Atlantic Thermoplastics Co., Inc., James B. Sullivan and Richard B. Fox v. Faytex Corporation, Defendant/cross-Appellant

Atlantic Thermoplastics owns U.S. Patent No. 4,674,204 (’204 patent) entitled “Shock Absorbing Innersole and Method of Preparing Same.” Atlantic sued Faytex Corporation 1 for infringing the ’204 patented process with innersoles manufactured by two separate processes. After a bench trial, the United States District Court for the District of Massachusetts held that Faytex infringed the ’204 patent by selling innersoles manufactured by Surge, Inc. The court held, however, that Faytex did not infringe the ’204 patent by selling innersoles manufactured by Sorbothane, Inc. Atlantic Thermoplastics Co. v. Faytex Corp., No. 88-0210-H (D.Mass. July 27, 1990). The trial court also determined that the ’204 patent is not invalid under the on-sale bar of 35 U.S.C. § 102(b) (1988).

This court affirms the district court’s infringement determination. Because unable to determine whether the district court applied the correct legal standards under section 102(b), this court vacates the district court’s judgment as to validity and remands for findings on the on-sale issue, Because the trial court improperly determined damages, this court also remands for recalculation of lost profits, if liability is again established.

BACKGROUND

The ’204 patent contains both process claims and product-by-process claims for a shock absorbing shoe innersole. The innersole is formed in a mold having a contoured heel and arch section. Two different materials combine to make the innersole: an elastomeric material in the heel section, and a polyurethane foam. The elastomeric heel insert enhances shock absorption. The polyurethane foam forms around the heel insert and supplies the rest of the innersole.

Claim 1 of the ’204 patent defines the process:

In a method of manufacturing a shock-absorbing, molded innersole for insertion in footwear, which method comprises:

(a) introducing an expandable, polyurethane into a mold; and

(b) recovering from the mold an innersole which comprises a contoured heel and arch section composed of a substantially open-celled polyurethane foam material, the improvement which comprises:

(i) placing an elastomeric insert material into the mold, the insert material having greater shock-absorbing properties and being less resilient than the molded, open-celled polyurethane foam material, and the insert material having sufficient surface tack to remain in the placed position in the mold on the introduction of the expandable polyurethane material so as to permit the expandable polyurethane material to expand about the insert material without displacement of tfae insert material; and

*836 (ii) recovering a molded innersole with the insert material having a tacky surface forming a part of the exposed bottom surface of the recovered innersole.

Faytex distributes half-sole innersoles, or heel cups, with an elastomeric heel insert. Two different manufacturers — Surge Products and Sorbothane — make Faytex’s innersoles. The Surge process for making innersoles differs from the Sorbothane process. Surge first manually places a solid elastomeric insert into the heel section of the innersole mold. Surge then injects polyurethane around the solid heel insert to form the innersole. Sorbothane, on the other hand, first injects a liquid elastomeric precursor into the mold, which solidifies to form the heel insert. While the heel insert is solidifying, Sorbothane injects polyurethane into the same mold to form the rest of the innersole.

The parties agree that the Surge process infringes the ’204 patent. The district court concluded that the Sorbothane process did not infringe the ’204 patent. The district court read the claims to require placement of a solid elastomeric insert into the mold. This reading leaves injection of liquid elastomers outside the scope of the claims. Atlantic contests this construction.

Because Faytex does not manufacture the innersoles, Atlantic cannot charge Fay-tex with infringement of the process claims. However, claim 24 of the ’204 patent states: “The molded innersole produced by the method of claim 1.” Atlantic argues that Faytex, by distributing products allegedly made by the claimed process, is liable as an infringer. Faytex cross-appeals from the award of lost profit damages for the sale of Surge and Sorbothane innersoles. Faytex also appeals the district court’s determination that the ’204 patent is not invalid under the on-sale bar of 35 U.S.C. § 102(b).

