• The On-Sale Bar Remains A Mighty Obstacle to Patentability, Even If The Sale Involves No Public Disclosure of the Invention
  • July 3, 2017 | Author: Dorothy Wu
  • Law Firm: Sunstein Kann Murphy & Timbers LLP - Boston Office
  • In passing the America Invents Act (the “AIA”) in 2011, Congress changed the statutory language concerning the “on-sale bar.” The bar prevents a party from patenting an invention that has been sold or offered for sale more than one year before the application date. The AIA added the phrase “or otherwise available to the public” to the statute. On its face, the phrase could be seen to impose a new requirement – public disclosure of the technology – in order for the on-sale bar to make a patent unavailable, but the Federal Circuit Court of Appeals recently ruled in Helsinn v. Teva Pharmaceuticals that despite the new language, the on-sale bar continues to apply to sales that do not involve a disclosure of the invention.

    Helsinn owned four patents covering intravenous formulations of palonosetron that reduce the impact or likelihood of chemotherapy-induced nausea and vomiting. Because palonosetron was already known in the art, the novel feature of the patents was the unexpectedly low dosage, 0.25mg, of this substance. Because all four patents claimed priority to the same provisional application, they had the same effective filing date of January 30, 2003. However, three patents were subject to pre-AIA patent law, whereas the fourth was subject to the AIA.

    In April 2001, Helsinn signed two agreements with MGI Pharma, Inc., which markets and distributes pharmaceuticals. The license required an initial $11M payment and set a future royalty on distributed products. Because Helsinn was still conducting its Phase III trials, the agreements could be terminated if the product failed to gain FDA approval. The companies issued a joint press release regarding the deals, and MGI submitted redacted copies of the agreements, which kept the dosage and agreed prices secret, in its Form 8-K filing with the Securities and Exchange Commission.

    Helsinn received FDA approval for its product in July 2003 and filed its patent applications thereafter. In 2011, Teva filed an Abbreviated New Drug Application with the FDA to pursue a generic version of Helsinn’s drug, whereupon Helsinn sued for infringement.

    The trial court ruled that the supply and purchase agreement was a contract for future sales under pre-AIA law, which rendered three of the four patents invalid due to the on-sale bar. However, the court interpreted the phrase “or otherwise available to the public” to imply that, in order for the on-sale bar to apply under the AIA, the offeror must have publicly disclosed the claimed features of the patented subject matter. Because MGI had redacted the dosage from agreements submitted with its Form 8-K filing, the sale was not “public” and could not invalidate Helsinn’s last patent.

    The Federal Circuit reversed the district court’s ruling on the AIA. Upon considering both the history of the on-sale bar and the recent legislation, the court concluded that the statute could be interpreted consistently with pre-AIA precedent and that Congressional statements on the AIA were not clear and precise enough to compel an alternative standard for the doctrine.

    The Federal Circuit quoted from a particularly early Supreme Court case that cautioned against permitting secrecy to enable a party to extend its monopoly by obtaining patent protection after it had obtained sales. See Pennock v. Dialogue, 27 U.S. 1, 19 (1829).

    What’s more, the Federal Circuit itself, in RCA Corporation v. Data General Corporation (1989), rejected any requirement that details of the invention be made publicly available. And in Abbott Laboratories v. Geneva Pharmaceuticals (1999), the court applied the on-sale bar even though neither party, much less the public, knew the details of the claimed invention. In this manner, the Federal Circuit concluded that precedent had never required the public to be informed of a product’s claimed features to trigger the on-sale bar.

    Helsinn’s position regarding the on-sale bar relied on statements by members of Congress, but the Federal Circuit noted that the remarks implicated either the public use of an invention, which was irrelevant to the case, or the extent to which the sales themselves were publicly known. As a result, the court concluded that the Congressional record lacked a sufficiently strong intent to change existing requirements about “public” sales.

    Instead, the court relied on its own precedent in Medicines Co. v. Hospira (2016), involving pre-AIA law and requiring that public knowledge only of the sales, not necessarily of their terms, was sufficient to invoke the on-sale bar. Since the joint press statement and MGI’s SEC filing publicly acknowledged that a transaction had occurred, the purchase and supply agreement was deemed an invalidating sale even though the novel dosage had been kept secret.

    The Federal Circuit’s refusal to impart meaning to the new statutory requirement “otherwise available to the public” casts the significance of that requirement in doubt. The statute implies that public activity analogous to some of the activities that have always precluded patent eligibility, such as public use or description in a printed publication, is required to bar patenting. The Helsinn decision suggests, however, that the on-sale bar will continue to apply even to sales that involve no disclosure of the invention to the public.