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Overcoming Uncertainties Surrounding the On-Sale Bar

The America Invents Act has been in force for over 6 years but questions still linger about one of its key sections: 35 U.S.C. § 102.

35 U.S.C. § 102(a)(1) states that “[a] person shall be entitled to a patent unless… the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.”

This section is the basis for the “on sale” bar which prevents an inventor from obtaining a patent if a sale or an offer for sale is made more than 1 year before the filing of a patent application.

In order to trigger the on-sale bar, i) an invention must be ready for patenting and ii) a commercial offer for sale of the invention must be made. The commercial transaction will typically involve a change of title. For instance, a distribution agreement involving a change of title from a manufacturer to a buyer will be sufficient as a sale while contracting with a manufacturer to make product without a change of title is probably not enough to be one.

One issue regarding the on-sale bar that required clarification earlier this year by the Supreme Court was whether the term “sale” applied to secret sales as well public sales (Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc.). After the AIA was enacted, the United States Patent and Trademark Office (USPTO) had taken the position that, in light of the expression “or otherwise available to the public” which acts as a residual clause in 35 U.S.C. § 102(a)(1), the term “on sale” does not cover secret sales and that a secret sale of an invention would not bar patentability of the invention. However, the Supreme Court held that the term “on sale” also covers a secret sale. Although the outcome in the Helsinn case is consistent with and thus preserves decades of jurisprudence relating to pre-AIA “on sale,” Helsinn’s patent as well as numerous patents that had followed the USPTO’s interpretation of “on sale” are now invalid as a result of the ruling.

The uncertainties regarding the term “on sale” do not end here. While 35 U.S.C. § 102(a)(1) does not specifically mention a 1-year grace period as it relates to sale activities, the patent community has accepted that such a grace period still exists in part because it has existed for decades before the AIA and in part because of 35 U.S.C. § 102(b)(1). 35 U.S.C. § 102(b)(1) provides a grace period for an inventor making a disclosure one year or less before filing a patent application as long as the following condition is met – the disclosure of the invention is derived from the inventor’s knowledge or another person’s disclosure of the invention is preceded by public disclosure of the invention derived from the inventor’s knowledge. Because 35 U.S.C. § 102(b)(1) uses the term “disclosure” which is not defined in the statute, it is unclear what to make of the aforementioned condition when this section is applied to sales or public uses.

In light of these uncertainties, the safest course of action for anyone looking to get a patent seems to be to file an application before engaging in any type of sale activity. The fact that some countries offer no grace period for a pre-filing disclosure also supports this course of action.

In particular, a provisional application seems to offer timeless benefits for an inventor looking to engage in some type of sale activities. A provisional application allows the inventor to secure a filing date at the USPTO without the financial burden of a non-provisional application. During the 12 months that are available prior to filing a non-provisional application, an inventor can evaluate the marketability of the invention and whether to even pursue a patent for the invention. Although it is common practice to file a provisional application by submitting the materials from the inventor(s) in order to keep costs down, it is worthwhile to invest in a solid written description as part of the provisional application. This will ensure that the provisional application provides support for the invention defined in the non-provisional application and that the inventor’s entitlement to the earliest effective filing has a solid foundation.

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