Patentability And Commercial Offers For Sale

Article by Mike Boggs and Jason Link

One of the requirements for obtaining a patent is that the invention be novel. The requirements for novelty are set forth in title 35, section 102 of the United States Code. For example, section 102(b) states that a person is not entitled to a patent if the invention "was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States."1 Section 102(b) includes what is known as the "on-sale bar," whereby a person who sells or offers to sell an invention in the United States more than one year before filing a patent application is barred from receiving a patent.

The on-sale bar arises often in patent infringement litigation. A party accused of infringement may assert that the patent is invalid due to an on-sale bar. To prevail, the accused infringer must demonstrate by clear and convincing evidence that "there was a definite sale or offer for sale of the claimed invention" more than one year before the patent application was filed.2 Thus, it is important for litigators to understand the law as it relates to the on-sale bar. Similarly, in the context of intellectual property counseling, an attorney needs to understand the on-sale bar in order to advise a client on whether to seek patent protection.

There are several recent developments concerning the on-sale bar as it relates to offers for sale. Recent cases from the Federal Circuit Court of Appeals have applied the United States Supreme Court's decision in Pfaff v. Wells Electronics, Inc 3 to disputes about the on-sale bar in the context of offers of sale.

I. Pfaffs v Wells Electronics, Inc.

Before 1998, the Federal Circuit applied a "totality of the circumstances" test to determine whether an invention had been offered for sale. Under this test, " 'all of the circumstances surrounding the sale or offer to sell, including the stage of development of the invention and the nature of the invention, must be considered and weighed against the policies underlying section 102(b).' "4

In 1998, the Supreme Court discarded this test in Pfaff v. Wells Electronics, Inc. 5 and developed a two-pronged test for determining whether an invention was on-sale. "First, the product must be the subject of a commercial offer for sale. . . Second, the invention must be ready for patenting."6 The Supreme Court stated that "the second condition may be satisfied in at least two ways: by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention." 7

Two cases from the Federal Circuit discuss what constitutes a commercial offer for sale in accordance with the first prong of the Pfaff test.8

II. Group One, Ltd v Hallmark Cards, Inc.

The Federal Circuit interpreted the term "commercial offer for sale" in Group One, Ltd v. Hallmark Cards, Inc. 9 In this case, Group One sued Hallmark alleging, in addition to claims for theft of trade secrets, infringement of two patents related to producing curled and shredded ribbon for packaging. Hallmark moved for summary judgment asserting that the patents were invalid because the patented machine and method had been on sale more than one year prior to the filing date of the application.

Before filing his application, the inventor had attempted to generate interest in his device by contacting Hallmark and others. In a letter to Hallmark, the inventor stated, "We have developed a machine...