Federal Circuit Pre-AIA “On Sale” Bar to UCC Level Offers

In The Medicines Company v. Hospira, Inc., App. No. 14-1469 (Fed. Cir. 2016) (en banc), the Federal Circuit has ruled that an invention claimed as a “product-by-process” is only “on sale” if “the subject of a commercial sale or offer for sale . . . that bears the general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial Code.”

Read the Case: MedCo

 

63 thoughts on “Federal Circuit Pre-AIA “On Sale” Bar to UCC Level Offers

    1. 9.1

      Paul, you might begin to consider that the “forfieture doctrine” is the heart and soul of Pennock and it was discussed in The Medicines Co.

      “Section 1 of the Patent Act of 1793 required that an invention for which a patent was sought be “not known or used before the application.” Act
      of Feb. 21, 1793, ch. 11, § 1, 1 Stat. 318. The Supreme Court interpreted this statute in Pennock v. Dialogue, 27 U.S. (2 Pet.) 1 (1829), holding that an inventor loses his right to a patent “if he suffers the thing invented to go
      into public use, or to be publicly sold for use, before he makes application for a patent. His voluntary act or acquiescence in the public sale and use is an abandonment of his right?.” Id. at 23-24 (emphases added). The Court noted “that under the common law of England, letters patent were unavailable for the protection of articles in public commerce at the time of the application, and that this same doctrine was immediately embodied in the first patent laws passed in this country.” (emphasis added.

      * 14-15.

    2. 9.2

      …non-102…?

      Paul, that appears as a rather weak attempt to have that doctrine escape the plain words of Congress with the changes of the AIA.

      Your attempt is stillborn.

  1. 8

    Now that I have taught Iit the actual rule on duty of candor, can we recenter the discussion on the topic of the thread and pick up the conversation at post 6?

    1. 8.1

      That’s just callous. Your comment at 7.2 was both inapplicable to the thread and an oversimplification of reality.

      1. 8.1.1

        Callous?

        Not at all. Maybe you want to actually read what this thread is about.

        (and my reply at 7.2 was spot on to your off-topic post). You are getting far too emotional for simply being wrong on a topic that I helped you with. The better response from you would have been “Thank you.”

        1. 8.1.1.1

          Did you abandon decency because my thread 7 garnered constructive commentary whereas your thread 6 was disregarded? It doesn’t appear that anyone else on this blog believes that large firms are any different than any other law practice when it comes to drafting attorney’s duty to the USPTO. In virtually every case, the drafting attorney will inquire as to the history of the invention, including whether the invention was disclosed outside of the organization in any way. Sophisticated applicants also do this as an internal check. Inventors are typically aware of offers for sale. Your comment at 7.2 describes an atypical scenario in the view of others on this blog.

          1. 8.1.1.1.1

            I am not the one being indecent here Iit.

            Again, I helped you by giving you the proper understanding of the duty of candor (why would I be jealous of the substance of your off-topic thread, when it is I that provided the legal substance of that off-topic thread?)

            It is you that lacks decency because the answer simply what you want it to be.

            Instead of being defensive and accusatory, I suggest that you actually (and slowly if need be) read my posts in reply to you.

            After that, maybe then you will want to return and center on the actual topic of this thread (and by the way, that topic is not the duty of candor angle – just in case you are still confused).

  2. 7

    Given that applicants have a duty of candor to the USPTO, the “offer for sale” component of 102 would seem to require that applicants disclose the facts surrounding a potential offer for sale and then fight it out with the examiner or the appeals board as to whether a patent precluding offer was present. This duty would probably require the applicant to disclose anything that loosely resembles an offer to provide the USPTO with an opportunity to determine whether the activity in question was in-fact patent preclusive or not. Seems like a strange venue for this fight, but this appears to be the law within the U.S.

