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Pre-filing commercialization can undermine your patent rights

May 09, 2017

Most people are familiar with the principle that if you publicly disclose your invention you might lose your right to seek patent protection for that invention. Canada, the U.S. and a handful of other countries provide a bit of a grace period, but in general people try to ensure that they file a patent application before publicly disclosing the invention. But what if you can commercially exploit your invention without actually disclosing the details to the public? For example, perhaps the invention is in the manufacturing process and the details cannot be derived from the end product, or perhaps the details of the invention sold to a customer are kept confidential under a non-disclosure agreement. Does this sales activity avoid triggering a bar to patentability by hiding the details of the invention from the public? In most countries, yes, but not in the United States.

The U.S. has long been unique in having an “on sale” bar to patentability. The “on sale” bar effectively means that if you start commercially exploiting your invention, even in a way that does not reveal the invention publicly, you are barred from seeking patent protection (unless you file within the one-year grace period). When the U.S. changed their patent laws in 2012 with the America Invents Act, it was thought by some that they changed this “on sale” bar to only apply to sales that made the invention public.  Indeed, the United States Patent & Trademark Office believed that was the case: M.P.E.P. 2152.02(d).

The old language in the US statute said:

35 U.S.C. §102 A person shall be entitled to a patent unless —

(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or

(b) 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, or…

The case law on that section had long held that the sales activity need only put the invention on sale, and need not actually disclose the details of the invention publicly. With the America Invents Act, the language of the section was changed to read:

35 U.S.C. §102

(a) NOVELTY; PRIOR ART.—A person shall be entitled to a patent unless— (1) 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; or ...

The fact that the list of scenarios – printed publication, or in public use, on sale – was followed by the language “or otherwise available to the public” was thought to mean (by some) that it modified the meaning of “on sale” to imply that the “on sale” scenario had to be one that also made the invention available to the public, thus changing U.S. law on this issue.

That question has now been definitively addressed by the Court of Appeals for the Federal Circuit (CAFC) in Helsinn Healthcare S.A. v. Teva Pharmaceuticals US, Inc. et al., 16-1284, May 1, 2017, (CAFC). The Court sided with Teva in deciding that the changes in language did not change the meaning of “on sale”, and that the on-sale bar still applies to commercialization activity that does not make the invention available to the public. Therefore, inventors are still cautioned to avoid starting commercialization until a patent application can be filed, even if the commercialization would not result in disclosure of the invention.

It might be noted that the CAFC acknowledged that the existence of the sales or offers for sale in this case were public.  The Court expressly declined to address whether secret commercialization, i.e. where existence of the sale or offer for sale is not public, is caught by the on-sale bar. Nevertheless, as ever, it is advisable to file for patent protection prior to any public disclosures or any commercialization efforts, whether they will lead to public disclosures or not.