On-Sale Bar to Patent Protection Under the AIA

END NOTES

Helsinn Healthcare S.A. v. TEVA Pharmaceuticals USA, Inc.,

Nos. 2016-1284, 2016-1787, (Fed. Cir. May 1, 2017). 2. Id. at 3, 23, 24. 3. The four patents are U.S. 7,947,724, U.S. 7,947,725, U.S. 7,960,424, and U.S. 8,598,219. 4.

Helsinn

at 10. 5. U.S. 5,202,333, now expired, taught use of palonosetron for “prevention and treatment of emesis.” 6.

Helsinn

at 6. 7. Id. 8. Patent Act of 1952, Ch. 950, 66 Stat. 798 (1952), 35 U.S.C. Section 102(b) stated that, “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 …”

(emphasis added). 9. Leahy Smith America Invents Act (AIA), Pub. L. No. 112-20. 125 Stat. 284 (2011) (codified at 35 U.S.C.) [hereinafter AIA]. 10. See, e.g. Manual of Patent Examining Procedure (MPEP) at § 2152 et seq. 11.

Helsinn

at 4. 12. Id. at 10. 13. Id. at 3. 14. Id. at 21, 23. 15. Id. at 22-23. 16. Id. at 26. 17. Id. 18. Id. at 18. 19. Id. at 27 (“Under

Pfaff

, there are at least two ways in which an invention can be shown to be ready for patenting: ‘by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention.”) 20. Id. at 24. 21. Id. at 25. 22.

Helsinn

at 22. 23. See, e.g.

Helsinn

at 23, citing

RCA Corp. v. Data Gen. Corp.,

887 F. 2d 1056, 1060 (Fed. Cir. 1989)

overruled in-part on other grounds by

Group One Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1048 (Fed. Cir. 2001). 24. See. e.g. Cong. Rec. – Senate, S1371 (March 8, 2011) (“The current forfeiture doctrines have become traps for unwary inventors and impose extreme results to no real purpose.… The present bill’s new section 102(a) precludes extreme results such as these and eliminates the use of the definition of prior art to pursue varied goals such as encouraging prompt filing or limiting commercialization.”) 25. Id. 26. Cong. Rec. – Senate, S1370. 27. Id. at 42 (“Subsection (b) – Section 102 is amended as follows: (a)(1) A patent shall not issue for a claimed invention if the invention was patented, described in a printed publication, or in public use, on sale or otherwise available to the public (A) more than a year before the filing date.…” 28.

Helsinn

at 23. 29. Cong. Rec. – Senate, S1371 (March 8, 2011). (Emphasis added.) 30. Cong. Rec. – Senate, S1370 (March 8, 2011). 31. Cong. Rec. – Senate, S1496 (March 9, 2011). 32. Pre-AIA jurisprudence is divided as to whether confidential sales or offers of sale by third parties bar an inventor from obtaining patent protection. See, e.g. Chism on Patents, § 6.02[6].

An object of the first-to-file system under the AIA, according to the same legislative history, was “elimination of the patent forfeiture doctrines in favor of a general public availability standard.” ³⁰

Contrary to the Federal Circuit’s assertion, there

were

statements in the legislative history requiring availability to the public of the fact of a claimed invention, such as by public disclosure of a sale. There were also statements requiring

enablement by the public

to practice that claimed invention as a consequence of public disclosure. This sentiment is explicitly laid out in the legislative history of the AIA:

By adopting the first-to-file system, …, the present bill already provides ample incentive for an inventor to enter the patent system promptly. There is no need to also require

forfeiture

of patents simply because the inventor has made some use of the invention that has not made the invention available to the public. And the current on-sale bar imposes penalties not demanded by a legitimate public interest. There is no reason to fear “commercialization” that merely consists of a secret sale or

offer for sale but that does not operate to disclose the invention to the public.

²⁹

* Principal at Hamilton, Brook, Smith & Reynolds, P.C., in Concord, MA, and Adjunct Professor at Suffolk University Law School. The author is solely responsible for the views of this article, which do not necessarily represent those of his Firm, or any client or organization.

