US patent law prohibits the patenting of an invention that is offered for sale more than one year before the filing of a patent application. Although the 'on-sale' bar restricts the time available for commercial exploitation of an invention in advance of patent filing, it also promotes prompt filing and early disclosure of inventions to the benefit of the public.

The effective filing date of the '320 patent was 14 January 1991. From August 1987, Elan sent letters of enquiry to potential licencees. However, the Appellate court found that a letter to Lederle concerned patent rights, not sales of items embodying the patented invention, and therefore overturned the district court's decision. The letter was offering the granting of a licence under the patent and the opportunity to become a partner in the clinical testing and eventual marketing of such tablets at some indefinite future time. The letter lacked any mention of quantities, time or place of delivery, or detailed product specifications. Moreover, dollar amounts mentioned in the letter were explicitly referred to as a licensing fee and were not price terms for the sale of tablets.

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