Bad patent outcomes can lead to bad business outcomes. Dippin' Dots filed for Chapter 11 bankruptcy on Thursday, November 3, 2011. Within an article by the Wall Street Journal, one finds reference to the patent litigation:
Its sales woes came at the tail end of an expensive legal battle—one that the company ultimately lost—over whether founder Curt Jones properly filed the patents that protected its special freezing process.
Dippin' Dots now becomes a poster child for how failure to handle patenting properly can ruin a business.
The WSJ post also included the text: The company has been hailed as an achievement in entrepreneurship by celebrities such as Oprah Winfrey. At the end of the day, Dippin' Dots may not have changed the way we live, and thus may not have been an innovation. A jury decided, and an appeals court affirmed, that is was NOT a patentable invention.
In covering the bankruptcy story, yahoo.news noted the connection of inventor Jones to SIU:
Curt Jones, a microbiology graduate of Southern Illinois University in Carbondale who now lives in Nashville, Tenn., created the ice cream beads in 1988. After having to sell a car and raid savings to keep going, he grew the business to nearly 2,000 locations across the country, from mall kiosks to amusement parks and stadiums. The ice cream is stored at 40 degrees below zero and sold at 20 below zero.
SIU is otherwise known for having a President, Glenn Poshard, who plagiarized his Ph.D. thesis. [See, for example,
Poshard's revisions to plagiarized thesis completed]
***As further information on the sales not mentioned to the Patent Office, from the decision:
Prior art under the § 102(b) on-sale bar is also prior art for the purposes of obviousness under § 103. See LaBounty Mfg. v. Int'l Trade Comm'n, 958 F.2d 1066, 1071 (Fed.Cir. 1992) ("Section 102(b) may create a bar to patentability . . . in conjunction with [§ 103], if the claimed invention would have been obvious from the on-sale device in conjunction with the prior art."). DDI argues that the sales at Festival Market were experimental in nature and therefore avoid the on-sale bar. In light of Jones's testimony that his purpose was to determine the marketability of his ice cream product and not to improve it technically, the jury could have found facts supporting a conclusion that the sales were not experimental. See In re Smith, 714 F.2d 1127, 1135 (Fed.Cir.1983) ("The experimental use exception . . . does not include market testing where the inventor is attempting to gauge consumer demand for his claimed invention."); see also Paragon Podiatry Lab., Inc. v. KLM Labs. Inc., 984 F.2d 1182, 1193 (Fed.Cir.1993). The Festival Market sales are therefore prior art citable against the patent claims for obviousness purposes.
The second question is whether the Festival Market sales, considered as prior art to the '156 patent, render its claims invalid for obviousness. We conclude that they do. The first three steps of the patented process (preparing, dripping, and freezing) were concededly practiced at Festival Market. The last two — bringing to a higher temperature and then serving at that temperature for direct consumption — were at least very closely approximated. No evidence of the exact temperature of any product served at Festival Market has been presented, but it would have been obvious in light of the activity there to measure that temperature and serve the product within an easily determined range of palatability. The fourth step, "storing" at a very cold temperature for an extended period of time, may not have been present, but extended cold storage was an obvious
elaboration on the Festival Market sales in order to distribute and retail the product. The motivation for DDI to make these trivial modifications is readily apparent from the problem to be solved. Someone of ordinary skill in the art of ice cream retailing, seeking to commercially develop the inventive kernel found at Festival Market, would immediately seek the appropriate temperature ranges within which to store and serve the product. See Alza, 464 F.3d at 1291 (noting that teaching, motivation, or suggestion can come from nature of problem to be solved).
**Of the inequitable conduct matter:
Absent explanation, the evidence of a knowing failure to disclose sales that bear all the earmarks of commercialization reasonably supports an inference that the inventor's attorney intended to mislead the PTO. The concealment of sales information can be particularly egregious because, unlike the applicant's failure to disclose, for example, a material patent reference, the examiner has no way of securing the information on his own. (...)
However, the district court was permitted to balance the relatively weak evidence of intent together with the strong evidence that DDI's omission was highly material to the issuance of the '156 patent and to find that on balance, inequitable conduct had occurred.4 Such a finding, as an exercise of the district court's equitable powers, is within its discretion. See Molins, 48 F.3d at 1178 ("Once threshold findings of materiality and intent are established, the court must weigh them to determine whether the equities warrant a conclusion that inequitable conduct occurred."). We perceive no abuse of discretion here. The district court's inequitable conduct finding is correct.
**In passing, a New York Times blog describes the 102(b) activities of Dippin' Dots in the following way:
Frosty Bites, however, argued that Dippin’ Dots had been selling its ice cream for more than a year before applying for a patent, a technicality that would invalidate its exclusive claim to the technology under a patent law provision. The jury sided with Frosty Bites.