If you are a regular reader of this newsletter, then you know that a sale or offer for sale of your invention will terminate your patent rights unless you first file a patent application. Did you know that the on-sale bar also applies to commercial sales of the invention to you, as from a contract manufacturer or prototype-maker?
Hamilton Beach recently learned to its sorrow that the on-sale bar applies not only to sales by the patent owner but also to purchases by the patent owner. Hamilton Beach invented an improved slow cooker. Hamilton Beach did not manufacture the slow cooker itself and instead negotiated with a foreign manufacturer. The foreign manufacturer offered to sell the improved slow cooker to Hamilton Beach. Hamilton Beach subsequently filed an application and obtained a patent for the improved slow cooker. Hamilton Beach later sued Sunbeam for patent infringement. Sunbeam argued that the Hamilton Beach patent was invalid because of the offer to sell the invention by the manufacturer to Hamilton Beach.
The U.S. Circuit Court for the Federal Circuit ruled that the offer by the manufacturer to sell the slow cookers to Hamilton Beach was an ‘offer of sale’ that tripped the ‘on sale’ bar and invalidated the patent.
Why is this decision important to small businesses and individual inventors?
The hidden risk of the Hamilton Beach decision lies in the production of prototypes. The on-sale bar requires (a) a commercial sale or offer for sale of (b) an invention that is ready for patenting. An estimate from, say, a machine shop to produce a prototype of an invention could be a commercial offer to sell the invention triggering the on-sale bar if the invention is ready for patenting. An invention is ‘ready for patenting’ when (a) the inventor has a working prototype or (b) the invention is described in drawings or in written descriptions sufficient to allow a knowledgeable person to build and use the invention.
The only way sure way to avoid the on-sale bar is to not buy or sell the invention until after you file a patent application. The Hamilton Beach case is yet another reason to file provisional patent applications early and often.
— Robert Yarbrough, Esq.