The Patent Light

As many of you know, a few years ago Congress passed the America Invents Act (‘AIA’).  Much of this statute became effective on March 16, 2013.

Prior to the AIA, an inventor or an invention owner had a one-year “grace period” to file a patent application after commercially selling an invention or using the invention in public.  If the patent owner failed to file a patent application within the grace period after such activity, the patent owner was “barred” from pursuing patent rights.  The patent rights simply evaporated.  Such activities are known as “patent bars.”

Unfortunately, the AIA introduced ambiguity into the on-sale and public use patent bars.

The U.S. Patent and Trademark Office and a majority of patent attorneys believe that the AIA preserved the one year grace period.  We will call this interpretation “the majority reading.”  However, recent Federal Circuit cases have significantly eroded the validity of this interpretation.

To understand the issue, the relevant portions of the new AIA §102 patent statute are reproduced below:

(a) Novelty; Prior Art.—A person shall be entitled to a patent unless—

(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention;   .   .   .

(b) Exceptions.—

(1) Disclosures made 1 year or less before the effective filing date of the claimed invention.— A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—

(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

Under the majority reading of this provision, the one-year grace period is still in place because the AIA included a new phrase and patent bar: the “otherwise available to the public” patent bar. The majority argues that the phrase modifies the other patent bars preceding it.  In other words, all patent bars must be “available to the public” including the on-sale and public use bars. The majority argues that the AIA on-sale and public use bars now require public disclosure of the invention for the bar to apply, and the disclosure by the patent owner qualifies for the one-year grace period under other provisions of the AIA.

The majority reading is supported not only by a plain reading of the statute, but the legislative history, the USPTO interpretation, and the overall intent of the AIA.  For instance, one purpose of the AIA was to put U.S. patent law closer to that of the rest of the world.  The rest of the world essentially requires a public disclosure in order to bar an activity, such as placing the invention on sale or using the invention in public.  For example, in Europe or China, an invention can be used in public or put on sale without creating a patent bar if such use would not disclose the invention to a bystander or observer.

In contrast, the minority reading argues that there is no grace period under the AIA for any commercial sale or offer for sale or public use of an invention. Thus, any commercial sale or offer for sale or public use of the claimed invention instantly terminates all patent rights in the invention, unless a patent application has been filed as of the time of the commercial sale or offer for sale or public use.  In other words, the minority reading argues that pubic use and on sale activities are not “disclosures” under part (b) of the §102 statute.

One problem is that Congress did not define the term “disclosure” when it drafted the AIA.  If an “on-sale” bar is a disclosure, then the one year grace period still applies.  However, if an “on-sale” bar is not a disclosure, then the one year grace period does not apply.  The rationale is as follows: if the term “otherwise available to the public” does not apply to “on-sale” and public use, then these activities do not publicly “disclose.”  Consequently, they are not part of the exceptions of AIA §102(b) which only focuses on disclosures and not activities which do not “disclose.”  In other words, if on-sale and public use activities are not part of the exceptions, then the grace period of AIA §102(b)  does not apply.

The Federal Circuit Court of appeals rejected the majority’s rationale in Helsinn Healthcare v Teva on May 1, 2017. The Helsinn decision concludes that ‘available to the public’ is not a limitation on the on-sale and public use bars.  In other words, a sale or use does not have to “disclose” the invention to trigger the bars. Most patent attorneys believe the Federal Circuit panel of three judges were simply wrong.  Subsequently, Helsinn petitioned for en banc rehearing (a hearing of all Federal Circuit judges).  That petition was denied on January 16, 2018 and Judge O’Malley wrote a concurring opinion explaining the rationale and arguing that the “otherwise available to the public” phrase of the AIA §102(a) does not apply to the on sale and public use patent bars.

The Helsinn decisions do not directly determine the issue of whether the grace period still is in effect for sales or public use under the AIA – that issue was not raised or decided.  However, the Helsinn decisions knock the legal underpinnings from under the majority reading – leaving it in serious doubt.

Thus, for now, one should assume that the minority reading is correct.  In other words, there is no longer a one year grace period for public use or on-sale activities (which include offers for sale).

If you have any questions on this or any other IP topic on this blog, feel free to contact Bill Naifeh at www.naifehlaw.com.