DISCUSSION

I. On Sale Bar

Faytex asserts that the ’204 patent is invalid because the claimed invention was on sale more than one year before the filing date of the application. Faytex bears the burden of showing invalidity under section 102(b) by clear and convincing evidence. See Buildex Inc. v. Kason Indus., 849 F.2d 1461, 1462-63, 7 USPQ2d 1325, 1326-27 (Fed.Cir.1988). To prevail, Faytex had to show that Atlantic sold or offered for sale the claimed innersole before October 9, 1984. A single sale or offer to sell suffices to bar patentability. In re Cave-ney, 7 61 F.2d 671, 676, 226 USPQ 1, 4 (Fed.Cir.1985). This court must determine whether the district court erred in concluding that Faytex did not meet its burden.

Appellate review of an on-sale bar proceeds as a question of law. U.S. Environmental Prods. v. Westall, 911 F.2d 713, 715, 15 USPQ2d 1898, 1900 (Fed.Cir.1990). Thus, this court reviews the trial court’s conclusion de novo, with factual findings underlying that conclusion subject to review for clear error. Manville Sales v. Paramount Sys., 917 F.2d 544, 549, 16 USPQ2d 1587, 1591 (Fed.Cir.1990); Moleculon Research v. CBS, Inc., 793 F.2d 1261, 1266, 229 USPQ 805, 808 (Fed.Cir.1986), cert. denied, 479 U.S. 1030, 107 S.Ct. 875, 93 L.Ed.2d 829 (1987).

To invoke the on-sale bar, a defendant must prove that the complete claimed invention is embodied in or obvious in view of the thing sold or offered for sale before the critical date. UMC Elecs. Co. v. United States, 816 F.2d 647, 656, 2 USPQ2d 1465, 1471 (Fed.Cir.1987), cert, denied, 484 U.S. 1025, 108 S.Ct. 748, 98 L.Ed.2d 761 (1988). The on-sale bar invalidates a patent for an invention offered for sale, even though not ready for satisfactory commercial marketing. Barmag Barmer Maschinenfabrik AG v. Murata Mach., 731 F.2d 831, 838, 221 USPQ 561, 567 (Fed.Cir.1984). If a patent owner seeks to avoid the on-sale bar on the basis that a sale or offer was experimental, UMC, 816 F.2d at 657, a trial court must determine whether the patent owner sought the sale primarily for profit rather than as part of a testing program. To determine whether profit motivated a transaction, a court must examine the claimed features, In re Smith, 714 F.2d 1127, 1136, 218 USPQ 976, 984 (Fed.Cir. *837 1983), the offeror’s objective intent, and the totality of the circumstances, U.S. Environmental Products, 911 F.2d at 716.

Despite the many issues affecting any application of the on-sale bar rule, the district court’s sole finding in this case consists of a conclusory statement:

[Atlantic’s] first offer to sell and a definite sale were made to Triangle Corporation after October 9, 1984 in January of 1985, as the invention was not commercially marketable before that time....

Atlantic Thermoplastics, slip op. at 26. The district court did not provide any findings of fact or analysis for its conclusion. Moreover, the district court’s finding does not consider several offers to sell before October 1984. The district court apparently assumed, incorrectly, that mere offers do not trigger the on-sale bar rule. In any event, in the absence of findings, this court cannot determine whether the trial court properly considered those offers of sale and therefore applied the correct legal standard.

After a bench trial, a trial court must put forth the findings of fact relied upon to justify its actions. Fed.R.Civ.P. 52(a). Without findings, this court has no basis to evaluate whether the district court’s analysis uses the proper legal standard. Cf. Nutrition 21 v. United States, 930 F.2d 867, 869, 18 USPQ2d 1347, 1349 (Fed.Cir. 1991) (preliminary injunction). Because the absence of findings goes to the heart of the issue, any error cannot be harmless error. Therefore, this court vacates the district court’s judgment on validity and remands for a proper on-sale analysis.

II. Infringement

The district court determined that infringement turned on the proper interpretation of two claim limitations: “placing an elastomeric insert material into the mold” and “the insert material having sufficient surface tack to remain in the placed position on the introduction of the expandable polyurethane material.” Atlantic Thermoplastics, slip op. at 14. According to the trial court, these limitations

describ[e] a method of manufacturing innersoles by which a solid or cellular preformed elastomeric insert material is manually placed or put in the heel portion of the mold and an open-celled expandable polyurethane foam material is then injected or poured into the mold so as to expand about the solid preformed elastomeric insert material without displacement of the insert material.

