## Facts

- Group One, Ltd. (through inventor Frederic Goldstein) developed a machine and method for producing curled and shredded decorative ribbon.
- The dispute involved U.S. Patent No. 5,518,492 (apparatus) and U.S. Patent No. 5,711,752 (method).
- In the early 1990s, Goldstein contacted Hallmark about the technology and negotiated a confidential disclosure agreement; Goldstein signed it, but Hallmark did not.
- Goldstein disclosed details of the device to Hallmark during a conference call; Hallmark later stated it had developed its own similar machine.
- Goldstein filed a U.K. patent application in 1991 and a PCT application in 1992; the PCT application published in 1993.
- Hallmark began producing its own ribbon-curling machine in 1995.
- Group One sued Hallmark in the Western District of Missouri for patent infringement and trade-secret misappropriation; Hallmark counterclaimed for declaratory judgment of invalidity/unenforceability.
- On summary judgment, the district court held the patents invalid under the § 102(b) on-sale bar based on pre-filing communications with Hallmark, and limited trade-secret damages to any pre-publication “head-start” period; Group One stipulated it could not prove head-start damages, resulting in dismissal of the trade-secret claim.

## Issues

1. Whether Group One’s pre-filing communications with Hallmark constituted an “offer for sale” triggering the 35 U.S.C. § 102(b) on-sale bar.
2. Whether “offer” under § 102(b) is governed by traditional contract-law principles (including UCC concepts) rather than a patent-specific standard.
3. Whether, under Missouri law, publication of the PCT application terminated trade-secret status and limited any remedy to pre-publication head-start damages.

## Decision

- Reversed the summary judgment invalidating the patents under the on-sale bar and vacated the related declaratory-judgment relief premised on that bar.
- Held that § 102(b) requires a “commercial offer for sale” as understood in traditional contract law—an offer that could be accepted to form a binding contract.
- Concluded Group One’s communications were preliminary discussions that lacked sufficiently definite commercial terms to qualify as a commercial offer for sale.
- Affirmed dismissal of the trade-secret misappropriation claim because publication ended secrecy and Group One could not prove pre-publication head-start damages.
- Remanded for further proceedings on the patent claims.

## Legal Principles

- For § 102(b) on-sale bar purposes, the “offer for sale” element is satisfied only by a commercial offer for sale under objective contract-law standards, not by invitations to negotiate or exploratory discussions.
- Courts generally look to UCC-based and Restatement contract principles to assess whether communications rise to the level of an offer capable of acceptance into a binding contract.
- Under the Pfaff framework, the on-sale bar requires (1) a commercial offer for sale and (2) that the invention be ready for patenting; this decision addresses the first prong.
- Under Missouri trade-secret law, information ceases to be a trade secret once it becomes publicly available through publication of a patent application.
- After publication, misappropriation remedies are limited, at most, to provable pre-publication head-start damages.

## Conclusion

The Federal Circuit limited § 102(b) to situations involving a contract-law commercial offer for sale and held that Group One’s preliminary contacts with Hallmark did not meet that standard, while also affirming that trade-secret protection ended upon PCT publication and, absent provable head-start damages, the trade-secret claim failed.


Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041 (Fed. Cir. 2001)