“On Sale”

[Editor Note: This MPEP section

may be applicable

to

applications subject to examination under the first inventor to file (FITF)

provisions of the AIA as set forth in

35 U.S.C. 100 (note)

.

AIA

35 U.S.C. 102(a)(1)

uses the same “on sale” term as

pre-AIA 35

U.S.C. 102(b)

and is treated as having the same meaning.

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., 139 S.Ct. 628 (2019).

See

MPEP § 2159

et seq. to determine whether an application

is subject to examination under the FITF provisions, and

MPEP §

2150

et seq. for examination of applications subject to

those provisions. See

MPEP § 2152.02(c) through (e)

for

a detailed discussion of the public use and on sale provisions of

AIA

35 U.S.C. 102

.]

An impermissible sale has occurred if there was a definite sale, or

offer to sell, more than 1 year before the effective filing date of the claimed

invention and the subject matter of the sale, or offer to sell, fully anticipated the

claimed invention or would have rendered the claimed invention obvious by its

addition to the prior art.

Ferag AG v. Quipp, Inc.,

45 F.3d 1562,

1565, 33 USPQ2d 1512, 1514 (Fed. Cir. 1995). The on-sale bar of

pre-AIA 35 U.S.C.

102(b)

is triggered if the invention is both (1) the subject of

a commercial offer for sale not primarily for experimental purposes and (2) ready for

patenting.

Pfaff v. Wells Elecs., Inc.,

525 U.S. 55, 67, 48 USPQ2d

1641, 1646-47 (1998). Traditional contract law principles are applied when

determining whether a commercial offer for sale has occurred. See

Linear

Tech. Corp. v. Micrel, Inc.,

275 F.3d 1040, 1048, 61 USPQ2d 1225, 1229

(Fed. Cir. 2001),

petition for cert. filed,

71 USLW 3093 (July 03,

2002) (No. 02-39);

Group One, Ltd. v. Hallmark Cards, Inc.,

254

F.3d 1041,1047, 59 USPQ2d 1121, 1126 (Fed. Cir. 2001) (“As a general proposition, we

will look to the Uniform Commercial Code (‘UCC’) to define whether … a communication

or series of communications rises to the level of a commercial offer for sale.”).

I

PQ2d 1225, 1229

(Fed. Cir. 2001),

petition for cert. filed,

71 USLW 3093 (July 03,

2002) (No. 02-39);

Group One, Ltd. v. Hallmark Cards, Inc.,

254

F.3d 1041,1047, 59 USPQ2d 1121, 1126 (Fed. Cir. 2001) (“As a general proposition, we

will look to the Uniform Commercial Code (‘UCC’) to define whether … a communication

or series of communications rises to the level of a commercial offer for sale.”).

I.

THE MEANING OF “SALE”

A sale is a contract between parties wherein the seller agrees

“to give and to pass rights of property” in return for the buyer’s payment or

promise “to pay the seller for the things bought or sold.”

In re

Caveney,

761 F.2d 671, 676, 226 USPQ 1, 4 (Fed. Cir. 1985). A

contract for the sale of goods requires a concrete offer and acceptance of that

offer. See, e.g.,

Linear Tech.,

275 F.3d at 1052-54, 61 USPQ2d

at 1233-34 (Court held there was no sale within the meaning of

pre-AIA 35 U.S.C.

102(b)

where prospective purchaser submitted an order for

goods at issue, but received an order acknowledgement reading “will advise-not

booked.” Prospective purchaser would understand that order was not accepted.).

“[T]o be ‘on sale’ under

[pre-AIA] §

102(b)

, a product must be the subject of a commercial sale

or offer for sale,” and to be a commercial sale it must be “one that bears the

general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial

Code.”

Medicines Co. v. Hospira, Inc.,

827 F.3d 1363, 1364, 119

USPQ2d 1329, 1330 (Fed. Cir. 2016) (

en banc

). The court in

Medicines Co.

went on to explain “[s]ection 2-106(1) of the

Uniform Commercial Code describes a ‘sale’ as ‘the passing of title from the

seller to the buyer for a price.’ U.C.C. § 2-106(1). The passage of title is a

helpful indicator of whether a product is ‘on sale,’ as it suggests when the

inventor gives up its interest and control over the product.”