Id. at 15. The court further held that the claim requires that the solid insert material be held in position by the inherent “tack” of the material. The trial court specifically rejected any interpretation which allowed injection of the heel insert as a liquid into the mold.

This court interprets the ’204 patent claims in light of the claim language, the specification, and the prosecution history. Hormone Research Found, v. Genentech, Inc., 904 F.2d 1558, 1562, 15 USPQ2d 1039, 1042-43 (Fed.Cir.1990), cert. dismissed, 111 S.Ct. 1434 (1991). This interpretation proceeds from the vantage point of one skilled in the art. Smithkline Diagnostics v. Helena Labs., 859 F.2d 878, 882, 8 USPQ2d 1468, 1471 (Fed.Cir.1988).

The parties agree that the district court correctly determined that the Surge process includes each limitation of claim 1. Therefore, the Surge process infringes the ’204 patent.

The Sorbothane process is a “two-pour” process which first injects a liquid elastomer and then a liquid polyurethane into the mold. The Sorbothane mold includes a dam which outlines the heel placement of the insert. This dam captures and confines the liquid elastomer. The dam ensures that the elastomer solidifies in place to form the heel insert. Thus, upon injection of the liquid elastomeric material, the dam — not the tack of the elastomeric material — holds the insert in place during introduction of polyurethane foam.

The district court found that the Sorbo-thane process did not literally infringe the ’204 patent for two reasons. First, the injection of liquid elastomeric material did not fit within the “placing” limitation. As a liquid, the court determined that the in *838 sert lacked the elastomeric qualities specified in the claim. Second, the district court determined that the dam, rather than the tackiness, held the insert in place in the mold. Thus, according to the district court, the Sorbothane process did not satisfy the tackiness limitation of the claim.

This court finds no clear error in the district court’s findings that in situ molding of the liquid elastomeric insert material does not fit within the placing limitation. “Placing an elastomeric insert material into the mold” is a limitation in claim 1. The Sorbothane process introduces a liquid insert into a mold within the larger innersole mold. The specification repeatedly refers to the insert as a “solid or cellular material” not a liquid. Furthermore, upon introduction under the Sorbothane process, the liquid polyurethane lacks elastomeric properties. The district court’s finding comports with the language used in the ’204 claims. Substantial evidence from expert witnesses supports the district court’s interpretation.

This court also finds no clear error in the district court’s finding that the Sorbothane process does not use tackiness to hold the elastomeric insert in place during injection of the polyurethane foam.

The trial court specifically found that the “tackiness of the chemical composition has no effect on the ‘Sorbothane’ process, as an essential component of this process is the use of a teflon-coated mold, sprayed with mold release, designed to reduce any surface tack, thus facilitating release of the heel cup from the mold.” Atlantic Thermoplastics, slip op. at 20. The record suggests no clear error in this finding. The teflon-coated mold and mold release of the Sorbothane process inhibit the tackiness of the solidified insert. Thus, tackiness does not hold the insert immobile during insertion and expansion of the polyurethane foam. Rather, as the district court found, the small dam in the heel section holds the elastomeric material in place during its liquid and solid states. The Sorbothane process thus does not meet the “surface tack” claim limitation.

The district court also found no infringement under the doctrine of equivalents. The trial court determined that the way the Sorbothane process performed its function was substantially different from that claimed in the ’204 patent. The district court found that use of a dam to hold the insert in place is substantially different from use of tack to perform the same function. This court discerns no clear error in this finding.

This court finds no basis to reverse the district court’s non-infringement finding on the Sorbothane process. Therefore, this court affirms the district court’s determination that Sorbothane innersoles do not infringe claim 24 of the ’204 patent.

III. Product-by-Process Claims

In the alternative, Atlantic argues that Scripps Clinic & Research Foundation v. Genentech, Inc., 927 F.2d 1565, 18 USPQ2d 1001 (Fed.Cir.1991) demands reversal of the non-infringement finding, even under the district court’s present interpretation of the claims. In Scripps Clinic, this court stated:

[T]he correct reading of product-by-process claims is that they are not limited to product prepared by the process set forth in the claims.

