Federal Circuit Reverses Summary Judgment Granted Pursuant To The Sham-Affidavit Doctrine
On May 21, 2019, the Court of Appeals for the Federal Circuit (“CAFC”) issued an opinion reversing a summary judgment of patent invalidity granted by the U.S. District Court for the District of Delaware. Quest Integrity USA, LLC, v. Cokebusters USA Inc., __ F.3d__ (Fed. Cir. May 21, 2019). The CAFC ruled that the district court abused its discretion and wrongly applied the sham-affidavit doctrine when it disregarded affidavits submitted by the patent owner, and that those affidavits created a material issue of disputed fact and should have blocked summary judgment.
In this infringement case, the accused infringer argued that the asserted claims, which are directed to systems and methods for displaying data collected from a furnace-inspection system, are invalid under the on-sale bar, 35 U.S.C. § 102(b) (pre-AIA). It was uncontested that before the critical date the patent owner had sold furnace-inspection services. During his deposition, the patent owner’s Rule 30(b)(6) corporate designee admitted that those services had included all of the claimed steps. Relying on the deposition, the accused infringer filed a motion for summary judgment of invalidity.
The patent submitted two affidavits in opposition to the motion, both averring that certain claimed steps had not been performed during the furnace inspections in question. The corporate designee was one of the affiants, along with another employee of the patent owner.
The district court ruled that the affidavits should be disregarded under the sham-affidavit doctrine and therefore did not create a disputed issue of material fact. As described by the CAFC in the opinion, the sham-affidavit doctrine prevents a party from avoiding summary judgment “by filing an affidavit disputing his or her own sworn testimony without demonstrating a plausible explanation for the conflict.”
In this case, the patent owner argued that dated comments in its source code indicated that the disputed functionality was not, in fact, active in its software at the time of the furnace inspections in question. The corporate designee explained that had he seen those comments during his deposition, he would have testified accordingly.
The CAFC ruled, first, that the sham-affidavit doctrine did not apply to the employee of the patent owner, because he had not given prior inconsistent deposition testimony.
The CAFC ruled, second, that the corporate designee’s explanation for the discrepancy between his deposition and his affidavit was “plausible.” Coupled with the corroborating evidence of the source code and contemporaneous records of the furnace inspections, his explanation “took the declaration out of the sham affidavit doctrine.” The discrepancy thus became an issue of fact for trial.