Social Networking Patent Invalidated Due To Offer For Sale Under 35 U.S.C. § 102(b)

This article previously appeared in Last Month at the Federal Circuit, June 2012

Judges: Lourie (author), Moore, Wallach

[Appealed from D. Del., Judge Stark]

In Leader Technologies, Inc. v. Facebook, Inc., No. 11-1366 (Fed. Cir. May 8, 2012), the Federal Circuit affirmed the invalidation of U.S. Patent No. 7,139,761 ("the '761 patent"), finding substantial evidence to support a jury's finding that the claimed invention was offered for sale and publicly demonstrated prior to the critical date.

Leader Technologies, Inc. ("Leader") owns the '761 patent, which is directed to software that allows users on a network to communicate on a large scale. Broadly, the '761 patent purports to improve upon conventional systems by associating data with an individual, group of individuals, and topical content, and not simply with a folder, as in traditional systems. The system achieves this improvement by having users collaborate and communicate through "boards" that are accessible through an Internet browser and appear as a webpage. To do so, the data management system employs metadata.

Prior to filing the application that issued as the '761 patent in December 2003, Leader developed a product called Leader2Leader®. Leader's founder, Michael McKibben, testified that the '761 patent claims cover Leader2Leader®'s "underlying engine," which is referred to as the Digital Leaderboard®. In January 2002, Leader presented a white paper to Wright-Patterson Air Force Base offering 20,000 licenses to the Leader2Leader® product and discussing the functionality of the system. Leader also represented that the Digital Leaderboard® software had been fully developed. In November 2002, Leader demonstrated the Leader2Leader® system to Boston Scientific and by December 8, 2002, had demonstrated it to a number of other companies. Leader filed a provisional patent application on December 11, 2002, and, on December 10, 2003, it filed the nonprovisional application that issued as the '761 patent.

When Leader sued Facebook, Inc. ("Facebook") for infringement in 2008, the jury returned a verdict in favor of Facebook, finding that the '761 patent was subject to an invalidating sale and an invalidating public use. The district court thereafter denied Leader's post-trial motions for JMOL or, in the alternative, a new trial.

On appeal, the Federal Circuit agreed with Facebook that legally sufficient evidence supported the jury's verdict that the version of Leader2Leader® demonstrated...