How to minimize risk of losing patent rights if products are used in public or offered for sale
When an invention appears potentially patentable, the inventor should consult with a patent attorney without delay. Often, the patent attorney will advise that a patent application be prepared and filed promptly before the invention is publicized, used in public, or offered for sale. If such advice is not sought or followed, some patents issued in the United States may be susceptible to being invalidated later on for one of several possible reasons. Inventors of emerging technologies such as microsystems and nanotechnology are vulnerable to that scenario.
For example, if it is determined that an invention was in “public use” or “on sale” (e.g., sold or offered for sale) in the United States more than one year prior to the date an application for a patent was filed, then a patent issued from that application may be invalidated under the “in-use bar” or the “on-sale bar” of U.S. patent law. In these circumstances, an inventor may overcome an assertion of invalidity of the patent by showing that the public use or the sale/offer for sale of the patented device was “primarily an experimental use.”
Experimental use may take place when an inventor feels that it is desirable to test the invention under actual operating conditions or in an environment where the invention is likely to be used. In such cases, there is a risk of a future challenge to the validity of a later issued patent for the invention. However, the risk may be minimized by following at least some of the 12 guidelines listed after the summary of the recent court opinion below.
A judgment of invalidity of U.S. Patent Nos. 5,169,242 and 5,567,056 under the on-sale bar was affirmed in Electromotive Division of General Motors Corp. v. Transportation Systems Division of General Electric Co. The Court of Appeals for the Federal Circuit concluded that the inventions claimed in the patents were the subject of commercial sales to several railroad customers more than one year prior to the dates of application for the two patents. The question was whether the circumstances surrounding each of those sales objectively showed that the sales were “primarily made for experimentation.”
In concluding that there was insufficient objective evidence to prove that the sales were primarily for experimentation, the court referred to a list of 13 objective factors in an earlier case, Allen Engineering Corp. v. Bartell Industries. After noting that the list is not exhaustive and that all factors may not apply in a particular case, the court held that two factors are “critical” and must be proven if experimentation is to be found - the inventor’s control over the alleged testing, and a customer’s awareness of the purported testing. Since the patent owner did not produce adequate evidence of either of these critical factors, both of its patents were held invalid. (If both critical factors had been shown, the court would have considered the rest of the 13 factors listed in Allen Engineering.)
In reaching this decision, the court discussed the types of evidence needed to prove that a pre-critical date sale (i.e., a sale/offer for sale more than one year before the patent application was filed) was “primarily made for experimentation.” The list of 12 guidelines below is based on the court’s discussion of what the inventors and patent owner did not do. Doing at least some of the following actions should establish the inventor’s control and customer awareness of the inventor’s testing:
- Document the fact that the invention is being provided to the customer for the purpose of testing the invention in actual use rather than as part of a commercial sale.
- Have the customer sign a confidentiality agreement or other agreement consenting to participate in a field program.
- Provide protocols to the customer directing their use of the invention.
- Supervise or restrict the customer’s use of the invention.
- Require the customer to operate the invention under specific conditions.
- Monitor the conditions under which the customer uses the invention.
- Require the customer to provide feedback, such as comments or data concerning the operation or durability of the invention.
- Have the inventor, or someone under his direction (e.g., the customer), collect data, keep progress reports, and operate the invention during specified times.
- Maintain records of the testing or require the customer to do so.
- Control, monitor, or systematize the field testing of the invention.
- Examine the invention being tested in the field on a schedule.
- Consider discounting the price of the invention sold for the purpose of experimentation.
James J. Kozuch is a partner/shareholder at Caesar, Rivise, Bernstein, Cohen & Pokotilow Ltd. in Philadelphia. He can be reached at firstname.lastname@example.org.