A recurring decision facing many businesses is how to best protect the technology it creates. One can always try to keep technology “secret,” but that is often not possible, particularly with methods or devices that will be marketed and sold to the public. Another source of protection is that afforded by a patent which, if acquired, would provide the owner the right to exclude others from practicing the patented invention — i.e., use the protected technology.

In the United States there are a number of events that can create a deadline by which a patent application must be filed. Putting an unpatented invention “on sale” is one such event. Once an invention is “on sale,” the inventor has one year in which to file an application. Failing to do so creates what is called an “on-sale bar,” and the inventor has lost the opportunity to acquire a valid U.S. patent for the invention. Moreover, this one-year timeline may not be available in other countries where local patent protection may be lost as soon as the invention is the subject of any type of public disclosure.

This begs the question: when is an invention “on-sale”? Generally, an invention is on sale when there is a commercial offer to sell some embodiment of the invention. Oftentimes, however, small and large companies want to “test the waters” of the invention by selling or offering to sell a new device in order to gauge public interest. In other instances, an invention is placed on sale with no thought of acquiring a patent, and patenting only becomes a question if the invention is met with early commercial success. Whether inadvertent or purposeful, recent court decisions are cautionary tales to consider patenting early on so as not to venture too deep into on-sale bar waters.

Recent Federal Circuit decisions address on-sale bar

In two recent decisions, the U.S. Court of Appeals for the Federal Circuit addressed the on-sale bar and how commonplace commercial activities could preclude patent protection. See Junker v. Medical Components, Inc., et al, 25 F. 4th 1027 (Fed. Cir. 2022) and Sunoco Partners Marketing & Terminals L.P. v. U.S. Venture, Inc. 32 F.4th 1161 (Fed. Cir. 2022).

In Junker, the inventor sent a letter to Boston Scientific Corporation with bulk pricing information for a product that 13 months later became the subject of a patent application. After the inventor was granted a patent and sued third parties for infringement, the validity of the patent was challenged based on the pre-application letter. The inventor argued that the letter was merely a quote and invitation to enter further negotiations. The Federal Circuit, however, decided the opposite. The court held that the letter constituted an “offer for sale,” and that even though the letter referenced itself as a “quotation,” an acceptance of the quotation would constitute a binding agreement. As a result, the invention was deemed to be “on sale” more than one year prior to the patent application, and the patent was declared invalid.

The Sunoco case addressed not only an offer for sale, but also whether the primary purpose of the sale-at-issue was experimentation, which, if shown, would negate the on-sale bar. In the offer in Sunoco, the buyer agreed to purchase butane in exchange for the seller/patent owner installing an embodiment of the patented invention, a butane blending system. Even though no money changed hands, the court determined that the contract constituted an offer to sell. In addition, the court determined that any testing associated with the sale was not experimental, and, instead, done to determine if the blending system was working in accordance with contract requirements.

Takeaways and best practices

Both cases highlight the importance of being prudent with new technology and how businesses can mitigate the risk of otherwise ordinary commercial discussions preventing patent protection for new ideas. Specifically, businesses should consider implementing the following:

1. Identify potentially patentable technologies early on and put systems in place so that company employees involved with the technology are aware of the on-sale bar and its implications;
2. If a communication is intended to be only a quote, and not an offer for sale, make the language clear;
3. If a commercial agreement with a third party is for experimentation, make that clear in the agreement.
4. Consider filing at least a provisional patent application even if steps (2) and/or (3) are taken.
5. Calendar any potential offer for sale of the new technology, even if there is no present intention to file an application for a patent, so that you can stay apprised of the potential year deadline by which to file a patent application; and
6. Most importantly, file a patent application early on in the development process to avoid having to argue that no offer occurred, or to rely on an experimentation argument.

Bottom line, the maxim “it’s never too late” does not apply in this context. Instead, it is “better to be early and have to try again, than to be too late and have to catch up.”¹

¹Aaron Levie