United States: Federal Circuit Applies Pre-AIA Interpretation Of On-Sale Bar To The America Invents Act

In a much-anticipated ruling, Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc.,1 a three-judge panel of the US Court of Appeals for the Federal Circuit concluded that the on-sale bar provision under the America Invents Act (AIA)2 should be interpreted in the same manner as the pre-AIA on-sale bar, despite differences in statutory language. The Federal Circuit ruled:

We conclude that, after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of the sale.3 (emphasis added)

In other words, an on-sale bar may be triggered as long as the sale itself was public, regardless of whether "the details of the claimed invention" were publicly disclosed as a result of that sale.

The patentee in this case, Helsinn Healthcare S.A., applied for a patent for intravenous formulations of a pharmaceutical composition for the prevention or reduction of chemotherapy-induced nausea on January 30, 2003. Helsinn filed its patent application nearly two years after it had entered into a commercial agreement directed to the claimed invention. On April 25, 2001, a Form 8-K was filed with the Securities and Exchange Commission that included a partially-redacted copy of the agreement. Whereas Helsinn's patent claims would later recite a specific dosage level of the pharmaceutically active compound, that dosage level was redacted from the agreement filed with the SEC, and thus not publicly disclosed.

Helsinn subsequently sued Teva Pharmaceuticals USA Inc. for patent infringement. Teva argued that pursuant to section 102, an on-sale bar that invalidated its patent claims was triggered when the sale of its invention was made public (minus the specific dosage levels) two years before it filed its patent application. Helsinn responded that the AIA had amended the on-sale bar provision in a manner that rendered the alleged on-sale bar ineffective because there had been no public disclosure of the claimed dosage level.

Helsinn relied heavily on the statutory changes the AIA made to the on-sale bar. The post-AIA version of section 102 states in pertinent part:

(a) Novelty; Prior Art.—A person shall be entitled to a patent unless—

(1)...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) (emphasis added). The AIA chose to use the same "on sale" language used in its counterpart pre-AIA statutory provision.4 The AIA added the highlighted phrase "or otherwise available to the public." Helsinn argued that the addition of this phrase implies that the "on sale" activity must also have been "made available to the public" before it can create an on-sale bar.5 Thus, a sale must have made the invention available to the public in order to trigger an on-sale bar, according to Helsinn, whereas a "secret sale" that did not make the invention available to the public will not create an on-sale bar.

Helsinn also relied on floor statements made by individual members of Congress, including the following from Congressman Lamar Smith, who co-authored the AIA:

[C]ontrary to current precedent, in order to trigger the bar in the new 102(a) in our legislation, an action must make the patented subject matter "available to the public" before the effective filing date.6

Helsinn also found support from the US Patent and Trademark Office (Patent Office), which filed an amicus brief favoring Helsinn's interpretation the AIA's section 102. The Patent Office has already publically interpreted the on-sale bar under the AIA as requiring public disclosure of the invention:

The phrase "on sale" in AIA 35 U.S.C. 102(a)(1) is treated as having the same meaning as "on sale" in pre-AIA 35 U.S.C. 102(b), except that the sale must make the invention available to the public.7 (emphasis added)

The Federal Circuit, however, rejected the notion that the AIA changed the on-sale bar requirement and adopted the pre-AIA interpretation. Despite the acknowledged lack of the public disclosure of a key element of the claims, the Federal Circuit ruled that Helsinn's sale created invalidating prior art. The Federal Circuit cited a Supreme Court decision from 1829 as well as several prior Federal Circuit decisions in support of its traditional interpretation:

Requiring such disclosure as a condition of the on-sale bar would work a foundational change in the theory of the statutory on-sale bar. . . So too under our cases, an invention is made available to the public when there is a commercial offer or contract to sell a product embodying the invention and that sale is made public. Our cases explicitly rejected a requirement that the details of the invention be disclosed in the terms of sale.8

Whether Helsinn will seek en banc review by the full Federal Circuit, or petition the US Supreme Court to hear its case and overturn the Federal Circuit, is unknown at this time. The ruling could spur calls for an amendment to clarify the language of 35 U.S.C. §102 (a)(1). Regardless, it should be noted that the Patent Office's published examination guidelines directing the application of the on-sale bar under the AIA are currently contrary to Federal Circuit case law. The effect of the ruling and the divergence in statutory interpretation could also be felt in patent litigation and post-grant validity challenges.

Footnotes

1 Appeal No. 2016-1284, Slip Op. (Fed. Cir. May 1, 2017)

2 See 35 U.S.C. § 102(a)(1); AIA, Pub. L. No. 112-29, § 3(n), 125 Stat. 284, 293 (2011).

3 Id.

4 35 U.S.C. § 102(b).

5 Id., p. 19.

6 157 Cong. Rec. 9782 (2011) (remarks of Sen. Smith).

7 Manual of Patent Examining Procedure ("M.P.E.P."), § 2152.02(d).

8 Case No. 2016-1284, Decision of May 1, 2017, pp. 22-23.

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