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Supreme Court Holds AIA Did Not Alter the Settled Meaning of “On Sale”

Today the United States Supreme Court unanimously affirmed the Federal Circuit and held that it remains the law under the America Invents Act (AIA) that a confidential sale to a third party can trigger the “on sale” bar to patentability.

Whether the AIA changed the contours of the “on sale” bar was first addressed by the United States District Court for the District of New Jersey, then the Federal Circuit and now the Supreme Court.  As previously reported, the Federal Circuit reversed the district court and concluded that under 35 U.S.C. § 102(a)(1), as revised by the AIA, a sale to a third party can invalidate a patent even if the sale does not disclose the details of the invention.  The Supreme Court granted certiorari on June 25, 2018 and heard oral arguments on December 4, 2018, as previously reported. 

In reaching its decision, the Supreme Court noted that the pre-AIA patent statute included an “on sale” bar that had been interpreted as including “secret sales” to a third party.  The Supreme Court presumed that the phrase “on sale” carried the same meaning in the AIA.  Slip Op. at 6-7.  “In light of this settled pre-AIA precedent on the meaning of ‘on sale,’ we presume that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase.”  Id. at 7. 

The Supreme Court then addressed whether the new AIA § 102 —which added a “new catchall clause”:  or otherwise available to the public”—altered this “settled pre-AIA precedent.”  The Court answered that question in the negative, reasoning that the addition of the catchall “is simply not enough of a change for us to conclude that Congress intended to alter the meaning of the reenacted term ‘on sale.’”  Slip Op., at 8.  The Court found that the “catchall clause” “captures material that does not fit neatly into the statute’s enumerated categories.”  Id. 

The Supreme Court concluded that even a confidential sale to a third party can trigger the “on sale” bar under the AIA.

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Brad M. Scheller is an experienced patent litigator and strategic counselor to start-up ventures and established businesses in the mechanical and electrical arts, with a focus in EV and battery technologies and advising clients on patent portfolio growth, management and enforcement. He represents clients before the United States Patent and Trademark Office and as lead counsel in federal district court and appellate litigation across the country.
Peter F. Snell is an IP litigator at Mintz. He represents clients in federal courts, including the US Court of Appeals for the Federal Circuit. Peter handles patent infringement, validity, and other disputes for a variety of sectors, including electronics, medical technology, and financial services.