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Supreme Court Affirms ‘Secret Sale’ as Prior Art, Even Under the America Invents Act

In a unanimous decision, the Supreme Court today affirmed a Federal Circuit case holding that a “secret” sale can constitute prior art, even under the Leahy-Smith America Invents Act (AIA).

Twenty years ago, the Supreme Court held that patentability could be defeated by an earlier, commercial offer to sell an invention which was ready for patenting when the sale occurred. These were the conditions on a prior art sale, even if the sale did not bring the invention into public knowledge.

Then, in enacting the AIA in 2011, Congress rephrased the relevant part of the statute to refer to subject matter which “was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public.” The added phrase “...or otherwise available to the public” became the subject of differing opinions. Some argued that this language excluded sales which happen under confidential terms, while others argued that the new statute should not change anything about “secret” sales.

Today, the Supreme Court has sided with the latter camp. Noting that the “otherwise available to the public” phrase would be an odd way of changing the meaning of the words “on sale,” the Supreme Court found that “on sale” had the same meaning as before.

Newer patent applicants and those in a rush to commercialize, especially with a U.S. focus, should take note here. For these companies, filing a patent application within one year of any offer for sale, and preferably before any sale, may be critical to pursuing patent coverage. Confidentiality of any earlier sales would not save the patentability of an application or the validity of an issued patent in the U.S. On the other hand, companies with international patent strategies may already have workflows in place to ensure that they file a priority application before making any commercial offers. Still, the decision from the Supreme Court serves as a reminder to file any patent applications before commercializing an invention, even under confidential terms.

Eric Myers