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Legal Insight for Start-Up and Established Technology Businesses

Is it HIPAA or HIPPA? Either way, it still applies.

Posted in Healthcare, IP Q&A, Technology Transactions

I have negotiated hundreds of SaaS agreements for dozens of software companies and I always hated when the company on the other side was a healthcare provider.  Invariably, they would bring up Protected Health Information (PHI) and the Health Insurance Portability and Accountability Act (HIPAA) and want us to sign a Business Associate Agreement (BAA).  I am an IP lawyer, not a healthcare lawyer.  My client was a software company, not a medical claim processor.  As explained below, rather than cursing under my breath, I should have thanked them for insisting that we sign a BAA.

Cloud Services Providers (CSPs), even those that merely provide data storage, need to be aware of the HIPAA requirements applicable to them.  A CSP storing PHI for a covered entity (e.g., a health care provider) is a business associate of that covered entity and required to comply with HIPAA.

In general, a business associate is anyone that creates, receives, maintains (i.e., stores), or transmits PHI for a covered entity.  According to recent guidance from the HHS, this would include a CSP that only stores encrypted PHI and does not have a decryption key.  Under HIPAA, an entity that stores PHI is a business associate, even if the entity cannot actually view the PHI.

If a covered entity (or business associate) uses a CSP to maintain PHI without entering into a BAA with the CSP, the covered entity (and/or business associate) is in violation of HIPAA.  To complicate matters further, this rule also applies to third-party subcontractors.  Many SaaS providers use third party hosting providers, such as Rackspace or Amazon Web Services, to host their software.  In such situations, there would need to be two BAAs:  (i) one between the SaaS provider and the covered entity; and (ii) one between the SaaS provider and the hosting company.  The hosting service provider would need to execute a BAA even if the hosting provider was unaware of and could not access the encrypted PHI stored on its servers.  For those of you using AWS, Amazon has an automated process for entering into a BAA with them.

A few other words of caution:  SaaS providers need to ensure their Service Level Agreements (e.g., system availability) are consistent with the BAA and HIPAA.  In addition to its contractual obligations to the covered entity, the CSP, as a business associate, has other regulatory obligations and can be directly liable under HIPAA for violations.

And now for the good news:  HIPAA provides an affirmative defense to the unsuspecting business associate that failed to get the necessary BAAs in place.  That defense is available to a CSP that doesn’t have actual or constructive knowledge that a covered entity or business associate is using its services to create, receive, maintain, or transmit PHI, as long as the CSP takes steps to correct the problem within 30 days from when the CSP knew or should have known about the PHI.

So, as you can see, when PHI is involved, tread with caution.  There is more information available on the HHS website.

Hat tip to my partner Cheryl Camin Murray for her help in navigating these HIPAA-compliance pitfalls.

QUICK HITS: Protecting Confidential Information in a Collaborative Setting

Posted in IP Q&A

A few years ago, our firm defended a client against a claim of patent infringement.  As it turned out, our client had disclosed its confidential information to a potential business partner during a pre-collaboration exploratory meeting, which the potential business partner then used to obtain the patent they were asserting.  Luckily, our client had insisted on putting a non-disclosure agreement (NDA) in place before the meeting and had clearly marked the information as being confidential.  Because of these precautionary measures, not only were we able to invalidate the patent, but we also won a breach of contract counterclaim based on the unauthorized use of the confidential information.

If you are exploring the possibility of collaborating with another company, you are likely going to exchange confidential information with that company so you can evaluate what they have to offer and they can evaluate what you have to offer.  Although necessary, these types of exploratory meetings can be a trap for the unwary.  Below are a few measures that should be taken to protect your confidential information before, during, and after any such meetings.

  • Before the meeting, identify your confidential information as compared to publicly available information.

Broadly speaking, confidential information encompasses any information that provides a competitive advantage and is not publicly known.  Thus, any non-public information that has actual or potential economic value should be protected.  When in doubt, assume the information has value and take measures to guard its secrecy.  Once identified, clearly mark your materials, such as by labeling documents as “confidential” or putting a footer on each slide of a presentation indicating its proprietary status.

  • Before the meeting, know what protections, if any, are in place for your confidential information.

Make sure NDAs have been signed by everyone that will be attending the meeting.  If multiple parties will be attending, you may need a multi-party NDA.  It is a good idea to send NDAs in advance to allow the other side to review and, if needed, edit the NDA.  Know the parties who have signed NDAs and what disclosures are covered by those agreements.  For example, some NDAs are one way–i.e., they only protect disclosures from one party to the other and not vice versa.  Also, some NDAs may be subject-matter specific–i.e., only protecting certain categories of information.

