Inventors Beware: Even Secret Activity Can Sink Your Patent

Intellectual Property Update

Date: January 31, 2019

Key Notes:

  • Offers for sale and sales of an invention can prevent patenting that invention, even if made in secret
  • Inventors and technology companies must move quickly to preserve their right to patent their inventions

Under U.S. patent law, an offer to sell or a sale of an invention starts a one-year grace period during which the owner of the invention must file a patent application with the U.S. Patent and Trademark Office or else forfeit their right to obtain patent protection for it. The grace period runs even if the offer for sale or sale of the invention is made in secret. This aspect of U.S. patent law is unique in the world, and gives rise to situations in which a U.S. inventor’s secret offer for sale of their invention forfeits their right to a U.S. patent, and yet the inventor remains eligible to obtain patents for that same invention in other countries.

In an effort to harmonize U.S. patent laws with the patent laws of other developed countries, Congress passed the America Invents Act (AIA), which became effective September 16, 2012. The AIA amended the language of the part of the Patent Act pertaining to the effect of a sale of the invention in a way that was viewed by many—including Senators Kyle and Leahy who were involved in drafting the AIA—as eliminating the effect of a secret offer for sale or sale starting the one-year clock.

However, those hopes were dashed on January 22, 2019, when a unanimous Supreme Court held that under the AIA a commercial sale places an invention “on sale” even if the sale was conducted in private. In Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., the Court held that the AIA did not change this aspect of the pre-AIA patent law. Thus, any sale—even a secret one—still may operate to forfeit the right to a patent, or invalidate an issued patent where the secret offer for sale or sale had occurred prior to the grace period. The Helsinn decision underscores the value in filing patent applications for a new product or process early in the product life cycle. Unfortunately, American inventors will have to wait for Congress to amend the Patent Act further to harmonize this aspect of U.S. patent laws with those of other countries.

Until such further amendments are made, if ever, inventors and technology companies should observe the following guidelines to maximize their ability to protect their inventions:

  • Caution sales and marketing personnel not to offer an invention for sale to a prospective purchaser until a patent application is filed, or a determination is made not to pursue a patent for it.
  • File a provisional patent application for the invention as soon as a practical commercial embodiment of the invention is known. Provisional patent applications are comparatively cheaper than utility patent applications, and stop the running of the one-year grace period. Provisional patent applications provide an additional one-year period to test the value of an invention by marketing and offering the invention for sale before pursuing a utility patent.
  • A secret offer for sale or sale starts the one-year grace period even if the prospective purchaser signs a non-disclosure agreement. Making the prospective purchaser sign an NDA has no effect on stopping the one-year grace period from running.
  • However, a secret showing of an invention to a prospective purchaser does not start the one-year grace period, provided that the secret showing is not accompanied by an offer for sale or sale of the invention.
  • Also, a secret showing of an invention to investors in the development of the invention, as opposed to purchasers of the invention, does not start the one-year grace period.
FOR MORE INFORMATION

For more information, please contact:

Theodore D. Lienesch
937.443.6958
Ted.Lienesch@ThompsonHine.com

Clifton E. McCann
202.263.4159
Clifton.McCann@ThompsonHine.com

Larry D. Williams Jr., Ph.D.
513.352.6534
Larry.WilliamsJr@ThompsonHine.com

or any member of our Intellectual Property practice group.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

© 2019 THOMPSON HINE LLP. ALL RIGHTS RESERVED.