Saturday, August 31, 2013

America Invents Act - On Sale Bar, 35 USC 102

Prior to the America Invents Act (AIA), the on sale bar has been a frequent way inventors lose U.S. patent rights. Basically, US patent law gave an inventor one year to file a US patent after the first offer for sale of an invention ready for patenting. Thus, it tackles inventors that are commercializing the invention too early before they file the patent application. See the U.S. Supreme Court's landmark decision Pfaff v. Wells Electronics, Inc. in 1998.

The AIA makes dramatic changes to 35 USC 102 that may increase loss of U.S. patent rights since the scope of the one year grace period is uncertain, a prior sale no longer needs to be "in this country" (USA), and in particular it is unclear how the grace period is narrowed with respect to non-public sales.

We don't have court decisions, however, the USPTO has published the Examination Guidelines For Implementing The First Inventor To File Provisions Of The Leahy-Smith America Invents Act (Examination Guidelines) and other USPTO educational materials that can guide our analysis of the new grace period.

The starting point for understanding the new grace period is the statutory language:

35 U.S.C. 102(a)(1) states "a person shall be entitled to a patent unless the claimed invention was ... on sale, or otherwise available to the public before the effective filing date of the claimed invention. Thus, 102(a)(1) tells us generally of activities that will result in denial of patent protection."

35 USC 102(b)(1) states, however, that "a disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if
(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor. Thus, 102(b)(1) tells us of the circumstances where the 102(a)(1) activities will be excused for one year."

The USPTO educational materials states to understand the exceptions of 35 USC 102(b), we must define three terms: disclosure, inventor, and one year or less. An inventor and one year or less are defined consistent with pre-AIA law. The term disclosure is defined in a new way to include evidence that the claimed invention was on sale.

Interpreting how the on sale bar requires (or doesn't) require "disclosure" is likely to be a litigation hot spot. The Examination Guidelines stated that "a number of comments suggested that public availability should be a requirement for “on sale” activities under AIA 35 U.S.C. 102(a)(1), and that non-public uses and non-public sales or offers for sale do not qualify as prior art under the AIA. The comments suggesting that public availability should be a requirement for 'on sale' activities under AIA 35 U.S.C. 102(a)(1) gave the following reasons: (1) The catch-all phrase 'otherwise available to the public' in AIA 35 U.S.C. 102(a)(1) and case law cited in the legislative history of the AIA supports the view that 'available to the public' should be read as informing the meaning of all of the listed categories of prior art in AIA 35 U.S.C. 102(a)(1); (2) the removal of derivation under pre-AIA 35 U.S.C. 102(f) and prior invention under pre-AIA 35 U.S.C. 102(g) as prior art indicates that the AIA intended to do away with 'secret' prior art; (3) public availability is the intent of AIA, and for the Office to construe the statute otherwise would erode the availability of patent protection in the United States, and weaken the economy; (4) interpreting the 'on sale' provision to require public availability is good public policy in that it would lower litigation costs by simplifying discovery, and would reduce unexpected prior art pitfalls for inventors who are not well-versed in the law."

Okay, that is one interpretation of the statute. But other comments "suggested that the legislative history of the AIA is insufficient to compel the conclusion that Congress intended to overturn pre-AIA case law holding that an inventor's non-public sale before the critical date is a patent-barring 'on sale' activity as to that inventor. One comment suggested that commercial uses that are not accessible to the public are nonetheless disqualifying prior art because Metallizing Engineering and other pre-AIA case law interpreting 'public use' and 'on sale' continue to apply under the AIA, and do not require public availability. The comment further suggested that commercial uses that are accessible to the public, even if such accessibility is not widespread, are disqualifying prior art to all parties. Another comment suggested that Metallizing Engineering and other forfeiture doctrines should be preserved because they serve important public policies. Another comment suggested that if the Office does adopt the position that Metallizing Engineering is overruled, and that any sale under AIA 35 U.S.C. 102(a)(1) must be public, the Office should promulgate a rule requiring that any secret commercial use of the claimed invention more than one year prior to the effective filing date be disclosed to the Office. Another comment indicated that sales between joint ventures and sales kept secret from the 'trade' should still be considered prior art under AIA 35 U.S.C. 102(a)(1)."

Here is how the USPTO responded: "A patent is precluded under AIA 35 U.S.C. 102(a)(1) if '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.' AIA 35 U.S.C. 102(a)(1) contains the additional residual clause 'or otherwise available to the public.' Residual clauses such as 'or otherwise' or 'or other' are generally viewed as modifying the preceding phrase or phrases. Therefore, the Office views the 'or otherwise available to the public' residual clause of the AIA's 35 U.S.C. 102(a)(1) as indicating that secret sale or use activity does not qualify as prior art."

This suggests a secret sale prior to filing an application needs no grace period because it is not prior art. However, this seems to allow for secret commercialization of the invention more than one year before filing the application, which is contrary to many decades of case law.

The USPTO says its "interpretation of AIA 35 U.S.C. 102(a)(1) also ensures that the AIA grace period can extend to all of the documents and activities enumerated in AIA 35 U.S.C. 102(a)(1) that would otherwise defeat patentability. In addition, this interpretation avoids the very odd potential result that the applicant who had made his invention accessible to the public for up to a year before filing an application could still obtain a patent, but the inventor who merely used his invention in secret one day before he filed an application could not obtain a patent."

If the goal is prompt disclosure to the public of the claimed invention I am not sure this is odd. Further, the USPTO's concern that a secret sale one day before the filing date bars a valid patent from issuing seems misplaced since the USPTO says a secret sale is not prior art requiring an exception to the general rule barring pre-filing activity.

Copyright © 2013 Robert Moll. All rights reserved.