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Technovator's Caveat: Don't Sell Inventions Before Seeking Patents

By William Vogeler, Esq. on January 23, 2019 2:54 PM

Technovators sometimes rush to the market with new ideas, hoping for brand recognition before competitors can catch up.

It can work, but there are trade-offs. Without protection for intellectual property, for example, a startup can fall down fast.

Once in a while, the courts and lawyers have to tell innovators to slow down. There's an old rule: the horse is supposed to go before the cart.

"On-Sale" Bar

In Helsinn Healthcare v. Teva Pharmaceuticals, the Supreme Court said that commercial exploitation of a patentable invention bars a later patent. The court affirmed the "on-sale" bar, tracing it back to 1836.

Ronald Mann, writing for SCOTUSblog, said the decision broke "no new ground." He said the purpose of the patent is to motivate the inventor to create and disclose the invention.

"It makes little sense," Mann said, "to grant an inventor the exclusive right that a patent reflects if the inventor began exploiting the invention commercially long before it filed an application for a patent."

The case moved the needle a little by applying the old rule to "secret sales." A pharmaceutical firm had entered a confidential contract to distribute its invention two years before it applied for patent protection.

"Secret Sales"

A trial judge held the patent was valid because the contract did not disclose the terms of the patent. But an appeals court reversed, and the Supreme Court affirmed.

The opinion was more complicated, of course. But Justice Clarence Thomas managed to put together a consensus decision in about two pages of original analysis.

Mann called it "brutally succinct," which sounds appropriate for an opinion that cut to the chase. After all, the "on-sale" rule has been around for about 183 years.

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