On-Sale Bar to Patent Protection Under the AIA

N. Scott Pierce, Hamilton, Brook Smith, Reynolds

On May 1, 2017, in

Helsinn Healthcare v. Teva Pharmaceuticals, Inc.,¹

the Court of Appeals for the Federal Circuit (Federal Circuit) held that the America Invents Act (AIA) did not change the statutory meaning of “on sale” where the “existence of the sale or offer was public,” regardless of whether the “details of the invention are disclosed in the terms of sale,” or “when or whether actual delivery occurs.”²

Helsinn Healthcare S.A. (Helsinn), is the owner of four patents (collectively, the Helsinn patents) directed to reducing the likelihood of chemotherapy-induced nausea and vomiting (CINV).³ The

Helsinn

patents all claimed the benefit of a provisional patent application filed on January 30, 2003. Only one of the four patents, U.S. 8,598,219 (the ‘219 Patent) was subject to the AIA, which became effective March 13, 2013.⁴ All of the patents were directed to use of a known drug, palonosetron, which was the subject of an unrelated and now-expired patent.⁵ The claims in the Helsinn patents were all directed to formulations that covered palonosetron present in an “unexpectedly low concentration” of “0.25 mg based on the weight of its free base” in a 5 mL sterile aqueous isotonic solution (0.25 mg dosage).⁶

On April 6, 2001, Helsinn entered into a Supply and Purchase Agreement with MGI Pharma, Inc. (MGI). The Supply and Purchase Agreement, in a partially redacted form that excluded price terms and the 0.25 mg dosage, was filed with the Securities and Exchange Commission (SEC) and, accordingly, became publicly available on April 25, 2001.⁷ Therefore, the existence of the Agreement was made publicly available more than one year before first-filed provisional patent application (January 30, 2003) to which the four Helsinn patents, including the ‘219 patent, claimed the benefit.

Prior to enactment of the AIA, an offer for sale of an invention was “prior art” regardless of whether the invention was made public, but inventors were entitled to a one-year “grace period” under 35 U.S.C. § 102(b), during which an offer for sale could be made in the United States before the first-filing of a patent application.⁸ Under 35 U.S.C. §102(a)(1) of the AIA: “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 date of the claimed invention.”⁹ A one year “grace period” exists under §102(b)(1) for “disclosures made 1 year or less before the effective filing date of the claimed invention.” Onset of the one-year grace period, both prior to and under the AIA, is known as the “critical date.”¹⁰ The critical date for all four of Helsinn’s patents was January 30, 2002, one year before the filing date of the provisional application of which they all claimed the benefit.¹¹

In 2011, Helsinn filed suit against Teva Pharmaceuticals (Teva), which had filed an abbreviated new drug application (ANDA) along with a Paragraph IV certification enabling Helsinn to file suit against Teva under the Hatch-Waxman Act for patent infringement. The United States District Court for the District of New Jersey (District Court) held that the three patents governed by pre-AIA law were not invalid because, although the Supply and Purchase Agreement was a commercial sale, the invention was not “ready for patenting” before the critical date. The fourth patent, on the other hand, was “not invalid” because, in the view of the district court, an on-sale bar under 35 U.S.C. §102(a)(1) of the AIA “requires a

public

sale

or offer for sale of the claimed invention.” According to the district court, since the version of the Supply and Purchase Agreement available to the public did not disclose the 0.25 mg dose, so there was no public sale under the AIA of the invention claimed in the ‘219 patent.¹²

The Court of Appeals for the Federal Circuit (Federal Circuit) reversed the district court’s decision with respect to the three patents subject to pre-AIA law, holding that the claimed invention was, indeed, reduced to practice and, therefore, ready for patenting. The Federal Circuit also reversed the decision of the district court and held the ‘219 patent to be invalid under the on-sale bar of the AIA.¹³ The Federal Circuit reasoned that it was unnecessary in this case to determine whether secret sales or offers for sale trigger prohibition under the so-called “on-sale” bar of the AIA because “[o]ur cases explicitly rejected a requirement that the details of the invention be disclosed in the terms of sale.” According to the court, “there can be ‘a definite offer for sale or a sale of a claimed invention even though no details are disclosed.’”¹⁴ To hold otherwise would, for the Federal Circuit, “work a foundational change in the theory of the statutory on-sale bar,” contrary to the policy of the Supreme Court in

Pennock v. Dialogue

that to allow public sales that withheld “the secrets of [the] invention … would materially retard the progress of science and the useful arts, and give a premium to those who should be least prompt to communicate their discoveries.”¹⁵ The Federal Circuit stated that nothing in the AIA requires the details of an invention to be publicly disclosed in the terms of a sale prior to a critical date, nor were any floor statements made during legislation of the AIA “suggesting that the sale or offer documents must themselves publicly disclose the details of the claimed invention before the critical date.”¹⁶ As stated by the court, “[i]f Congress intended to work such a sweeping change to our on-sale bar jurisprudence and ‘wished to repeal … [these prior] cases legislatively, it would do so by clear language.’”¹⁷

