Can On-Sale Bar Apply to “Secret Sales”?

October, 24th, 2018

Categories: Articles, Blog Tags: patent, precedential, USPTO, whipgroup

By William L. Birks III

Palensetron U.S. 8,598,2019 (Col. 3, Lines 53-65)

 

35 U.S.C. 102 states “A person shall be entitled to a patent unless— (1) 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.” Before the America Invents Act, it was well settled law that even secret sale offers of claimed inventions made by their inventors could bar an applicant from obtaining a patent for an invention. Later this year, the United States Supreme Court will hear arguments from Helsinn Healthcare S.A. and Teva Pharmaceuticals USA, Inc. (Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc. Docket No. 17-1229) regarding whether secret offers for sale, where the details of claimed inventions are kept secret from the public, can still bar patentability under post-AIA law.

In April of 2001, two years before applying for a patent, Helsinn and MGI Pharma, Inc. entered into agreements for supply and distribution of anti-nausea drug products containing palonosetron. The agreements were subsequently announced to the public in an SEC filing. All information about the Agreements was included in the filing except the price terms and the dosage amounts. Helsinn then filed a patent application for a 0.25 mg palonosetron product, claiming priority to a January 30, 2003 provisional application. The application issued.

In 2011 Teva sought FDA approval to offer a generic version of the 0.25 mg palonosetron product. Helsinn sued Teva alleging infringement in Federal District Court and Helsinn won, the Court finding that Teva’s 0.25 mg dose product infringed Helsinn’s patent. More importantly, the District Court held that the AIA changed the meaning of the on-sale bar and now “requires a public sale or offer for sale of the claimed invention [by the inventor].” (Emphasis added). The District Court concluded that for a sale to be public under the AIA, it must publicly disclose the details of the invention, which the Agreements did not do by omitting the 0.25 mg dosage amount. Teva appealed to the Federal Circuit.

Before the Federal Circuit, Helsinn asserted that the AIA changed the law by adding the “otherwise available to the public” phrase and as a result, the on-sale bar does not encompass secret sales and requires that a sale describe the claimed invention to the public in order to trigger the application of the on-sale bar. Helsinn’s argument, which the Federal Cricuit dismissed, relied heavily on floor statements made by individual members of Congress.

The Federal Circuit went on to find that even though not all of the details of the invention were disclosed, for example, the dosage level, the invention was made available to the public upon announcement of the sale in SEC filings. It held that an invention can be made available to the public when there is a commercial offer or contract to sell a product embodying the invention and that offer for sale is made public. The details of the invention may not need to be disclosed in the terms of the sale for it to trigger the on-sale bar. Because the floor comments by individuals of Congress did not explicitly cite any on-sale bar cases it sought to overturn, the Federal Circuit overruled the District Court and applied pre-AIA Federal Circuit precedent to post-AIA sales offers.

In summary, under current Federal Circuit doctrine, any sale that is known to the public, including those where the public is not given details of the invention, can trigger the on-sale bar under both pre-AIA and post-AIA versions of 35 U.S.C. 102. If you are in a position to sell an invention and information about the sale will be made public, make sure that a patent application is filed within a year of the effective date of the sale. The public simply knowing about a sale, regardless of whether it knows that a claimed invention is offered, may be all that is required to trigger the on-sale bar.

Arguments for Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc. (Docket No. 17-1229) are scheduled for December 4, 2018. Briefs on the merits can be found here.

 

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