patent

By Lauren J. Rucinski

Generally, an invention is not patent eligible if it has become publicly known. If the patent is subject to a sale or offer for sale prior to the critical date, it has become “publicly known” and thus no longer eligible for patenting. This obstacle to a patented invention is known as the “on-sale bar” and is found in 35 U.S.C. 102. The statutory language to the “on-sale bar” is similar for patents governed by the pre-American Invents Act (“AIA”) version of 35 U.S.C. 102 and those governed by the AIA version. However, the AIA version include the phrase “or otherwise available to the public.” This lead to arguments that “secret sales,” or those in which the public had no knowledge of the invention, were not triggers for the on-sale bar. In an opinion issued on May 1, the Federal Court dismissed this type of argument, holding instead that the definition of “on sale” in the AIA version was not altered by the additional phrase. Helsinn Healthcare v. Teva Pharmaceuticals USA, No. 2016-1284 (Fed. Cir. May 1, 2017).

Helsinn Healthcare (“Helsinn”) was the owner of four drug patents which treated chemotherapy-induced nausea. Three of the four fall under pre-AIA rules and a fourth under AIA rules. Helsinn brought suit against Teva Pharmaceuticals (“Teva”) alleging that the filing of Teva’s Abbreviated New Drug Application (“ANDA”) constituted infringement of various claims of its four patents. In its defense, Teva argued that the drugs disclosed in the four patents were in fact on sale more than a year before the filing date of the patents. Id.at 4. Teva cited a deal between MGI Pharma, Inc. (“MGI”) and Helsinn which included a License Agreement and Supply and Purchase Agreement (“the agreements”). These agreements were effective almost two years before Helsinn filed its application for any of its four patents. The agreements were announced in a joint press release and in SEC filings. However, Helsinn argued that the agreements did not meet the requirements of the on-sale bar because despite the sale’s existence being available to the public, the agreements did not disclose the actual invention to the public, i.e. the dosage levels.

Because three of Helsinn’s patents fall under pre-AIA rules, the court first analyzed the pre-AIA on-sale bar’s definition of “on sale.” The court applied general contract law to find that the agreements between Helsinn and MGI were in fact a commercial sale and therefore enough to trigger the on-sale bar. Id. at 12-17.

Next, the court analyzed the AIA definition of “on sale” applicable to Helsinn’s fourth patent. Helsinn argued that the AIA changed the law by excluding “secret sales” from the on-sale bar provision through the addition of the “otherwise available to the public” phrase. Id. at 19. Because the details of the invention were not disclosed in the agreements made available to the public, the AIA on-sale bar should not apply. The court declined to make such a sweeping change to the on-sale bar holding instead that:

although confidentiality weighs against the application of the on-sale bar . . . that fact alone is not determinate. . . . [A]n invention is made available to the public when there is a commercial offer or contract to sell a product embodying the invention and that sale is made public. Our cases explicitly rejected a requirement that the details of the invention be disclosed in the terms of the sale.

Id. at 18, 23. The court went on to find that the invention in the fourth patent, like the invention in first three patents, was on sale more than a year before the filing date under the AIA version of section 102. Therefore, both the pre-AIA and AIA on-sale bars applied.

Finally, the court overruled the district court’s finding that the invention was not “reduced to practice” and therefore not ready for patenting. In order to trigger the on-sale bar for both pre-AIA and AIA governed inventions, the invention must also be “ready for patenting.” An invention is considered “ready for patenting” if it, for example, is reduced to practice. In this case, the court held that overwhelming evidence, including the results of studies performed by Helsinn and declarations of the inventors, established that the invention was reduced to practice and ready for patenting when the offer to sale was made by Hellsinn. Id.at 35.

The court refused to decide whether a “truly secret” sale, one without public knowledge of its existence, still triggered the on-sale bar and instead tied its holding to the facts at hand. Here, the existence of the sale was made known through the public press release and in SEC filings. However, the court’s unwillingness to diminish the scope of the on-sale bar is at least an indication that it may consider any sale, even secret sales, a trigger for the on-sale bar.