An inventor trying to save his $1.2 million award is out of line in asserting that the Federal Circuit “turned contract law on its head” with a decision rooted in consistent patent law precedent, attorneys say.
Larry Junker asked the US Supreme Court earlier this month to review the US Court of Appeals for the Federal Circuit’s ruling that vacated his patent infringement award against Medical Components Inc. and Martech Medical Products. The appeals court said the companies didn’t infringe Junker’s design patent for a medical device because an offer to sell the invention was made more than a year before he filed the patent application.
Under what’s known as the “on-sale bar” doctrine, patent applications will be blocked if they’re filed more than one year after an initial sale of an invention. The question in Junker’s case, he argues, is whether a price quotation in a letter starts that clock, because not all industries consider a price quote as an offer for sale.
While Junker claims the Federal Circuit’s decision allows third parties to effectively steal patents and inappropriately blurs the line between a sale offer and price quotations, patent attorneys say Junker’s case is one acutely dependent on the facts at play.
Characterizing a letter as a quotation isn’t a “magic word” to avoid the on-sale bar, said Jeremy W. Bock, a law professor at Tulane University.
“This Federal Circuit case, which is precedential, does make the waters murkier as to when a price quote could potentially become an offer for the purposes of the on-sale bar,” Bock said. “The substance of the letter is important, as opposed to how the letter is labeled.”
An attorney for MedComp and Martech didn’t immediately respond to a request for comment.
No Federal Contract Law
Junker worked with Xentek Medical to manufacture his design of a device called an introducer sheath (US Patent No. D450,839), which is used to insert a catheter into a patient’s vein. Xentek created a prototype and sent a letter to
The US District Court for the Eastern District of Pennsylvania found that the letter only represented preliminary negotiations, meaning the on-sale bar wasn’t triggered. After a bench trial, a judge awarded Junker $1.2 million for MedComp’s patent infringement.
The Federal Circuit disagreed, noting that Xentek sent the letter in direct response to Boston Scientific’s request for a quote. The letter’s specificity and completeness outweigh the reference to a “quotation,” according to the opinion.
Junker claims the ruling will sow chaos into contract law, as it muddies the distinction between a price quotation and a sale offer. He argued that the Federal Circuit is “undermining long-established federal contract law.”
One problem for Junker is that there’s no such thing as federal contract law, attorneys and professors said.
“Contract law is a state law problem,” said University of Richmond School of Law professor Kristen Osenga. “If you’re sending out prices, and prices attached to things, it seems like an offer for sale.”
The letter that was sent didn’t include specific information that actual offers contain, said James D. Petruzzi of The Petruzzi Law Firm, who represents Junker. It was an initial negotiation, not a binding contract, according to Petruzzi.
“That would be a fundamental shift in contract law, because in contract law there has to be a meeting of the minds,” Petruzzi said. “There were a lot of terms that weren’t in there.”
Clear Case Law
The Supreme Court isn’t likely to step back into on-sale bar issues after dealing with a similar issue in the 2019 Helsinn Healthcare SA v. Teva Pharms USA Inc., said Mel Bostwick, a partner at Orrick, Herrington & Sutcliffe LLP in Washington. Junker would need to show clearly that the Federal Circuit created a conflict, she said.
“If they’re right that there’s a circuit split here, then that’s exactly the sort of thing that might interest the Supreme Court,” Bostwick said. “I didn’t see anything to back that up.”
A long line of cases establishes that once a price is attached to an item, it looks like an offer for sale, Osenga said. Even in Helsinn, the prices weren’t attached to the exact doses of a drug product, and both the Supreme Court and Federal Circuit still found it was an offer for sale, she said.
Other decisions also blunt another argument from Junker that the sale of an invention by “thieves”—or third parties who don’t have authorization to make the sale—shouldn’t trigger the on-sale bar.
A Third Circuit ruling from the 1940s and a 1997 Federal Circuit decision say it doesn’t matter if a third party sold the invention. The purpose of the on-sale bar is to prevent the issuing of patents on ideas that are already in the public domain. The previous rulings put the onus on the inventor to file the patent application ahead of time.
“Once it’s in the public domain, the public has a right to know it’s in the public domain,” Osenga said. “Thief no thief, the on-sale bar isn’t only addressed when the inventor puts it on sale.”
The letter, though, wasn’t public and should’ve been protected by a non-disclosure agreement, Petruzzi said. It doesn’t philosophically fit with what the on-sale bar is meant to protect because it didn’t also disclose the details of Junker’s invention, Petruzzi said. This issue is just another expansion of the on-sale doctrine from the Federal Circuit, he said.
“The Supreme Court takes up very few patent cases,” Petruzzi said, “but this leaves a gaping hole on two issues that might be of interest to the Supreme Court.”
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