Federal Court Rules on “Public Disclosure,” Private Sale of Inventions

The US Court of Appeals for the Federal Circuit has weighed in on a case involving “public disclosure” rules under the America Invents Act and the private sale of inventions to third parties, Keval Amin writes on the IP Update blog of McDermott Will & Emery.

In Sanho Corp. v. Kaijet Technology Int’l Ltd, Inc. the Court affirmed a Patent Trial & Appeal Board (PTAB) decision that concluded the private sale of an invention or intellectual property does not qualify as “public disclosure” under federal patent law (35 U.S.C.).

Sanho’s HyperDrive utilizes a patent to improve connectivity between laptops and other end-user devices, and peripherals like printers. Kaijet contested certain patent claims and filed a petition for inter partes review with the PTAB, asserting that some claims of Sanho’s patent were obvious in light of a prior art reference.

The Board ruled the patent claims invalid based on the earlier filing date of the prior art reference. Sanho contended that the patent holder’s previous sale of its device should exclude the reference as prior art. The Board disagreed with this argument.

Sanho appealed to the Federal Circuit, referencing the America Invents Act’s redefinition of prior art. The Act transitioned from a first-to-invent to a first-inventor-to-file system. According to the Act, prior art includes patents and applications filed before the effective filing date of a patent. Some public disclosures made by the inventor can qualify for exceptions- Sanho contended that its sale of HyberDrive was one of these cases.

The Federal Circuit rejected Sanho’s claim that “publicly disclosed” should include all types of disclosures, including the private sale of inventions. The key question was whether placing an invention “on sale” constituted a “public disclosure.”

The Court explained that the term “publicly” in the statute indicates a more limited scope than just “disclosed.” It noted that the exception exists to safeguard inventors who share their inventions with the public prior to someone else’s patent filing. The Court also considered the legislative history to support its interpretation.