Federal Circuit Addresses Two Key Requirements of On-Sale Bar of Pre-AIA Section 102(b)

January 31, 2025

The Federal Circuit’s recent precedential decision in Crown Packaging Technology Inc. v. Belvac Production Machinery, Inc.¹ is noteworthy because it discusses two key requirements of the on-sale bar prong of pre-AIA section 102(b). First, the court explained why a quotation letter that included specific and complete price and delivery terms was a commercial offer for sale under section 102(b) even though it also included an acceptance term. Second, the court explained that even though the letter was sent from outside the U.S., it was an offer for sale made in the U.S. because it was addressed to a business in Colorado.

The patents asserted by Crown against Belvac relate to “necking” machines used to reduce the diameter of the top of a metal beverage can during manufacture.² Before the critical date, Crown sent a letter to Complete Packaging Machinery regarding Crown’s CMB3400 necking machine.³ The letter was titled “Quotation Number Q22764” and included a description of the machine and its purchase price.⁴ The letter also specified that the machine would be ready to be shipped within 30 weeks of receipt of an order and would be delivered at a location designated by Complete Packaging or, alternatively, at Crown’s premises.⁵ The letter recited payment terms of “50% with order, 50% after buy-off in [Crown’s] plant but payment must be received before despatch.”⁶ The letter also stated that the quotation was valid for 60 days and “subject to [Crown’s] written acceptance of your order.”⁷ Crown sent the letter from the UK to Complete Packaging at an address in Colorado.⁸

The parties cross-moved for summary judgment on the issue of whether Crown’s letter was an invalidating offer for sale under section 102(b).⁹ The district court denied Belvac’s motion and granted Crown’s motion on the ground that the letter was merely “an invitation to make an offer, not an offer in itself.”¹⁰ On appeal, the Federal Circuit reversed, holding that the letter was an offer for sale under section 102(b).¹¹

The Federal Circuit explained that an offer for sale must meet several requirements: (1) the subject of the offer for sale must embody the claims of the asserted patent; (2) the offer for sale must have been “in this country”; (3) the offer for sale must have occurred before the critical date; and (4) before the critical date the invention had to be (a) the subject of a commercial offer for sale and (b) “ready for patenting.”¹² Crown and Belvac disputed only whether Crown’s letter was a commercial offer for sale and, if so, whether it was made in the U.S.¹³

The Federal Circuit held that Crown’s letter was a commercial offer for sale.¹⁴ The court explained that for there to be a commercial offer for sale, the offer must be sufficiently definite that another party could make a binding contract by simple acceptance.¹⁵ The court acknowledged that labelling an offer as a “quote” or a “quotation” is an “important fact” but clarified that this label is not controlling.¹⁶ Instead, the court concluded that Crown’s letter had the “hallmarks of an offer for sale” with specific and complete terms.¹⁷ In particular, the letter described the machine and stated its purchase price along with payment and delivery terms.¹⁸ The letter also characterized itself as an “offer” by providing that it was in accordance with Crown’s standard conditions of sale and additional terms regarding “payment, price variation, ownership, warranty, and liability.”¹⁹ Moreover, the letter was not broadly disseminated but instead sent specifically to Complete Packaging and was signed by a Crown representative.²⁰

The Federal Circuit rejected Crown’s argument that the letter was not an offer for sale that could create a binding contract upon acceptance because of the reservation that the quotation was “subject to [Crown’s] written acceptance of your order.”²¹ The court explained that a communication “taken as a whole may still be a commercial offer for sale even with an express written acceptance term.”²² The court concluded that Crown’s letter was sufficient to create a binding contract through acceptance because the letter obligated Complete Packaging to commence performance by paying 50% of the purchase price and providing certain requested information to Crown, and also stated that the machine would be ready within 30 weeks of receipt of the order.²³ The court also cited evidence that Crown’s practice was to send an acknowledgement of an order as opposed to an acceptance, which implied that the order was effective upon receipt.²⁴ Finally, a former Crown executive had testified that if a customer who received a quotation responded with an order, a contract would be in place for Crown to deliver a machine to that customer.²⁵

The Federal Circuit also held that Crown’s letter was an offer for sale made “in this country.”²⁶ The court rejected Crown’s argument that section 102(b) did not apply to an offer made from outside the U.S. unless the invention was also sold for use in the U.S.²⁷ The court explained that an offer for sale sent from outside the U.S. but directed to a U.S. entity at its place of business in the U.S. is sufficient under section 102(b).²⁸

Although this decision addressed pre-AIA section 102(b) instead of AIA section 102(a)(1), it is still a useful reminder of the importance of filing a patent application no later than one year after any activity that could be characterized as a commercial offer for sale in the U.S. Doing so should avoid the uncertainty and expense of later having to litigate whether or not the content and circumstances of the activity were sufficient to create an invalidating bar.