Offer Or Quote ' Contract Question Remains The Source Of Patent Peril

• Jurisdiction: United States,Federal
• Law Firm: McNees Wallace & Nurick
• Subject Matter: Corporate/Commercial Law, Intellectual Property, Contracts and Commercial Law, Patent
• Author: Mr Shawn K. Leppo and Yangamo Harvey Ahn
• Published date: 08 March 2023

Innovators are often anxious to get a new product to market but moving too quickly can expose a major consequence lurking behind what might have seemed like a trivial distinction at the time.

In principle, an inventor loses the right to seek a patent if the invention is put into public use before filing a patent application. U.S. patent law provides a one year grace period for a number of activities that seeks balance between the public's right to retain knowledge already in the public domain with the inventor's right to control whether and when to patent an invention.

One such grace period is often referred to as the "on-sale bar," which renders an invention unpatentable if it was sold or offered for sale more than one year before the patent application's filing date. In Pfaff v. Wells Elecs., Inc., 525 U.S. 55 (1998), the Supreme Court articulated a two-prong test, holding the on-sale bar applies when, before the critical date (one year prior to the filing date of a patent application), the claimed invention was (1) the subject of a commercial offer for sale and (2) ready for patenting.

The Supreme Court explained the "ready for patenting" prong of Pfaff in detail, but it provided less input on "commercial offer for sale". The Court of Appeals for the Federal Circuit has periodically provided guidance for that prong over the past twenty years. In doing so, the Federal Circuit has applied traditional contract law principles, often relying on the Uniform Commercial Code, Restatement (Second) of Contracts, and other similar treatises. Thus, only an offer that the other party could make into a binding contract by simple acceptance constitutes an offer for sale. However, as a recent case demonstrates, that determination often still leaves room for interpretation based on the underlying facts. Moreover, by the time the relevance of the activity comes into question many years later, the relative importance of the outcome is likely to far outweigh what might or might not have been intended by the parties at the time.

In Junker v. Med. Components, Inc., 25 F.4th 1027 (Fed. Cir. 2022), cert. denied, 143 S. Ct. 205 (2022), the Federal Circuit examined whether a communication was a commercial offer for sale or a mere invitation for an offer or further negotiation. The former would invoke the first prong of Pfaff, while the latter would not.

In this case, the inventor developed a new design of a handle for a medical device. By January 1999, in cooperation with the...