Fildes & Outland, P.C.

On January 22, 2019, the U.S. Supreme Court issued a decision in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. (U.S. Supreme Court docket no. 17-1229), a patent case involving the meaning of “on sale” in Section 102(a)(1) of the Patent Law as enacted in the America Invents Act (AIA) of 2011.  The Court held that Congress did not intend to change the meaning of “on sale” as it had been interpreted in previous patent statutes, and therefore the pre-AIA jurisprudence regarding “on sale” also applies to present Section 102(a)(1).  Hence, a commercial sale to a third party with a requirement that the invention be kept confidential may still place the invention “on sale” and act as a bar to patentability.

Appellant Helsinn produces a drug for treating chemotherapy-induced nausea and vomiting.  In the early 2000’s, Helsinn and MGI Pharma entered into both a license agreement and a purchase and supply agreement under which Helsinn would supply the drug to MGI Pharma with MGI making upfront payments to Helsinn, and MGI would also distribute, promote, market, and sell the drug to consumers.  Both agreements required MGI to keep proprietary information confidential, and the joint press release and SEC disclosure of the agreements did not include specific dosage formulations.  Almost two years after entering into the agreements, Helsinn filed its first application covering dosages of the drug, which eventually resulted in U.S. Patent No. 8,598,219 (“the ‘219 patent”).  Respondent Teva manufactures generic drugs, and in 2011 sought FDA approval to market a generic version of the dosage of anti-nausea drug covered by the ‘219 patent.  Helsinn then sued Teva for infringement of the ‘219 patent, and Teva countered that the ‘219 patent was invalid because the invention had been “on sale” more than one year before the priority date of the ‘219 patent.

Pre-AIA Section 102(b) recited that a person shall be entitled to a patent unless “the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States.”  (Pre-AIA 35 U.S.C. 102(b); emphasis added).  Current Section 102(a)(1) as passed by Congress in the AIA recites that “[a] person shall be entitled to a patent unless . . . the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.”  (35 U.S.C. 102(a)(1); emphasis added).  Appellant Helsinn argued that the inclusion of the language “or otherwise available to the public” in the AIA version of Section 102 modified “on sale” and added a requirement that the invention be made public for the on-sale bar to apply.  However, the Supreme Court has now determined that Congress’s use of the same “on sale” language as in prior patent statutes indicated that Congress intended to adopt the previous judicial construction of this term.  The Supreme Court also has found that the phrase “or otherwise available to the public” was merely a catchall intended to capture material that does not clearly fit within one of the specified categories, rather than intended to upset the longstanding construction of the term “on sale.”

Thus, all previous case law interpreting the on-sale bar continues to apply to AIA Section 102(a)(1), including the Supreme Court’s 1998 decision in Pfaff v. Wells Electronics, Inc., 525 U. S. 55 (1998), which held that an invention was “on sale” when it was “the subject of a commercial offer for sale” and “ready for patenting” (as evidenced by a reduction to practice or an enabling description).  The Supreme Court also noted that previous Federal Circuit decisions finding “secret sales” to be a bar to patentability followed Supreme Court precedent and remain good law.

In this case, Helsinn did not dispute that the invention had been offered for sale, but contended that the details of the invention (the enabling disclosure) had been kept private and therefore was not available to the public.  However, Helsinn could have filed an application at the time of entering into the agreements with MGI (Helsinn’s invention was ready for patenting).  Therefore, the Supreme Court affirmed that the Federal Circuit properly determined the ‘219 patent to be invalid because Helsinn’s invention was “on sale” prior to the effective filing date.

The Supreme Court’s decision does not alter the scope of the on-sale bar, but instead affirms that the status quo is maintained for the judicial construction of the words “on sale” as they appear in new Section 102(a).  Sales in which the details of an invention are kept secret can still trigger a bar to patentability.

A copy of the Helsinn decision may be accessed at https://www.supremecourt.gov/opinions/18pdf/17-1229_2co3.pdf.

 

U.S. Supreme Court Issues Decision in the Helsinn On-Sale Bar Case

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