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On-sale Bar: Patentability and Selling Your Invention

On-sale Bar: Patentability and Selling Your Invention

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A deep dive into the on-sale bar and the trapdoor-esque implications of selling your innovation before filing.

Blog: https://www.aurorapatents.com/blog/on-sale-bar-patentability-and-selling-your-invention

Podcast: https://www.buzzsprout.com/1734511/8152380

A deep dive into the on-sale bar and the trapdoor-esque implications of selling your innovation before filing.

Blog: https://www.aurorapatents.com/blog/on-sale-bar-patentability-and-selling-your-invention

Podcast: https://www.buzzsprout.com/1734511/8152380

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On-sale Bar: Patentability and Selling Your Invention

  1. 1. Patently Strategic Musings ASHLEY SLOAT | January 26, 2020 This presentation is for information purposes only and does not constitute legal advice.
  2. 2. WELCOME! – Format • 10 Minutes Ice: Breaker • 15-20 Minutes: Problem Solving • 30-35 Minutes: New Material
  3. 3. Ice Breaker • New people - introduce yourself • What’s the best professional development book you ever read?
  4. 4. Shared Problem Solving • Fun Strategy Tidbits? • Any problems you are encountering with the USPTO? • Any practice issues arising? • Any technical issues you are facing?
  5. 5. “On-Sale” in the U.S. Pre-AIA: A person shall be entitled to a patent unless – the invention was …in public use or on sale in this country, more than one year prior to the date of application for patent in the United States AIA: A person shall be entitled to a patent unless— the claimed invention was … on sale, or otherwise available to the public before the effective filing date of the claimed invention...
  6. 6. Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998) The on-sale bar applies, pre-AIA or AIA, when the following are satisfied before the effective filing date: • The invention must be the subject of a commercial offer for sale • The invention must be ready for patenting, but does not require reduction to practice * If Pfaff would’ve paid for manufacturing services as opposed to selling the invention to TI, Pfaff wouldn’t have triggered the on-sale bar (Meds. Co. v. Hospira, Inc., 827 F.3d 1363 (Fed. Cir. 2016))
  7. 7. Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1048 (Fed. Cir. 2001) • "We have developed a machine which can curl and shred ribbon so that Hallmark can produce the product you see enclosed — a bag of already curled and shredded ribbon. . . . We could provide the machine and/or the technology and work on a license/royalty basis.” • ”while the pre-critical-date communications between Group One and Hallmark did not constitute a formal offer for sale in the contract sense, they did constitute an offer for sale in the § 102(b) on-sale bar context.” • Leases and Licenses also trigger the on-sale bar (Minton v. NASDAQ Inc. 336 F.3d 1473 (Fed.Cir.2003)) See also: Lacks Indus., Inc. v. McKechnie Vehicle Components USA, Inc., 322 F.3d 1335, 1348 (Fed. Cir. 2003)
  8. 8. Polara Eng’g Inc. v. Campbell Co., 894 F.3d 1339, 1348 (Fed. Cir. 2018). • The invention must be “ready for patenting” at the time of the sale and not in a stage of “experimental use.” • Although no confidentiality agreement, Polara protected confidentiality in other ways o Its own employees installed and maintained devices o Did not explain to Fullerton how they worked
  9. 9. RCA Corp. v. Data General Corp., 887 F.2d 1056, 12 USPQ2d 1449 (Fed. Cir. 1989) • More than 1 year before filing, RCA submitted a proposal in response to a Request for Proposal put out by the Federal Aviation Administration (FAA) for character generation equipment for use in air traffic control centers o Invention had been reduced to practice prior to the FAA proposal o Court ruled this as a definite offer to sell the Cole invention
  10. 10. Quest Integrity USA, LLC v. Cokebusters USA Inc., No. 2017-2423 (Fed. Cir. May 21, 2019) • Quest only provided final reports as a service, no hardware or software was provided to the client • Performance of the service for the client triggered the on-sale bar — rather than the sale of the physical or digital product • Performing a method indicates that the product is ready for patenting
  11. 11. Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321, 1328–29 (Fed. Cir. 2001) • The invention that was the subject matter of the offer for sale must satisfy each claim limitation of the patent – even inherently • In this case, the on-sale process inherently satisfied the high solids concentration and the small particle size claim limitations • Still applies even if “offer” is not accepted or an order is cancelled (Merck & Cie v. Watson Labs., Inc., 822 F.3d 1347 (Fed. Cir. 2016))
  12. 12. Helsinn v. Teva Pharma 586 U.S. (Supreme Court 2019) • Helsinn executed license and supply and purchase agreement with MGI Pharma, agreement required confidentiality and was publicly announced • Filed patent nearly 2 years later, covering the dosages used in the MGI agreement • Commercial sale to a 3rd party that is required to keep the invention secret, still triggers the on-sale bar
  13. 13. this Quote • “[i]t is a condition upon an inventor’s right to a patent that he shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy, or legal monopoly.” – Pfaff, 525 U.S. at 68 (quoting Metallizing Eng’g Co. v. Kenyon Bearing & Auto Parts Oc., 153 F.2d 516, 529 (2d Cir. 1946))
  14. 14. Conclusions • These may not constitute offers for sale: – Advertising a product not yet developed – Pre-announcing a product – Transferring technical knowledge about a process – since requires recipient to develop the product itself – Manufacturing agreement – Inventor maintains control in “experimental” use • These may constitute an offer for sale: – Licensing agreements – Performance of services related to a product (providing reports) – Providing detailed technical drawings to a potential licensee – Unaccepted or cancelled orders – Secret sales where the details of the invention are not made public

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