  • Before the meeting, know the scope of what you will disclose.

Determine in advance what confidential information must be shared, may be shared, and should not be shared and stick to the plan. If no NDA is in place, avoid disclosing any confidential information. If, for business reasons, you have a need to share information without having an NDA in place, share the information at a sufficiently high level that, even if someone knows the objectives and results of your solution, they will not know how those objectives and results are achieved.

  • At the meeting, know your audience before you disclose.

If, at the meeting, there are attendees who are not subject to an NDA, have those parties sign an NDA or do not disclose confidential information.  It is perfectly normal to delay the start of a meeting in order to have all attendees sign an NDA.  If confidential information is inadvertently disclosed to a party that has not signed an NDA, be sure that party knows you consider the information to be confidential and then follow up with an NDA after the meeting.

  • At the meeting, keep records of the attendees and the information discussed.

Maintain records of the parties that attended the meeting and what confidential information was provided to them.  Be sure you identify confidential information in the manner required by the applicable NDA.  For example, if confidential information is disclosed orally, some NDAs require a written follow-up indicating what information is confidential.  Even if not required by the NDA, it is a good idea to send a follow-up email broadly outlining what confidential information was disclosed.

  • At the meeting, be aware of confidential information received from another party.

If possible, avoid receiving confidential information from the other side.  If you do receive confidential information, send a follow-up email narrowly stating what you received—do not use open-ended language, but do end with “and nothing else.”  If you receive an email from the other side stating what confidential information was disclosed to you, review the list and send an email agreeing with the list or narrowing the list, as appropriate.

  • Remember that an NDA is intended to be a temporary arrangement while the parties evaluate each other.

If you choose to partner with a company on a project, establish a more formal relationship via a joint development agreement or other appropriate contract that specifically addresses ownership of intellectual property.

What are Trademarks?

Posted in IP Q&A

Here at Winstead, we are fortunate enough to have two lawyers that were selected for inclusion in The Best Lawyers in America® 2018 in Trademark Law, Stan Moore and Cathryn Berryman.  Before answering the question What are Trademarks?, I thought it would be a good idea to get their insights on trademark best practices.

Stan Moore:  Most businesses have trademark issues, whether they know it or not.  With trademarks, ignorance is not bliss.  Businesses can lose their hard-earned goodwill based solely on inaction–either failing to protect their own trademarks or inadvertently using someone else’s trademarks.  A little effort upfront can save you years of heartache.

Cathryn Berryman:  When starting a new company or releasing a new product, why pick a name that is going to cause you problems down the road?  The time to pick a good name is at the outset, before any marketing dollars have been spent.  You would be surprised how many times clients fall in love with a name and fail to heed our advice when we recommend against using that name–even though they had not yet spent any money on advertising.  More often than not, it ends up costing the client a lot more money to protect the name, money that could have been saved if they would have picked a better trademark at the outset.

So, if this is something every business needs to address, what exactly are trademarks and what makes for good ones?  Put simply, trademarks are source identifiers.  They can be any combination of words, phrases, symbols, or designs, that identify the source of goods or services and distinguish those goods or services from others.  When choosing a name for a new business or a new product, the goal should be to select a strong trademark, i.e., one that is highly distinctive.  Not only are strong trademarks easier to register, they are also easier to enforce.

The strongest trademarks are fanciful or made-up words invented by the owner to be used as a trademark, such as Starbucks®, Altoids®, and Polaroid®.  The next strongest trademarks are arbitrary trademarks, which are real words that are completely unrelated to the product or service they represent.  A good example is the use of the common word “Apple” for computers.

On the opposite end of the distinctiveness / descriptiveness continuum, the weakest trademarks are generic terms or common names of products and services, which are never registerable and nearly impossible to enforce.  For example, “apple” cannot be registered for apples (the fruit).  Marketing budgets would be wasted trying to promote a generic term and years of continuous use would result in little, if any, value being created.

In the middle of the continuum are trademarks that are either suggestive or descriptive of the products or services they represent.  In general, suggestive trademarks are registerable and enforceable, while trademarks that are merely descriptive are not.  A descriptive mark is one that describes the intended purpose, function, or use of the goods.  Suggestive marks suggest, but do not describe, the qualities or characteristics of a product .  The Ford Explorer® SUV is a great example because it suggests what the owner may do with the vehicle without being descriptive.

