On January 22, the U.S. Supreme Court issued a surprising opinion1 that depended upon a case2 I handled as an associate at a large West Coast IP firm at the beginning of the millennium. In that case I was defending a client (Special Devices, Inc.) sued for infringing a very broad patent on the initiators used to trigger airbags. More than a year before filing for its patent on those initiators, the plaintiff OEA, Inc. had negotiated with a supplier (Coors Ceramics Co.) to manufacture the initiators for OEA in quantity. 35 U.S.C. § 102(b) of the U.S. patent laws in effect then established a one-year time limit to filing for a patent once a product embodying the invention had been sold or offered for sale.
Although the initiator claimed in OEA’s patent had been reduced to practice at least in the form of viable drawing specifications at the time, the OEA-Coors contract was confidential and moreover OEA did not itself sell any of the initiators more than a year before filing its patent. The latter facts led my boss, the partner responsible for the case, to be dubious that OEA’s patent could be invalidated under Section 102(b)’s “on-sale bar,” particularly by means of a motion for summary judgment. Nevertheless he and the client gave me latitude to aggressively develop evidence and spearhead a motion, and the federal district court did indeed summarily invalidate OEA’s patent on this grounds. This cut short a litigation that was draining the client’s time and resources and could have gone on much longer.3 OEA was confident that its patent would be revived on appeal to the U.S. Court of Appeals for the Federal Circuit, but it was not, and the resulting opinion4 established nationally that secret sales from a supplier to a patent owner can create an invalidating on-sale bar.
A dozen years later, 35 U.S.C. § 102 was extensively restructured and rewritten as part of the sweeping Leahy-Smith America Invents Act overhaul of the patent laws in 2013. The changes were understood by many if not most to have overruled Special Devices v. OEA by excluding “secret sales” from the on-sale bar to patentability. House sponsor Lamar Smith himself submitted an amicus curiae brief in the Supreme Court case stating:
Unlike the pre-H.R. 1249 Patent Act, the comparable text of the newly enacted statute makes explicit that a public accessibility standard applies with respect to all “in public use” or “on sale” activities under the newly enacted statute—by virtue of the addition to the statute of the new terminal qualifier “or otherwise available to the public.” The added qualifier could have no other purpose and, thus, leaves no room for doubt.
Amicus Brief, p.4 (emphasis in original). There was consequently some surprise when the Supreme Court issued its opinion in Helsinn and held that Congress implicitly adopted the Special Devices v. OEA interpretation of the on-sale bar when it revised Section 102 in 2013 without expressly changing the phrase “on sale.”5
I find a few morals in this story:
- The adage “hard cases make bad law” applied to Special Devices v. OEA. OEA hid things from the Patent Office and then acted in bad faith during litigation, making it a hard plaintiff to sympathize with. And OEA had contracted for vast quantities – millions of units – to be manufactured for it, a fact I exploited by characterizing the actions as “stockpiling” in the summary judgment motion and appeal. But the legal precedent that resulted from the case was not limited to bad faith litigants or cases of stockpiling.
- A corollary that careless legislators make bad law also applies. If Congressman Smith, Senator Leahy, or their many aids and expert advisors had been diligent and considered the Special Devices v. OEA precedent on the meaning of “on sale,” it would have been quite facile to overrule.
- If you have an invention that is reduced to practice well enough to work or otherwise in shape for a patent filing, get an application filed at least within a year of first contracting with a supplier. If this might be complicated, make sure to advise your patent attorney fully in advance so he can help navigate the situation.
- Helsinn Healthcare v. Teva Pharms., __ S.Ct. __ (2019).
- Special Devices, Inc. v. OEA, Inc., 117 F. Supp. 2d 989 (C.D. Cal. 2000).
- I also worked to obtain an award against OEA for Special Devices’ legal fees in the case, which OEA unsuccessfully appealed.
- Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353 (Fed. Cir. 2001).
- While the Federal Circuit’s 2016 en banc decision in The Medicines Co. v. Hospira, Inc., 827 F.3d 1363 (Fed. Cir. 2016) may have softened the Special Devices holding as to secret sales and/or manufacturing services contracts, Hospira was issued after Congress enacted the AIA in 2013 and it was not part of the meaning of “on sale” adopted thereby as referenced by the Supreme Court in Helsinn. I believe Helsinn implicitly overruled Hospira’s post-Special Devices conflation of commercialization with the requirements of a commercial sale or offer.
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