Are You "Ready for Patenting?" Pfaff And The New On-Sale Bar Test

Copyright 1999.  All Rights Reserved.

The United States Supreme Court's recent decision in Pfaff v. Wells Elec., Inc.⁽¹⁾ has clarified what an alleged patent infringer must prove to challenge the validity of a patent under 35 U.S.C. section 102(b). The Court abolished the Federal Circuit Court of Appeals' ambiguous "substantially complete" standard for determining whether an invention was on-sale and replaced it with a "ready for patenting" test. In addition, the Court rejected petitioner Pfaff's argument that only reduction to practice should trigger the start of the on-sale bar period in order to provide certainty to inventors. Instead, drawings or other descriptions that are detailed enough to enable one skilled in the art to practice the invention -- even without reducing the invention to practice -- can invalidate a patent if the invention was offered for sale more than one year before application for a patent.

The "on-sale bar" provision of the Patent Statute provides that "[a] person shall be entitled to a patent unless . . . (b) the invention was . . . on sale in this country, more than one year prior to the date of the application for the patent in the United States. . . ."⁽²⁾ Thus, a sale or offer to sell the invention before the "critical date" (one year before the patent is filed) will invalidate a patent. Since a patent carries a presumption of validity,⁽³⁾ an alleged infringer must prove invalidity under section 102(b) by clear and convincing evidence.⁽⁴⁾

The on-sale bar is governed by several, often competing, policy considerations. The primary policy is to prohibit an inventor from exploiting the invention beyond the period authorized under the statute.⁽⁵⁾ Other policy considerations include: encouraging the inventor's commercial evaluation of the invention; encouraging prompt and widespread disclosure of the invention; and preventing removal of inventions from the public domain when the public has come to rely on their availability.⁽⁶⁾

Prior to the establishment of the Federal Circuit in 1982, the prevailing test for analyzing the on-sale bar was the Timely Prod. Corp v. Arron⁽⁷⁾ three-part test, which required: the complete invention to be embodied in or obvious in view of the product offered for sale; sufficient testing of the invention to verify that it was both operable and commercially marketable; and a sale primarily for profit rather than for experimentation. The second prong of the Timely Products test essentially required a reduction to practice of the invention before the on-sale bar could be invoked.⁽⁸⁾

In a precursor to the Pfaff decision, the Federal Circuit in UMC Elec. Co. v. United States⁽⁹⁾ rejected reduction to practice as an absolute requirement for the on-sale bar. The UMC court acknowledged that a reduction to practice may well establish that a sale occurred before the critical date, but it must be considered with all the surrounding circumstances, including the nature of the invention and its stage of development.⁽¹⁰⁾ In addition, the court noted that a sale will not trigger the bar where the purchaser is participating in experimental testing of the invention.⁽¹¹⁾ However, the UMC court expressly reserved the issue of "when something less than a complete embodiment of the invention will suffice under the on-sale bar" to invalidate a patent under section 102(b).⁽¹²⁾

The experimental use exception to the on-sale bar referred to in UMC allows the inventor to test the product under limited circumstances, even if the product is sold to a customer.⁽¹³⁾ The overriding concern is that the use is primarily for experimentation rather than for commercial profit.⁽¹⁴⁾ The court must consider objective evidence of experimental use, such as whether an evaluation is reasonably necessary to determine the efficacy of the invention, the reasonableness of the test period length in relation to the nature of the invention, the number of tests run, the number of products distributed, the inventor's control over the testing, whether progress reports were kept, whether payments were made for the product, and whether a secrecy agreement existed.⁽¹⁵⁾ Courts have long recognized an experimental use exception, particularly where durability is an element of the invention.⁽¹⁶⁾

In recent decisions, the Federal Circuit had been wavering from its original 1987 pronouncement in UMC that it is not necessary to show a reduction to practice of the claimed invention to establish an on-sale bar under 35 U.S.C. § 102(b). Within the past few years, the Federal Circuit has applied no less than three different tests to determine when an invention is on sale. In Seal-Flex,⁽¹⁷⁾ the Federal Circuit criticized the "substantially complete" test as "unworkable" and instead required proof that the invention was "complete." Nevertheless, the Federal Circuit in Micro Chem, Inc. v. Great Plains Chem. Co., Inc.⁽¹⁸⁾ applied the "substantially complete" test. Finally in Pfaff v. Wells Elec., Inc.,⁽¹⁹⁾ the Federal Circuit limited the "substantially complete" test by reviving UMC's holding that a reduction to practice was not required. Such inconsistency by the Federal Circuit called for the Supreme Court to step in and enunciate a single test.