However, a word of caution–be careful when choosing a suggestive mark because if it is too suggestive, it will be considered descriptive.  Descriptive terms may not be enforced as trademarks absent proof of acquired distinctiveness.  To acquire distinctiveness, a trademark owner must show that, after years of usage and marketing, consumers recognize the name and associate it exclusively with the products or services it represents.

Before adopting a proposed trademark, a search should be conducted to ensure there is no likelihood of confusion between the proposed trademark and any trademarks already used by others.  It should be noted that the trademarks do not have to be identical to be considered confusingly similar. For example, trademarks that are phonetically equivalent, are visually similar, produce the same meaning or create the same general impression in the mind of a consumer might be confusingly similar.  Even if two marks are similar, a likelihood of confusion will exist only if the two marks cover commercially related goods or services.

Finally, trademark owners should constantly police their marks.  If unauthorized uses of a mark go unchecked, the trademark becomes diluted and loses its distinctiveness.  Also, if the trademark becomes so famous that it begins to be used to refer to the actual product, the mark may become generic and, thus, unenforceable.  Xerox has been battling against this problem for decades.  The Xerox® photocopier was such a revolutionary product, it became a victim of its own success–the trademark itself started to become a noun to describe photocopiers, generally.

In summary, a strong trademark is vital to the brand building process.  The ability to protect your mark should inform trademark selection.  The difficulty for the new brand owner is to determine where a given mark lands on the continuum.  The further along the continuum one moves, the less the mark will protect the brand.  Adoption and use of weak trademarks leads to problems that many owners may never overcome.  First, registration is difficult, if not impossible.  Second, even if a registration is obtained, enforceability is less certain.  These are costly yet easily avoidable risks.

What are Moral Rights?

Posted in IP Q&A

The term moral rights in the United States typically refers to the right or ability of creators of certain works of visual art (e.g., paintings, drawings, prints, sculptures, and photographs) to control the eventual fate of such works.  In Europe and elsewhere, an artist’s moral rights are much broader and not limited to visual art.  Moral rights protect the personal and reputational, rather than purely monetary, value of a work to its creator.  The right of attribution and the right of integrity (i.e., right to prevent revision, defacement, alteration, or distortion of the work, regardless of who owns it) are two primary rights of authors of works of visual art that are protected in the U.S. under various federal and state laws including protection through an amendment in the U.S. Copyright Act by the Visual Artists Rights Act (“VARA”) of 1990 (17 USC § 106A).  These rights are not transferable by license or assignment, but can be waived in writing by the author.

The moral of the story–when acquiring a copyrighted work, don’t forget to have the artist waive any moral rights in the work.

PTAB Finds Sovereign Immunity Applies to IPRs for State Universities

Posted in Patent Counseling & Strategies

The Patent Trial and Appeal Board (PTAB) dismissed three inter partes review (IPR) proceedings involving the University of Florida based on sovereign immunity.

As background, the University of Florida Research Foundation filed a suit in state court alleging breach of a licensing agreement.  Medtronic subsequently brought a counterclaim seeking a declaratory judgment of non-infringement on the patent of the licensing agreement and attempted to remove the case to a federal court or the U.S. District Court for the Northern District of Florida.  However, the suit was remanded to state court due to Eleventh Amendment immunity from suit in a federal forum (Univ. of Fla. Research Found., Inc. v. Medtronic PLC , N.D. Fla., No. 1:16CV183-MW/GRJ, July 15, 2016).

Covidien-Medtronic also pursued three IPRs involving the University of Florida patent (Covidien LP v. University of Florida Research Foundation Inc., Case Nos. IPR 2016-01274; -01275, and -01276 (PTAB January 25, 2017)).  However, the PTAB dismissed holding the Eleventh Amendment extends to IPRs.

Major Record Labels file Copyright Suit Against YouTube-MP3.org

Posted in E-Commerce, E-Commerce (Internet Agreements and Issues), Technology News & Events

YouTube is a well-known video sharing website that allows users to view, upload, share, rate, and comment on videos.  Generally, the user streaming the video from YouTube cannot download, copy, or save the video.

Stream ripping allows users to save streamed media from websites, such as YouTube.  YouTube-MP3.org provides an online stream ripping service that allows users to convert YouTube videos to MP3s.  In particular, “the only thing you need is a YouTube URL. We will start to convert the audiotrack of your videofile to mp3 as soon as you have submitted it and you will be able to download it.” (http://www.youtube-mp3.org/).

