Introduction
In a recent appellate decision, the United States Court of Appeals for the Federal Circuit (CAFC or Federal Circuit) affirmed a ruling by the Patent Trial and Appeal Board (PTAB), finding all challenged claims of U.S. Patent No. 10,572,429 ("the '429 patent") unpatentable as obvious. The case, Sanho Corp. v. Kaijet Tech. Int'l Ltd.,1 centers around the interpretation of the phrase "publicly disclosed" within the statutory exception to prior art under AIA 35 U.S.C. § 102(b)(2)(B). This ruling has significant implications for how prior art is determined and how inventors may protect their innovations under the America Invents Act (AIA).
Case Background
Sanho Corporation appealed the PTAB's final decision, which deemed the claims of the '429 patent unpatentable based on obviousness as asserted in Kaijet's petition for Inter Partes Review. The PTAB's decision relied on U.S. Patent Application Publication No. 2018/0165053 ("Kuo"), which predates the '429 patent's effective filing date, thus qualifying as prior art under AIA 35 U.S.C. § 102(a)(2). Sanho argued that Kuo should not be considered prior art because the relevant subject matter had already been "publicly disclosed" by the inventor of the '429 patent through a private sale of a product ("the HyperDrive") that embodies the claimed invention.
Essentially, Sanho argued that a private sale of the HyperDrive, which purportedly contained the claimed features of the '429 patent, constituted a "public disclosure" under § 102(b)(2)(B). According to Sanho, this disclosure occurred before Kuo's effective filing date, and therefore should exempt Kuo from being considered as prior art.
The Federal Circuit's Analysis
The Federal Circuit examined whether a non-confidential, private sale should be deemed a "public disclosure" under the statutory language of § 102(b)(2)(B). The analysis necessarily implicated the U.S. Supreme Court's decision in Helsinn Healthcare S.A. vs Teva Pharmaceuticals Inc.2 which established that a private commercial sale constitutes a disclosure under Section 102(a)(1) sufficient to trigger the "on sale" aspect of the statute.
Initially, the CAFC's analysis highlighted the plain language of the statute and noted that the Congress deliberately chose the term "publicly disclosed" rather than simply "disclosed." This distinction suggested that Congress intended to differentiate between types of disclosures with some being "public" and others not.
Further, the court identified that the purpose of § 102(b) is to protect some inventors who publicly disclose their inventions before filing for a patent from invalidity due to certain patent applications subsequently filed by others. Sanho's interpretation of "publicly disclosed" as inclusive of private disclosures conflicted with this objective. The CAFC additionally discussed the legislative history of § 102(b), which clarifies that the "public disclosure" requires the invention to be made accessible to the public.
As such, the Federal Circuit determined that simply placing something "on sale" in Section 102(a)(1) does not necessarily mean that the invention embodied by the device sold is "publicly disclosed" for purposes of Section 102(b)(2)(B).
Congressional Intent
In analyzing the plain language of the statute as noted above, the Federal Circuit invoked congressional intent in its determination that the phrase "publicly disclosed" in section 102(b)(2)(B) should not be presumed to have the same meaning with the word "disclosed" in section 102(a)(1). Since the phrases "publicly disclosed" and "disclosed" are different, this suggested that Congress intended for the phrases to have different meanings. As determined in Hibbs vs Winn,3 "a statute should be construed so that effect is given to all its provisions, so that no part will be inoperative, superfluous, void or insignificant." So, the Federal Circuit determined that if Congress had intended for the phrases "publicly disclosed" and "disclosed" to have equivalent meaning, then Congress would have used the same phrase in both instances when it rewrote Section 102 in the AIA.
Public Use
The decision also addressed the distinction between "publicly disclosed" and "public use." Sanho argued that a public use is a public disclosure under Section 102(b)(2)(B) as long as the recipient is not under a secrecy obligation and that the phrase "publicly disclosed" should incorporate existing judicial interpretation of the word "public" in context of invalidating "public use." The Federal Circuit explained that Sanho again was ignoring the fact that "public disclosure" and "public use" are different statutory terms. Though a public disclosure could be accomplished through a public use, a public use does not necessarily constitute a public disclosure of the invention in every instance. Sanho relied solely on the Supreme Court's 140-year old decision in Egbert vs Lippmann4 to argue their position, but the CAFC stated that Sanho misapplied that precedent. The Egbert decision dealt with qualification of invalidating prior art based on a public use by a single person; the Supreme Court's decision did not establish that the public use of the invention constituted a public disclosure. Nor did Egbert deal with the different terms as used in the America Inventions Act. Therefore, the CAFC rejected Sanho's argument that the new statutory phrase "publicly disclosed" should incorporate existing law regarding the statutory phrase "public use."
The Ruling
The CAFC found that the sale alleged by Sanho did not publicly disclose the relevant subject matter and therefore did not qualify for the exception in AIA 35 U.S.C. § 102(b)(2)(B). There is no indication that Sanho disclosed the relevant subject matter disclosed in Kuo to the public in regard to the sale. The CAFC determined that the PTAB did not err in applying Kuo as prior art, and thus it affirmed the invalidity decision rendered in the Inter Partes Review filed by Kaijet.
Implications of the Decision
The Federal Circuit established (or reaffirmed) the meaning and intent of the phrase "public disclosure" As used in AIA 35 U.S.C. § 102(b)(2)(B). In particular, the CAFC established that the statutory phrase "public disclosure" should be interpreted as having a different meaning from the phrases "disclosed" and "public use." The ruling further established or reaffirmed that a statute should be interpreted as a whole, that Congressional intent should be relied upon when interpreting a statute's plain and simple language, and that similar but non-equivalent phrases should be considered with the intent that one phrase should not be interpreted so as to render the other phrase as inoperative, superfluous, void, or insignificant.
As far as inventors are concerned, it is now clear that a single private sale of the invention, even if non-confidential, may not qualify as a public disclosure of the invention sufficient to antedate a prior art reference having an effective date after that private sale, but before the inventor's own effective filing date. Accordingly, it is always prudent to file one's own patent application before any act of commercialization of the invention, including a private non-confidential sale.
Footnotes
1 108 F.4th 1376 (Fed. Cir. 2024).
2 586 U.S. 123 (2019).
3 542 U.S. 88 (2004).
4 104 U.S. 333 (1881).
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