Federal Circuit Reiterates the Urgency of Opting for Patent Protection or Trade Secrecy, as the On-Sale Bar to Patentability Looms

Under 35 U.S.C. § 102, the “on-sale bar” invalidates a patent if an inventor has sold or made the invention publicly available more than one year before filing the patent application.[i] Recently, the United States Court of Appeals for the Federal Circuit decided Celanese Int'l Corp. v. International Trade Commission, and held to the traditional rule that the on-sale bar clock starts when an inventor sells a product made with a patented process. Therefore, a patent for a process will be invalid if such a sale occurs more than a year before the patent filing.

What IP owners should know:

• Inventors of new processes have only one year to file for patent protection of their new process once they sell a product made with that process (or they sell the process itself).
• Celanese emphasizes the need for inventors of new processes to decide between patent protection and trade secrecy early on, preferably BEFORE offering any product for sale.
  • If the process will eventually require disclosure to fully exploit; or if its products make the invented process vulnerable to reverse-engineering, seeking the legal monopoly of a patent is likely best.
  • If patentability of the process is uncertain for other reasons, or if the process can be kept confidential and presents potential value beyond what a 20-year patent term would provide, trade secrecy may provide a better alternative.
• Conversely, a party accused of infringing a patented process should investigate when the patentee first employed that process and sold a product resulting therefrom, as such sales more than a year before the patent filing date can provide an additional invalidity defense.

Case Summary: Celanese petitioned the U.S. International Trade Commission (ITC) to stop another entity, Jinhe, from importing an artificial sweetener that Jinhe produced using a process that infringed Celanese’s patent.[ii] In defense, Jinhe argued that Celanese’s patent was invalid due to the on-sale bar. Celanese had not sold the process—the claimed invention in the patent itself—or otherwise made it public more than a year before Celanese filed for its patent. But, critically, it had sold sweetener made from that process more than a year before filing.[iii] Applying the same principles established before passage of the America Invents Act (AIA), the ITC agreed with Jinhe that Celanese’s sale of a product of the claimed process, rather than of the process itself, activated the on-sale bar, invalidating Celanese’s Patent.[iv] Celanese appealed the ruling.

The Federal Circuit affirmed the ITC’s determination that the on-sale bar applied, rejecting Celanese’s arguments that the AIA changed what sales could implicate the on-sale bar.[v] Though Celanese pointed to particular differences between the statutory language in the pre-AIA on-sale bar and that language post-AIA, the Federal Circuit found those differences immaterial. Rather, the purpose of the on-sale bar remained the same—that inventors are not allowed to effectively extend their patent term by exploiting their invented process for over a year, and then seek patent protection sometime later, perhaps when it could further exploit the process by selling or disclosing it.[vi] For that reason, the long-established rule that the sale of a product of a patented process can activate the on-sale bar continues to apply post-AIA.

If you have any questions about this development or any other IP issues, your Dinsmore IP team is always happy to provide further insight.