Prior to enactment of the AIA, secrecy of a sale or offer was a consideration, but, as recited by the Federal Circuit in

Helsinn

, “not determinative.”¹⁸ Further, the Supreme Court in

Pfaff v. Wells Electronics

stated that a claimed invention need only be “ready for patenting,” and not necessarily “reduced to practice.”¹⁹ As recited by the court in

Helsinn

, “[a] primary rationale of the on-sale bar is that publicly offering a product for sale that embodies the claimed invention places it in the public domain, regardless of when or whether actual delivery occurs.”²⁰ The court further stated that “[w]e have also not required that members of the public be aware that the product sold actually embodies the claimed invention.”²¹

While the court was correct in stating that, “[r]equiring such disclosure as a condition of the on-sale bar would work a foundational change in theory of the statutory on-sale bar,”²² all of the case law cited by the court in

Helsinn

rejecting any requirement that the details of an invention be disclosed in the terms of a sale predated the AIA.²³ Instead, as explained below, that precise “foundational change” recited by the court goes to the heart of the first-to-file system now in place, and was the explicit intent of Congress, at least according to the legislative history of the AIA.

Among the changes made in United States patent law under the AIA was transition of precedence from the first inventor to the first inventor to file a patent application directed to an invention. Moving to a “first-to-file” system was intended to remove much of the incentive to delay filing of a patent application in the United States, thereby eliminating the need, or even making counterproductive, recognition, either by Congress or the courts, of

nonpublic activities by inventors or third parties

that take place prior to filing.²⁴ As stated by the legislative history of the AIA, “[p]rior art will be measured from the filing date of the application and will include all art that publicly exists prior to the filing date, other than disclosures by the inventor within one year of filing.”²⁵ The legislative history of the AIA also included a statement that “[t]he word ‘otherwise’ makes clear that the preceding clauses describe things that are of the same quality or nature as the final clause–that is, although different categories are listed, all of them are limited to that which makes the invention ‘available to the public’”²⁶ Claimed inventions “on sale” were among the enumerated items that must be “available to the public.”²⁷

Public availability under the AIA made unnecessary the pre-AIA policy of the Supreme Court in

Pennock

against “public sale of an item but the withholding from ‘the public the secrets of [the] invention,’” that was relied upon by the court in

Helsinn

.²⁸ As stated in the legislative history of the AIA:

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2017 Ⓒ Boston Patent Law Association

NEWSLETTER ARCHIVE

Volume 48, Issue 3

If a disclosure resulting from the inventor’s actions is not one that is

enabled

, or is not made available to the public, then such a disclosure would not constitute patent-defeating prior art under 102(a) in the first place.³¹

Although the Supply and Purchase Agreement was made publicly available prior to the critical date of the ‘219 Patent, redaction of the 0.25 mg dosage claim element of the ‘219 Patent rendered the publicly-available version non-enabling. If the redacted Supply and Purchase Agreement was prior art under subsection 102(a) of the AIA, then it would be prior art not only to the inventor, but to third parties.32 However, the claimed invention was not enabled by the redacted Supply and Purchase Agreement and, as a consequence,

the invention

was not publicly available. Therefore, the redacted Supply and Purchase Agreement should not have been considered “prior art” under subsection 102(a) of the AIA. The only document associated with the sale that may have been enabling was the

unredacted

Supply and Purchase Agreement, which was maintained in secret. To consider this undisclosed document to be “prior art” would constitute a continuation of the forfeiture doctrine by embracing “secret prior art” in violation of the language of 35 U.S.C. §102(a) and the clear intent of Congress.

Elimination of the forfeiture doctrine and “secret prior art” are consistent with establishment of the first-to-file system of the AIA. Public availability and enablement of a claimed invention are hallmarks of “prior art” under the AIA, and are rendered meaningless if a sale, or offer for sale, is publicly available but not enabling, or enabling but not publicly available. The

unredacted

Supply and Purchase Agreement was not publicly available, and the

redacted

Supply and Purchase Agreement was not enabling. Neither should have been considered “prior art” under subsection 102(a) of the AIA.