Death by a Salesman: The OnSale Bar
Patent Law – Prof Merges
10.5.2010
Agenda
1. On sale bar
2. Experimental Use exception to statutory
bars
Pfaff v. Wells
4/8/81
4/19/81
The “Critical Date”
for the
Patent Application
Texas Instruments places P.O.
for 30,100 new chip carriers
7/81
Order Filled
4/19/82
Pfaff Files Patent
Application
On Sale Bar – Litigation Issues
• Sale can be completely confidential and
still bar the patent
– A truly “secret” form of prior art
• Discovery is obviously crucial
– Spending time with the shoeboxes . . .
[I]t is evident that Pfaff could have
obtained a patent on his novel socket
when he accepted the purchase order
from Texas Instruments for 30,100
units. At that time he provided the
manufacturer with a description and
drawings that had "sufficient clearness
and precision to enable those skilled in
the matter" to produce the device.
-- 525 U.S. 55, 63
Major Developments Post-Pfaff
• What is a “sale or offer
for sale”?
• License vs. sale
Group One, Ltd. v. Hallmark Cards, Inc.
254 F.3d 1041
C.A.Fed.,2001.
[W]e will look to the Uniform Commercial
Code ("UCC") to define whether, as in
this case, a communication or series of
communications rises to the level of a
commercial offer for sale.
Hallmark Cards
“Because of the importance of having a
uniform national rule regarding the onsale bar, we hold that the question of
whether an invention is the subject of a
commercial offer for sale is a matter of
Federal Circuit law, to be analyzed
under the law of contracts as generally
understood.”
Problems with Hallmark?
• Lacks Industries, Inc. v. McKechnie
322 F.3d 1335, 1348 (Fed. Cir. 2003)
Lacks Industries
Lacks "(1) vigorously solicited wheel
manufacturers to whom Lacks could
sell overlays and on whose wheels
Lacks could perform its overlaybonding method, and (2) vigorously
solicited [original equipment
manufacturers] to specify and
purchase wheels clad by the laterpatented method."
• “[T]he Special Master did not find this
activity, nor any other of Lacks'
activities, to be a commercial offer for
sale as defined by contract law.”
– Lacks Industries, Inc. v. McKechnie
322 F.3d 1335, 1348 (Fed. Cir. 2003)
License vs. Sale
In re Kollar, 286 F.3d 1326 (CA FC 2002)
Elan Corp. PLC v. Andrx Pharmaceuticals
Inc., 366 F.3d 1336 (CA FC 2004)
In re Kollar
Although the Celanese Agreement specifically
contemplates that “resultant products”
manufactured using the claimed process
could potentially be sold, nowhere in the
Celanese Agreement is there an indication
that a product of the claimed process was
actually offered for sale. Rather, that
agreement constitutes a license to Celanese
under any future patents relating to Kollar's
invention.
We have held that merely
granting a license to an
invention, without more, does
not trigger the on-sale bar of
§102(b). See Mas-Hamilton
Group v. LaGard, Inc., 156 F.3d
1206, 1217, 48 USPQ2d 1010,
1019(Fed. Cir. 1998).
Elan v Andrx
•366 F.3d 1336
C.A.Fed. 2004.
Elan v Andrx
“I would like to confirm to you our licensing
and development plans for our once daily
tablet aimed at a launch in the U.S.A. by the
patent expiry date . . .”
“I would confirm that we would take
responsibility for supplying bulk tablets with
our objective being to achieve a price
structure allowing you an initial gross margin
based on current naproxen prices of not less
than 70% after taking into account our
processing charge . . . “
The letter to Lederle lacked any mention of
quantities, time of delivery, place of
delivery, or product specifications beyond
the general statement that the potential
product would be a 500 mg once-daily tablet
containing naproxen. Moreover, the dollar
amounts recited … are clearly not price
terms for the sale of tablets, but rather the
amount that Elan was requesting to form
and continue a partnership with Lederle.
