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Patent Application Filings and Experimental Use Exception

Posted on Feb 1, 2016 in Articles

This article originally appeared in The Legal Intelligencer on January 27, 2016.

The United States is one of only a few countries that permits public disclosure of an invention before filing a patent application. While the patent laws in each country vary, the United States permits an invention to be on sale, or in public use, no more than one year prior to the filing of a patent application. File your patent application within the one-year grace period and (barring any other issues) your patent rights are secure. Exceed the one-year grace period and your patent rights are gone.

Enter the “experimental use exception.” Along the pathway of invention, a sale or public use may need to occur that is essential to the development of an invention. Sometimes, for example, money may change hands as outside vendors help to fine-tune the details of the innovative concept. Or perhaps the invention—by necessity—needs to be partly developed in public view. These events might be considered exceptions to the one-year grace period rule, and their occurrence more than one year before a patent application is filed does not necessarily destroy patent rights.

When do events fall under the ­experimental use exception? When can an invention be sold (or publicly used) more than one year before a patent application is filed without destroying patent rights? The U.S. Court of Appeals for the Federal Circuit is about to take a close look at this issue.

The Medicines Co. v. Hospira, No. 14-1469 (Fed. Cir. 2015), was decided by the Federal Circuit on July 2, 2015. The Medicines Co. is the owner of two patents for Angiomax, an anticoagulant. In 2010, The Medicines Co. sued Hospira Inc. for patent infringement. More than one year before The Medicines Co. filed its patent applications, it paid a drug manufacturer to prepare three batches of Angiomax. The district court found the patents to be valid, basing its decision on a finding that the preparation of Angiomax by the drug manufacturer outside of the grace period was “experimental.” On appeal, the Federal Circuit ruled that the Angiomax manufacturing was not experimental, and since it occurred more than one year before the patent applications were filed, the patents were invalid. A petition was filed for en banc review, which was granted. Oral hearings are set to soon begin.

The experimental use exception has a long history. One of the oldest cases on the subject, City of Elizabeth v. American Nicholson Pavement, 97 U.S. 126 (1878), is a ­favorite in law school IP casebooks. A wooden pavement on a street in Boston had been patented, and a patent infringement civil action ensued. Among other things, the defendants argued that the patent was invalid, for the wooden pavement had been in public use before the patent application had been filed, and outside of the grace period.

The testimony of one witness who was quoted in the opinion is telling: “Mr. [Samuel] Nicholson [the patent owner] was there [at the wooden pavement] almost daily, and when he came he would ­examine the pavement, would often walk over it, cane in hand, striking it with his cane, and making particular examination of its condition. He asked me very often how people liked it, and asked me a great many question about it. … It was frequently traveled by teams having a load of five or six tons, and some larger. As these teams usually stopped at the toll-house, and started again, the stopping and starting would make as severe a trial to the pavement as it could be put to.”

The court continued: “If the invention is in public use or on sale prior to [the grace period] it will be conclusive evidence of abandonment, and the patent will be void. … [The] nature of a street pavement is such that it cannot be experimented upon satisfactorily except on a highway, which is always public.”

On that basis, the court concluded that an experiment had taken place, and the ­resulting patent was valid despite the public use ­outside of the grace period.

The court in City of Elizabeth also explained why there is a limited grace period for filing a patent application and why, outside of the experimental use exception, the grace period is not extendable. The goal of the patent system is to encourage disclosure of inventions so that technology can advance. The patent system achieves this goal by providing, in return for inventive disclosure, an exclusive monopoly for a limited amount of time. A patent’s expiration date is affected by the application filing date, i.e., any delay in filing a patent application will result in a later expiration date for the resulting patent. If, however, an invention is being sold or publicly used, and the inventor delays to file his patent application, then the inventor is unfairly extending the date by which the patent expires—his monopoly is ending later than the patent statutes intended.

The court explained how the limited monopoly provided by the patent system must be balanced against the inventor’s need to complete his invention: “It is sometimes said that an inventor acquires an undue advantage over the public by delaying to take out a patent, inasmuch as he thereby preserves the monopoly to himself for a longer period than is allowed by the policy of the law; but this cannot be said with justice when the delay is occasioned by a bona fide effort to bring his invention to perfection.”

Another well-known case that deals with the experimental use exception is Pfaff v. Wells Electronics, 525 U.S. 55 (1998). Pfaff cites extensively from City of Elizabeth, and quotes the above paragraph in its entirety.

Pfaff further explains when the one-year grace period begins: “First, the product must be the subject of a commercial offer for sale. … Second, the invention must be ready for patenting. That condition may be satisfied in at least two ways: by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to ­practice the invention.”

Returning to The Medicines Co., a three-judge panel of the Federal Circuit determined that the sale of three batches of Angiomax by a drug manufacturer to The Medicines Co. constituted a “commercial sale” outside of the one-year grace period. Furthermore, the panel concluded that the sale of Angiomax did not fall under the experimental use exception because “the batches [of Angiomax] sold satisfied the claim limitations [of The Medicines Co.’s patent].”

On Nov. 13, 2015, the Federal Circuit granted a petition for panel rehearing and rehearing en banc. The parties are required to submit briefs answering the question of whether the sale of Angiomax to The Medicines Co. by its supplier was a commercial sale (triggering the one-year grace period) or an experimental use (and thus a permissible experimental use exception outside of the one-year grace period). Furthermore, despite the fact that a sale (from the drug manufacturer to The Medicines Co.) had occurred, is this a “sale” that starts the one-year grace period for filing a patent application? The parties are required to submit briefs addressing that issue as well.

On Jan. 11, Hospira filed a brief and argued that the “sale” of the three batches of Angiomax by the drug manufacturer started the one-year grace period, and as a result, the patents at issue were invalid.

On Jan. 19, the American Intellectual Property Law Association filed an amicus brief. The post-Pfaff cases, the brief explained, “lack clarity on what constitutes a patent-defeating commercial offer for sale.” Furthermore, the brief stated, “The application of the on-sale bar should not turn on whether inventors need to or choose to commercially contract with third parties to develop or produce their inventions.”

“All life is an experiment. The more experiments you make the better,” Ralph Waldo Emerson said. Whether an “experiment” occurred in this controversy may be key to how it will be decided.

– by Lawrence E. Ashery


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