Rachel Krevens

The on-sale bar rule requires an inventor to file a patent application no later than a year after the invention was first on sale in the United States. If the inventor does not meet the deadline, the patent is invalid. This rule has spawned numerous court decisions, generally focusing on two key aspects of when the intention was "on sale." First, what is a sale, e.g., is an offer to sell a sale before it is accepted? What about advertising, or a booth at a trade show? Second, is an invention on sale when prototypes are provided to potential customers for on site testing? Many of those in intellectual-property geared industries (and many courts) had become comfortable with the idea that the product embodying the invention had to exist to be "on-sale" for purposes of the on-sale bar. In patent terms, the assumption was that the invention had to be "reduced to practice." The Pfaff case has proved any such assumptions wrong.

Pfaff was an individual who designed a new computer chip socket. He made detailed drawings of the socket and sent them to a manufacturer to be made according to his specifications. Before any sockets or even a prototype had been made, Pfaff showed his drawings to Texas Instruments and offered to supply them with the product. Texas Instruments placed an order for sockets, which Pfaff accepted and then filled with chip sockets made by his manufacturer. Pfaff filed a patent application on his chip socket design less than a year after the manufacturer first produced the sockets, but more than a year after he took the order from Texas Instruments.

After Pfaff's patent issued, he sued Wells for infringement. Wells raised an on-sale bar defense, but the district court rejected it because Pfaff had filed his application less than a year after his chip socket was reduced to practice by the manufacturer. The Federal Circuit reversed. Focusing on the word "invention" in section 102(b), the Federal Circuit looked to its precedent _ not limiting that precedent to section 102(b) cases _ to determine when an invention is complete. The court found that an "invention" is complete when the inventor has conceived of the idea with enough clarity and completeness that he can describe it in sufficient detail to enable others to make the invention (a so-called "enabling description"). The Federal Circuit found no reason in the text of section 102(b) to apply a different definition of "invention" in the on-sale bar context. Pfaff's invention plainly met the "enabling description" test when he offered it for sale, because he had already sent drawings to the manufacturer which it then used to make the product.

Pfaff sought review by the Supreme Court. The thrust of his complaint was that he (and many others) reasonably believed that the deadline for filing a patent application was a year after the date when an invention which had been reduced to practice was offered for sale. In essence, Pfaff argued that, because he and the industry reasonably relied on this "rule," the courts could not "change" the rule retroactively to invalidate his patent. Pfaff bolstered this argument with case law on the development of the on-sale bar doctrine which emphasized the need to provide inventors with a clear standard identifying when the on-sale bar period starts to run.

While the Supreme Court agreed that a clear standard is necessary, it was unimpressed with Pfaff's argument. The Court held that because the patent system embodies a "carefully crafted bargain" between the interests in public disclosure of new ideas and a limited monopoly for the inventor of those ideas, the statute must be construed strictly so as not to alter the bargain. Pfaff's argument required creating a judicial exception to the terms of the statute, which the Court refused to do. Under Pfaff, the one-year period for on-sale bar purposes starts to run when two conditions are met:

(1) the invention is "ready for patenting," which may be shown either by an enabling description of the invention or by proof that it was actually made; and

(2) the invention has been offered for sale.

Notably, although the Supreme Court affirmed the judgment of the Federal Circuit, it criticized its formulation of the test for when the on-sale bar starts to run, and established a different standard.
The Pfaff decision is of great practical importance to companies whose products embody internally developed intellectual property. Every company in that position has (or ought to have) a system for calendaring deadlines for filing patent applications. Pfaff makes it clear that to be absolutely certain the deadline is met, companies should (with very rare exceptions) treat the one-year period as starting with the first offer for sale, regardless of the status of development of the invention. Clearly under Pfaff there can be no reliance on the fact that the actual product is not ready when the offer is made.

Ms. Krevens is a partner in the firm of Morrison & Foester.