Under U.S. law, a patent may be obtained to protect a “process, machine, manufacture, or composition of matter” (35 U.S.C. § 101) that meets standards of utility, novelty and non-obviousness.

Whether a patented invention covers a particular product – of the patentee, or of an infringer – is a legal conclusion that hinges on whether all the requirements of one or more patent claims are met by that product. (Patent counsel may be called upon to review that question.)

Telling apart a product and an invention impacts both the validity and enforcement of patent rights. One consequence of correctly making this distinction is that a competitor may find a way to compete lawfully if he can design his own product so as not to incorporate the claimed invention.

Another implication of the product/invention distinction was recently addressed by the Federal Circuit Court of Appeals in August Tech Corp. v. Camtek Ltd. The Court considered the case of an inventor who offers a product for sale but, at the time the offer is made, the product, as conceptualized, does not contain the invention because the invention has not yet been conceived.

In order to limit the period of exclusive rights afforded by a patent, the statute provides that when a product contains an invention, the inventor must file for patent protection within one year of making the offer. Otherwise, the opportunity to protect the invention will be lost and the invention will be available for others to use. (New considerations enacted in the America Invents Act will go into force in 18 months, and, while highly significant, are outside the scope of this note.)

One of the questions addressed in August Tech. is:What happens if what is offered for sale is merely the idea for a product, and, at the time of the offer, the product hasn’t assumed its final form? What if, in particular, the offer assumes that some technical challenge can be met, and, indeed, further research leads to an invention?

The Court dedicated almost six pages to the question of whether the offer for sale of a product necessarily starts a clock running, such that a patent application must be filed within one year, highlighting the complexity of this area of the law and the product/invention distinction.

Of necessity, the Court reckoned with the Supreme Court’s decision in Pfaff v. Wells Elecs., Inc. (1998), which held that two conditions must be met for an offer for sale to bar patenting based on an application filed more than a year later: The productmust be the subject of a commercial offer for sale, and the invention must be ready for patenting, which is to say that the invention must have been conceived. The Supreme Court had stated that the word “invention” refers to “the inventor’s conception.”

The Federal Circuit Court, interestingly, made clear that if there has been an offer for sale merely of an idea for a product and if, at the time the product was offered, the invention has not yet been conceived, then the clock starts to run only as of the conception date.

Thus, it becomes part of the accused infringer’s burden, in alleging that a patent is barred by prior sale, to prove, by clear and convincing evidence, that the inventor had conceived of the invention more than one year before filing a patent application.

The case has been sent back down to the district court in Minnesota and its resolution will hinge on other grounds. Thus, the appellate court’s grappling with the question of what sets the clock ticking for purposes of the one-year on-sale bar was somewhat theoretical.

Under the “first-to-invent” premise of the U.S. patent law’s ancien régime, an inventor has typically been motivated to show an early conception of an idea. This ruling, however, points to the importance, if an offer for sale has been made, of showing a conception date that is not so early that it predates the filing of the application by more than a year. This is because, according to the ruling, the offer of the product becomes an offer of the invention as of the date the invention is conceived.

Conversely, this case highlights the importance of timely filing a patent application. Under the “first-inventor-to-file” system, just introduced to the U.S. by the America Invents Act, the importance of early filing is only magnified.