Due Diligence Checklist–Statutory Bars (Part 5 of 5)

Part 5 of 5:

Before investing to purchase a patent asset, verify that no obvious statutory bars exist with respect to the patent asset.

If a statutory bar exists, then the patent will be invalidated–no questions asked.

A statutory bar applies when any of the following scenarios occur, more than one year prior to the patent asset’s filing date: (1) the patent asset is patented or described in a printed publication (anywhere in the world); (2) the invention is in public use in the U.S.; or (3) the invention is on sale in the U.S.

Less obvious statutory bars occur with respect to (1) above–this usually surfaces in litigation after the defendants conduct a very thorough prior art search.

More obvious statutory bars occur with respect to (2) and (3).

Regarding (3), if the seller or any prior owner sold a product embodying the invention of the patent asset, verify the first sale was not more than a year prior to the filing date of the patent asset.

Regarding (2), if the seller or prior owner disclosed an invention prior to filing a patent on it, verify the disclosure was confidential and occurred under the protection of a non-disclosure agreement, or that the disclosure was less than one year prior to filing the patent application.

If either (2) or (3) above does not check out, do not purchase the asset.


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