Federal Circuit Patent Decision Highlights Inventors Must Be Mindful of On-Sale Bar

Companies must contend with a number of deadlines when seeking patent protection. Under the law prior to the America Invents Act, an inventor had to file a patent application within one year of publicly disclosing or selling the invention. The rule is commonly referred to as the “patent on-sale bar.”

In a recent case before the U.S. Court of Appeals for the Federal Circuit, the court shed light on the applicability of the on-sale bar. In a split decision, the panel invalidated Hamilton Beach Brands Inc.’s slow cooker patent because its foreign supplier offered to manufacture the product more than a year before the patent application was filed.

The Facts of the Case

 In Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc., Sunbeam Products, Inc. defended a patent infringement action by Hamilton Beach Brands, Inc. by asserting that Hamilton Beach offered for sale and publicly used the Stay or Go® slow cooker, the commercial embodiment of the patent at issue, more than one year prior to the earliest possible filing date.

The on-sale bar applies when two conditions are satisfied before the critical date: (1) the claimed invention must be the subject of a commercial offer for sale; and (2) the invention must be ready for patenting. This case focused on the first requirement.

Hamilton Beach issued a purchase order to its supplier for manufacture of 2,000 units of its Stay or Go® slow cookers. Hamilton Beach listed on the purchase order its facility in Tennessee as the shipping address and its office in Virginia as the billing address. Shortly thereafter, the supplier, via email, confirmed that it had received the purchase order and noted that it would begin production of the slow cookers as soon as it received Hamilton Beach’s release.

The Court’s Decision

The Federal Circuit ultimately concluded that Hamilton Beach’s purchase order with the foreign supplier amounted to an invalidating commercial offer for sale under the on-sale bar. As explained by the court:

 Hamilton Beach’s supplier responded prior to the critical date that it was ready to fulfill the order. In other words, the supplier made an offer to sell the slow cookers to Hamilton Beach. At that point, the commercial offer for sale was made and, under the governing corporate purchase agreement, Hamilton Beach could accept the offer when it so pleased. And, Hamilton Beach concedes, as it must, that, had it provided a “release” any time after it received that email, a binding contract would have been formed.

 As further highlighted by the court, it did not matter that the offer was made by Hamilton Beach’s own supplier and was made to Hamilton Beach itself. In addition, the court noted that a commercial offer for sale made by a foreign entity that is directed to a United States customer at its place of business in the United States is sufficient to serve as an invaliding activity.

As this decision makes clear, the on-sale bar can be fatal to an otherwise valid patent. To avoid running afoul of the statute, inventors should consult with an experienced patent attorney who can carefully evaluate what types of activities may trigger the start of the one-year deadline.  Under the current law, it is advisable to file a patent application as soon as possible.

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