Indeed, the letter explicitly refers to the total
as a “licensing fee.” – 366 F.3d at 1341
Elan v Andrx
“An offer to enter into a license under a
patent for future sale of the invention
covered by the patent when and if it
has been developed, which is what the
Lederle letter was, is not an offer to sell
the patented invention that constitutes
an on-sale bar.” – 366 F.3d 1336, at
1341
Enzo Biochem Inc. v. Gen-Probe Inc., 424
F.3d 1276 (CA FC 2005)
Provision of agreement executed more than one year
prior to filing date of patent in suit, which required
patentee to supply its customer with “active
ingredients” of polynucleotide probes for detecting
Neisseria gonorrhoeae bacteria, constituted
commercial offer to sell invention of patent, since
provision relates … to … commercial supply, since
provision in question cannot be considered mere
research and development provision relating to
undeveloped process, in that claimed polynucleotide
probe invention is tangible item that can be sold or
offered for sale, and since provision clearly
constitutes binding commitment by parties to enter
into commercial sale and purchase relationship.
But: “commercial activity” prong
of public use -- ??
• Invitrogen Corp. v. Biocrest Mfg., L.P.
424 F.3d 1374
C.A.Fed. 2005
A process for producing transformable
E. coli cells of improved competence
by a process comprising the
following steps in order:
(a) growing E. coli in a growthconductive medium at a temperature
of 18C to 32C;
(b) rendering said E. coli cells
competent; and
(c) freezing the cells.
The parties do not dispute that Invitrogen
used the claimed process before the
critical date, in its own laboratories, to
produce competent cells. Invitrogen did
not sell the claimed process or any
products made with it. The record also
shows that Invitrogen kept its use of the
claimed process confidential. The process
was known only within the company.
Stratagene does not dispute that the
claimed process was maintained as a
secret within Invitrogen until some time
after the critical date.
-- 424 F3d at 1379
The proper test for the public
use prong of the § 102(b)
statutory bar is whether the
purported use: (1) was
accessible to the public; or (2)
was commercially exploited.
- 424 F.3d 1374, 1380
Thus, the test for the public use prong
includes the consideration of evidence
relevant to experimentation, as well as,
inter alia, the nature of the activity that
occurred in public; public access to the
use; confidentiality obligations imposed
on members of the public who observed
the use; and commercial exploitation. - 424
F.3d 1374, 1380
The district court reasoned that Invitrogen
had used the claimed process in its own
laboratories, more than one year before
the '797 application was filed, to "further
other projects" beyond development of
the claimed process and to acquire a
commercial advantage. Invitrogen admits
that it used the claimed process in its
own laboratories before the critical date
to grow cells to be used in other projects
within the company.
 Still, NOT a Public Use
Agenda
1.On sale bar
2.Experimental Use exception to
statutory bars
American Nicholson Paving
Wood block pavements were laid in New
York and Philadelphia about 1835, in
England about 1838, and in Paris about
1880. The first blocks were round or
hexagonal, and many different types of
wooden pavements were patented
between 1840 and 1913.
Wood Block technology
Wood block technology II
Nicholson timeline
Hosking
Patent: 1850
8.1847:
Nicholson
files caveat
1854: Patent
filed/Issues
1875:
Reissued
Patent
Expires
Nicholson Facts
6 Years of
Public Use
8.1847:
Nicholson
files caveat
1854: Patent
filed/Issues
1875:
Reissued
Patent
Expires
• 1821: Mill Dam runs from Beacon Street to
Charles Street and across to Sewellís
Point, Brookline. The dam is the brainchild
of Uriah Cotting and the Roxbury Mill
Corporation. The structure is 50 feet wide
and one half mile long with a toll road
running over it between a row of trees. It
is called Western Avenue and later
Beacon Street.
Key Facts
• Lang Testimony, p. 587
– Nicholson inspected surface daily
– Asked questions about it
• Corroboration by witnesses
Holding
• Public use okay “when the delay [in filing]
is occasioned by a bona fide effort to
bring his invention to perfection or to
ascertain whether it will answer the
purpose intended”
Extra Points
• Reissues, nineteenth century
• Sovereign immunity/gov’t Ks
Public use and “on sale”:
experimental use exception
applies to BOTH
•Public
(commercial) uses
vs. offers for sale
Lough v. Brunswick
• Stern drive assembly seal for boats
• Lough installed 6 prototypes in boats
of friends and acquaintenances
• Question: public use statutory bar?
Judge Lourie opinion
• Experimental use factors (pp. 562-563)
• No. of prototypes, duration of testing,
records, progress reports, secrecy
agreements, payment to patentee,
extent of control
• Control “is critically important”
So, Lough loses here
• Why?
