The On-Sale Bar to Patentability: Considering the AIA’s Changes

The recently enacted America Invents Act (“AIA”) changes the current definition of prior art provided by 35 U.S.C. § 102, and in doing so changes the so-called on-sale bar to patentability. Although the AIA changes to the on-sale bar will not affect patents whose applications are filed before March 16, 2013, the changes and their effects warrant efforts to begin considering what measures and strategies inventors, patentees, and their assignees should take to avoid falling within the AIA’s on-sale bar.

Presently, the on-sale bar provides: “A person shall be entitled to a patent unless . . . (b) the invention was . . . on sale in this country, more than one year prior to the date of the application for the patent in the United States.” 35 U.S.C. § 102 (underlining added). And, the courts have concluded that this bar is triggered when the invention is (1) the subject of a commercial offer for sale, and (2) ready for patenting. Pfaff v. Wells Elec.s, Inc., 525 U.S. 55, 67 (1998). Simply, if an embodiment of the invention is merely offered for sale once in the United States, by anyone—not just the inventor or patentee—more than one year before the patent application is filed, any resulting patent is invalid.

The AIA changes to the on-sale bar are found in the new section 102, which reads: “(a) A person shall be entitled to a patent unless – (1) the claimed invention was . . . on sale, or otherwise available to the public before the effective filing date of the claimed invention.” From the face of this text both the territoriality requirements of “in this country” and the grace period of “more than one year” are notably absent. Additionally, the phrase in the AIA’s new section 102 “otherwise available to the public” implies that the preceding, including the AIA’s on-sale bar, pertains to only public things. Each of these three distinctions between the old and new on-sale bar deserves separate consideration and may result in a significant shift in the business, prosecution, and litigation practices of repeat players, such as research and development firms, manufacturers, and non-practicing entities (a/k/a patent trolls).

First, the grace period is still present in the AIA, and it applies to “a disclosure” of the invention, which equally implicates all of the traditional categories of anticipatory prior art; namely, printed publications, public use, and sales. But, it may be difficult to consider each sale, or offer for sale, of an embodiment of an invention as “a disclosure” of that invention, especially where an offer to sale is made for a product from which the invention cannot necessarily be determined. At the very least the use of “a disclosure” seems to be an imprecise use of words that has created an ambiguity. And even though the AIA’s legislative history suggests that the on‑sale bar is not to be excluded from the new grace period, whether the courts will use the term “a disclosure” to close-off the grace period vis-à-vis the on-sale bar, in whole or in part, is unknown.

Further, the grace period will no longer be the straightforward “more than one year” inquiry. The AIA’s new section 102(b) defines the new grace period, and essentially limits the grace period for those disclosures made by the inventors, their privities, and those “who obtained the subject matter directly from” the inventors. And thus, under the AIA, an applicant or patentee may not be able to afford itself of the new grace period where an offer for sale of the claimed invention was made by a third party (e.g. a close-in-time inventor). See also In re Caveney, 761 F.2d 671, 675-76 (Fed. Cir. 1985) (distinguishing between sales made by the patentee and an independent third party where the patented method was kept secret before and after the sale of the unpatented product). Such an implication of the AIA’s changes to the on-sale bar is especially interesting given the AIA’s ostensible purpose of moving the United Stated from a “first to invent” system to a “first inventor to file” system.

Second, the territorial aspect of the on-sale bar will be eliminated. The AIA expands the scope of the on-sale bar to include all sales. This extra-territorial expansion will likely lead to additional layers of complexity in analyzing whether the new on-sale bar will be triggered by a firm’s commercial activity—both legally and factually. See Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1047 (announcing that the United States’ Uniform Commercial Code will determine whether communications rise to the level of an offer for sale).

Third, the AIA’s use of the phrase “otherwise available to the public” appears to suggest that the AIA’s on-sale bar applies only to public sales or offers for sale. In other words, the new on-sale bar could be read to allow private sales and offers for sale of the invention. Under the current section 102(b) it has long been held that the term “public” modifies only “use”—not “sale”—meaning that the current on-sale bar is triggered equally by public and private sales or offers for sale. Hobbes v. United States, 451 F.2d 849 (5th Cir. 1971). And, the principles of statutory construction suggest that the new on-sale bar has not changed in this regard because the AIA does not expressly state that it applies only to public sales or offers. But, it is likely that the courts will need to confirm whether the AIA’s on-sale bar is triggered by all sales and offers before anyone may act with certainty in timing the commercialization of inventions.

These three distinctions between the current and AIA on-sale bar provisions taken individually create sufficient uncertainty to take pause and consider their import. And, when taken together, the new on-sale bar may serve to significantly complicate the inquiry of when and where an invention to be patented may be marketed, as well as who may market that invention. Especially for those repeat players having business operations here and abroad.

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Posted on February 3, 2012, in Patent. Bookmark the permalink. Comments Off on The On-Sale Bar to Patentability: Considering the AIA’s Changes.

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