Addressing whether the on-sale bar of America Invents Act (AIA) 35 USC § 102(a)(1) applies to confidential sales where specific details are not made public, the Supreme Court of the United States found that the post-AIA provision operates the same as it did pre-AIA—namely, the sale or details of the sale do not need to be publicly available in order to create a bar to patentability. Helsinn Healthcare S.A. v Teva Pharmaceuticals, USA, Inc., Case No. 17-1229 (Sup. Ct. Jan. 22, 2019) (Thomas, Justice).

Helsinn developed Aloxi, a drug that treats chemotherapy-induced vomiting and nausea, and which contains the active ingredient palonosetron. Helsinn entered into a licensing and a supply and purchase agreement with MGI Pharma to distribute, promote, market and sell 0.25 mg and 0.75 mg doses of palonosetron in the United States. The purchase agreement included a confidentiality clause with regard to any proprietary information that might be revealed. The dosage formulations in the agreement were not released to the public, although there was a joint press release about the agreement in general, and the Form 8-K filing at the US Securities and Exchange Commission was accompanied by redacted copies of the agreements. In January 2003, almost two years after entering into the agreement with MGI Pharma, Helsinn filed a provisional patent application for 0.25 mg and 0.75 mg treatment doses of palonosetron. This provisional application ultimately led to four issued patents, the most recent of which was at issue in the case. It was filed post-AIA in May 2013 and claimed a 0.25 mg dose of palonosetron in a 5 mL solution.

The litigation started after Teva sought approval from the US Food and Drug Administration in 2011 to market a generic 0.25 mg palonosetron product. Helsinn sued Teva for patent infringement of issued patents, including the post-AIA-filed patent. Teva argued that the patent was invalid under the on-sale bar of 35 USC § 102(a)(1). The district court ruled in favor of Helsinn, finding that the sale to MGI Pharma did not create an on-sale bar under § 102(a)(1) because there was no public disclosure of the details of the agreement, such as the fact that it involved the 0.25 mg dose. The Federal Circuit reversed, explaining that the public disclosure of the sale itself was sufficient to meet the on-sale bar (IP Update, Vol. 21, No. 7). Helsinn appealed to the Supreme Court.

The Supreme Court addressed the question of whether, under the AIA, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention. In a unanimous decision authored by Justice Clarence Thomas, the Supreme Court concluded that such a sale qualifies as prior art.

The pre-AIA version of § 102(b) stated: “A person shall be entitled to a patent unless . . . (b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States.” Under the AIA version of the on-sale bar, § 102(a)(1) states that “[a] person shall be entitled to a patent unless . . . 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.”

The Supreme Court noted that its decisions prior to the AIA suggested that a sale or offer for sale did not need to be available to the public. The Supreme Court also noted that the US Court of Appeals for the Federal Circuit had issued pre-AIA decisions finding that “secret sales” can still trigger the on-sale bar. Helsinn argued that these prior decisions were inapplicable to the AIA version of the bar, § 102(a)(1), because the addition of the language “or otherwise available to the public” limits the “on-sale” bar to sales that make an invention available to the public, but the Supreme Court disagreed. It found that the term “on sale” was used in the pre-AIA as well as the AIA statute, and when Congress adopts similar language, it “must be considered to have adopted also the construction given by this Court to such language.” The Supreme Court, therefore, decided that the additional language in the AIA version of § 102(a)(1) did not alter the meaning of the on-sale bar, and that confidential sales are thus a bar to patentability.

Practice Note: Companies should be careful not to enter licensing, royalty, or supply and purchase agreements prior to filing of any patent applications.