In the complaint filed Sept. 26, 2016, various record labels allege that YouTube-MP3.org has reproduced and distributed their copyrighted sound recordings without authorization (UMG Recordings, Inc. et al. v. PMD Technologie UG et al., Case No. 2:16-CV-07210, in the U.S. District Court for the Central District of California).

INVENTIONS OUT OF THIS WORLD: PATENT PROTECTION IN OUTER SPACE

Posted in Development & Commercialization of Technology, Intellectual Property, Patent Counseling & Strategies, Patent Prosecution

Outer space exploration has been expanding.  For instance, since 1998, the International Space Station has served as a platform for scientific research and discoveries in space within modules that are operated by the space agencies of the United States, Russia, Europe, Japan, and Canada[1].  Moreover, efforts are underway to build spacecraft that can transport astronauts on deep space missions to Mars and beyond[2].

The aforementioned efforts require the use of many innovative technologies and products in outer space.  Therefore, an issue that arises is how to protect inventions that may be exploited in outer space (i.e., space-related inventions).  Based on numerous national laws and international agreements, a recommended route is to seek patent protection for space-related inventions in countries and regions that have registered space objects (e.g., space station modules, space shuttles, or spacecraft).  Such countries and regions primarily include: (1) Canada; (2) China; (3) Europe; (4) Japan; (5) Russia; and (6) the United States[3].

According to international agreements and national laws, the country in which a space object is registered retains control and jurisdiction over that space object, including patent jurisdiction[4].  For instance, an international agreement pertaining to the use of the International Space Station indicated that patent jurisdiction over an activity that occurs in or on an International Space Station module is deemed to have occurred in the territory of the country in which the space station module is registered[5].  Likewise, according to U.S. patent laws, “[a]ny invention made, used or sold in outer space on a space object or component thereof under the jurisdiction or control of the United States shall be considered to be made, used or sold within the United States.”[6]

Accordingly, the United States, Russia, Canada, and Japan would each have exclusive patent jurisdiction over activities conducted in their respective space station modules on the International Space Station.  Likewise, a European country or court may have patent jurisdiction over activities conducted in an International Space Station module that is registered to the European Space Agency.  Similarly, China may have patent jurisdiction over activities conducted in a Chinese spacecraft.

In summary, strategies for the protection of inventions that could be exploited in outer space are dictated by a set of complex national laws and international agreements.  A broad interpretation of the aforementioned laws and agreements indicates that the attainment of patents in countries that have registered space objects could help maximize the protection of such space-related inventions.

[1] See NASA’s website entitled “Research & Technology on the Space Station.”  Also see NASA’s website entitled International Cooperation.”
[2] See NASA’s website entitled “NASA’s Journey to Mars.”
[3] See United Nations’ Register of Objects Launched into Outer Space.
[4] See Article VIII of United Nations’ Outer Space Treaty (signed on December 19, 1966).  Also see World Intellectual Property Organization’s website entitled “Patent Expert Issues: Inventions in Space.”  Also see United Nations’  Convention on Registration of Objects Launched into Outer Space  (entered into force on 15 September 1976).  Also see 35 U.S.C. 105 (a).
[5] See Article 21 (Paragraph 2) of the Agreement Among the Government of Canada, Governments of the Member States of the European Space Agency, the Government of Japan, the Government of the Russian Federation, and the Government of the United States of America Concerning Cooperation on the Civil International Space Station (Signed on January 28, 1998).
[6] See 35 U.S.C. 105 (a).

USPTO Cancer Immunotherapy Pilot Program

Posted in Cancer Immunotherapy, Patent Counseling & Strategies, Technology News & Events

In July 2016, the USPTO launched the Cancer Immunotherapy Pilot Program to provide a fast-track review for cancer immunotherapy-related patent applications without the need for applicants to pay a petition fee.  Under this program, patent applications pertaining to cancer immunotherapy are advanced out of turn for examination, resulting in accelerated review.

The program aims to cut the time it takes to review patent applications pertaining to cancer immunotherapy in half by issuing final decisions in one year or less after they are received.  In order to request consideration for the program:

  • Applications must contain one or more claims to a method of treating a cancer using immunotherapy.
  • Applicants must file a grantable petition under this initiative using our patent electronic filing system (EFS-Web).
  • Open to:
  1. any application that has not received a first Office action,
  2. any application where the petition is filed with a Request for Continued Examination (RCE), or
  3. any application not under final rejection where the claimed cancer immunotherapy is the subject of an active Investigational New Drug (IND) application that has entered Phase II or Phase III (FDA) clinical trials.
  • No additional fee is required to participate in the program.

