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How Much Damage?

By Robert P. Hoag
October 07, 2003

The recent decision by the U.S. Court of Appeals for the Federal Circuit in EZ Dock Inc. v. Schafer Systems Inc., 276 F.3d 1347 (Fed. Cir. 2002) may well have an impact on the development of biotechnological and pharmaceutical inventions. In EZ Dock, the Federal Circuit adopted a 13-factor 'totality of the circumstances' test to determine whether an offer to sell an invention is primarily commercial or primarily experimental, and thus whether the on-sale bar under 35 U.S.C. 102(b) should apply.

The on-sale bar prevents a patentee from obtaining and enforcing a patent if the invention was the subject of a commercial sale or offer for sale in the United States more than 1 year before the inventor or company filed a patent application on the invention. The rationale behind the bar is four-fold. First, the bar discourages the removal of inventions from the public domain after the public has come to believe the invention is freely available as a result of the sale of products embodying it. Second, the bar favors widespread disclosure of inventions. Third, the bar provides the inventor a reasonable amount of time after sales have started to decide whether the invention is worth patenting. Finally, the bar prevents the inventor from unduly extending the period of his monopoly by delaying the filing of a patent application until he fears that he might start to experience competition. King Instrument Corp. v. Otari Corp., 767 F.2d 853 (Fed. Cir. 1985).

The test for whether the on-sale bar applies was enunciated by the U.S. Supreme Court in Pfaff v. Wells Electronics Inc., 525 U.S. 55 (1998). This two-prong test focuses on whether there was a commercial offer for sale (or a sale) of the invention and, if so, whether the invention at that time was ready to be patented. The intent of the inventor to sell or not to sell (or to experiment or not to experiment) is not relevant to the determination; the test instead relies on objective factors and events that are evaluated against the patented invention on a claim-by-claim basis. See e.g., EZ Dock, 276 F.3d at 1357.

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