Journal of Intellectual Property Law


In BASF Corp. v. SNF Holding Co., the Federal Circuit applied what is commonly referred to as a “licensing exception” to statutory prior art status. While the court describes the exception as a “well-established principle,” the licensing exception is less than twenty years old, formulated over the opposition of the USPTO, and has been disputed on several instances by Federal Circuit judges. Moreover, the existence of a licensing exception is a clear contradiction of the Supreme Court’s ruling in Pfaff v. Wells Electronics that a sale of an invention occurs when an intangible conception of that invention is first marketed commercially. This Note provides a case study of licensing practices in the chemical industry and argues that offering to sell licenses is a typical way in which intangibles such as process inventions are commercially marketed and put “on sale.” This Note further provides a history of legal thought on the licensing exception and submits the argument that the Federal Circuit’s rulings in In re Kollar and BASF arbitrarily discriminate between classes of invention and may contribute to greater levels of premature commercial exploitation. Finally, this Note concludes with the benefits of eliminating the licensing exception as it currently exists.