SCOTUS Finds That Secret and Mere Existence of Sales May Invalidate Patents

SCOTUS Finds That Secret and Mere Existence of Sales May Invalidate Patents

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., 586 U.S. ___ (2019)

In this decision, the Supreme Court of the United States (“SCOTUS”) confirms that even if the details of the invention are not disclosed, when the existence of a sale is made public, such a sale “can qualify as prior art”. [pg. 5]

The SCOTUS affirmed the United States Court of Appeals for the Federal Circuit’s (“CAFC”) decision, finding that Helsinn’s public disclosure of the sale of the claimed invention more than one year before its provisional patent application rendered its US Patent No 8,598,219 (“219 Patent”) invalid. [pg. 8-9]

Background

Helsinn Healthcare S.A. (“Helsinn”) makes a drug treating chemotherapy-induced nausea and vomiting, which has palonosetron as an active ingredient. In 2000, Helsinn’s clinical trials studied a 0.25 mg and a 0.75 mg dose of palonosetron, and afterwards, Helsinn and MGI Pharma Inc (“MGI”) entered into a license agreement and a supply and purchase agreement, which they announced in a press release, without disclosing the dosage information. [pg. 2] In 2003, Helsinn filed a provisional patent application covering the 0.25 mg and 0.75 mg doses of palonosetron, and thereafter filed four other patents, all claiming priority to the 2003 application. [pg. 3]

Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA, Inc. (collectively “Teva”) sought to market a generic 0.25 mg palonosetron product in 2011. Helsinn sued Teva for infringing its patents, and Teva argued as a defense that the 219 Patent was invalid because the 0.25 mg dose was “on sale” more than one year before Helsinn filed the provision patent application in 2003. [pg. 3]

The Leahy-Smith America Invents Act (“AIA”) provides 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.” 35 U. S. C. §102(a)(1) [pg. 3] The District Court held that the “on sale” provision did not apply, since the sale in question did not make the claimed invention available to the public. The CAFC reversed this decision, concluding that if the existence of the sale is public, the details of the invention do not need to be publicly disclosed in the terms of sale to fall within the AIA on-sale bar. [pg. 4]

The Sale Does Not Need To Make The Invention Public

The SCOTUS granted certiorari of the CAFC’s decision. It had to determine whether the sale of an invention to a third party who is contractually obliged to keep confidential information constitutes “on sale” within the meaning of §102(a). [pg. 1] The patent statute in force immediately before the AIA prevented a person from receiving a patent if more than one year prior to the date of the application in the United States, “’the invention was . . . on sale’ in the United States”. The AIA retained the on-sale bar and added the following phrase: “or otherwise available to the public.” The SCOTUS concluded that this addition did not alter the meaning of “on sale”. [pg. 6]

The SCOTUS refers to one of its previous decisions, Pfaff v. Wells Electronics, Inc., 525 U. S. 55, 67 (1998), in which it determined that the pre-AIA on-sale bar applied “when two conditions are satisfied” more than a year before the inventor files a patent application. First “the product must be the subject of a commercial offer for sale”, and second, “the invention must be ready for patenting” (i.e. the drawings or descriptions would be sufficient to enable the person skilled in the art to practice the invention.) [pg. 6] The SCOTUS recognizes that it didn’t address the precise question of the current case in Pfaff, however, the SCOTUS’ precedents suggest that a sale or offer of sale does not need to make an invention available to the public. [pg. 6] The SCOTUS further notes that the CAFC, which has “exclusive jurisdiction” over patent appeals “has made explicit what was implicit in our precedents. It has long held that ‘secret sales’ can invalidate a patent.”

The SCOTUS concluded that in the light of this pre-AIA jurisprudence of the meaning of “on-sale”, when Congress reenacted the same language in the AIA, it adopted the earlier jurisprudence (citing Shapiro v. United States, 335 U. S. 1, 16 (1948) to support its conclusion). [pg. 7] The SCOTUS explains that, contrary to Helsinn’s argument, the addition of “or otherwise available to the public” is not enough a change to conclude that Congress intended to alter the meaning of “on sale”. [pg. 8] The SCOTUS affirmed the judgment of the CAFC. [pg. 9]

Commentary

The SCOTUS explains in this decision that the US federal patent system encourages new and useful creations by granting inventors the exclusive right to practice the invention for a set period of years, but that the system tries to avoid “monopolies that unnecessarily stifle competition”. One of the conditions imposed by Congress to an IP right is the on-sale bar, which reflects Congress’ “reluctance to allow an inventor to remove existing knowledge from public use”. The SCOTUS explains that that every patent statute since 1836 has included an on-sale bar. [pg. 5]

In this case, the SCOTUS concluded that the public disclosure of the sale is what invalidated Helsinn’s patent. However, the SCOTUS also stated that even a secret sale can invalidate a patent under 35 U.S.C. § 102(b): “Thus an inventor’s own prior commercial use, albeit kept secret, may constitute a public use or sale under §102(b), barring him from obtaining a patent”. [pg. 7]

This decision serves as an important reminder for businesses that the mere existence of a sale – even if the invention is not disclosed – may invalidate a patent. [pg. 5] Patent applicants from outside of the United States who have sold their invention may consider the strategy to file a patent application in another jurisdiction within the one-year grace period as provided by 35 U.S.C. § 102(b)(1). The applicant could then file a US Patent application within one year of this patent application made outside of the United States, claiming priority to that previous application. The filing in the other country would not be statutorily barred because the sale will have been secret, and the US patent filing would not be barred because the effective priority date would he within the grace period provided by the law.

Patentees should therefore make sure they retain the services of able patent agents and IP lawyers who will provide appropriate advice on patentable matter. For more information, please contact a PCK patent or IP lawyer.

Due care