Id. at 1583. Atlantic states that the Sorbo-thane process results in innersoles which are indistinguishable from innersoles made by the Surge process and claimed in the ’204 patent. Therefore, according to Atlantic, the Sorbothane innersoles— though made by a different non-infringing process—also infringe. In sum, Atlantic urges this court to ignore the process claim language in its product-by-process claim.

A. Supreme Court and Regional Circuit History

To construe and apply the product-by-process claim of the ’204 patent, this court must examine the history of products claimed with process terms. 2 This inquiry *839 begins with several century-old Supreme Court cases.

In Smith v. Goodyear Dental Vulcanite Co., 93 U.S. 486, 493, 23 L.Ed. 952 (1877), the Supreme Court construed a patent claiming a “plate of hard rubber, or vulcan-ite, or its equivalent, for holding artificial teeth, or teeth and gums, substantially as described.” This claim was not drafted in contemporary product-by-process terms, but instead incorporated the specification. The specification, in turn, described a process for embedding teeth in soft vulcan-ite which later hardened to hold the artificial teeth firmly in place. 3 The Supreme Court stated that the product could not be separated from the process by which it was made:

The invention, then, is a product or manufacture made in a defined manner. It is not a product alone separated from the process by which it is created.... The process detailed is thereby made as much a part of the invention as are the materials of which the product is composed.

Smith, 93 U.S. at 493. The Supreme Court concluded that both the process and the product of that process were patentable. Id. at 493, 494, 501.

A few years later, the same patent was again before the Supreme Court — this time in an infringement context. Goodyear Dental Vulcanite Co. v. Davis, 102 U.S. 222, 26 L.Ed. 149 (1880). A district court had held that a celluloid plate for artificial teeth with its differing process did not infringe the patent. The Supreme Court first quoted from its Smith opinion to clarify that the patent claimed both product and process. On that basis, the Supreme Court concluded:

Hence, to constitute an infringement of the patent, both the material of which the dental plate is made, or its equivalent, and the process of constructing the plate, or a process equivalent thereto, must be employed.

Id. at 224. After noting that “the [celluloid] process is wholly unlike that employed in making hard rubber or vulcanite plates,” id. at 229, the Court affirmed the district court’s noninfringement decree. The Court also reasoned that the product of that process, a celluloid plate, is not “substantially the same as one made of hard rubber.” Id.

Another Supreme Court case in this time frame illustrated the significance of claiming a product with process limitations. In Merrill v. Yeomans, 94 U.S. 568, 24 L.Ed. 235 (1877), the patentee of heavy hydrocarbon oils deodorized by an innovative process sued retailers. These retailers sold a product nearly identical to the patentee’s oil, though deodorized by a different process. As the Supreme Court noted, if the patent claimed “a new oil,” then the sellers of that product may be liable as infringers. Id. at 568. If, on the other hand, the patent claimed only the process, the retailers did not use that, or any other, process. Id.

The Court again read the process language in Merrill’s specification as a limitation on the claims. Id. at 571. Merrill *840 argued, for good reason, against this interpretation:

The counsel for appellant disclaim this latter construction, and allege that the patent covers the oil described, by whatever mode it may be produced. It is necessary to insist on this view, because it is made to appear in the case that the oils sold by defendants were produced by a process very different from that described by appellant.

Id. The Supreme Court noted that Merrill’s counsel had to make that argument because defendants sold oil made by a different process. In discussing the process limitations, the Court said

by the well-settled rules of construing all instruments, some importance must be attached to them; and, if they are to be regarded at all, they must either refer to the process of making the oils for which the applicant is claiming a patent, or they are intended to limit his claim for a patent for the product to that product only, when produced by treating the oils in the manner before described.

Id. (emphasis added). The Court concluded that Merrill claimed only a process. 4 Therefore, the retailers were not proper parties.