How to file

  • Fill out Petition Form: PTO/SB/443
  • Save form and upload via the USPTO patent electronic filing system, EFS-Web
  • Select document description, “Petition for Cancer Immunotherapy Pilot” (found under the “Petition Category”) on the EFS-Web screen to ensure processing)
  • If the application is a new application, do not choose “Accelerated Exam” or “Track One”

Is Final really Final? Alternative Patent Prosecution Routes after a Final Office Action

Posted in Development & Commercialization of Technology, Intellectual Property, Patent Counseling & Strategies, Patent Law, Patent Prosecution, Uncategorized

The prosecution of a patent application before the U.S. Patent and Trademark Office (USPTO) can be a prolonged and costly process. The patent prosecution process can include the issuance of an Office Action by the USPTO and the subsequent filing of an Office Action response by the applicant. While such communications can occur multiple times, the USPTO can close the prosecution of the patent application by the issuance of a Final Office Action[1].

A Final Office Action is usually issued when previous arguments are unpersuasive or a new ground of rejection is required by an applicant’s claim amendments.  The most conventional routes for continuing the prosecution of a patent application after the issuance of a Final Office Action have included: (1) the filing of a request for continued examination (RCE) along with new arguments and/or amendments that address the Final Office Action[2]; or (2) the filing of a Notice of Appeal followed by an Appeal Brief, which initiates appeal proceedings before the Patent Trial and Appeal Board (PTAB)[3].

However, the filing of an RCE may further prolong the prosecution of a patent application without providing substantial guidance to the applicant. Likewise, appeal proceedings can be very prolonged and costly.

Various pilot programs enacted by the USPTO can avoid the time and costs associated with RCE and appeal proceedings. Such pilot programs include: (1) the Post-Prosecution Pilot Program (P3 Program)[4]; (2) the After Final Consideration Pilot 2.0 program (AFCP 2.0)[5]; and (3) the Pre-Appeal Brief Conference Program[6].

As outlined in more detail below, each of the aforementioned programs can be used to provide more direction and guidance to the applicant prior to the filing of an RCE or a Notice of Appeal. Participation in each of these programs could also result in the allowance of the application without the need for any further proceedings.

 The P3 Program: Reconsideration by a Panel of Examiners

The P3 Program, which began in July 2016, allows for an applicant to request the reconsideration of a Final Office Action by a panel of examiners. No claim amendments or fees are required to participate in the P3 Program.

To participate in the P3 Program, the applicant must file a request within two months of the mailing date of the Final Office Action along with an Office Action response that is no more than five pages[7]. Upon the receipt of the request, the Patent Office will contact the applicant to schedule a conference (e.g., a teleconference call)[8]. During the conference, the applicant will make an oral presentation to a panel of examiners[9]. Thereafter, the applicant will be informed of one of three outcomes in writing: (1) the upholding of the Final Office Action; (2) finding of allowable subject matter, which will be followed by a Notice of Allowance; or (3) the withdrawal of rejections and the reopening of patent prosecution, which will be followed by a new Office Action[10].

AFCP 2.0: Reconsideration of Additional Claim Amendments

AFCP 2.0, which precedes the P3 Program, allows for the Examiner to search and/or consider an applicant’s additional claim amendments after a Final Office Action and communicate those findings to the applicant. No fees are required to participate in AFCP 2.0.

To participate in AFCP 2.0, the applicant must file a request along with a response to the Final Office Action that includes a non-broadening amendment to at least one independent claim[11]. Thereafter, the Examiner will consider the applicant’s arguments and claim amendments[12]. The Examiner may also conduct additional searches[13]. The Examiner will then communicate his or her findings to the applicant. For instance, the Examiner may hold a brief interview (e.g., a teleconference call) with the applicant to outline the detailed reasons why the Final Office Action is being upheld[14]. Alternatively, the Examiner may find allowable subject matter and issue a Notice of Allowance[15].

Pre-Appeal Brief Conference Program: A Route to Avoiding Appeal

The Pre-Appeal Brief Conference Program provides an applicant with an opportunity to request a panel of examiners to formally review the legal and factual bases of the rejections in the Final Office Action before the initiation of appeal proceedings[16]. To participate in the Pre-Appeal Brief Conference Program, the applicant must file an Office Action response of no more than five pages along with a Notice of Appeal and the requisite fees[17]. A panel of examiners will then consider the applicant’s response and issue a written decision that will state one of the following: (1) the patent application remains under appeal because there is at least one actual issue for appeal; (2) prosecution on the merits is reopened, which will be followed by an Office Action; or (3) the patent application is allowed, which will be followed by a Notice of Allowance[18].