    1. 7.1

      I’ve also raised this other Sect. 102 issue before, but the AIA revised Sect. 102 does not use the phrase “public disclosure” in the patent precluding part of the section:

      “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;”

      Does a presentation to an auditorium full of people preclude patenting without a printed document accompanying the presentation? This activity does not appear to fall within section 102(a)(1)…

      1. 7.1.1

        I invented that, good point about public knowledge not being expressly part of the new 102. Whether the invention was known by others prior at least to the application date has always been the law, and the most important part of the law. It is the purpose of the patent system to bring to the public, knowledge of the invention; and what defeats a patent is prior knowledge. That the patent statute would excise from its purview knowledge of the invention, and allow a patent to issue even though the invention was known by others, so long it was not disclosed in a printed publication or in public use, defies common sense. But apparently that is the way the statute was written.

        Perhaps the drafters intentionally excluded public knowledge as essentially the kind of evidence that is subject to the most fabrication and falsehood.

        1. 7.1.1.1

          Thanks Ned for your take on this issue. I’m quite frustrated (as are many others) by the way 102 has been redrafted. It’s currently fraught with uncertainty and leaves everyone guessing.

          1. 7.1.2.1.1

            I see that people are (once again) not remembering that Congress was explicit in wanting to remove the personal forfeiture bar.

            “New to you” is the new patentably new.

            1. 7.1.2.1.1.1

              anon, the discovery of a product of nature does not entitle one to a patent. The discovery of something implies that what is discovered is not new.

              The patent laws are intended, in words of the Supreme Court, often repeated, to reward creation – the making of something new.

              Now, in all the legislative history regarding the AIA I have never heard anybody say that Congress intended to overturn the entire history of the 101 jurisprudence by the Supreme Court. In fact I would think that the Congress be very, very careful in addressing the fundamental patent law of this nation.

              1. 7.1.2.1.1.1.1

                Let’s take a step back for a moment and pretend that all of the previous counter points regarding “discovery” – both in the Constitution and in the words of Congress (which take precedence over any “version” from the judicial branch) – have been re-posted here.

                Do you even recognize those counter points Ned?

              2. 7.1.2.1.1.1.2

                Then, let’s recalibrate your “fundamental” aspect by once again reminding you that the Supreme Court is not the body of the government that has been duly authorized by the Constitution to write the statutory law that is patent law.

                I know that you have a serious problem with elevating the Supreme Court above the Constitution, but you really need to be aware that all three branches are subject to the checks and balances of the separation of powers and that not a single one of the three branches is above the Constitution.

                Shall I again inquire as to the actual words of your oath as an attorney? I know that you don’t like me asking questions, but you never seem to be able to give answers to the questions, so they do tend to keep coming up. Would not a better path be for you to provide answers to the questions so that I would have no need to keep asking them?

                1. anon, the fact that you do not understand either the law or the constitution is a well established fact. The more you open your mouth on this topic the more you embarrass yourself.

                2. And yet again, Ned, your post is the opposite of reality.

                  Maybe you want to not gloss over things so much – things like 35 USC 100(a).

                  I will say this though, your ineptitude is matched by your arrogance.

        1. 7.1.2.2

          Anonymous, one could make that argument, indeed. But then there is the whole point that Armitage repeatedly made that prior art had to be of a kind and nature that was open, transparent and relatively clear. What one person said to another and when does not meet that criteria, now does it. Neither does one’s knowledge.

          Just for example, in hiring new employees, I required them to file patent applications on their prior inventions. They could not just say they had them (without specifying what they were in detail). If not, they could say that such and such new feature of our product-line was their invention — and who are we to disagree. It is their word against ours. Gets real nasty very quickly. Trust me.

    2. 7.2

      The duty of candor is related to those active in the prosecution of the application. In many midsize and larger firms, there would not be a nexus of the people involved with application prosecution and those on the business end involving offers for, or actual sales.

      1. 7.2.1

        Anon – I don’t agree with your comment. The Applicant would have the duty in this scenario in my view.

        1. 7.2.1.1

          It does not matter whether you agree – the duty of candor IS as I mention.

          I mention what is, and it IS regardless of my mentioning it. You may wish that the duty were different, but it is not.

          1. 7.2.1.1.1

            Anon – first, it would be nigh malpractice for a drafting attorney to not inquire into the history of the invention prior to filing. Also, the inventors have this duty and often are aware of whether an offer had been made.

            1. 7.2.1.1.1.1

              I do not think that you are tracking what I am saying. There is nothing “wrong” in your reply immediately above, but that simply does not change my previous post concerning the non-nexus of those associated with prosecuting applications and those involved in the sales function.

