December 06, 2019
Intellectual Property Alert
In the December 2019 edition of Intellectual Property & Technology Law Journal, our IP attorneys authored an article that examines the impact of the U.S. Supreme Court’s decision in Helsinn Healthcare S.A. et al. v. Teva Pharmaceuticals USA, Inc. This decision held that the America Invents Act may have actually broadened the scope of what counts as a sale by clarifying the confusing catchall phrase “otherwise available to the public.” Until Helsinn, it was unclear whether this catchall phrase rendered more inventions ineligible for patent protection. This article highlights what companies need to know in light of this decision.
Reproduced with permission from Wolters Kluwer’s Intellectual Property & Technology Law Journal, December 2019.
Earlier this year, the U.S. Supreme Court held in Helsinn Healthcare S.A. v. Teva Pharmaceuticals U.S. that the America Invents Act (AIA) may have actually broadened the scope of what counts as a sale. As patent practitioners know, 35 U.S.C. § 102 prohibits applicants from obtaining patents for any invention that has been “on sale” for more than a year before the effective patent-filing date. This on-sale restriction existed previously, but the AIA added a confusing catchall phrase barring patents for inventions that were “otherwise available to the public,” and also removed the requirement that the sale be in the United States. Until Helsinn, it was unclear whether this catchall phrase rendered more invention ineligible for patent protection.
Helsinn Healthcare S.A. entered into a confidential agreement with MGI Pharma, Inc., to market and sell a new drug. Details about the drug were not made public, but the existence of the sale was. Nearly two years later, Helsinn filed a provisional patent application for their new drug, which eventually led to U.S. Patent No. 8,598,219. Helsinn filed suit against Teva Pharmaceuticals U.S., asserting infringement of the ‘219 patent. The district court ruled that the AIA had changed the definition of “on sale,” and that sales where details of the invention were not disclosed to the public now did not qualify as “sales” for the purpose of § 102. The U.S. Court of Appeals for the Federal Circuit reversed the district court’s ruling, and the Supreme Court granted certiorari to resolve the question.
In his unanimous opinion, Justice Clarence Thomas noted that the new language of the post-AIA on-sale bar was adopted in light of a well-developed body of law holding that a sale did not need to disclose invention details to bar patenting. Because post-AIA § 102 retained the same “on sale” phrase, the new catch-all phrase did not now require invalidating sales to publicly disclose details of the invention. According to Justice Thomas, attempting to alter the well-settled meaning of “on sale” in this manner would be “fairly oblique,” and thus was “not enough of a change for us to conclude that Congress intended to alter the meaning of the re-enacted term ‘on sale.’” As such, Justice Thomas concluded that “an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can quality as prior art under § 102.”
The broad language in the Supreme Court’s opinion does not clarify whether private sales that do not reveal invention details prohibit patenting. The Federal Circuit’s opinion distinguished Helsinn’s sale from prior cases where the existence of the sale itself was a secret, and specifically concluded that “if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale.” However, the Supreme Court did not distinguish between public sales that keep invention details private and private sales whose existence is never revealed.
Almost a year after the Court’s decision in Helsinn, no lower courts have answered this question about unrevealed private sales. In Barry v. Medtronic, the Federal Circuit held that the on-sale bar was not implicated because the invention was not ready for patenting at the time of the alleged sale, prior to the critical date. And in Quest Integrity USA, LLC v. Cokebusters USA Inc., the Federal Circuit confirmed that the sale of a product “produced by performing a claimed process implicates the on-sale bar.” The U.S. District Court for the Southern District of Texas addressed Helsinn more directly in Schlumberger Tech. Corp. v. BICO Drillings Tools, Inc., but simply noted that even under Helsinn, it is only private sales by the patentee that implicate the on-sale bar, not private sales by third parties.
Helsinn also created some uncertainty about the scope of prior art. Pre-AIA, a purely foreign use or sale did not trigger the on-sale bar. The AIA, however, removed the geographical limitation of all prior art, including the on-sale bar. Thus, it remains to be seen if confidential transactions and activities in foreign countries can now trigger the on-sale bar.
Helsinnalso did not distinguish between secret commercial sales and secret commercial uses. However, the Supreme Court did endorse the dictum from the Federal Circuit’s 1998 Woodland Trust decision (“... an inventor’s own prior commercial use, albeit kept secret, may constitute public use or sale under 102(b), barring him from obtaining a patent.”). In doing so, the Court seems to be saying secret commercial sale and secret commercial use are to be treated similarly. Thus, a trade secret or private commercial use may also now trigger the on-sale bar.
It remains to be seen if a trade secret or private commercial use by one party can trigger the on-sale bar against another party. Helsinn hints that secret commercial sale and secret commercial use are to be treated similarly. In other words, Helsinn is saying that a trade secret or private commercial use, just like the “private sale” in Helsinn, can be prior art under 35 U.S.C. § 102(a). While § 102(b) provides exceptions for certain disclosures made by the inventors, § 102(b) makes no exceptions for disclosures made by a third party. As such, private commercial use by one party may trigger the on-sale bar against another party. While the Court clarified that the term “on sale” means the same as in pre-AIA law, it remains to be seen if pre-AIA case law on exceptions to the on-sale (and “public use”) bars for experimental use still remains authoritative in view of the changes in AIA. Thus, while the meaning of “on sale” may remain the same after Helsinn, the full impact of Helsinn will be significant and will trap the unwary.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
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