In Cochrane v. Badische Anilin & Soda Fabrik, 111 U.S. 293, 4 S.Ct. 455, 28 L.Ed. 433 (1884) (BASF), the Supreme Court considered an infringement case. BASF involved alizarine, a dye. BASF obtained Reissue Patent No. 4,321 covering the product, artificial alizarine, as produced by a bromine reaction process. The claim stated:

Artificial alizarine, produced from an-thracine or its derivatives by either of the methods herein described, or by any other method which will produce a like result.

Id. at 296, 4 S.Ct. at 456. The Supreme Court noted, “No. 4,321 furnishes no test by which to identify the product it covers, except that such product is to be the result of the process it describes.” Id. at 305, 4 S.Ct. at 461. 5

Cochrane, the accused infringer, sold artificial alizarine made by a sulfuric acid reaction process. BASF sued Cochrane for infringing the 4,321 patent. The district court determined that Cochrane’s product made by a sulfuric process infringed the 4,321 patent. The circuit agreed. Before the Supreme Court, BASF contended that Cochrane infringed because it made artificial alizarine “from anthracine or its derivatives by some method.” Id. at 309, 4 S.Ct. at 463 (emphasis added). BASF argued that Cochrane made artificial alizarine; therefore, the process did not matter. Id. at 310, 4 S.Ct. at 464. The Supreme Court disagreed. 6

Instead, the Supreme Court enunciated a rule for products claimed with process limitations:

Every patent for a product or composition of matter must identify it so that it *841 can be recognized aside from the description of the process for making it, or else nothing can be held to infringe the patent which is not made by that process.

Id. at 310, 4 S.Ct. at 464. Based on this standard, the Supreme Court held the claim of the 4,321 patent not infringed because the defendants had used a different process.

After stating this rule for claim construction, the Supreme Court offered an alternative “view of the case.” BASF, 111 U.S. at 311, 4 S.Ct. at 464. BASF’s artificial aliza-rine was an “old article.” Id. In the words of the Supreme Court, “While a new process for producing it was patentable, the product itself could not be patented, even though it was a product made artificially for the first time.” Id.; see also The Wood-Paper Patent, 90 U.S. 566, 596, 23 L.Ed. 31 (1874). In other words, a patent applicant could not obtain exclusive rights to a product in the prior art by adding a process limitation to the product claim. A new process, although eligible for a process patent, could not capture exclusive rights to a product already in the prior art. Therefore, BASF could have claimed a new process for making artificial alizarine, but it had no rights to claim the product. 7

Thus, in BASF, the Supreme Court addressed both infringement and validity (in terms of patentability) of product claims containing process limitations. In judging infringement, the Court treated the process terms as limitations on the patentee’s exclusive rights. In assessing validity in terms of patentability, the Court forbade an applicant from claiming an old product by merely adding a new process. The infringement rule focused on the process as a limitation; the other rule focused on the product with less regard for the process limits. A decision from the Patent Office, for instance, cited BASF twice — once for an infringement rule and oncé for a patent-ability rule. Ex parte Fesenmeier, 1922 C.D. 18, 302 Off. Gaz. Pat. Office Í99 (1922).

In Plummer v. Sargent, 120 U.S. 442, 7 S.Ct. 640, 30 L.Ed. 737 (1887), the Supreme Court reviewed two patents. One claimed an improved process for bronzing or coloring iron; another claimed the product of that process. Id. at 443, 7 S.Ct. at 641. After reviewing the prior art and descriptions of both patents, the Court stated:

[I]t may be assumed that the new article of manufacture called Tucker bronze is a product which results' from the use of the process described in the patent, and not one which may be produced in any other way. So that, whatever likeness may appear between the product of the process described in the patent and the article made by the. defendants, their identity is not established unless it is shown that they are made by the same process.

Id. at 448, 7 S.Ct. at 643. After finding it “difficult, if not impossible” to discern differences between the accused product and the product claimed with process limitations, the Court concluded that “the two processes differ.” Id. at 449, 7 S.Ct. at 644. Accordingly, the Court affirmed the circuit court’s noninfringement ruling. Id. at 450, 7 S.Ct. at 644.