              The duty of candor simply does not mean that an attorney must go to every single person in a corporation to “clear” the contents in relation to a corporation’s sales efforts.

              1. 7.2.1.1.1.1.1

                The duty of candor simply does not mean that an attorney must go to every single person in a corporation to “clear” the contents in relation to a corporation’s sales efforts.

                It also doesn’t include getting on a plane and flying around the world for five days straight. Or eating chocolate covered gila monster toenails.

                Nobody suggested doing any of these three things.

                Every decent patent attorney will ask the client to provide information known to the client that is material to patentability of the proposed invention before putting an earnest pen to paper. There are a number of great reasons for doing that, compliance with the duty of candor being just one of those reasons.

                1. That’s great Malcolm – but you are NOT addressing what I am actually saying.

                  Perhaps this is just too subtle for you, but when an “applicant” is a corporation, the duty of candor just does not reach what Iit wants it to reach.

                  And that IS in fact what “someone” is saying.

                  No one is saying otherwise to “other reasons” for being diligent – that’s certainly a pretty strawman that you have created.

            2. 7.2.1.1.1.2

              Iit,

              Instead of becoming more melodramatic (malpractice? really? ) and instead of merely disagreeing (just becuase you feel like it should be different), let me point you to 37 CFR 1.56, which outlines exactly who has the duty of candor:

              Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office

              The section goes on to explain this with:

              (c) Individuals associated with the filing or prosecution of a patent application within the meaning of this section are:
              (1) Each inventor named in the application;
              (2) Each attorney or agent who prepares or prosecutes the application; and
              (3) Every other person who is
              substantively involved in the preparation or prosecution of the application AND who is associated with the inventor, the applicant, an assignee, or anyone to whom there is an obligation to assign the application.

              emphasis added.

              Now instead of finding solace in Malcolm, who has a habit of (badly) tr011ing me, you would have been better off simply listening to me.

              The duty is simply not as extensive as you seem to imagine.

              Yes, if someone already within this more narrow band has information of the “on sale” variety, then that already is captured in the duty. But there is just no such thing as to go out to the rest of the corporation, and to the sales branch in particular and hunt down this type of thing.

              Can you imagine if IBM with its ANNUAL rough number of claims of about 140,000** had to vet those items with all of its sales staff?

              **guestimate based on standard 20 claims per patent for 7,000 new patents in a single year. See link to www-03.ibm.com

      2. 7.2.2

        In many midsize and larger firms, there would not be a nexus of the people involved with application prosecution and those on the business end involving offers for, or actual sales.

        LOL

        Nice try. Nobody really cares what you think about any “nexus” that may or not exist between “many midsize and larger firms” and the “business end” of a client. That wasn’t the question being asked, or the answer.

        The issue is that if the inventor or anybody else associated with the prosecution of the application is aware of an activity that could be fairly construed as a 102(b) “sale”, the duty of candor would require revealing the details of that activity to the PTO.

        Or you can just take your chances! Because “anon” told you so. And he’s so often right about this stuff.

        LOLOLOLOLOLOLOLOLOLOLOL

        1. 7.2.2.1

          Thanks MM for re-centering the discussion. My point was primarily directed at the duty of the Applicant to disclose facts that could possibly be construed as an “offer for sale”, with the prospect of having this fight at the admin level rather than in a court.

        2. 7.2.2.2

          There is nothin about “take your chances” and my answer remains accurate as to what the duty of candor includes.

          Not sure where you think that what I said is not correct.

          The applicant is simply NOT the entirety of the corporation, as a direct reading of “the question” proposed by Iit would indicate.

          Let me know if you have ever chased down every individual in a corporation to clear any possible sales activity.

          Yeah, thought so.

          1. 7.2.2.2.1

            Let me know if you have ever chased down every individual in a corporation to clear any possible sales activity. Yeah, thought so.

            Wow. You can literally smell “the decimation.”

            Tough luck, Iit. It happens to everybody.

            1. 7.2.2.2.1.1

              Maybe you want to not be in such a hurry, and actually read what is being posted.

              Just a thought.

