In Sanho Corp. v. Kaijet Technology International Limited, Inc, the Federal Circuit affirmed the PTAB’s decision finding obvious all challenged claims of the ‘429 patent, which relates to a device that provides ports for connecting peripherals to a computer. The court’s affirmation clarifies that a private sale does not necessarily publicly disclose subject matter under § 102(b)(2)(B).

The ‘429 patent was invalidated at IPR utilizing a patent application publication (Kuo) as prior art. The sole issue on appeal was whether Kuo was entitled to the prior art exception under 35 U.S.C. § 102(b)(2)(B), which states a disclosure shall not be considered prior art if “the subject matter disclosed [in the alleged prior art] had . . . been publicly disclosed by the inventor” before its effective filing date. Sanho argued the inventor of the ‘429 patent had “publicly disclosed” the subject matter of Kuo through the private sale of a product to a laptop accessory brand. Sanho contended that the phrase “publicly disclosed” in § 102(b)(2)(B) should be construed to include all the “disclosure[s]” described in § 102(a)(1), including situations when the invention was “on sale.”

The Federal Circuit affirmed the Board’s decision that the private sale did not constitute a “public disclosure” under the statute, and therefore Kuo was correctly treated as prior art. The court first relied on statutory text, explaining that it requires a “public disclosure,” not a “private sale,” and that the sale in question did not disclose the inventive subject matter to the public. The court also stated the lack of a nondisclosure agreement did not change the analysis because “there was no testimony concerning whether the order was fulfilled” or if the devices were ever manufactured, and “there is no indication the sale disclosed the inventive subject matter to the public sufficiently for the exception to prior art in section 102(b)(2)(B) to apply.”