No Supplier Exception to the "On Sale" Patent Bar
By: DAVID C. WEST & MATTHEW J.S. GRAHAM
Your company has developed an improved product that you believe will give you a competitive edge. As you prepare to launch the product you meet with your regular supplier and agree upon the terms under which the supplier will produce the product for you. Several months later you begin selling it. The product enjoys much success, so much so that you consider obtaining a patent on the improvement to prevent your competitors from selling it. You know from previous discussions with your patent attorney that due to the “on sale” bar rule, you won’t be eligible for a patent if you file your application more than 1 year after you started selling the product. As you began selling the product 11 months ago, you’re still eligible for a patent, right? Unfortunately, the discussions with your supplier are also probably covered by the “on sale” bar prohibition; since they occurred more than 1 year ago, you are probably no longer eligible for a patent.
The “on sale” bar is a statutory prohibition to patenting found in section 102(b) of the United States Code relating to patents. Generally, the “on sale” bar works by establishing a critical date when:
- an invention is the “subject of a commercial offer of sale,” and
- the invention is “ready for patenting.”
Ready for patenting may mean, for example, having reduced the invention to practice or having prepared drawings or other descriptions of the invention that would enable one skilled in the art to practice the invention.
The “on sale” bar requires the applicant to file for a patent within one year of the critical date or a valid patent cannot be obtained.
The “on sale” bar can apply to many different scenarios. Perhaps the most straightforward is when customers have been buying an invention for more than a year. Note, however, that a completed sale is not required in order to trigger the “on sale” bar; the prohibition only requires that the invention be offered for sale. Even an offer from a supplier to produce the invention can trigger the “on sale” bar.
The courts have held that there is no supplier exception to the “on sale” bar. Therefore, it applies to offers for sale of the invention from suppliers to the patent applicant after the invention is ready for patenting. This situation frequently arises when the applicant invents an article it does not have the desire or resources to produce, such as injection-molded parts. In that case, the patentee may contract with a supplier to produce the part. The supplier’s offer to produce a quantity of the parts for a certain price may constitute an “offer for sale” under § 102(b). Further, even an unaccepted quote from a potential supplier may suffice to bar patentability, because the “on sale” bar does not require a completed sale.
Not all offers for sale (or sales for that matter) will automatically be encompassed by the on sale bar prohibition. For example, if the offer for sale was made before the invention was ready for patenting, the offer will not affect patentability. In addition, certain sales may fall outside of the bar because they were primarily for experimental purposes and testing or significant design changes occurred after the sale.
The determination of whether certain business dealings or a transaction will constitute an “offer for sale” under § 102(b) is a complex undertaking. Therefore, it is wise to consult your attorney before significant resources are wasted pursuing a patent that cannot validly issue or trying to enforce an invalid patent.