    3. 7.3

      Interesting thought…though for post-AIA applications, applicants are at least entitled to rely on the view of the PTO and all courts to rule thus far – unless/until a higher court decides that the statute doesn’t mean what it says.

      1. 7.3.2

        Ken, “entitled?” Applicant do not get vested legal rights for relying on PTO interpretations of the law.

        1. 7.3.2.1

          That’s a decidedly odd phrase coming from you Ned.

          Is not the grant of a patent the very sign of vested rights? Does not that grant fully depend on the PTO applying the law? Can the PTO apply the law without having its interpretation of the law? Granted, this last step is not an invitation for the Office to create its own version that conflicts with either the plain reading or the (properly limited to actual) interpretations from the Article III courts – but Ken did include the courts in his comment.

          So where does the vesting occur, in your opinion, other than through the PTO?

          1. 7.3.2.1.1

            Anon, if one were entitled to rely upon the opinion of the patent office regarding what the state of the law was, then Myriad could have relied upon the patent office view that isolated DNA claims were eligible. It would not have even had to discuss whether that opinion was correct.

            1. 7.3.2.1.1.1

              That does not answer my post Ned.

              So let’s try once again: where does the vesting occur, in your opinion, other than through the PTO?

              (Come man, here is an opportunity to showcase your knowledge)

  3. 6

    Returning to the point of the thread, I have to wonder if anyone else feels that the difference between an actual sale and the state of “offer for sale” was not glossed over in this decision?

    Combined with the particular here of a product-by-process, which the court appeared to fixate on the “product” side of the validity question, instead of the necessary conclusion that with such a claim, the timing of said product is the same as the action making the product, I am not convinced with the court’s reasoning as to the fixation of the critical date.

    There appears to be a consolidation of “actual sale,” “on sale,” “for sale,” and “offer for sale.”

    The court seems to grasp a difference with the pre-Pfaff distinction (lower than commercial terms for the offer as opposed to any actual sale), but then seems to be brow-beaten by the Court and loses the distinction.

    Now that distinction may also have moved to a different “test” than the totality of the circumstances, but I do not think that “offer” should be collapsed fully into “actual sale” as appears to have been done in this decision.

    1. 6.1

      The difference definitely was glossed over. I can’t remember some cases, but some of the (sparse) case-law on “offer for sale” has rejected the idea that the UCC defines an “offer for sale.” So it’s interesting if they’ve backed down on that.

      1. 6.1.1

        An easy way to mark the distinction is that an offer for sale can include a term of the sale being completed at a later date; thus, offer of and actual sale must be two different things.

        Reading the decision (and most comments to date), it appears that the distinction is not only “glossed over,” but that there appears to be at least an implicit merging of these different items into a single point in time for “on sale.”

        This strikes me as both odd and as just not in accord with reality.

        It also just may have a very real impact on the result of this immediate case. Some of the court’s distinctions as to why an actual sale was not deemed to have happened become completely immaterial if the distinction between offer for sale and actual sale is recognized.

        (also, as has been noted, Pfaff was concerned with the “ready for patenting” aspect – an aspect here in this case that does predate the critical date (the court almost protests too much about the process/product distinction, since both process and product were complete before the critical date)

  4. 5

    Bob, thanks for your urgings that others might adopt my nickname for the poster who calls himself “anon”. The thing is though, it ain’t “Dingleberry”.

    It is in fact “Dogberry”, the laughably officious policeman in the Shakespeare play.

    1. 5.1

      As if MaxDrei’s name calling is not itself “laughably officious”…

      Yay ec(h)osystem!

      Here’s an idea MaxDrei – back up your posts with more than just your opinions and leave out the empty ad hominem.

      Once you get to the point where your posts have some minimal level of substance, then – and only then – even start to consider adding rhetorical flourishes.

      Otherwise, you just appear to be a vindictive @$$ who does not like critical thinking applied to your “pet opinions.”

    1. 4.1

      You don’t necessarily have to wait for the case to publish to start writing your comments on it. You gotta think ahead like the obituary writers at the NYTimes. ;)

      1. 4.1.1

        I’m actually quite ambivalent about McRo.