'Pfaff v. Wells Electronics, Inc.'

At the behest of Texas Instruments representatives, petitioner Pfaff began working on a new computer chip socket in November 1980.⁽²⁰⁾ Pfaff sent detailed engineering drawings to a manufacturer in February or March 1981.⁽²¹⁾ Pfaff also showed a sketch of the concept to Texas Instruments representatives before March 17, 1981, which then placed a written confirmation order on April 8, 1981.⁽²²⁾ Actual reduction to practice of the invention occurred in the summer of 1981.⁽²³⁾ Consistent with his usual practice, Pfaff did not make or test his invention before offering the device for sale.⁽²⁴⁾ Pfaff filed his patent on April 19, 1982, making the critical date for on-sale purposes April 19, 1981.⁽²⁵⁾ The subsequent Patent No. 4,491,377 ("'377 patent") issued on January 1, 1985.⁽²⁶⁾

Pfaff filed a patent infringement suit against respondent Wells Electronics, Inc. ("Wells"), which responded by alleging several defenses, including the section 102(b) on-sale bar.⁽²⁷⁾ The District Court held that two claims were invalid but that four other claims were valid and infringed.⁽²⁸⁾ On appeal, the Federal Circuit found all the claims invalid, holding that the four claims were invalid under section 102(b) because the invention was "substantially complete" when offered for sale before the critical date, even though the invention had not yet been reduced to practice.⁽²⁹⁾ The Supreme Court affirmed, but rejected the "substantially complete" test as lacking support in the statute.⁽³⁰⁾

The Supreme Court enunciated a new "ready for patenting" test to determine when the one year on-sale bar period begins to run.⁽³¹⁾ "First, the product must be the subject of a commercial offer for sale." Id. However, the experimental use exception still applies.⁽³²⁾ "Second, the invention must be ready for patenting."⁽³³⁾ Proof of readiness may be established in at least two ways: (1) proof of reduction to practice before the critical date or (2) proof of drawings or other descriptions prepared by the inventor, before the critical date, that are sufficiently specific to enable a person skilled in the art to practice the invention.⁽³⁴⁾ The Court rejected the "substantially complete" test, as not supported by the text of section 102(b) and having been criticized as "unnecessarily vague."⁽³⁵⁾ The Court also rejected petitioner's argument that the term "invention" as used in section 102(b) requires proof of an actual reduction to practice to provide certainty to the inventor.⁽³⁶⁾ Instead, the Court emphasized the policy of preventing an inventor from exploiting his or her invention beyond the statutory period.⁽³⁷⁾ The Court held that the word "invention" in the statute refers to a complete conception of the invention, whether or not it is actually reduced to practice.⁽³⁸⁾

Applying the Court's New 'Ready For Patenting' Test Without Proof of Reduction to Practice

Whether the "ready for patenting" test will prove more certain than the "substantially complete" test is debatable. Nevertheless, the new test will undoubtedly be frequently invoked by alleged infringers, since the Court explicitly rejected drawing a bright line in determining when there is an "invention" under § 102(b) based on a reduction to practice.⁽³⁹⁾ The Court acknowledged that such evidence is often determinative that there is an "invention" ready for patenting.⁽⁴⁰⁾ However, it is more likely that the battleground will move from determining whether the invention was "substantially complete" to determining when the inventor's drawings or descriptions of the inventions were ready to be patented by satisfying the enablement requirement.