In General Electric v. Wabash Appliance, 304 U.S. 364, 58 S.Ct. 899, 82 L.Ed. 1402 (1938), the Supreme Court considered a product claim for a filament in incandescent lamps. Under R.S. 4888 (the forerunner of the current 35 U.S.C. § 112 (1988)), the Supreme Court determined that the claim did not adequately describe the invention. General Elec., 304 U.S. at 368, 58 S.Ct. at 901. In reviewing the claim, the Court considered whether the process described in the specification made the claim *842 more definite. In that context, the Court stated:

Although in some instances a claim may validly describe a new product with some reference to the method of production, a patentee who does not distinguish his product from what is old except by reference, express or constructive, to the process by which he produced it, cannot secure a monopoly on the product by whatever means produced.

General Elec., 304 U.S. at 373, 58 S.Ct. at 904 (footnote omitted). At that point, the Court quoted from BASF: “nothing can be held to infringe the patent which is not made by that process.” Id. at 373-74, 58 S.Ct. at 904.

Thus, the Supreme Court stated in a line of cases that the infringement inquiry for product claims with process limitations focuses on whether the accused product was made by the claimed process or its equivalent. In reviewing for infringement, the regional circuits followed the rule that the process limits a product-by-process claim. For instance, in Hide-Ite Leather v. Fiber Products, 226 F. 34 (1st Cir.1915), the United States Court of Appeals for the First Circuit affirmed the trial court’s non-infringement holding because the accused product was not made by the claimed process or its equivalent. The First Circuit stated:

It is also a well-recognized rule that, although a product has definite characteristics by which it may be identified apart from the process, still, if in a claim for the product it is not so described, but is set forth in'the terms of the process, nothing can be held to infringe the claim which is not made by the process.

Id. at 36; see also Paeco, Inc. v. Applied Moldings, 562 F.2d 870, 876, 194 USPQ 353, 358 (3d Cir.1977); United States Gypsum Co. v. Consolidated Expanded Metal Cos., 130 F.2d 888, 893, 55 USPQ 247, 252 (6th Cir.), cert, denied, 317 U.S. 698, 63 S.Ct. 441, 87 L.Ed. 558 (1943); Buono v. Yankee Maid Dress Corp., 77 F.2d 274, 279, 26 USPQ 57, 61 (2d Cir.1935); Downes v. Teter-Heany Dev. Co., 150 F. 122, 124 (3d Cir.), cert, denied, 205 U.S. 543, 27 S.Ct. 790, 51 L.Ed. 922 (1907).

In Parke, Davis & Co. v. American Cyanamid Co., 207 F.2d 571, 572, 99 USPQ 237, 238 (6th Cir.1953), the pat-entee’s product claim included a process limitation: “said acid being the acid derived by autolysis of mammalian liver tissue.” The Sixth Circuit determined that a synthetic folic acid process did not infringe the claimed extraction process. Id. Likewise, the Seventh Circuit in National Carbon Co. v. Western Shade Cloth Co., 93 F.2d 94, 97 (7th Cir.1937), cert, denied, 304 U.S. 570, 58 S.Ct. 1039, 82 L.Ed. 1535 (1938), stated: “It has been said that a claim for a product produced by any process which will produce a like result covers the product only when made by equivalent processes.” Indeed sister circuits that examined the standard for infringement of product-by-process claims uniformly followed the Supreme Court’s lead.

Commentators have generally read this line of cases to mean that, in infringement proceedings, the process in a product-by-process claim serves as a limitation. In his treatise, Donald Chisum states:

A “product-by-process” claim is one in which the product is defined at least in part in terms of the method or process by which it is made. Most decisions hold that such a claim is infringed only by a product made through a substantially identical process....

2 D. Chisum, Patents § 8.05 (1991) (footnotes omitted). 8 Lipscomb’s Walker on Patents states:

A claim to a product by a specific process is not infringed by the same product made by a different process.

3 E. Lipscomb III, Lipscomb’s Walker on Patents § 11:19 (3d ed. 1985). Another legal text states:

Product-by-process claims are usually deemed infringed only by a product made by the same process.

*843 1 Iver P. Cooper, Biotechnology and the Law § 5B.05[2] (1991). Finally, one treatise concludes:

There is considerable ease authority supporting th[e] position [that pr