Id.

at 1375, 119 USPQ2d at 1338. The

Medicines

Co

cines Co.

went on to explain “[s]ection 2-106(1) of the

Uniform Commercial Code describes a ‘sale’ as ‘the passing of title from the

seller to the buyer for a price.’ U.C.C. § 2-106(1). The passage of title is a

helpful indicator of whether a product is ‘on sale,’ as it suggests when the

inventor gives up its interest and control over the product.”

Id.

at 1375, 119 USPQ2d at 1338. The

Medicines

Co.

court held “a contract manufacturer’s sale to the inventor of

manufacturing services where neither title to the embodiments nor the right to

market the same passes to the supplier does not constitute an invalidating sale

under

§

102(b)

.”

Id.

at 1381, 119 USPQ2d at

1342.

A.

Conditional Sale May Bar a Patent

An invention may be deemed to be “on sale” even though the

sale was conditional. The fact that the sale is conditioned on buyer

satisfaction does not, without more, prove that the sale was for an

experimental purpose.

Strong v. General Elec. Co.,

434 F.2d

1042, 1046, 168 USPQ 8, 12 (5th Cir. 1970).

B.

Nonprofit Sale May Bar a Patent

A “sale” need not be for profit to bar a patent. If the sale

was for the commercial exploitation of the invention, it is “on sale” within

the meaning of

pre-AIA 35 U.S.C. 102(b)

.

In re Dybel,

524 F.2d 1393, 1401, 187 USPQ 593, 599 (CCPA

1975) (“Although selling the devices for a profit would have demonstrated the

purpose of commercial exploitation, the fact that appellant realized no profit

from the sales does not demonstrate the contrary.”).

C.

A Single Sale or Offer To Sell May Bar a Patent

Even a single sale or offer to sell the invention may bar

patentability under

pre-AIA 35 U.S.C. 102(b)

.

Consolidated

Fruit-Jar Co. v. Wright,

94 U.S. 92, 94 (1876);

Atlantic Thermoplastics Co. v. Faytex Corp.,

970 F.2d

834, 836-37, 23 USPQ2d 1481, 1483 (Fed. Cir. 1992).

D

ant realized no profit

from the sales does not demonstrate the contrary.”).

C.

A Single Sale or Offer To Sell May Bar a Patent

Even a single sale or offer to sell the invention may bar

patentability under

pre-AIA 35 U.S.C. 102(b)

.

Consolidated

Fruit-Jar Co. v. Wright,

94 U.S. 92, 94 (1876);

Atlantic Thermoplastics Co. v. Faytex Corp.,

970 F.2d

834, 836-37, 23 USPQ2d 1481, 1483 (Fed. Cir. 1992).

D.

A Sale of Rights Is Not a Sale of the Invention and Will Not in

Itself Bar a Patent

“[A]n assignment or sale of the rights in the invention and

potential patent rights is not a sale of ‘the invention’ within the meaning of

[pre-AIA]

section 102(b)

.”

Moleculon Research Corp. v.

CBS, Inc.,

793 F.2d 1261, 1267, 229 USPQ 805, 809 (Fed. Cir.

1986); see also

Elan Corp., PLC v. Andrx Pharms. Inc.,

366 F.3d 1336, 1341, 70 USPQ2d 1722, 1728 (Fed. Cir. 2004);

In re

Kollar,

286 F.3d 1326, 1330 n.3, 1330-1331, 62 USPQ2d 1425, 1428

n.3, 1428-1429 (Fed. Cir. 2002) (distinguishing licenses which trigger the

on-sale bar (e.g., a standard computer software license wherein the product is

just as immediately transferred to the licensee as if it were sold), from

licenses that merely grant rights to an invention which do not

per

se

trigger the on-sale bar (e.g., exclusive rights to market the

invention or potential patent rights));

Group One, Ltd. v. Hallmark

Cards, Inc.,

254 F.3d 1041, 1049 n. 2, 59 USPQ2d 1121, 1129 n. 2

(Fed. Cir. 2001).

“[T]he mere sale of manufacturing services by a

contract manufacturer to an inventor to create embodiments of a patented

product for the inventor does not constitute a ‘commercial sale’ of the

invention.”

Medicines Co. v. Hospira, Inc.,

827 F.3d 1363,

1373, 119 USPQ2d 1329, 1336 (Fed. Cir. 2016) (

en banc

). The

court in

Medicines Co.

further stated that “commercial

benefit—even to both parties in a transaction—is not enough to trigger the

on-sale bar of

§ 102(b)

; the transaction

must be one in which the product is ‘on sale’ in the sense that it is

‘commercially marketed.’”