By rejecting a reduction to practice bright line test, the Court emphasized the policy of preventing an inventor from commercially exploiting the invention more than one year before the inventor applies for a patent, and unfairly extending the period of protection, over an inventor's concern of knowing exactly when the on-sale bar is triggered. Inventors, patent attorneys and plaintiff's attorneys will have to evaluate thoroughly whether any description of the invention, such as drawings, lab notebooks, dictations, computer models, or even an oral presentation at a conference or trade show (whether or not it included handouts or slides), would enable one skilled in the art to practice the invention.

Implicit in the Court's holding is the contention that simpler inventions need not be reduced to practice if the descriptions enable one skilled in the art to reduce the invention to practice. Complex inventions that require testing to determine whether they will actually work for their intended purpose usually must be reduced to practice. In addition, inventions where durability is a requirement of the invention will likely have to be reduced to practice and tested. However, simple inventions that can be understood by those skilled in the art simply from a drawing or other description may be more susceptible to a section 102(b) challenge.

Finally, the Court's opinion leaves open the possibility of using other tests to determine whether there is a complete invention before the critical date.⁽⁴¹⁾ Savvy defense attorneys will argue for other ways in which the "ready for patenting" test can be applied to show that there was a complete invention offered for sale. For example, an alleged patent infringer could argue that an oral presentation of an invention to colleagues at a trade show, particularly of a simple invention, was enough to enable those skilled in the art to practice the invention, thereby triggering the start of the on-sale bar. Other innovative arguments are sure to follow. 

Read More

1. ___ U.S. ___, 119 S. Ct. 304 (1998).
2. 35 U.S.C. section 102(b).
3. 35 U.S.C. section 282.
4. See Mas-Hamilton Group v. LaGard, Inc., 156 F.3d 1206, 1216 (Fed. Cir. 1998).
5. See Ferag AG v. Quipp, Inc., 45 F.3d 1562, 1566 (Fed. Cir. 1995).
6. Id.
7. 523 F.2d 288, 302 (2d Cir. 1975).
8. Id.
9. 816 F.2d 647 (Fed. Cir. 1987).
10. Id. at 656.
11. Id at 657; See also Seal-Flex,Inc. v. Athletic Track and Court Constr., 98 F.3d 1318 (Fed. Cir. 1996). 12. Id.
13. See Kolmes v. World Fibers Corp., 107 F.3d 1534 (Fed. Cir. 1997).
14. See Manville Sales v. Paramount Sys., 917 F.2d 544 (Fed. Cir. 1990).
15. See Petrolite Corp. v. Baker Hughes Inc., 96 F.3d 1423, 1426-27 (Fed. Cir. 1996); Seal-Flex, 98 F.3d at 1323.
16. See, e.g., Seal-Flex, 98 F.3d at 1322-24 (testing of durability in all weather conditions required for inventor's all-season running track); Kolmes, 107 F.3d at 1534; Manville Sales, 917 F.2d at 551; City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126 (1887).
17. 98 F.3d at 1322.
18. 103 F.3d 1538, 1545 (Fed. Cir. 1997).
19. 124 F.3d 1429, 1434-35 (Fed. Cir. 1997).
20. Pfaff, ___ U.S. ___, 119 S. Ct. at 307.
21. Id.
22. Id.
23. Id.
24. Id.
25. Id.
26. Id. at 308.
27. Id. at 308.
28. Id.
29. Id.
30. Id. at 311.
31. Id. at 311.
32. Id.
33. Id. at 312.
34. Id.
35. Id. at 311, n.11.
36. Id. at 310.
37. Id. at 312 (citing Judge Learned Hand's opinion in Metallizing Eng'g Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516, 520 (2d Cir. 1946) ("[I]t is a condition upon an inventor's right to a patent that he shall not exploit his discovery competitively after it is ready for patenting. . . .").
38. Id. at 311.
39. Pfaff, 119 S. Ct. at 309-10.
40. Id.
41. two ways."). at least 119 S. Ct. at 312 (The ready for patenting test "may be satisfied in Pfaff,