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Supreme Court Holds that AIA’s “On Sale” Bar Applies to Confidential Commercial Sales

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On January 22, 2019, the Supreme Court held that a confidential commercial sale of an invention can qualify as prior art under 35 U.S.C. § 102(a). Helsinn Healthcare S. A. v. Teva Pharm. United States, No. 17-1229, slip. op. at 8-9 (U.S. Jan. 22, 2019). The Court determined that Congress did not alter the meaning of “on sale” when it enacted the AIA, and upheld precedent that an offer for sale could cause an inventor to lose the right to patent, without regard to whether the offer disclosed each detail of the invention.

In Helsinn Healthcare S. A. v. Teva Pharm, Helsinn, a Swiss pharmaceutical company, developed a drug to treat chemotherapy-induced nausea and vomiting. Before filing a patent application covering the formulation, Helsinn entered into two confidential agreements with MGI Pharma, Inc. (MGI), a U.S.-based pharmaceutical company: (1) a license agreement and (2) a supply and purchase agreement. Helsinn later announced the agreements in a press release without disclosing the formulation. On January 30, 2003, nearly two years after Helsinn and MGI entered into the agreements, Helsinn filed a provisional application covering the specific formulation of the drug. In May 2013, Helsinn filed a patent application, claiming priority to the January 30, 2003 provisional application. The patent issued as U.S. Patent No. 8,598,219 (’219 patent), and was governed by the AIA by virtue of its effective date.

In 2011, Helsinn sued Teva Pharmaceutical Industries, Ltd. (Teva) for infringing the ’219 patent. In defense, Teva argued that the ’219 patent was invalid because the formulation at issue was on sale more than one year before Helsinn filed the provisional application.

Helsinn argued that the AIA changed the scope of the on sale bar to exclude confidential commercial sales with the addition of the phrase “or otherwise available to the public” to the on sale bar provision. But the Court decided that “[t]he addition of ‘or otherwise available to the public’ is simply not enough of a change for us to conclude that Congress intended to alter the meaning of the reenacted term ‘on sale.’” The Court referenced its precedent in Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 67 (1998), holding that an offer for sale could cause an inventor to lose the right to patent under pre-AIA § 102, without regard to whether the offer discloses each detail of the invention. The Court also cited Federal Circuit precedent holding that secret sales could invalidate a patent. E.g.Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353, 1357 (Fed. Cir. 2001). The Court wrote that, in light of the earlier judicial construction of the on sale bar, “the reenactment of the phrase ‘on sale’ in the AIA did not alter this meaning.”

What This Means for You

The Court’s decision in Helsinn expressly confirms that the pre-AIA on sale bar is no different than the post-AIA on sale bar. Practitioners should be aware that despite efforts to privatize a commercial sale, an invention is “on sale” within the meaning of 35 U.S.C. § 102(a) when it is the subject of a commercial offer for sale and ready for patenting.

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.