Id

’ of the

invention.”

Medicines Co. v. Hospira, Inc.,

827 F.3d 1363,

1373, 119 USPQ2d 1329, 1336 (Fed. Cir. 2016) (

en banc

). The

court in

Medicines Co.

further stated that “commercial

benefit—even to both parties in a transaction—is not enough to trigger the

on-sale bar of

§ 102(b)

; the transaction

must be one in which the product is ‘on sale’ in the sense that it is

‘commercially marketed.’”

Id.

at 1373-74, 119 USPQ2d at

1336-37.

E.

Buyer Must Be Uncontrolled by the Seller or Offerer

A sale or offer for sale must take place between separate

entities.

In re Caveney,

761 F.2d 671, 676, 226 USPQ 1, 4

(Fed. Cir. 1985). Where the parties to the alleged sale are related, whether

there is a statutory bar under

pre-AIA 35 U.S.C. 102(b)

depends on whether the seller so controls the purchaser that the invention

remains out of the public’s hands.

Ferag AG v. Quipp, Inc.,

45 F.3d 1562, 1566, 33 USPQ2d 1512, 1515 (Fed. Cir. 1995) (Where the seller is

a parent company of the buyer company, but the President of the buyer company

had “essentially unfettered” management authority over the operations of the

buyer company, the sale was a statutory bar.).

II.

OFFERS FOR SALE

“Only an offer which rises to the level of a commercial offer for

sale, one which the other party could make into a binding contract by simple

acceptance (assuming consideration), constitutes an offer for sale under

[pre-AIA]

§102(b)

.”

Group One, Ltd. v. Hallmark Cards,

Inc.,

254 F.3d 1041, 1048, 59 USPQ2d 1121, 1126 (Fed. Cir. 2001).

A.

Rejected or Unreceived Offer for Sale Is Enough To Bar a

Patent

Since the statute creates a bar when an invention is placed

“on sale,” a mere offer to sell is sufficient commercial activity to bar a

patent.

In re Theis,

610 F.2d 786, 791, 204 USPQ 188, 192

(CCPA 1979). Even a rejected offer may create an on sale bar.

UMC

Elecs. v. United States,

816 F.2d 647, 653, 2 USPQ2d 1465, 1469

(Fed. Cir. 1987). In fact, the offer need not even be actually received by a

prospective purchaser.

Wende v. Horine,

225 F. 501 (7th Cir

“on sale,” a mere offer to sell is sufficient commercial activity to bar a

patent.

In re Theis,

610 F.2d 786, 791, 204 USPQ 188, 192

(CCPA 1979). Even a rejected offer may create an on sale bar.

UMC

Elecs. v. United States,

816 F.2d 647, 653, 2 USPQ2d 1465, 1469

(Fed. Cir. 1987). In fact, the offer need not even be actually received by a

prospective purchaser.

Wende v. Horine,

225 F. 501 (7th Cir.

1915).

B.

Delivery of the Offered Item Is Not Required

“It is not necessary that a sale be consummated for the bar to

operate.”

Buildex v. Kason Indus.,

Inc.,

849 F.2d 1461, 1463-64, 7 USPQ2d 1325, 1327-28 (Fed.

Cir. 1988) (citations omitted). See also

Weatherchem Corp. v. J.L.

Clark, Inc.,

163 F.3d 1326, 1333, 49 USPQ2d 1001, 1006-07 (Fed.

Cir. 1998) (A signed purchase agreement prior to the critical date constituted

a commercial offer; it was immaterial that there was no delivery of later

patented caps and no exchange of money until after critical date.).

C.

Seller Need Not Have the Goods “On Hand” When the Offer for Sale

Is Made

Goods need not be “on hand” and transferred at the time of the

sale or offer. The date of the offer for sale is the effective date of the “on

sale” activity.

J. A. La Porte, Inc. v. Norfolk Dredging

Co.,

787 F.2d 1577, 1582, 229 USPQ 435, 438 (Fed. Cir. 1986).

However, the invention must be complete and “ready for patenting” (see

MPEP §

2133.03(c)

) before the critical date.

Pfaff

v. Wells Elecs., Inc.,

525 U.S. 55, 67, 48 USPQ2d 1641, 1647

at the time of the

sale or offer. The date of the offer for sale is the effective date of the “on

sale” activity.