        While Dingleberry* and co would describe me as anti patent, I don’t really care for Alice. The knots the Office has twisted itself into trying to gratify both SCotUS and the patent bar are absurd and a waste of time for me.

        I’d rather reject everything under 112 and 103, rather than reject everything under 112, 103, and 101.

        * Maybe it’ll stick if we all support MD?

        1. 4.1.1.1

          LOL – like that makes any sense….

          Max Drei cannot even be bothered to explain what goes on in his own backyard, and has ZERO clue about the jurisprudence on patent law in this sovereign.

          But then again, you did “upvote” nearly anything Malcolm ever posted in the DISQUS days, so your “views” are pretty much w0rthless as it is.

  5. 3

    An excellent opinion – one of the best ever by the Federal Circuit. The reason it is so good is that it actually looked at the history and development of the law regarding “on sale.” It began with the first patent acts, and their interpretation by the Supreme Court in Pennock v. Dialogue, 27 U.S. (2 Pet.) 1 (1829) – which led to the enactment of the on sale bar in the patent act of 1836. The reenactment was essentially carried forward from there through the various patent acts including the patent act of 1952.

    The holding of this case is very much consistent with Pennock. Therefore it is correct.

    The point about “confidential sales” being eligible for the on sale bar should be noted. I think this holding is going to apply to the AIA because it is not clear that Congress intended to overturn the Supreme Court holding in Pennock in reenacting on sale in the new statute.

    1. 3.1

      Your last paragraph is expressly off.

      Revisit the Soliloquy.

      (Your over-adoration of Pennock is noted as well, but here largely immaterial)

    2. 3.2

      Ned, this decision was compelled by the Sup. Ct. in Pfaff overruling prior ad hoc decisions “on sale” of the Fed. Cir., not the ancient history you love cite.

      1. 3.2.1

        Paul, the court in was careful to note that Pffaf was not controlling on the one sale part, just the ready for Patenting part.

        On “on sale,” Pennock is controlling.

    3. 3.3

      There appears to be some tension between this decision and the old foundry case Intel v ULSI, where the court found a “sale” for patent exhaustion purposes, rejecting the argument that the foundry arrangement was really the sale of manufacturing services. And like Ben Venue here, “[b]ecause [HP] lacked title, it was not free to use or sell the claimed products or to deliver the patented products to anyone other than [ULSI], nor did it do so.” (See Judge Plager’s dissent in ULSI.)

      1. 3.3.1

        Where’s the tension? The CAFC is crystal clear here that there is no “blanket” or “talismanic” ruling as to whether a contract for manufacturing services is a “sale”or not, even within the limited context of 102(b). You have to walk through the Supreme Court’s Pfaff test and look at the facts.

        Patent exhaustion presents some different issues. Why did ULSI sue Intel, and what was the relationship between ULSI, HP and Intel?

        1. 3.3.1.1

          ULSI designed chips covered by an Intel patent. Intel and HP had previously entered into a patent cross-license agreement. Since ULSI did not have a license under Intel’s patent, it arranged for HP to undertake manufacturing services to manufacture the chips (a “foundry” arrangement) so as to take advantage of HP’s license and the first “sale” doctrine.

          The only “blanket” or “talismanic” takeway is that the parties are free to structure their transactions as they see fit to either call it a sale (patent exhaustion) or not (to avoid “on sale bar”) and the CAFC will let them get away with it. Cf. U.S. v. Masonite, 316 U.S. 365 (looking behind facial structure of “del credere agency” agreements to find transactions were in substance “sales”:

          “As Chief Justice Taney said in Bloomer v. McQuewan, 14 How. 539, 549, 14 L.Ed. 532, when the patented product ‘PASSES TO THE HANDS OF THE PURCHASER, IT is no longer within the limits of the monopoly. It passes outside of it, and is no longer under the protection of the act of Congress.’ And see Adams v. Burke, 17 Wall. 453, 21 L.Ed. 700; Hobbie v. Jennison, 149 U.S. 355, 13 S.Ct. 879, 37 L.Ed. 766. In applying that rule this Court has quite consistently refused to allow the form into which the parties chose to cast the transaction to govern. The test has been whether or not there has been such a disposition of the article that it may fairly be said that the patentee has received his reward for the use of the article.)

