Reversing a district court’s summary judgment of invalidity and non-infringement, the U.S. Court of Appeals for the Federal Circuit held that any objective evidence of nonobviousness must always be considered in evaluating obviousness under § 103(a). The Court further held that a contract between two United States companies for the sale of a patented invention with delivery and performance in the United States constitutes an offer for sale and sale within the meaning of 35 U.S.C. § 271(a). Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., Case No. 09-1556 (Fed. Cir., Aug. 18, 2010) (Moore, J.).

Transocean sued Maersk for infringement of three offshore drilling patents directed to a “dual-activity” rig that allows a single derrick with two advancing stations to perform parallel drilling operations. Maersk argued that the claims were invalid and that its activities did not fall within the scope of § 271(a).

The district court found that the asserted claims were obvious under Section 103(a), in light of two prior art references. Although the Federal Circuit agreed that the two prior art references established a prima facie case of obviousness, it held that the district court erred by failing to consider Transocean’s significant objective evidence of nonobviousness. Transocean presented evidence of industry skepticism, industry praise for Transocean’s dual activity rig, commercial success in its implementation of the dual activity invention and invention success, which caused others to copy it. The Federal Circuit stressed that a district court “must always consider any objective evidence of nonobviousness presented in a case.”

The district court also concluded that Maersk’s activities did not constitute either an offer for sale or sale within the United States under § 271(a) because contract negotiation and execution took place abroad, although the contract was between two U.S. companies and specified performance in the U.S. Gulf of Mexico. The Federal Circuit disagreed holding that an offer made between two U.S. companies to sell a product for delivery and use within the United States constitutes an offer to sell within the United States, regardless of whether it was negotiated or signed within the this country. The Federal Circuit stressed that “[t]he focus should not be on the location of the offer, but rather the location of the future sale that would occur pursuant to the offer.”

Practice Note: To overcome an attack on validity under § 103(a), a party should consider presenting objective evidence of nonobviousness because the Federal Circuit has made clear that district courts must always consider this type of evidence in evaluating the obviousness of a claimed invention. For infringement purposes, companies should be aware that the location of a contemplated sale controls whether there is an offer to sell within the U.S., rather than the location of the contract negotiation or execution.