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IP Alert: Federal Circuit Holds Letter Sent Before Critical Date Was a Commercial Offer For Sale

February 16, 2022

On February 10, in Junker v. Medical Components, Inc., the Federal Circuit invalidated a design patent based on commercial activity that occurred before the critical date of the subject patent application, reversing a nearly $1.25M damages award in the case. This case represents the latest guidance on commercial conduct that may constitute an offer for sale for purposes of invoking the on-sale bar.

The patentee of the design patent in question, US D450,839, engaged Xentek Medical to develop a prototype of the product, a catheter introducer sheath. Xentek corresponded with Boston Scientific Corporation regarding selling the patentee’s introducer sheaths to Boston Scientific. Among the communications were a January 8, 1999 letter from Xentek to Boston Scientific that included a price chart and specified numerous commercial terms such as payment terms, shipment terms, and delivery conditions.

The patentee filed the application for the ’839 patent on February 7, 2000—more than one year after the January 8, 1999 letter. The patentee later filed suit against Medical Components, Inc. (MedComp), asserting infringement of the ’839 patent. MedComp countered, asserting invalidity of the ’839 patent under pre-AIA 35 U.S.C. 102(b), which states a patent claim is invalid if “the invention was . . . on sale in this country, more than one year prior to the date of the application for patent in the United States.”

At issue before the Federal Circuit was whether the January 1999 letter from Xentek to Boston Scientific was a commercial offer for sale of the claimed design, or merely a quotation signaling the parties were engaged in preliminary negotiations.

The Federal Circuit rejected the patentee’s argument that the January 1999 letter was merely an invitation to further negotiate and determined the letter contained all the required elements to qualify as a commercial offer for sale. Citing resources such as the Uniform Commercial Code and Restatement (Second) of Contracts, the court observed the January 1999 letter was sent directly in response to a “request for quotation” from Boston Scientific, was addressed to Boston Scientific alone, contained a number of necessary terms typical for a commercial contract, and specified multiple different purchase options.

The Federal Circuit concluded that the January 1999 letter was an offer for sale which Boston Scientific could have accepted to bind the parties in a contract. Because the offer for sale occurred prior to the critical date of the application for the ’839 patent, the court held the ’839 patent is invalid under pre-AIA 35 U.S.C. 102(b).

The Junker decision provides further guidance regarding potential on-sale bar implications resulting from prefiling commercial activity. The decision may also be a cautionary tale for patent applicants. Courts will objectively analyze correspondence to evaluate whether an offer for sale existed. A patent may be invalidated regardless of whether the applicant believes they offered their invention for sale.

For more information on this topic, please contact Fitch Even partner Brett J. Smith, author of this alert.

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