United States: Federal Circuit Interprets The Post-AIA On-Sale Bar

Last Updated: May 12 2017
Article by Richard F. Kurz and Alexander Callo

On May 1, 2017, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. that considered the America Invents Act ("AIA")'s changes to the on-sale bar rule of 35 U.S.C. § 1021. Specifically, the Court addressed the extent to which an alleged sale must be made "public" in order to trigger application of the on-sale bar post-AIA. Based on the particular facts of this case, the Court found that a purchase and sale agreement that was publicly disclosed satisfied the post-AIA on-sale bar, even though the public disclosure did not include all of the details about the claimed invention.

Before Congress enacted the AIA, § 102 barred the patentability of an invention that 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 application for patent."2 The AIA amended § 102, so that it now bars the patenting of an "invention [that] 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 application."3 At issue in Helsinn was the extent to which the statutory language "or otherwise available to the public" modified the preceding "on sale" language.

The patent-in-suit is directed to intravenous formulations of palonosetron, which are used to reduce the likelihood of chemotherapy-induced nausea and vomiting ("CINV"), a serious side effect of chemotherapy treatment. The Court explained that "[t]he use of palonosetron to treat CINV was not new." However, the patent claimed purportedly "novel intravenous formulations using unexpectedly low concentrations of palonosetron that were not taught by the prior art."

But "almost two years before applying for a patent," Helsinn and MGI Pharma. Inc. entered into a Supply and Purchase Agreement and a License Agreement (which, for simplicity, will be collectively referred to as the "Agreement"). The Court noted that the Agreement "described the palonosetron formulation in detail" and that it was undisputed that the Agreement was for the claimed invention. The Court also found that the Agreement "bears all the hallmarks of a commercial contract for sale." Moreover, a partially-redacted copy of the Agreement was included in a Form 8-K filing with the SEC, and the Agreement was announced in a joint press release. Based on the case's specific facts, the Federal Circuit found that the Agreement at issue was publicly announced and constituted a sale of the claimed invention, and the Court also found that the invention was ready for patenting prior to the critical date for the patent-in-suit. Thus, after applying the two-step framework outlined in Pfaff v. Wells Electronics, Inc.,4 the Federal Circuit invalidated the patent for being in violation of the post-AIA on-sale bar.

Notably, the Court arrived at this decision even though there were "two features of the [Agreement] that were not publicly disclosed[, namely] the price terms and the specific dosage formulations covered by the [Agreement] . . . ." Helsinn contended that "since the [] dose was not disclosed, the invention was not disclosed and the on-sale bar does not apply." Joined by the government and other amici, Helsinn "argue[d] that the AIA changed the law by adding the 'otherwise available to the public' phrase." Thus, they asserted, "the on-sale bar now does not encompass secret sales and requires that a sale make the invention available to the public in order to trigger the application of the on-sale bar."

But in the Court's view, "[a]part from the additional statutory language, this argument primarily relies on floor statements made by individual members of Congress." The Court made note of several such floor statements. For instance, the Court acknowledged Senator Leahy's statement that: "[S]ubsection 102(a) was drafted in part to do away with precedent under current law that private offers for sale or private uses or secret processes practiced in the United States that will result in a product or service that is then made public may be deemed patent-defeating prior art. That will no longer be the case." The Federal Circuit further noted Senator Kyl's statement that: "[T]he current on-sale bar imposes penalties not demanded by any legitimate public interest. There is no reason to fear 'commercialization' that merely consists of a secret sale or offer for sale that does not operate to disclose the invention to the public. . . . The present bill's new section 102(a) precludes extreme results such as these . . . ."

After recognizing such statements, the Court "decline[d] the invitation by the parties to decide this case more broadly than necessary." The Court found that "[a]t most the floor statements show an intent 'to do away with precedent under current [§ 102] law[,]'" which "had held certain secret uses to be invalidating under the 'public use' prong of § 102." And, the Court judged that the floor statements cited by Helsinn "do not identify any sale cases that would be overturned by the [AIA] amendments." In the end, the Court reasoned that even if the floor statements had been intended to overrule confidential sales, such an intention would not apply in the immediate case because the Agreement was publicly disclosed in a joint press release and in MGI's SEC filings.

Helsinn also argued that the AIA and associated floor statements "suggest that the on-sale bar does not apply unless the sale 'disclose[s] the invention to the public' before the critical date." Since the Agreement did not publically disclose the dosage, Helsinn contended that the invention was not disclosed to the public and the on-sale bar does not apply. The Court disagreed, concluding that requiring particular details of the claimed invention be publicly disclosed before the on-sale bar is triggered "would work a foundational change in the theory of the statutory on-sale bar." According to the Court, Congress would have used "clear language" if it had "intended to work such a sweeping change to [the Federal Circuit's] on-sale bar jurisprudence."

Thus, the Court "conclude[d] 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 sale." The Court explained that it "do[es] not find that distribution agreements will always be invalidating under [the on-sale bar]." Instead, it "simply [found] that this particular [] Agreement" triggered the on-sale bar.


1 Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc., No. 16-1284 (Fed. Cir. May 1, 2017).

2 35 U.S.C. § 102 (2006) (emphasis added).

3 35 U.S.C. § 102 (2012) (emphasis added).

4 Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998) held that the on-sale bar applies when the claims were: (1) subject to an invalidating contract for sale prior to the critical date of the patents-in-suit, and (2) ready for patenting at the time of the invalidating contract for sale.

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