Outsourcing Manufacturing and the Pre-AIA On-Sale Bar


United States patent law prior to the America Invents Act (AIA) implementation provides that an invention is unpatentable if it is on sale more than one year before a patent application is filed. The on-sale bar is triggered when an invention that is ready for patenting is the subject of a commercial offer for sale. While the on-sale grace period exists in § 102 of the AIA, the modified language and its impact on the on-sale doctrine is unclear for now.

A recent Federal Circuit case (Hamilton Beach Brands v. Sunbeam Products; No. 2012-1581, Fed. Cir. Aug. 14, 2013) provides a cautionary lesson regarding the pre-AIA on-sale bar of 35 U.S.C. § 102(b). In this case, Hamilton Beach disclosed detailed specifications and sent a purchase order to a foreign supplier requesting that approximately 2000 slow cookers be built for Hamilton Beach internal use. The foreign supplier responded and indicated its readiness to perform upon release by Hamilton Beach. Hamilton Beach gave the release to start performance. A patent application was subsequently filed and issued covering the slow cooker technology. The slow cooker was marketed with great success to the public. Later, Sunbeam began offering a similar slow cooker prompting Hamilton Beach to bring suit for patent infringement.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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