Contemporary Business and Online Commerce Law 7th Edition by Henry R Cheeseman

Exercise 3

On-Sale Doctrine Wayne K. Pfaff commenced work on designing a computer chip socket in November. Pfaff prepared detailed engineering drawings that described the design, dimensions, and materials to be used in making the socket. Prior to March 17 of the following year, Pfaff showed a sketch of his design to representatives of Texas Instruments, a large company. On April 8, Texas Instruments and Pfaff signed a written contract confirming a previously placed verbal purchase order for 30,100 of his new sockets, for a total price of $91,000. Pfaff did not make a prototype of the new socket device before offering it for sale to Texas Instruments.

Pfaff filled the order in July. The socket achieved substantial commercial success, as other companies placed orders. On April 19 of the next year, Pfaff filed an application for a patent on his computer chip socket, and a patent was issued. When a competitor made a similar socket, Pfaff sued for patent infringement. The competitor countered that Pfaff did not have a valid patent because the one-year on-sale doctrine of the federal patent statute had been violated. The U.S. District Court held that Pfaff’s patent was valid. The U.S. Court of Appeals held that Pfaff violated the one-year on-sale doctrine and reversed the judgment of the U.S. District Court. Pfaff appealed to the U.S. Supreme Court. Was the one-year on-sale doctrine violated, thus invalidating Pfaff’s patent on the computer chip socket? Pfaff v. Wells Electronics, Inc., 525 U.S. 55,119 S.Ct. 304,142 L.Ed.2d 261, Web 1998 U.S. Lexis 7268 (Supreme Court of the United States)