NCS Multistage Inc. v. Nine Energy Service, Inc.: Private Sales Are Not Necessarily Public Disclosures Under the AIA
In NCS Multistage Inc. v. Nine Energy Service, Inc., the Federal Circuit held that a patentee’s prior commercial sale of a device embodying the invention does not qualify as a “public disclosure” under the AIA safe harbor of 35 U.S.C. § 102(b)(1)(B) merely because a sale occurred.
Relying on its earlier decision in Sanho Corp. v. Kaijet Technology International Ltd., the court explained that the safe harbor applies only when the subject matter of the invention is made available to the public.
The jury found NCS’s patent, which covers a rupture-disc tool used to position casing strings in a wellbore, infringed and not invalid. On appeal, Nine Energy argued that a third party’s earlier sale of a competing device constituted invalidating prior art and that NCS could not invoke the AIA safe harbor because its own earlier AirLock sale had not been publicly disclosed. The Federal Circuit agreed. Relying on Sanho, the court held that the identical “publicly disclosed” language appearing in § 102(b)(2)(B) informs the interpretation of § 102(b)(1)(B) as well. Under Sanho, a disclosure is public only when it is reasonable to conclude that the invention was made available to the public, and a private commercial sale does not necessarily satisfy that standard. Because NCS’s AirLock sale was a private transaction that did not make the relevant aspects of the invention available to the public, it did not qualify as a public disclosure for purposes of § 102(b)(1)(B).
The facts fell well short of public disclosure. NCS sold the AirLock device to a single customer, the product was delivered in a sealed tube that had to be cut open for inspection, and the accompanying technical materials were marked confidential. The court emphasized that the absence of a nondisclosure agreement was not dispositive because there was no evidence that anyone beyond the purchaser ever learned the relevant aspects of the invention. Because NCS’s sale did not publicly disclose the patented subject matter, the competitor’s later sale remained prior art, and the court vacated the judgment of no invalidity and remanded for a new trial.
The decision is significant because it applies the Federal Circuit’s Sanho reasoning to the § 102(b)(1)(B) safe harbor and confirms that the identical “publicly disclosed” language in the AIA’s parallel safe-harbor provisions should be interpreted consistently. In doing so, the court reinforced that the key inquiry under the safe harbor is not whether a commercial transaction occurred, but whether the inventor’s disclosure made the subject matter of the invention available to the public. As a result, inventors who engage in limited sales, pilot projects, field testing, customer evaluations, or other pre-filing commercialization efforts should not assume that such activities will trigger the statute’s safe harbor. Instead, the critical question remains whether the inventor’s actions made the subject matter of the invention available to the public. The decision highlights the importance of coordinating patent-filing and commercialization strategies before products are sold, distributed, tested, or launched.
By: Roberto Capriotti, Ragae Ghabrial, Garrett Tobin, Kara Shearer and Ying Pan