Netscape Communications Corp. v. Konrad

Allan Konrad (defendant) worked at a US Department of Energy (DOE) Office of Science laboratory managed by the University of California (UC). On September 26, 1990, Konrad and an assistant, Cynthia Hertzer, successfully tested a first prototype of a remote database object system that allowed users to remotely access a database residing on a computer maintained on the UC Berkeley campus. In 1991, Konrad demonstrated the first prototype to UC Berkeley personnel without confidentiality restrictions. Also in 1991, Konrad and Hertzer developed a second prototype of the remote database object system (the second prototype) that would allow users to access a high-energy-physics database maintained at the Stanford Linear Accelerator Center (SLAC), operated by Stanford University. Konrad demonstrated the second prototype to SLAC personnel, again without confidentiality restrictions. In September 1991, Konrad offered to create a working version of the second prototype to the University Research Association Superconducting Super Collider Laboratory (SSCL). In exchange for his creation of a working version of the second prototype, the SSCL would fully employ Konrad for four months or pay him no more than $48,000. Konrad and the SSCL memorialized these terms in a memorandum purchase order. On January 8, 1993, Konrad filed his first patent application directed to his invention. He later filed two additional related patent applications. All three applications issued as US patents. Later, Netscape Communications Corp. (Netscape) (plaintiff) brought a declaratory-judgment action of patent invalidity against Konrad in district court and moved for partial summary judgment that the invention prototypes were in public use or on sale under pre-AIA 35 U.S.C. § 102(b) before the critical date—namely, January 8, 1992, one year prior to the first application filing date. In the district court, Konrad admitted that his invention was reduced to practice on or about September 26, 1990. This admission meant that Konrad conceded that his invention was ready for patenting before the critical date (January 8, 1992), thereby satisfying one of the required elements for establishing invalidity under the § 102(b) on-sale bar. However, Konrad argued that his invention demonstrations were sufficiently confidential because he had submitted his invention through UC’s patent-disclosure program and because the DOE had funded his invention, the DOE owned the invention, and anyone working on the invention was subject to DOE confidentiality. Konrad also argued that the arrangement proposing his four-month employment at the SSCL was not a commercial offer for sale, characterizing the memorandum purchase order as a mere accounting instrument as opposed to a contract. Konrad argued that therefore, the second element to find invalidity under the on-sale bar was not met. Rejecting those arguments, the district court granted Netscape’s motion, finding that: (1) Konrad’s demonstrations at UC Berkeley and to the SLAC personnel constituted invalidating public uses under pre-AIA 35 U.S.C. § 102(b), and (2) Konrad’s offer to the SSCL, coupled with Konrad’s reduction-to-practice admission, satisfied the on-sale bar of § 102(b). Konrad appealed.