Definitive Holdings sued Powerteq for infringing U.S. Patent No. 8,458,689, which covers methods and devices for upgrading software in engine controllers by connecting a device that can replace portions of stock engine control software while retaining an image of the original software. The patent, with a priority date of March 30, 2001, was challenged by Powerteq based on prior sales by non-party Hypertech Inc. of its 'Power Programmer III' device, which allegedly embodied all limitations of the asserted claims and was sold starting in 1994.
U.S. District Judge David Barlow granted Powerteq's motion for summary judgment of invalidity under the pre-AIA on-sale bar, finding that Hypertech's PP3 sales more than one year before the critical date of March 30, 2000, invalidated Definitive's patent claims. Judge Cunningham wrote that the court properly rejected Definitive's evidentiary challenges, explaining that 'the question is not whether the sale, even a third party sale, 'discloses' the invention at the time of sale, but whether the sale relates to a device that embodies the invention.'
The Federal Circuit delivered particularly strong language rejecting Definitive's argument that secret sales cannot invalidate patents, writing: 'In these circumstances, the public was directly making use of the patented features and permitting a patentee to remove them from the public domain would 'withdraw[ ] from the public domain technology already available to the public.'' Judge Cunningham emphasized that 'triggering the on-sale bar does not require that the sale make the details of the invention available to the public.'
The case reached the Federal Circuit after extensive discovery disputes over the admissibility of evidence from Hypertech's CEO Mark Ramsey, who testified as the company's Federal Rule 30(b)(6) witness despite joining Hypertech years after it stopped selling the PP3 device. Definitive argued that Ramsey's deposition testimony violated Federal Rule of Evidence 602's personal knowledge requirement and that the PP3 source code constituted inadmissible hearsay.
Judge Cunningham rejected both evidentiary challenges, finding that Ramsey had sufficient personal knowledge to authenticate sales records and source code. As to the source code, the court held that 'while comments and descriptions in source code may include statements that could be offered for their truth, the actual source code commands themselves are not offered for their truth and thus are not hearsay.' The court distinguished the Federal Circuit's 2021 Wi-Lan decision, noting that case involved concerns about trustworthiness of unauthenticated printouts, not authenticated source code commands.
The Federal Circuit's ruling affirms the broad reach of the pre-AIA on-sale bar to third-party sales, even when the sales do not publicly disclose how the patented invention works. Judge Cunningham wrote that this case differed from situations involving secret manufacturing processes, explaining that 'Hypertech was directly selling to the public the ability to perform the claimed method and to use the claimed apparatus.' The decision reinforces that patents cannot remove technology already available to the public through commercial sales.
The ruling provides important guidance for patent practitioners on the admissibility of source code evidence and corporate representative testimony in invalidity challenges. The court's holding that source code commands are not hearsay could have broader implications for software patent litigation, while its treatment of Rule 30(b)(6) testimony establishes that corporate designees can authenticate business records within their knowledge even when lacking personal knowledge of historical events.