On-sale bar to patentability could be triggered by an order to your own OME manufacturer

On-sale bar is a patentability bar derived from 35 U.S.C. 102 of the U.S. Patent Law.  Under 35 U.S.C. 102(a), a person shall be entitled to a patent unless- (1) 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.  The on-sale bar is triggered if (1) the invention is the subject of a commercial offer for sale; (2) the offer for sale is not for experimental purposes; and (3) the invention is ready for patenting.

An offer for sale of an invention is usually thought of as a sale event of the invention to public by the patent owner or designees.  A recent case decided by the Federal Circuit, Hamilton Products v. Sunbeam Products offers an interesting twist.

Here is the fact of the case: Hamilton Beach and Sunbeam both sell slow cookers.  Hamilton Beach owns a patent for a slow cooker, sold under the brand the "Stay or Go" cooker. Hamilton Beach's first patent application for the Stay or Go was filed on March 1, 2006. “Stay or Go” cooker turned out to be a big success for Hamilton Beach.  In response, Sunbeam developed a competing slow cooker, branded as "Cook & Carry.”  "Cook & Carry” product has sealing clips mounted on the lid of the slow cooker. 

On June 4, 2010, Hamilton Beach filed another patent application claiming priority to its first application having a filing date of March 1, 2006.  The second patent application claims a slow cooker with sealing clips mounted on the lid, which covers Sunbeam’s “Cook & Carry” product. The USPTO granted a patent on Hamilton Beach's second application. Hamilton Beach sued Sunbeam alleging that Cook & Carry products infringed upon the second application.

Remember that Hamilton Beach’s second application has an effective filing date of March 1, 2006 (by claiming the priority to the first application), so any patentability barring event will need to happen before March 1, 2005 (critical date).  Sunbeam found out that Hamilton Beach issued a purchase order for nearly 2,000 Stay or Go slow cookers to its foreign supplier (an OEM manufacturer) on February 8, 2005.

Because the filing date of Hamilton Beach's first patent application for the Stay or Go slow cooker was March 1, 2006, the critical date in this dispute was one year earlier, or March 1, 2005. Sunbeam argued that Hamilton Beach's foreign supplier offered to sell the Stay or Go before that critical date. Specifically, Hamilton Beach listed its Tennessee facility as the shipping address for the merchandise and its Virginia office as the billing address. The supplier confirmed receipt of the purchase order on February 25, 2005, and responded that it would begin manufacturing the slow cookers once it received Hamilton Beach's release.  This response from the supplier was significant, according to the Federal Circuit, because it was an offer to sell from the foreign supplier (the OEM manufacturer) of Stay or Go slow cookers to Hamilton Beach.  According to the Federal circuit, this offer to sell from a supplier to a brand-name owner is sufficient to satisfy “a commercial offer for sale” under the on-sale bar, and there is no "supplier exception" rule under the on-sale bar.

The court subsequently decided that the invention is ready for patenting and the sale does not qualify for an experimental use exception.  Combining all three factors, the court concluded that on-sale bar invalidates the claims against Sunbeam from the second patent of Hamilton Beach. 

Here is the lesson learned: This case reiterates the importance of filing patent applications covering commercial embodiments of an invention as early as possible. This case also shows the need for potential patentees to be cautious when dealing with suppliers, including overseas suppliers and OEM manufacturers, as those dealings may trigger the on-sale bar.

Thanks for reading.

Connie

cwan@patentonomy.com