Celanese v. ITC – Selling a Product Made by a Secret Inventive Process Triggers the Start of the One-Year Grace Period
Can you commercialize a secret, novel process and, more than year after a first sale of a product made by that secret process, seek to patent that process? According to the Federal Circuit’s recent decision in Celanese Intl. Corp. v. Intl. Trade Comm'n, — F.4th — (Fed. Cir. Aug. 12, 2024), the answer is no.
In Celanese, a patentee had filed an action with the International Trade Commission alleging that respondents were importing an artificial sweetener that had been manufactured using a process that infringed its patents. The asserted patents had an effective filing date of September 21, 2016, and the action therefore was governed by the America Invents Act.
More than one year before that critical date of September 21, 2016, the patentee had made secret use of its process in Europe and sold products made using the process in the United States. Under pre-AIA law, such sales would have precluded patentability. According to the patentee, the AIA had changed that rule such that the on-sale bar would not be triggered by that commercial exploitation.
Not so, said the Federal Circuit. Under pre-AIA law that interpreted identical “on sale” language, there existed a wide body of interpretive case law. “As a ‘limiting provision’ on patentability, the on-sale bar prevents one from extending a patent monopoly beyond the statutory term by commercially exploiting an invention prior to seeking a patent.” The inventor’s “‘voluntary act’ of exploiting his invention through a commercial sale before the critical date [one year before the effective filing date] constitutes ‘an abandonment of his right’ to a patent.” In enacting the same language in the AIA, the Federal Circuit presumed Congress intended to draw on that judicial precedent without changing it. Accordingly, the court held “that the enactment of the AIA did not constitute a foundational change in the theory of the statutory on-sale bar provision, 35 U.S.C. § 102(a)(1), in particular, to require that sales of products made using a secret process cannot trigger the on-sale bar.”
In reaching that conclusion, the court also briefly addressed the patentee’s argument that the interplay between the on-sale bar and the one-year grace period weighed in its favor. This interplay was also on display in Sanho v. Kaijet, decided just a week and a half earlier, which held that the on-sale bar and “publicly disclosed” under section 102(b)(2)(B) are not synonymous. In the Sanho decision, the court was asked to lower the threshold of the “public disclosure” in section 102(b)(2)(B) to be synonymous with the on-sale bar. The court there declined and held that mere sale without disclosure is not sufficient to “publicly disclose” an invention to predate prior art published in the one-year grace period. In this case, the court was asked to raise the public-disclosure threshold of the on-sale bar provision to match the public disclosure that section 102(b) requires to predate prior art. The court rejected that argument and declined to opine on the patentee’s contention of a “mismatch” between the two sections.
A policy rationale underlies the apparent “mismatch” between the on-sale bar and the “public disclosure” requirements of sections 102(b)(1)(B) and (b)(2)(B). The on-sale bar is, at least in part, about preventing a patentee from extending the effective term of its patent monopoly through pre-filing secret exploitation of an invention. The grace-period provisions, on the other hand, are about (at least in part) protecting rapid public disclosure of an invention from otherwise prejudicing an inventor’s rights, even before an inventor might have found the time to file a patent application. The rationale behind the on-sale bar is (purportedly) served by denying patent protection to the secret exploiter, and the rationale behind the grace-period provisions is served by requiring full public disclosure before a patentee can avail itself of the provisions’ protection.
Though not a new issue, the on-sale bar creates, in some circumstances, a marginal incentive for continued secrecy: if one has commercially exploited an invention for longer than one year, they gain nothing from the patent laws by disclosing the invention in a patent application or elsewhere. They instead have an incentive to continue secret commercial exploitation. A possible rule that solves that problem may be to require terminal disclaimers that trigger from the start of a patentee’s own commercial exploitation, such that the patent laws do not create a relative incentive for continued secrecy if you miss your one-year deadline. Such rule would (if perfectly administered) avoid effective term-extensions from secret use. On the other hand, such a hypothetical rule would require a patent applicant’s full cooperation in a potentially invasive discovery process into prior secret sales in an ex parte process, before relevant documents and information become lost or destroyed, and the ex parte patent prosecution process may be ill-suited for that task.
The upshot of the Celanese and Sanho decisions taken together is that commercial exploitation of an invention without accompanying public disclosure of the invention will trigger the start of the one-year grace period to seek patent protection—but it will not save a patent from intervening inventive disclosures by others that predate a patent’s effective filing date, as a patent applicant’s other public disclosures that also trigger the grace period might.
This post may be considered an advertisement for legal services. It is provided for general information purposes only and may not be relied upon as legal advice. Connor Lynch is a licensed lawyer in California and before the USPTO and is responsible for this content. You can reach Connor at contact at lynchllp.com.