Offers for Sale in the Post-AIA World

The US has been operating under the full enacted provisions of the America Invents Act for over six months now, and some of the questions presented by the new law have been answered. However, one area of uncertainty – troubling uncertainty – is the modification to the on-sale bar statutory provision and what the effects of a non-disclosure agreement may or may not be in the context of an offer for sale.

The AIA changed the way prior art and potentially patent-barring disclosures are defined. One provision states that, with exceptions, the invention is not patentable if it “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.”

Practitioners, academics, and other professionals split on the correct interpretation of the new law. One camp has believes that the phrase “otherwise available to the public” qualifies the “on sale” portion of the law, in which case an offer for sale made under the protection of a confidentiality agreement would not be a barring event. On the other hand, some say that the phrase doesn’t modify the “on sale” portion, arguing that the the pre-AIA case law which adopts this reasoning still holds. The latter interpretation would render meaningless, for patentability’s sake, a non-disclosure agreement in the context of an offer for sale, though the NDA would still be an effective contract tool.

The Patent Office sides with the first camp, saying that a secret sale or use, or an offer for sale made under the protection of a confidentiality or non-disclosure agreement, will not be considered prior art against the invention. The Office claims that this was the intent of Congress. Unfortunately, what the Patent Office uses as a guideline and what the courts may ultimately decide need not coincide. The courts are not at all required to follow any rules of the Patent Office. Because so few patents have yet been issued under the new AIA rules, however, it will likely be some time before those cases are litigated and appealed, and probably even more time until one of the appealed cases raises the issue of whether an on-sale bar occurred in the context of a confidential offer for sale.

Until that point, it is up to the client to decide how to proceed. Best practices may dictate that the more conservative route be taken, that it is assumed an offer for sale even under an NDA will not be protected, and that an application (likely a provisional) should be filed before any secret offers for sale are made. On the other hand, if a client believes that the Patent Office rule should hold, then it can proceed with making secret offers and uses of the invention without filing pre-disclosure application.

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