Decision Basics

The Supreme Court, on Monday January 22, upheld the Federal Circuit’s interpretation of the “on sale bar.”  The issue in this case was whether a prior sale by an inventor to a third party qualifies as prior art, even where the third party is obligated to keep the invention confidential.  The Supreme Court held such a sale is prior art.

Practical Result

This decision does not change settled law.  As such, patents should be filed prior to any sale, regardless of whether the sale is known by the public or makes the details of the invention known to the public.

Decision Details

The decision was unanimous and short, authored by Justice Thomas and weighing in at only 9 pages.  The Supreme Court held a commercial sale to a third party who is required to keep the invention confidential may place the invention “on sale” under §102(a).

In reaching their decision, the Supreme Court turned to prior precedent that secret sales count as prior art and reasoned that Congress’s reuse of the phrase on sale in the AIA did not change the prior meaning of on sale.  To reach this conclusion, the Supreme Court noted:

Every patent statute since 1836 has included an on-sale bar.  The patent statute in force immediately before the AIA prevented a person from receiving a patent if, “more than one year prior to the date of the application for patent in the United States,” “the invention was . . . on sale” in the United States. 35 U. S. C. §102(b) (2006 ed., Supp. IV).  The AIA, as relevant here, retained the on-sale bar and added the catchall phrase “or other- wise available to the public.”

Further, the Supreme Court reasoned:

Congress enacted the AIA in 2011 against the backdrop of a substantial body of law interpreting §102’s on-sale bar [e.g., Pfaff]… In light of this earlier construction, we determine that the reenactment of the phrase “on sale” in the AIA did not alter this meaning. Accordingly, a commercial sale to a third party who is required to keep the invention confidential may place the invention “on sale” under the AIA.

Interestingly, after holding that the AIA did not change settled law, the Supreme Court noted that this exact question has never actually been decided by the Court.  That is, all prior on sale bar precedents focus on whether the invention had been sold, as opposed to whether the details of the invention were made available to the public as a result of the sale.  The Supreme Court reviewed a number of prior cases to reconcile that secret sales count as prior art:

Elizabeth v. Pavement Co., 97 U. S. 126, 136 (1878) (“It is not a public knowledge of his invention that precludes the inventor from obtaining a patent for it, but a public use or sale of it”).  The Federal Circuit—which has “exclusive jurisdiction” over patent appeals, 28 U. S. C. §1295(a)—has made explicit what was implicit in our precedents. It has long held that “secret sales” can invalidate a patent. E.g., Special Devices, Inc. v. OEA, Inc., 270 F. 3d 1353, 1357 (2001) (invalidating patent claims based on “sales for the purpose of the commercial stockpiling of an invention” that “took place in secret”); Woodland Trust v. Flowertree Nursery, Inc., 148 F. 3d 1368, 1370 (1998) (“Thus an inventor’s own prior commercial use, albeit kept secret, may constitute a public use or sale under §102(b), barring him from obtaining a patent”).