This is a #GuestBlog authored by Kevin Flynn, a Patent and Intellectual Property attorney with Flynn IP Law. Kevin is a friend of Felton Banks and all-around patent/IP guru. If you have questions or comments about this post, please reach out to Kevin directly at KEF@flynniplaw.com. Enjoy!
For about 8 years, there has been a belief that it was safe for a company to sell an item or offer to sell an item without first filing a patent application as long as the sale or offer for sale was under a non-disclosure agreement so the sale would be secret and not public. This month, the United States Supreme Court in a unanimous decision said NO in Helsinn Healthcare S. A. v. Teva Pharmaceuticals USA, Inc.
This is newsworthy and needs to be widely discussed as this Supreme Court opinion is 180 degrees from the explicit guidance provided by the United States Patent Office (USPTO) for the last several years. Patent attorneys (including me) passed on the guidance from the USPTO to clients with a footnote that the issue of whether it was safe to have a sale under a non-disclosure agreement was not settled and would need a court case to provide the final answer.
The Leahy–Smith America Invents Act (abbreviated as “AIA”) was signed into law on September 16, 2011 and made many changes to the United States patent laws, including a big shift from our traditional first-to-invent system to a first-to-file system (with an ability to rectify a situation where someone files a patent on an idea they took from you). One of many changes was some tweaks to what things could or could not be done by the inventor or the company that owned the invention before filing a patent.
The relevant part of the law was really badly written:
“A person shall be entitled to a patent unless— … the claimed invention 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…”
Most commentators thought that the tail phrase (in bold) implied that on sale was limited to public sales but not private/secret sales under a Non-Disclosure Agreement (NDA). This is what the USPTO put in their manual for examiners. Confusing, right?
How the Supreme Court Changed the General Rule
The US Supreme Court has now ruled that sales under an NDA count as a sale with respect to ruining your ability to seek a patent on inventive features in the product sold in a sale covered with secrecy. So in the future, companies that may want a United States patent need to file a patent application before the feature is sold to a client – even a client under an NDA. This would include merely offering to sell a client a product that has the feature (providing the offer is sufficiently detailed that it is something that could form a contract—rather than a vague would you be interested in a product that had this feature but we don’t have a price yet).