2133.03(e)(1) Commercial Exploitation [R-07.2022]
[Editor Note: This MPEP section may be applicable to applications subject to examination under the first inventor to file (FITF) provisions of the AIA as set forth in 35 U.S.C. 100 (note). See MPEP § 2159 et seq. to determine whether an application is subject to examination under the FITF provisions, and MPEP § 2150 et seq. for examination of applications subject to those provisions. See MPEP § 2152.02(c) through (e) for a detailed discussion of the public use and on sale provisions of AIA 35 U.S.C. 102.]
One policy of the on sale and public use provisions of 35 U.S.C. 102 is the prevention of inventors from exploiting their inventions commercially more than 1 year prior to the filing of a patent application. Therefore, if applicant’s precritical date activity is a sale or offer for sale that is an attempt at market penetration, the activity may be cited as prior art. Thus, even if there is bona fide experimental activity, an inventor may not commercially exploit an invention more than 1 year prior to the effective filing date of a claimed invention. See In re Theis, 610 F.2d 786, 793, 204 USPQ 188, 194 (CCPA 1979).
I. THE COMMERCIAL ACTIVITY MUST LEGITIMATELY ADVANCE DEVELOPMENT OF THE INVENTION TOWARDS COMPLETION
As the degree of commercial exploitation in public use or sale activity increases, the burden on an applicant to establish clear and convincing evidence of experimental activity with respect to a public use becomes more difficult. Where the examiner has found a prima facie case of a sale or an offer to sell, this burden will rarely be met unless clear and convincing necessity for the experimentation is established by the applicant. See Sunoco Partners Mktg. & Terminals LP v. U.S. Venture, Inc., 32 F.4th 1161, 1171-72, 2022 USPQ2d 417 (Fed. Cir. 2022) (performing testing at a third party’s location instead of at the buyer’s facility, along with the fact that the testing could have been performed before the offer to sell, showed that "[t]he need to perform this testing … cannot have been the primary purpose for the … sale"). This does not mean, of course, that there are no circumstances which would permit alleged experimental activity in an atmosphere of commercial exploitation. In certain circumstances, even a sale may be necessary to legitimately advance the experimental development of an invention if the primary purpose of the sale is experimental. In re Theis, 610 F.2d 786, 793, 204 USPQ 188, 194 (CCPA 1979); Robbins Co. v. Lawrence Mfg. Co., 482 F.2d 426, 433, 178 USPQ 577, 582 (9th Cir. 1973). However, careful scrutiny by the examiner of the objective factual circumstances surrounding such a sale is essential. See Ushakoff v. United States, 327 F.2d 669, 140 USPQ 341 (Ct.Cl. 1964); Cloud v. Standard Packaging Corp., 376 F.2d 384, 153 USPQ 317 (7th Cir. 1967).
II. SIGNIFICANT FACTORS INDICATIVE OF "COMMERCIAL EXPLOITATION"
As discussed in MPEP § 2133.03, a policy consideration in questions of sales activity is premature "commercial exploitation" of a "completed" or "ready for patenting" invention (see MPEP § 2133.03(c)). The extent of commercial activity which constitutes "on sale" status depends upon the circumstances of the activity, the basic indicator being the subjective intent of the inventor as manifested through objective evidence. The following activities should be used by the examiner as indicia of this subjective intent:
- (A) Preparation of various contemporaneous "commercial" documents, e.g., orders, invoices, receipts, delivery schedules, etc.;
- (B) Preparation of price lists (Akron Brass Co. v. Elkhart Brass Mfg. Co., 353 F.2d 704, 709, 147 USPQ 301, 305 (7th Cir. 1965)) and distribution of price quotations (Amphenol Corp. v. Gen'l Time Corp., 397 F.2d 431, 436, 158 USPQ 113, 117 (7th Cir. 1968));
- (C) Display of samples to prospective customers (Cataphote Corp. v. DeSoto Chemical Coatings, Inc., 356 F.2d 24, 27, 148 USPQ 527, 529 (9th Cir. 1966) mod. on other grounds, 358 F.2d 732, 149 USPQ 159 (9th Cir.), cert. denied, 385 U.S. 832 (1966); Chicopee Mfg. Corp. v. Columbus Fiber Mills Co., 165 F.Supp. 307, 323-325, 118 USPQ 53, 65-67 (M.D.Ga. 1958));
- (D) Demonstration of models or prototypes (General Elec. Co. v. United States, 206 USPQ 260, 266-67 (Ct. Cl. 1979); Red Cross Mfg. v. Toro Sales Co., 525 F.2d 1135, 1140, 188 USPQ 241, 244-45 (7th Cir. 1975); Philco Corp. v. Admiral Corp., 199 F. Supp. 797, 815-16, 131 USPQ 413, 429-30 (D. Del. 1961)), especially at trade conventions (Interroyal Corp. v. Simmons Co., 204 USPQ 562, 563-65 (S.D. N.Y. 1979)), and even though no orders are actually obtained (Monogram Mfg. v. F. & H. Mfg., 144 F.2d 412, 62 USPQ 409, 412 (9th Cir. 1944));
- (E) Use of an invention where an admission fee is charged (In re Josserand, 188 F.2d 486, 491, 89 USPQ 371, 376 (CCPA 1951); Greenewalt v. Stanley, 54 F.2d 195, 12 USPQ 122 (3d Cir. 1931)); and
- (F) Advertising in publicity releases, brochures, and various periodicals (In re Theis, 610 F.2d 786, 792 n.6, 204 USPQ 188, 193 n. 6 (CCPA 1979); Interroyal Corp. v. Simmons Co., 204 USPQ 562, 564-66 (S.D.N.Y.1979); Akron Brass, Co. v. Elkhart Brass Mfg., Inc., 353 F.2d 704, 709, 147 USPQ 301, 305 (7th Cir.1965); Tucker Aluminum Prods. v. Grossman, 312 F.2d 393, 394, 136 USPQ 244, 245 (9th Cir. 1963)).
See MPEP § 2133.03(e)(4) for factors indicative of an experimental purpose.