• He lacked control over the early
prototypes of his outdrive seal
assembly
• Friends free to show to others, sell
boats, etc.
Dissent
• Judge Plager
• Not a sophisticated party; he
experimented within the bounds of
common sense
• Only the infringer benefits . . .
UNITED STATES COURT OF
APPEALS FOR THE FEDERAL
CIRCUIT
2007-1188
ATLANTA ATTACHMENT COMPANY,
v.
LEGGETT & PLATT,
INCORPORATED,
Feb. 21, 2008
One Sale Bar – Experimental
Use
• Patentee Atlanta Attachment (AA) had
deal to develop machine and sell
prototypes of it to customer Sealy
• AA quoted sales prices for first two
epprototypes in December, 1999 and
January, 2000; 3rd prototype,
September, 2000
The patent is directed at a
machine that automatically
attaches a gusset to a panel of
a pillowtop mattress, rotating
the panels at the corners, and
pleating the corners of the
gusset.
32. A system for attaching a gusset to a panel,
comprising:
a. a gusset forming station for automatically
forming the gusset from a strip of gusset
material;
b. a sewing table having an upper surface
supporting the panel as the gusset is
attached thereto;
c. a sewing machine adjacent the upper
surface of the sewing table, positioned along
sewing path for the panel, for attaching the
gusset to the panel;
d. a pleat generator for forming at least one
pleat in the gusset at a desired location
about the panel, said pleat generator
operated in timed relation with said sewing
machine, sewing the gusset to the panel; and
e. a system controller controlling a sewing
operation for attaching the gusset to the
panel, wherein said system control can
control the sewing of the gusset to the panel
at varying rates to enable high speed sewing
of the gusset to the panel and sewing at a
different rate for generation of the pleats in
the gusset as needed.
• One operator produces 60+ queen size
pillow-top panels (per hour)
with flanging and ruffled gusset corners
• 600% production gain over manual
operation
• Automatically flanges panel, edge
guides, senses corner, ruffles gusset,
stops, repositions folder assembly for
finishing operation.
• Plain, fused, vertical stitch and quilted
gusset
Pfaff – p. 8
• Commercial offer for sale
• Ready for patenting
– Reduced to practice
– Drawings etc. – enabling description on
hand
[O]nce there has been a
commercial offer, there can
be no experimental use
exception. We also conclude
that the third prototype was a
reduction of claim 32 to
practice, and therefore the
invention was ready for
patenting.
Key question: whether the
primary purpose of the
offers and sales was to
conduct experimentation.
Allen Eng’g Corp. v.
Bartell Indus., 299 F.3d
1336, 1354 (Fed. Cir. 2002)
Leggett & Platt is correct to emphasize
that Atlanta Attachment did not
retain control over the prototypes
when they were in Sealy’s
possession. While we have held that
control may not be the lodestar test
in all cases, we have also said that it
is important, and sometimes
dispositive. Electromotive Div. of
Gen. Motors Corp. v. Transp. Sys.,
417 F.3d 1203, 1213 (Fed. Cir. 2005)
Atlanta Attachment was not
experimenting within the
contemplation of the
experimental use doctrine when
it sold its invention to Sealy
because Sealy performed the
testing and because Atlanta
Attachment did not have control
over the alleged testing to
establish experimentation.
Atlanta Attachment – p. 9
Consistent with the rule that later
refinements do not preclude reduction
to practice, it is improper to conclude
that an invention is not reduced to
practice merely because further testing
is being conducted.
• Changes in 3rd prototype do not show
experimental use -- ??
• Refund of purchase price does not
show machine was not yet fit for its
purpose, and hence not reduced to
practice -- ??
Concurrence – Prost & Dyk
Assuming a complete invention, ready for
patenting, inventors should be able to
continue to privately develop any claimed
aspect of that invention without risking
invalidation, if they conduct development
activities in a way that is neither public
nor simply commercial, even if there is
some commercial benefit to the inventor
in connection with the experimental use.
• “[E]vidence that the ... sale of the
patented device was primarily
experimental may negate an
assertion of invalidity.”
• Monon Corp. v. Stoughton
Trailers, Inc., 239 F.3d 1253 (Fed.
Cir. 2001), at 1258