          1. 3.3.1.1.1

            Well Pilgrim, if there is tension, the problem is not in the current case but in the Intel case. The present decision is entirely consistent with Pennock v. Dialogue. If you recall the facts in that case, the inventor had allowed others, with this consent, to make and sell the inventive firehose to the public for years prior to filing a patent application. He and his authorized manufacturer were able to maintain the monopoly by keeping the techniques of its manufacture secret.

            Now if the third-party is making commercial sales, intended for the public, I can see how the court can believe that the presence of intermediaries, even if those intermediaries might include the inventor or his assigns, might be irrelevant. But if the third-party is making sales to the inventor or his company for the purposes of evaluation or for other purposes, but not for immediate sale, then there has in my view that no commercial sale at all.

            Now if I understand the Intel case, HP was making for ULSI, and ULSI was then selling to the public. This clearly was the kind of case where the sale by HP to ULSI might well indeed have been considered to be a commercial sale under the present case.

          2. 3.3.1.1.2

            The entire sale/”not a sale but a lease or license” scene needs a serious cleaning.

            Far too many are trying to avoid the implications of a sale by wordsmithing.

            For there was an area needing “control of scrivining” and “Gisting” down to some essence, this would be that area.

  6. 2

    Haven’t yet digested the whole discussion, but at first blush it appears to be the correct result re: on sale bar. More interesting to me is the remand back to the merits panel to address grounds of appeal that the panel didn’t rule on the first time around because of its finding the patents invalid. I particularly want to hear what the panel has to say about the District Court’s claim construction and its basis for finding non-infringement.

  7. 1

    An interesting case addressing the question as to whether an inventor’s payment to a manufacturer to create batches of a patented product for “stockpiling” (by the inventor, prior to sale by the inventor) constitutes an on-sale bar. Lots of key passages but these stood out:

    Applying § 102(b) in light of Pfaff, we conclude that the transactions between MedCo and Ben Venue in 2006 and 2007 did not constitute commercial sales of the patented product. We, thus, affirm the district court’s conclusion that those transactions were not invalidating under § 102(b). In the discussion that follows, we first clarify that the 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. We then address the issue of “stockpiling” by an inventor and clarify that “stockpiling” by the purchaser of manufacturing services is not improper commercialization under § 102(b). We explain 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.” There are, broadly speaking, three reasons for our judgment in this case: (1) only manufacturing services were sold to the inventor—the invention was not; (2) the inventor maintained control of the invention, as shown by the retention of title to the embodiments and the absence of any authorization to Ben
    Venue to sell the product to others; and (3) “stockpiling,” standing alone, does not trigger the on-sale bar. …

    If Congress wanted to prevent stockpiling or any form of commercial benefit, it could have added “or stockpiled” or “engaged in a transaction conferring commercial benefit” to the list of statutory bars in § 102(b), in addition to “public use or on sale.” It did not. Stockpiling by the purchaser of manufacturing services is not a trigger to the on-sale bar….

    [E]xamining the arguments made by the parties and the facts not in dispute in those cases, the precise holdings in those cases are not inconsistent with the analysis we employ or conclusions we reach here. Lest there be any doubt, however, to the extent language in those cases might be viewed as dictating a different result here, they are overruled with one important caveat. We still do not recognize a blanket “supplier exception” towhat would otherwise constitute a commercial sale as we have characterized it today. While the fact that a transaction
    is between a supplier and inventor is an important indicator that the transaction is not a commercial sale, understood as such in the commercial marketplace, it is not alone determinative. Where the supplier has title to the patented product or process, the supplier receives blanket authority to market the product or disclose the process for manufacturing the product to others, or the transaction is a sale of product at full market value, even a transfer of product to the inventor may constitute a commercial sale under § 102(b). The focus must be on the commercial character of the transaction, not solely on the identity of the participants.

    No dissent.

    1. 1.1

      Definitely an interesting decision, and one that will take some time to digest.

      First blush though, there appears to be some rather “light” treatment of “offer for sale,” and the Pfaff ‘ready to be patented’ timing that I would have thought to have been more decisive given the facts of the case here involved a product by process item.

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