In Hamilton Beach Brands, Inc. v. Sunbeam Products, Inc., Fed. Cir. Case No. 2012-1581, (August 14, 2013), the Federal Circuit affirmed a lower court ruling that Hamilton Beach’s patent was invalid because a suppler made a binding offer for sale more than one year prior to the filing date of the patent application.
The patent at issue covered Hamilton Beach’s line of pressure cookers marketed as the “Stay or Go’ slow cooker.” The product had proven quite successful for Hamilton Beach having boosted its market share to over 30%, displacing the previous market leader Sunbeam. Sunbeam responded by introducing to the market its “Cook and Go” slow cooker, which embodied features similar to that of Hamilton Beach’s product. Hamilton Beach filed suit for patent infringement.
In an effort to invalidate Hamilton Beach’s patent, Sunbeam conducted extensive discovery into Hamilton Beach’s relationship with its supplier. Sunbeam learned that more than one year prior to the filing date of the patent, Hamilton Beach had issued a purchase order to its foreign supplier. More than one year prior to the filing date of the patent application, the supplier confirmed the order and stated that manufacturing would begin once Hamilton Beach provided its “release.” Hamilton beach provided its release within one year of the filing date of its patent application, and no products were manufactured or sold more than one year before the filing date.
However, In patent law, an offer for sale is deemed to occur where the other party only needs to accept an order to create a binding contract for sale. The lower court deemed Hamilton Beach’s supplier’s confirmation of Hamilton Beach’s purchase order to have been a binding offer that could have been accepted by Hamilton Beach at any time, and on this ground invalidated Hamilton Beach’s patent. The Federal Circuit affirmed.
This case illustrates that retailer and its supplier relationships can, if not managed carefully, create situations which give rise to a patent invalidating on-sale bar. Patentees should take care to ensure that patent applications are filed within one year of any production order for a product from a supplier or take other remedial action by way of Confidential Supply Agreements.