J. A. La Porte, Inc. v. Norfolk Dredging

Co.,

787 F.2d 1577, 1582, 229 USPQ 435, 438 (Fed. Cir. 1986).

However, the invention must be complete and “ready for patenting” (see

MPEP §

2133.03(c)

) before the critical date.

Pfaff

v. Wells Elecs., Inc.,

525 U.S. 55, 67, 48 USPQ2d 1641, 1647

(1998). See also

Micro Chemical, Inc. v. Great Plains Chemical

Co.,

103 F.3d 1538, 1545, 41 USPQ2d 1238, 1243 (Fed. Cir. 1997)

(The on-sale bar was not triggered by an offer to sell because the inventor

“was not close to completion of the invention at the time of the alleged offer

and had not demonstrated a high likelihood that the invention would work for

its intended purpose upon completion.”);

Shatterproof Glass Corp. v.

Libbey-Owens Ford Co.,

758 F.2d 613, 225 USPQ 634 (Fed. Cir. 1985)

(Where there was no evidence that the samples shown to the potential customers

were made by the new process and apparatus, the offer to sell did not rise to

the level of an on sale bar.). Compare

Barmag Barmer Maschinenfabrik

AG v. Murata Mach., Ltd.,

731 F.2d 831, 221 USPQ 561 (Fed. Cir.

1984) (Where a “make shift” model of the inventive product was shown to the

potential purchasers in conjunction with the offer to sell, the offer was

enough to bar a patent under

pre-AIA 35 U.S.C. 102(b)

.).

D.

Material Terms of an Offer for Sale Must be Present

“[A] communication that fails to constitute a definite offer

to sell the product and to include material terms is not an ‘offer’ in the

contract sense.”

Elan Corp., PLC v. Andrx Pharms. Inc.,

366

F.3d 1336, 1341, 70 USPQ2d 1722, 1728 (Fed. Cir. 2004). The court stated that

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... is not an

offer to sell the patented invention that constitutes an on-sale bar.”

Id.,

70 USPQ2d at 1726

an ‘offer’ in the

contract sense.”

Elan Corp., PLC v. Andrx Pharms. Inc.,

366

F.3d 1336, 1341, 70 USPQ2d 1722, 1728 (Fed. Cir. 2004). The court stated that

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... is not an

offer to sell the patented invention that constitutes an on-sale bar.”

Id.,

70 USPQ2d at 1726. Accordingly, the court concluded

that Elan’s letter was not an offer to sell a product. In addition, the court

stated that the letter lacked material terms of a commercial offer such as

pricing for the product, quantities, time and place of delivery, and product

specifications and that the dollar amount in the letter was not a price term

for the sale of the product but rather the amount requested was to form and

continue a partnership, explicitly referred to as a “licensing fee.”

Id.

III.

SALE BY INVENTOR, ASSIGNEE OR OTHERS ASSOCIATED WITH THE INVENTOR IN THE

COURSE OF BUSINESS

A.

Sale Activity Need Not Be Public

Unlike questions of public use, there is no requirement that

“on sale” activity be “public.” “Public” as used in

pre-AIA 35 U.S.C.

102(b)

modifies “use” only. “Public” does not modify

“sale.”

Hobbs v. United States,

451 F.2d 849, 171 USPQ 713,

720 (5th Cir. 1971). It is noted that

AIA 35 U.S.C.

102(a)(1)

uses the same “on sale” term as

pre-AIA

35 U.S.C. 102(b)

and is treated as having the same

meaning.

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA,

Inc.,

139 S.Ct. 628, 129 USPQ2d 1189 (2019). See

MPEP § 2152.02(d)

.

B.

Inventor’s Consent to the Sale Is Not a Prerequisite To Finding an

On Sale Bar under pre-AIA 35 U.S.C. 102(b)

If the invention was placed on sale by a third party who

obtained the invention from the inventor, a patent is barred even if the

inventor did not consent to the sale or have knowledge that the invention was

embodied in the sold article.

Electric Storage Battery Co. v.

Shimadzu,

307 U.S

B.

Inventor’s Consent to the Sale Is Not a Prerequisite To Finding an

On Sale Bar under pre-AIA 35 U.S.C. 102(b)

If the invention was placed on sale by a third party who

obtained the invention from the inventor, a patent is barred even if the

inventor did not consent to the sale or have knowledge that the invention was

embodied in the sold article.

