t is incorrect to impose on the patent owner, as the trial court in this case did, the burden of proving that a “public use” was “experimental.” These are not two separable issues. It is incorrect to ask: “Was it a public use?” and then “Was it experimental?” Rather the court is faced with a single issue: Was it a public use under 102(b)?

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Click the case caption above for the full
text of the Court's opinion.

This court vacates the district court's grant of summary judgment that the '055 patent is invalid due to an on-sale bar and remands for trial.

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