72 Pages Posted: 14 Nov 2010
Date Written: November 1, 2002
In order to comport with our obligations under the Agreement on Trade Related Aspects of Intellectual Property (TRIPS), Congress made it an act of infringement to "offer to sell" a patented invention. Prior to TRIPS, a party could infringe a patent under 35 U.S.C. § 271(a) only by making, using, or selling a patented invention without the permission of the patent owner. Whereas previously "a threat of a sale [did] not constitute an act of infringement," now a party who simply offers to sell a device covered by a patent is liable as an infringer, even if the sale is never completed. In adopting this new form of infringement, however, Congress provided virtually no guidance as to its meaning. Neither courts nor commentators have written about this new version of infringement. This article examines the history of 35 U.S.C. § 271 and what is considered to be infringement of a patent. It then assesses what the proper standard for an “offer” should be under this new provision. After reviewing the current case law on this issue as determined by the U.S. Court of Appeals for the Federal Circuit, the article considers three sources of authority to assess the appropriate standard for "offer to sell" infringement. First, infringement for "offers to sell" is compared and contrasted with the statutory proscription of obtaining a patent on a device that has been "on sale" under 35 U.S.C. § 102(b). Second, because § 271(a) was amended to harmonize U.S. law with international law, the article also compares interpretations of offers to sell and sales in foreign jurisdictions, specifically the United Kingdom and Canada. Third, the article analyzes the economic consequences of an infringing offer to sell to determine whether the Federal Circuit's standard for an "offer to sell" adequately redresses the pecuniary harm to the patentee caused by this infringing activity. After evaluating these sources, Part III concludes that a general commercialization standard would best effectuate the objectives of both the "on-sale bar" and "offer to sell" infringement. Finally, the article then addresses whether a complete, physical embodiment of an invention should be required for an infringing "offer to sell." Historically, for there to be infringement, the allegedly infringing device had to be in a physically complete form. The article suggests that the addition of "offer to sell" as a form of infringement challenges this norm, not only for offers to sell but also for completed sales of a patented device. While a requirement that the invention be in its complete and assembled form is appropriate in determining whether an infringer has "made," "used," or "imported" an invention, such a standard is inappropriate for sales of, and offers to sell, an infringing device. Instead, drawings or models should be sufficient for offers to sell and actual sales, so long as a person of ordinary skill in the relevant art would be able to read such drawings and readily build the device.
Keywords: patent, infringement, offer to sell, sell, make, use, TRIPS, damages, remedies, on-sale bar, on-sale, comparative patent law, lost profits, price erosion, reasonable royalty
Suggested Citation: Suggested Citation
Holbrook, Timothy R., Liability for the 'Threat of a Sale': Assessing Patent Infringement for Offering to Sell an Invention and Implications for the On-Sale Patentability Bar and Other Forms of Infringement (November 1, 2002). Santa Clara Law Review, Vol. 43, No. 753, 2003. Available at SSRN: https://ssrn.com/abstract=1686783