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Federal Circuit Invalidates a Design Patent Under the On-Sale Bar graphic

On February 10, 2022, the Federal Circuit in Junker v. Medical Components, Inc. reversed the United States District Court for the Eastern District of Pennsylvania’s judgment awarding over $1 million in damages for infringement of a design patent.  Based on this Letter providing a quotation with a price/quantity grid for a product “in the final stages of development[,]” the Federal Circuit held that constituted a commercial offer for sale of the claimed design, and that the offer for sale rendered the design patent invalid.  For inventors, the case stands as an example of the risks of failing to file for patent protection in a timely fashion after communicating about a product—even if the author of the communication believes that the communication is not a formal offer for sale, or that the product is incomplete.     

Under current statutory law, both utility patents and design patents are unavailable—and invalid if granted—if the claimed invention was “on sale . . . before the effective filing date of the claimed invention.”  35 U.S.C. § 102(a)(1).  For patent applications in which all claims were effectively filed before March 16, 2013, a similar rule bars a patent where the claimed invention was “on sale in this country, more than one year prior to the date of the application for patent in the United States.”  35 U.S.C. § 102(b) (pre-America Invents Act).  Despite some changes to the surrounding statutory language, the U.S. Supreme Court held in Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc., 139 S. Ct. 628 (2019), that the standard for whether an invention is “on sale” was not altered by the revision of Section 102.  As a result, the standard for determining whether an invention was “on sale” before the statutory bar date continues to be the standard announced by the Supreme Court in Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998): whether the invention (a) is the subject of a commercial offer for sale, and (b) is ready for patenting. 

The Federal Circuit and the District Court disagreed about whether the Letter was a commercial offer for sale.  Individual inventor Larry Junker (“Junker”) had defeated Medical Components, Inc.’s “on sale” bar defense on summary judgment before the District Court, which held that the Letter was not a commercial offer for sale.  The Letter specifically stated, “[t]hank you for the opportunity to provide this quotation for the MediTech Peelable Sheath Set[]” and “[t]he device we are proposing is in the final stages of development[.]” The District Court reasoned that the Letter was not an offer for sale because it  repeatedly characterized itself as a “quotation” and failed to specify a date for delivery, which the District Court viewed as a critical omission.  

The Federal Circuit reversed.  The Federal Circuit applied “traditional contract law principles” from the Uniform Commercial Code, the Restatement (Second) of Contracts, and other treatises in determining that the Letter was a commercial offer for sale.  The Federal reasoned that the Letter specified delivery conditions (bulk, non-sterile); shipment terms (FOB Athens, Texas); payment terms (net 30 days); and prices for various quantities and sizes of the device (in the form of a grid of prices and quantity discounts).  Although Junker argued that the Letter failed to specify a delivery date—and could not do so, because the product was not yet ready for production and sale—the Federal Circuit held that the terms of the Letter were sufficiently complete to constitute a commercial offer for sale. 

The parties agreed that the Letter was directed to the claimed invention.  The text and timing of the Letter were undisputed.  As a result, based on the holding that the Letter was an offer for sale, the Federal Circuit reversed the award of damages and invalidated Junker’s design patent.   

A Note For Inventors

When developing new and innovative products, keep in mind that an “offer for sale” may bar you from securing later patent protection, even for a product that is still in development and not ready for production.  Always consult with counsel or file a patent application to protect your new and innovative inventions and designs before sending any “offer for sale” or quotation letter or e-mail. The Letter in this case scuttled a million-dollar opportunity: the design patent likely would have been valid if the patent application had been filed before sales or promotional efforts began.  Reasonable minds may disagree (as the two courts did here) about whether a communication about a product has placed the product “on sale” under the patent laws.  Therefore, inventors would be well served to consult patent counsel early, so that patent applications can be filed before any “on sale” issues arise.

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