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Have You Bargained Away Your Patent Rights?

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Biotech attorney Breffni Baggot says genomics inventors should take heed of a recent Supreme Court ruling

 

Breffni X. Baggot is a business consultant, attorney at law, and patent attorney for biotech companies. He previously was an attorney for a Fortune 500 company and taught law at the University of Connecticut. He holds a BSc in electrical engineering, a MSc in biochemical genetics, and a University of Chicago MBA. He can be reached at [email protected] or through biotechlawyer.com.

 

Holders and seekers of patents should be aware of a Supreme Court ruling. In Pfaff v. Wells Electronics, the Court considered whether the “on-sale” bar should apply to inventions “substantially completed” at the time of sale or “fully completed.” One might think that the decision has little to teach about genomics. But note where the decision was made: the Supreme Court. Regardless of the subject, be it civil rights or patent rights, the Supreme Court only grants a hearing when it wants to influence policy at the national level, whether the company is high-tech, low-tech, or no-tech.

The on-sale bar disqualified patents if an invention was offered for sale more than a year before patent filing. Some biotech companies have ignored the on-sale bar. Their oversight did not become apparent until they tried to enforce their rights and found that the patent did not hold up in court. For instance, the CEOs of two biotechnology companies invented an improvement in chromatography equipment and sent a prototype to a customer to induce him to buy the equipment. Later, they got a patent to secure their market niche. But when they took their competitor, Beckman Instruments, to court, these CEOs found that their earlier commercial activity had resulted in an invalid patent (Stearns v. Beckman).

Is an idea on paper an invention? Texas Instruments asked Mr. Pfaff to develop a socket. Pfaff prepared drawings and sent them to a tooling company for production. TI issued a purchase order. Pfaff did not file a patent application until more than a year later. Years later, Pfaff sued Wells Electronics for infringing his patent. At trial, the court determined that Pfaff’s invention was not “on sale” because it wasn’t completed at the sale date. On appeal, the decision was overturned. Because Pfaff had drawings with requirements before the purchase order was made, because he sent those drawings to the tooling company, and because he had a habit of going into production without manufacturing prototypes, the appeals court concluded that Pfaff had expected that his invention would work at the time of sale.

Should the Pfaff patent be held invalid when Pfaff’s invention was not fully completed more than one year before he filed his patent application? Yes. “The primary meaning of the word invention … refers to the inventor’s conception rather than to a physical embodiment,” wrote Justice Stevens. The Court quoted from an 1888 case, which held that Alexander Graham Bell’s telephone patent was valid, even though it was awarded before he built a working model.

The bottom line for inventors is that whether products are completed or not, their sale starts at the one-year countdown, and during that year, inventors must file for patent protection or risk losing their rights. For management, the bottom line is communication. Neither marketing nor patenting can be done in a vacuum. Those in charge of research and development need to send the same messages to the legal and marketing departments. The legal department must know what is being offered for sale, and the marketing department must know what is to be patented. If all the essential departments hold together, so should the elements of the invention.

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