DEFINITIVE HOLDINGS v. POWERTEQ
Authored by: Jeremy J. Gustrowsky
The Federal Circuit affirmed that U.S. Patent No. 8,458,689 is invalid because a similar device was already being sold to the public years before the patent’s critical date. Definitive Holdings sued Powerteq, alleging infringement of several claims covering methods and devices for reprogramming engine control software. Powerteq responded by arguing that a third-party product called the “Hypertech Power Programmer III” (or “PP3”), which had been commercially available since at least 1996, already did everything the patent claimed. The district court agreed and granted summary judgment of invalidity, and the Federal Circuit affirmed.
A central issue on appeal was whether certain evidence should have been kept out of the case. Definitive challenged the testimony of Hypertech’s corporate representative, Mr. Ramsey, arguing he lacked personal knowledge about the PP3’s sales history because he joined the company long after the device stopped being sold. The Federal Circuit sidestepped the broader legal question about corporate representative testimony, finding that Mr. Ramsey had enough firsthand knowledge to authenticate key sales records and to confirm that the source code analyzed by Powerteq’s expert matched the software running on a 1996 PP3 device. He had personally reviewed the sales records, examined a sealed 1996 device, and compared its software version to internal records.
Definitive also argued that the PP3’s source code was inadmissible hearsay. The court disagreed, drawing a distinction between the actual code commands and any human-readable comments embedded in the code. Source code commands are instructions to a computer. They are neither true nor false and therefore cannot be offered “for the truth of the matter asserted,” which is the legal test for hearsay. The court distinguished this situation from a prior case involving unreliable paper printouts of source code, noting that here the source code was properly authenticated and the expert testimony was based on the commands themselves.
Definitive’s most significant legal argument was that the on-sale bar should not apply because Hypertech never publicly disclosed the inner workings of the PP3. In other words, Definitive argued that simply selling a device is not enough to invalidate a patent if the buyer cannot see how the device works internally. The Federal Circuit rejected this argument, citing Supreme Court precedent holding that a sale can trigger the on-sale bar “without regard to whether the offer discloses each detail of the invention.” The court explained that this was not a case involving a secret manufacturing process. Hypertech was selling the PP3 directly to the public, and consumers were actively using the patented features. Allowing a patent to remove that technology from public use would undermine the purpose of the on-sale bar.
With all of Definitive’s evidentiary and legal challenges resolved against it, the Federal Circuit affirmed the district court’s judgment. Because Definitive had chosen not to dispute the underlying facts and instead relied entirely on keeping evidence out, once those evidentiary objections failed, there was no factual dispute left to send to a jury.