CAFC: On-Sale Bar Requires Conception of Invention

Sparton Corp. v. United States (Fed. Cir. 2005).

Sparton, a military contractor, sued the U.S. government to recover money under 28 U.S.C. Section 1498(a) for unlicensed use of its patented inventions by the U.S. government.  The U.S. Claims Court has jurisdiction over this type of claim and held that Sparton's two patents were invalid because they were offered for sale more than one year before the patents were filed.  Specifically, the Claims Court found that an engineering proposal submitted by Sparton to the Navy created the bar.

On apppeal, the Federal Circuit panel (Archer) explained that, although "the Supreme Court has not explained what is necessary for a "commercial offer for sale," we have held that two elements are necessary. Namely, a court must find that (1) there was a "commercial offer"; and (2) that offer was for the patented invention."

Sparton argued that the proposal that they submitted was not an offer for the patented invention, and thus, could not present an on-sale bar.  Both sides agreed that the proposal did not describe the complete patented invention.  However, the lower court had construed the proposal using standard contract law to determine that the proposal/offer would also include the patented invention.

The Federal Circuit agreed with the patentee, finding that the claim's court's "result is illogical. . . . With no conception of an invention, there cannot be an offer for sale or a sale of that invention."

REVERSED AND REMANDED

Links:

• Download Federal Circuit Decision in Sparton v. U.S.pdf