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On Sale Bar

Posted Thursday, April 5, 2012 by Mike Cicero

Under United States patent law there are certain activities which amount to statutory bars against obtaining a patent. These activities are defined by 35 U.S.C. §102(b) which states “[a] person shall be entitled to a patent unless…the invention was … on sale in this country, more than one year prior to the date of the application for patent in the United States.” Because the critical date here is one year before the actual filing date, as opposed to the effective filing date, the applicant cannot swear back of an offer for sale. Moreover, nothing in this statute limits the bar to sales by the inventor or applicant; thus, even an unauthorized offer for sale of the invention by a third-party can act as a statutory bar. Because the exact meaning of this language can have enormous consequences for an invention of high economic value, it has been the subject of extensive litigation. One very difficult issue that has been the subject of such litigation is: at what developmental stage must an invention be before an offer for sale will start the 1-year countdown to a statutory bar?

The issue of developmental stage of the invention was litigated in Pfaff v. Wells Electronics, where the Supreme Court of the United States determined “whether the commercial marketing of a newly invented product may mark the beginning of the 1-year period even though the invention has not yet been reduced to practice.” 525 U.S. 55 (1998). Because the petitioner in this case, Wayne Pfaff, filed the relevant patent application on April 19, 1982, any activity that happened prior to April 19, 1981, and would trigger the on-sale bar 1-year countdown, would constitute a statutory bar against his obtaining a patent.

The relevant activities in Pfaff can be summarized in roughly chronological order as follows: (1) Pfaff sent detailed engineering drawings to a manufacture in February or March of 1981; (2) sometime prior to March 17, 1981, Pfaff showed a sketch of the concept to Texas Instruments; (3) on April 8, 1981, Texas Instruments provided written confirmation to Pfaff of an orally placed order for 30,100 units for a total price of $91,155 (the invention had not been made, tested, or otherwise reduced to practice); (4) sometime between receiving the drawings from Pfaff and July 1981, the manufacturer built the custom tooling required to produce the invention; and, finally, (5) around July 1981, Pfaff reduced the invention to practice and filled the order placed by Texas Instruments.

Pfaff was issued Patent No. 4,491,337 on January 1, 1985, and later sued Wells Electronics alleging infringement of that patent. Wells Electronics countered that the patent was invalid due to an on-sale bar under §102(b). In response, Pfaff argued that an on-sale bar cannot occur until the invention is actually reduced to practice. Ultimately, the Supreme Court granted certiorari (review) to explore the relevancy, if any, of an invention’s reduction to practice on a §102(b) statutory bar.

At the onset of its analysis, the Court flatly stated that the word “invention” in 35 U.S.C. 102 “unquestionably refers to the inventor’s conception rather than to a physical embodiment of that idea.” Id. The Court further notes that the statute does not require an invention to be reduced to practice prior to obtaining a patent (although filing for a patent does constitute a constructive reduction to practice assuming its description is enabling under 35 U.S.C. §112), and that the only reference to reduction to practice in the statute comes from the language of 102(g) for deciding an interference proceeding. Thus, “[the Court could] find no basis in the text of §102(b) or in the facts of [the] case for concluding that Pfaff’s invention was not ‘on sale’ within the meaning of the statute until after it had been reduced to practice.” Id. In other words, answer to the issue the Court set out to settle is: yes, the commercial marketing of an invention can start the 1-year clock event though the invention has not yet been reduced to practice.

The Court went on to state that the word “invention” must refer to a completed concept rather than one that one that is merely “substantially complete.” Id. While an actual reduction to practice is sufficient to prove that the inventive concept is complete, it is not a necessary condition for an inventive concept to be complete.

In conclusion, the Court held “that the on sale bar applies when two conditions are satisfied before the critical date (the date 1 year prior to the filing date).” These conditions are that the invention must be (1) the subject of a commercial sale, and (2) ready for patenting. In this case, prior to the critical date Pfaff’s invention was the subject of a commercial sale, evidenced by the written confirmation provided by Texas Instruments, and was ready for patenting, evidenced by the fact that detailed drawings enable the manufacture to make the invention. Therefore, Pfaff’s Patent No. 4,491,337 was held to be invalid.

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