In the case of Pfaff v. Wells Electronics, the United States Supreme Court established that the bar to patentability that exists when the invention has been "on sale" in the United States more than one year before the filing date of the patent application in question means that, for the bar to apply, the product that is the subject of the application must have been the subject of a commercial offer for sale and at the time of that offer the invention must have been ready for patenting (see our March 1999 Newsletter). In Group One Limited v. Hallmark Cards Inc., the Court of Appeals for the Federal Circuit made it clear that one should look to the general principles of the Uniform Commercial Code rather than to any particular state contract law to determine whether such an offer had been made.

The application of these principles to situations where the invention involved a process rather than a product was, however, not entirely clear. The issue has now been addressed in In re Kollar where the Court of Appeals for the Federal Circuit reversed a decision rejecting Kollar's application by the Patent and Trademark Office's Board of Patent Appeals and Interferences.

Kollar's invention related to a process for the production of a dialkyl peroxide. A company owned by Kollar had an agreement with Cellanese which included provisions relating to a research and development phase and a commercial phase. In the latter, Cellanese would receive an exclusive right to sell products produced by the process in return for payment of a royalty. The Board held that this meant that Kollar had made an offer to sell the products. The Board also held that the transfer of a written description of the process in return for a consideration also constituted a sale. Since the agreement was more than one year before the filing of the patent application, it followed that the grant of a patent was barred.

In reversing the Board's decision, the Federal Circuit focused on two issues: the nature of the agreement and the fact that what was claimed was a process. On the former issue, the court pointed to some of its earlier decisions and held that "the offer of a license under a patent and a description of the invention, without more, does not fall within the on-sale bar." On the second issue, the court stated that "the issue concerning the on-sale bar is not whether the process is physically represented by "... a written description but whether the process has been commercialized. The transmission of a written description does not meet that test."

The case was referred back to the Patent and Trademark Office for a determination of whether any commercialization of the process had occurred more than one year before the filing date of the application.