Choosing the Right Pilot Program

Choosing between the different patent prosecution pilot programs after the issuance of a Final Office Action can depend on numerous factors.  For instance, pursuing a request under AFCP 2.0 may be suitable if the applicant desires the Examiner to consider additional claim amendments and arguments.  Likewise, pursuing a request under the P3 Program may be suitable if the applicant desires a panel of examiners to re-consider the previously presented claim amendments and/or arguments.  Similarly, participation in a Pre-Appeal  Brief Conference Program can provide an applicant with an opportunity to determine whether or not the patent application is in a condition for appeal before pursuing a prolonged and costly appeal proceedings.

[1] See Manual of Patent Examining Procedures (M.P.E.P.) § 2271.

[2] M.P.E.P. § 706.07(H).

[3] M.P.E.P. §§ 1201-1216.

[4] Federal Register Notice, Vol. 81, No. 132, July 11, 2016, pages 44845-44849.

[5] Federal Register Notice, Vol. 78, No. 96, May 17, 2013, pages 29117-29119.

[6] Official Gazette Notice entitled  “New Pre-Appeal Brief Conference Pilot Program”, July 12, 2005.

[7] Federal Register Notice, Vol. 81, No. 132, July 11, 2016,  page 44846.

[8] Federal Register Notice, Vol. 81, No. 132, July 11, 2016,  page 44848.

[9] Id.

[10] Federal Register Notice, Vol. 81, No. 132, July 11, 2016,  page 44849.

[11] Federal Register Notice, Vol. 78, No. 96, May 17, 2013, page 29118.

[12] Federal Register Notice, Vol. 78, No. 96, May 17, 2013, pages 29118-29119.

[13] Federal Register Notice, Vol. 78, No. 96, May 17, 2013, page 29119.

[14] Id.

[15] Id.

[16] Official Gazette Notice entitled  “New Pre-Appeal Brief Conference Pilot Program”, July 12, 2005.

[17] Id.

[18] Id.

Patent Law: Making On-Sale Bar Jurisprudence Coherent

Posted in Development & Commercialization of Technology, Intellectual Property Litigation, Patent Counseling & Strategies, Patent Prosecution, Technology Transactions, Uncategorized

“Rather than rest our decision on formalities, our focus is on what makes our on-sale bar jurisprudence coherent: preventing inventors from filing for patents a year or more after the invention has been commercially marketed, whether marketed by the inventor himself or a third party.”  The Medicines Company v. Hospira, Inc., No. 2014-1469, slip op. at 25 (Fed. Cir. July 11, 2016).

An invention cannot be patented in the United States if the invention “was on sale in this country, more than one year prior to the date of application for patent in the United States”.  35 U.S.C. § 102(b) (pre-AIA).  Any patent claims to a product that was on-sale prior to this one-year date are invalid and the right to exclude others from making, using and selling the product is lost.

The Court concluded that to be “on-sale” “a product must be the subject of a commercial sale or offer for sale, and that a commercial sale is one that bears the general hallmarks of a sale pursuant to Section 2-106 of the of the Uniform Commercial Code.”  The Medicines, at 3.  When “no actual sale is present ‘[o]nly an offer which the other party could make into a binding contract by simple acceptance (assuming consideration)’ triggers the on-sale bar.”  Id. at 27 (quoting Group One, Ltd. v. Hallmark Cards, Inc. 254 F.2d 1041, 1048 (Fed. Cir. 2001)).

This case involved product-by-process claims and a supply contract for a third-party to produce three batches of the drug using the claimed processes.  The Federal Circuit held that the supply contract was for performing services and not a commercial sale.  “[A] contract manufacturer’s sale to the inventor of manufacturing services where neither the title to the embodiments nor the right to market the same passes to the supplier does not constitute an invalidating sale under § 102(b).”  Id.at 33.

What the Court makes coherent is that the “on-sale” bar is based on activities that constitute a commercial sale or offer for sale and not merely pre-commercial activities in preparation for future sales.  “The on-sale bar is triggered by actual commercial marketing of the invention, not preparation for potential or eventual marketing.”  Id. at 26.

What the Court also makes coherent is that the best course of action is to file an application for patent as soon as the invention is ready for patenting.

Next up is Helsinn v. Teva and whether on-sale activity under the AIA includes secret sales or is limited to public sales only.