Electric Storage Battery Co. v.

Shimadzu,

307 U.S. 5, 41 USPQ 155 (1938);

In re

Blaisdell,

242 F.2d 779, 783, 113 USPQ 289, 292 (CCPA 1957);

CTS Corp. v. Electro Materials Corp. of America,

469 F.

Supp. 801, 819, 202 USPQ 22, 38 (S.D.N.Y. 1979).

C.

Objective Evidence of Sale or Offer To Sell Is Needed

In determining if a sale or offer to sell the claimed

invention has occurred, a key question to ask is whether the inventor sold or

offered for sale a product that embodies the invention claimed in the

application. Objective evidence such as a description of the inventive product

in the contract of sale or in another communication with the purchaser controls

over an uncommunicated intent by the seller to deliver the inventive product

under the contract for sale.

Ferag AG v. Quipp, Inc.,

45

F.3d 1562, 1567, 33 USPQ2d 1512, 1516 (Fed. Cir. 1995) (On sale bar found where

initial negotiations and agreement containing contract for sale neither clearly

specified nor precluded use of the inventive design, but an order confirmation

prior to the critical date did specify use of inventive design.). The purchaser

need not have actual knowledge of the invention for it to be on sale. The

determination of whether “the offered product is in fact the claimed invention

may be established by any relevant evidence, such as memoranda, drawings,

correspondence, and testimony of witnesses.”

RCA Corp. v. Data Gen.

Corp.,

887 F.2d 1056, 1060, 12 USPQ2d 1449, 1452 (Fed. Cir. 1989).

However, “what the purchaser reasonably believes the inventor to be offering is

relevant to whether, on balance, the offer objectively may be said to be of the

patented invention.”

Envirotech Corp. v

stablished by any relevant evidence, such as memoranda, drawings,

correspondence, and testimony of witnesses.”

RCA Corp. v. Data Gen.

Corp.,

887 F.2d 1056, 1060, 12 USPQ2d 1449, 1452 (Fed. Cir. 1989).

However, “what the purchaser reasonably believes the inventor to be offering is

relevant to whether, on balance, the offer objectively may be said to be of the

patented invention.”

Envirotech Corp. v. Westech Eng’g,

Inc.,

904 F.2d 1571, 1576, 15 USPQ2d 1230, 1234 (Fed. Cir. 1990)

(Where a proposal to supply a general contractor with a product did not mention

a new design but, rather, referenced a prior art design, the uncommunicated

intent of the supplier to supply the new design if awarded the contract did not

constitute an “on sale” bar to a patent on the new design, even though the

supplier’s bid reflected the lower cost of the new design.).

IV.

SALES BY INDEPENDENT THIRD PARTIES

A.

Sales or Offers for Sale by Independent Third Parties May be Prior

Art

A sale or offer for sale of the invention by an independent

third party more than 1 year before the effective filing date of applicant’s

claimed invention may be applied as prior art and may prevent applicant from

obtaining a patent. “An exception to this rule exists where a patented method

is kept secret and remains secret after a sale of the unpatented product of the

method. Such a sale prior to the critical date is a bar if engaged in by the

patentee or patent applicant, but not if engaged in by another.”

In re

Caveney,

761 F.2d 671, 675-76, 226 USPQ 1, 3-4 (Fed. Cir.

1985).

B.

Nonprior Art Publications Can Be Used as Evidence of Sale Before

the Critical Date

Abstracts identifying a product’s vendor containing

information useful to potential buyers such as whom to contact, price terms,

documentation, warranties, training and maintenance along with the date of

product release or installation before the inventor’s critical date may provide

sufficient evidence of prior sale by a third party to support a rejection based

on

pre-AIA 35

U.S.C. 102(b)

or

103

Abstracts identifying a product’s vendor containing

information useful to potential buyers such as whom to contact, price terms,

documentation, warranties, training and maintenance along with the date of

product release or installation before the inventor’s critical date may provide

sufficient evidence of prior sale by a third party to support a rejection based

on

pre-AIA 35

U.S.C. 102(b)

or

103

.

In re

Epstein,

32 F.3d 1559, 31 USPQ2d 1817 (Fed. Cir. 1994) (Examiner's

rejection was based on nonprior art published abstracts which disclosed

software products meeting the claims. The abstracts specified software release

dates and dates of first installation which were more than 1 year before

applicant’s filing date.).