The US Court of Appeals for the Federal Circuit interpreted the scope of the on-sale bar provision, 35 USC § 102(a)(1), under the America Invents Act (AIA) and held that claims are invalid where there is public disclosure of a sale of an invention, even when the details of the invention are not public. Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., Case Nos. 16-1284; -1787 (Fed. Cir., May 1, 2017) (Dyk, J).  

The Federal Circuit has long held that the on-sale bar of “old” 35 USC § 102(b) is triggered when an invention is made available to the public through a commercial offer or contract to sell a product embodying that invention and the sale is made public. Congress amended the text of § 102 to add the phrase “or otherwise available to the public” when identifying bars to patentability. Under “new” § 102(a)(1), patents issued on applications filed after March 2013 are barred from patenting if the invention is “described in a printed publication, or in public use, on sale, or otherwise available to the public” (emphasis added). 

In a Hatch-Waxman suit brought by Helsinn Healthcare, the district court interpreted the new text as requiring a public sale or offer for sale of the invention only when the sale publicly discloses the details of the invention.  

Helsinn asserted four patents for a pharmaceutical treating chemotherapy-induced nausea. Three of the patents issued on applications filed before enactment of the AIA, and the fourth patent issued on an application filed after the AIA’s effective date. All four asserted patents claim priority to a provisional patent application filed on January 30, 2003, making the critical date for the on-sale bar January 30, 2002. The district court was asked to determine whether a license and purchase agreement for the pharmaceutical (entered into while the pharmaceutical was in clinical trials) barred patentability. The license and purchase agreement was publicly announced and disclosed in US Securities and Exchange Commission filings prior to the critical date. For the three patents governed by pre-AIA law, the district court found that the sale was not invalidating because the invention was not “ready for patenting” before the critical date. For the fourth patent, governed by new § 102(a)(1), the district court found that the AIA changed the meaning of what constituted a public sale, and concluded that the on-sale bar is only triggered when the sale publicly discloses the details of the invention. Teva appealed.

The Federal Circuit reversed the district court’s finding that under either the old or new version of the on-sale bar the invention was not ready for patenting before the critical date. Precedent requires that for the on-sale bar to apply, (1) there must be a sale or offer for sale before the critical date, and (2) the invention must be ready for patenting. For the three pre-AIA patents, the Federal Circuit concluded that although the district court was correct that there was a qualifying offer for sale, the district court applied the wrong standard in assessing whether the invention was ready for patenting. Under Federal Circuit precedent, an invention is ready for patenting when there is evidence that it works for its intended purpose. This is a lesser showing than what the US Food and Drug Administration (FDA) requires to approve new drugs. In this case, the district court had found the claimed invention not ready for patenting because at the time of the critical date the drug was still in clinical trials. The Federal Circuit explained that reliance on FDA standards for approval was too demanding. The correct inquiry is whether, before the critical date, the claimed invention was working for its intended purpose of reducing nausea during chemotherapy. Because there was overwhelming evidence that the pharmaceutical was reduced to practice before the critical date, the district court erred in finding the invention not ready for patenting. The three pre-AIA patents were therefore barred under old § 102(b).

In addressing the lone post-AIA patent, the Federal Circuit found that Congress did not change the meaning of the on-sale bar. Contrary to Helsinn’s argument that legislative floor statements limited the scope of the on-sale bar, the Federal Circuit explained that such statements only addressed public use, not an offer to sell. Moreover, the floor statements did not suggest that the sale or offer documents themselves must publicly disclose all the details of the claimed invention. As the Court noted, under AIA, “if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of the sale.” Here, the on-sale bar was triggered at the time the license and purchase agreement was made public, rendering the fourth asserted patent subject to the new § 102(a)(i) bar.  

Practice Note: The Federal Circuit’s holding regarding the AIA amendments addresses public sales. This decision does not address whether a commercial sale that is confidential or not publicly disclosed would also trigger application of the on-sale bar for post-AIA patents.