Secret Sales-Loss of Patent Rights

Introduction: I always encourage the prompt filing of provisional applications for patent to protect the inventor’s patent rights.  Secret sales or sales of product or services, even without disclosing the “secret sauce” will invalidate later attempts to patent the invention.  Secret sales are public use for patenting purposes.  You cannot obtain a patent upon an invention that was “in public use, on sale, or otherwise available to the public” more than one year prior to the effective filing date of a patent application.

Discussion:  Small businesses or startup typically have limited resources to protect their intellectual property.  Third party investment often requires that the startup have achieved some generation of revenue, e.g., has made sales of products or services utilizing their invention.  There is a tremendous incentive to hurry your invention to the market to show that there is a viable market demand for your product or service.  As stated, this is typically required to obtain angel or venture capital funding.

Unfortunately, rushing this step can forever jeopardize or destroy the competitive advantage of your business.  Stated differently, a sale made utilizing your invention, even if subject of an iron clad confidentiality agreement, starts a one year clock to file an application for patent.  See 35 U.S.C. Section 102(a)(1).  See also the Supreme Court’s decision of Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. 580 U.S.    (2019).

The remedy to avoid this drastic loss of competitive advantage is to timely file a provisional application for patent.  I have written about this many times.  See, for example, my posts Provisional Patent Applications and DIY Provisional Applications.  Note that the USPTO filing fee for a provisional application can be as little as $70.00.  I have tried to provide practical guidance to walk you through the application process.

Conclusion:  A sale of your product or software or the marketing of your innovative service is an event that can jeopardize your ability to seek patent protection.  This can cause loss of your competitive advantage.  It may cause your startup to be less attractive to potential investors.  You have to be careful.

Prompt filing of a provisional application can protect your intellectual property and competitive advantage, thereby preserving your portfolio of business assets.  I remain available to discuss this topic.


© David McEwing 2021