Think
Forward

In The Media
Shareholder Mark Remus is Quoted in Intellectual Property Magazine
Published By Intellectual Property Magazine
January 23, 2019

The America Invents Act’s (AIA) on-sale bar provision requires a patent to be invalidated if the invention was offered for sale before the patent was filed, the Supreme Court of the US (SCOTUS) has held.

Passing the eagerly-awaited Helsinn Healthcare v Teva Pharmaceuticals verdict, the Washington, DC-based court ruled that an inventor’s sale of an invention to a third party can qualify as invalidating prior art, even if the third party is obligated to keep the invention confidential.

Upholding a May 2017 US Court of Appeals for the Federal Circuit (CAFC) verdict, Justice Thomas said that “a commercial sale to a third party who is required to keep the invention confidential may place the invention ‘on-sale’ under the AIA.”

Issuing the 9-0 unanimous decision on 22 January, the court added that Congress has included the ‘on-sale’ bar in every patent statute since 1836, and the “bar serves the important function of ensuring that an inventor cannot remove existing knowledge from public use”.

Harness, Dickey & Pierce’s Bryan K Wheelock welcomed the ruling, saying, “Nearly eight years after the passage of the AIA, we finally have some clarity on what is prior art under the statute.”

Background

Specifically, the 2011 AIA changed patent law but retained the ‘on-sale bar’ from prior law that bars a patent (after any applicable statutory grace period) as a result of the inventor putting an invention on sale without having applied for a patent.

Section 102 of the Patent Act (as amended by the AIA) added the words “or otherwise available to the public” to the recitation of various patent-barring activities (including prior sale, among other acts).

After the adoption of the AIA in 2011, lawyers speculated on this added phrase that it might overturn the established rule that even ‘secret sales’ by the inventor will bar a patent and subsequently, practitioners waited for a test case on this issue.

Helsinn Healthcare is the owner of the four patents-in-suit directed to intravenous formulations of palonosetron for reducing or reducing the likelihood of chemotherapy-induced nausea and vomiting.

Helsinn brought suit against Teva alleging that the filing of Teva’s Abbreviated New Drug Application constituted an infringement of various claims of those patents. Teva defended on the ground that the asserted claims were invalid under the on-sale bar provision of 35 USC Section 102.

In May 2017, the CAFC found that the AIA’s on-sale bar provision requires a patent to be invalidated, if the invention was offered for sale before the patent was filed, to which Helsinn appealed.

SCOTUS verdict

Passing the new 11-page judgment, Justice Thomas explained that Congress did not intend to modify the ‘on-sale’ bar by adding the catchall phrase ‘or otherwise available to the public’ to the law in 2011.

“Helsinn’s argument places too much weight on Section 102’s catchall phrase. Like other such phrases, ‘otherwise available to the public’ captures material that does not fit neatly into the statute’s enumerated categories but is nevertheless meant to be covered.

“Given that the phrase ‘on-sale’ had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catch-all phrase to upset that body of precedent,” it added.

Justice Thomas concluded, “The 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 re-enacted term ‘on-sale’.”

Summary

Brinks Gilson & Lione's Mark Remus said the judgment means that "innovators must continue to take great care when engaging in commercial activity before filing a patent application in order to avoid the appearance of a commercial sale and application of the on-sale bar".

He stated, "Such precautions include: avoiding any passing of title for products covered by the alleged invention; accurately describing the commercial activity (eg, manufacturing services v sales); imposing confidentiality obligations; and avoiding other indications of a commercial sale.”

Lewis Baach Kaufmann Middlemiss’ Ronald Abramson said that there are “fine points” that the court’s decision did not address.

“SCOTUS treated this as a sale that did not make the patented technology publicly known, due to a confidentiality obligation on the part of the buyer. Another variation is where the fact that the sale took place is itself a secret, and this was not explicitly addressed, though under the court’s rationale, the prior law that such a sale would also be invalidating would appear to remain valid,” he said.

Abramson added that another question not addressed is “what happens if the sale is not by the inventor but there happens to have been a prior sale by an independent third party of subject matter equivalent to the patented technology, where the sale itself is secret or does not inform the purchaser (or the public) of the details needed to implement the invention,” he pondered.

“The opinion repeatedly focuses on pre-patent-application acts of the inventor – ‘we hold that an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under Section102(a)’… the effect of third-party sales appears to be beyond the scope of the decision," he commented.

This article first ran in Intellectual Property Magazine. Click here to read more.

Forward Thinkers
RELATED PRACTICE GROUPS
RELATED AREAS OF FOCUS