United States: Supplier's Agreement To Manufacture Product Invalidates Patent

It is not intuitive that an offer to manufacture a product made by a patent owner's own supplier could be a commercial offer for sale that would start the clock ticking on the one-year deadline for filing a patent application on an invention embodied in the product. Yet, this was precisely the U.S. Court of Appeals for the Federal Circuit's conclusion in Hamilton Beach Brands v. Sunbeam Products, 2013 U.S. App. LEXIS 16797 (Fed. Cir. Aug. 14, 2013).

Hamilton Beach Brands Inc. has successfully marketed its Stay or Go slow cooker, increasing its market share by 30 percent. The company's success was met by its competitor Sunbeam Products Inc.'s introduction of a competing product, the Cook & Carry. The Stay or Go is the commercial embodiment of the invention claimed in Hamilton Beach's U.S. Patent 7,485,831 (the '831 patent), which was pending at the time of the introduction of Sunbeam's Cook & Carry slow cooker. The description in Hamilton Beach's pending patent application also covered Sunbeam's Cook & Carry product so Hamilton Beach filed a continuation of its application covering its competitor's product. When the resulting U.S. Patent 7,947,928 (the '928 patent) duly issued, Hamilton Beach brought a patent infringement suit against Sunbeam in the U.S. District Court for the Eastern District of Virginia.

The court granted Sunbeam's motion for summary judgment and invalidated the '928 patent because Hamilton Beach failed to file the underlying '831 patent application within one year of its purchase order to its foreign supplier and the latter's offer to manufacture the slow cooker, thereby violating the on-sale bar under 35 U.S.C §102(b) in effect at the time. The on-sale bar prohibits patent protection where a claimed invention was commercially offered for sale more than one year prior to the effective filing date of the patent application and that it was ready for patenting at that time, as in Pfaff v. Wells Electronics, 525 U.S. 55, 67 (1998). Hamilton Beach appealed to the Federal Circuit.

The district court's analysis focused on the communications between Hamilton Beach and its supplier. Hamilton Beach sent a purchase order to its supplier for manufacture of the Stay or Go slow cooker, identifying the quantity, price and delivery date. The supplier confirmed it had received the purchase order, stating that it would begin production of the slow cookers upon Hamilton Beach's release. The court held that the supplier's response was a manifestation of assent that created a binding contract. The Federal Circuit found that there was no need for the district court to require a binding contract. Instead, the Federal Circuit held that the supplier's response was a commercial offer for sale that satisfied the first prong of the on-sale bar inquiry.

The court also emphasized that there is no supplier exception to the on-sale bar, and held that "it is of no consequence that the 'commercial offer for sale' at issue in this case was made by Hamilton Beach's own supplier and was made to Hamilton Beach itself."

The Federal Circuit found no error in the district court's determination that the product was ready for patenting under the second prong of the analysis. "An invention is 'ready for patenting' when one of the following two conditions are met prior to the critical date: the invention is reduced to practice or the invention is depicted in drawings or described in writing of sufficient nature to enable a person of ordinary skill in the art to practice the invention." The district court found that Hamilton Beach held pre-critical date meetings where it provided its suppliers and retail customers' buying agents with descriptions, drawings and specifications that would enable one of ordinary skill in the art to manufacture the invention, thus evidencing it was ready for patenting. Hamilton Beach had also admitted that it possessed a workable sample of the product in question prior to the critical date, providing additional support to conclude the invention was ready for patenting at the time of the commercial offer for sale. Accordingly, the Federal Circuit affirmed.

The holding is a reminder that a commercial offer for sale triggering the on-sale bar can be initiated by someone other than the patentholder.

The case creates an additional concern for small businesses or entities that outsource their manufacturing. Had Hamilton Beach manufactured its own slow cookers, the company would have geared up to manufacture the product without contacting an outside supplier. No commercial offer for sale would have taken place. Companies with no manufacturing or prototyping capabilities must be especially careful. Even limited production, such as outsourcing creation of a single prototype, could trigger the on-sale bar.

It is important to note that the Hamilton Beach case was decided under the version of 35 U.S.C. §102(b) that existed prior to the implementation of the analogous provision in the America Invents Act. The AIA's amendments to Section 102 raise uncertainties about the application of the on-sale bar to patentability. The new 35 U.S.C. §102, effective March 16, provides in part as follows:

"A person shall be entitled to a patent unless (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention." Exceptions include "a disclosure made one year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under Subsection (a)(1)."

The amendment raises two issues: (1) whether there is a one-year grace period after an offer for sale under the AIA; and (2) whether a secret sale, such as one where both parties are under a confidential agreement, would qualify as prior art to trigger the grace period.

Examination guidelines issued by the U.S. Patent and Trademark Office address the first issue explicitly:

"The office is treating the term 'disclosure' as a generic expression intended to encompass the documents and activities enumerated in AIA 35 U.S.C. 102(a) (i.e., being patented, described in a printed publication, in public use, on sale, or otherwise available to the public, or being described in a U.S. patent, U.S. patent application publication, or WIPO published application)."

Accordingly, the USPTO will interpret the activities of an inventor, including any sales activities, as a disclosure. It follows then that the one-year grace period provisions under 36 U.S.C. 102(b) would apply to the sale activities.

The second issue has generated more uncertainty. Under pre-AIA case law, an entity that engages in a confidential or secret sale, or uses an invention in secret, for over a year forfeits the right to then seek patent protection. See, for example, Metallizing Engineering Co. v. Kenyon Bearing and Auto Parts, 153 F.2d 516 (2d Cir. 1946). The AIA has turned this forfeiture doctrine on its head. The addition of the residual clause "otherwise available to the public" in §102(a)(1) has been interpreted by the USPTO as repealing the forfeiture doctrine. In the examination guidelines, the USPTO states that "the phrase 'on sale' in AIA 35 U.S.C. 102(a)(1) is treated as having the same meaning as 'on sale' in pre-AIA 35 U.S.C. 102(b), except that the sale must make the invention available to the public." The USPTO has thus stated clearly that secret sales will not qualify as prior art that would defeat patentability. Some practitioners, including the American Bar Association's IP Law Section and the AIPLA, agree.

Other practitioners are skeptical of the USPTO's view, based on the belief that Congress would have been more explicit had it intended to overrule the forfeiture doctrine. Regardless of the added residual clause, many believe that Congress, by continuing to use the same terms like "on sale" in the new statute, intended for the existing law to apply to future patentability analyses under the AIA. Many criticize the exemption of confidential or secret sales as contravening the public policies behind the patent system because it allows entities to exploit an invention as a trade secret, potentially for a long time, and then apply for patent protection just as the trade secret is about to be disclosed. This will remain a hotly contested issue until it is addressed by the courts in litigation.

Inventors should take a cautious approach when evaluating deadlines for filing patent applications in light of the Hamilton Beach outcome and ambiguities in the on-sale bar under the AIA, and should educate others in their organizations of the pitfalls so on-sale bars are avoided.

Originally published in The Legal Intelligencer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.