2133.03(b) “On Sale”
This MPEP section is not applicable to applications subject to examination under the first inventor to file (FITF) provisions of the AIA.
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| 2133.03(b) |
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.
The on-sale bar of pre-AIA 35 U.S.C. 102(b) is triggered if the invention is both:
- the subject of a commercial offer for sale not primarily for experimental purposes and
- ready for patenting.
Traditional contract law principles are applied when determining whether a commercial offer for sale has occurred.
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.”
- A contract for the sale of goods requires a concrete offer and acceptance of that offer.
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.
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).
- “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).
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).”
E. Buyer Must Be Uncontrolled by the Seller or Offerer
A sale or offer for sale must take place between separate entities.
“Where the parties to the alleged sale are related, whether there is a statutory bar depends on whether the seller so controls the purchaser that the invention remains out of the public’s hands.
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 §102(b).”
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.
- Even a rejected offer may create an on sale bar.
- In fact, the offer need not even be actually received by a prospective purchaser.
B. Delivery of the Offered Item Is Not Required
“It is not necessary that a sale be consummated for the bar to operate.”
- 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.
- However, the invention must be complete and “ready for patenting” before the critical date.
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.”
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.
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.”
- 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.”
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.”
B. Inventor’s Consent to the Sale Is Not a Prerequisite To Finding an On Sale Bar
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.
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.
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.”
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 Will Bar a Patent
Sale or offer for sale of the invention by an independent third party more than 1 year before the filing date of applicant’s patent will bar 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.”
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.
