Pre-Filing Private Sales Cannot Antedate Prior-Art References Under the § 102(b)(2)(B) “Public Disclosure” Exception

In Sanho Corp. v. Kaijet Technology International Ltd., Inc., No. 23-1336 (Fed. Cir. July 31, 2024), the Federal Circuit affirmed the Patent Trial and Appeal Board’s decision that the inventor’s pre-filing private sale of a product cannot be used to antedate a prior-art reference under the “public disclosure” exception in 35 U.S.C. § 102(b)(2)(B) (AIA) (“A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention . . . [if] the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor.”).

In an inter partes review, the Board found certain claims of Sanho’s patent unpatentable for obviousness based on several prior-art combinations, each of which included the Kuo publication. Sanho argued that Kuo is not prior art because the inventor of Sanho’s patent privately sold a product called the HyperDrive that purportedly embodied the subject matter disclosed in Kuo before Kuo’s effective filing date. Based on this sale, Sanho argued that Kuo was disqualified as prior art under the exception in § 102(b)(2)(B). As evidence, Sanho showed that the inventor of its patent privately messaged the buyer about the HyperDrive product and sent a finished version of it via private courier. Sanho also showed that the buyer ordered 15,000 units of the HyperDrive product and rendered payment before Kuo’s effective filing date. Based on these facts, Sanho argued that for purposes of § 102(b)(2)(B), the inventor had “publicly disclosed” the subject matter that was later disclosed in Kuo. However, the Board concluded that this sale did not qualify as a “public disclosure” under the exception. Sanho appealed.

The Federal Circuit affirmed the Board’s decision that no public disclosure had occurred and that the § 102(b)(2)(B) exception did not apply to Kuo. The Court acknowledged that a commercial sale may constitute a disclosure under § 102(a) (AIA). However, both the plain language and the legislative history of the statute indicate that public disclosures, as specified in the § 102(b)(2)(B) exception, are a narrower subset of “disclosures” that require the invention to be made available to the public. The Court found that here, there was only a private sale between two parties arranged by private message. This transaction did not sufficiently disclose the relevant subject matter of Kuo to the public for the prior-art exception to apply.