United States: New Fed Circuit Decision Bolsters On-Sale Bar

Patent litigators will tell you that there are many ways to invalidate a patent. One of their favorites is a self-inflicted ground of invalidity known as the "on-sale bar." Under patent law, if you sell (or offer to sell) your invention more than one (1) year before you file your patent application, you invalidate your patent. This can often be a problem for entities who push publication of new technology (like universities) or for those who are unsure of the economic value of technology until it is actually shopped (like start-ups). These entities often find that they have valuable, patentable technology after having sold or shopped that technology publicly — rendering their patents invalid.

The passing of the America Invents Act by Congress brought some uncertainty to this area of patent law. The Act altered the statutory language creating the on-sale bar. What was unknown, however, was the effect of this alteration. Had Congress meant to change the scope of the on-sale bar or was the language an inconsequential update?

The case of Helsinn Healthcare SA v. Teva Pharmaceuticals USA Inc. allowed the Federal Circuit to weigh in on this new language. In interpreting this language from the America Invents Act, the Federal Circuit held that publicly known sales of inventions — even those that don't disclose the details of an invention — made one year before the filing of a patent application trigger the on-sale bar. This is in contrast to the prior opinion of the United States Patent and Trademark Office (USPTO) interpreting this language, which had held that a sale must make the invention available to the public in order to trigger the on-sale bar.

Background

Prior to passage of the America Invents Act, 35 U.S.C. § 102 stated that a person was entitled to a patent unless "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). In other words, any sale of an invention prior to one year before filling a patent application precluded a patent covering that invention regardless of whether the sale made details of the invention — how it works — available to the public. Passage of the America Invents Act changed the language of 35 U.S.C. § 102 to read, in part, that a person is 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 filing date" (emphasis added) with an exception for disclosures made within one year. 

The USPTO interpreted the "on sale" language as the same regardless of the change in language "except that the sale must make the invention available to the public." Manual of Patent Examining Procedure 2152.02(d). Under this interpretation, a sale among parties subject to "an obligation of confidentiality" does not trigger the on-sale bar.

The dispute in this case began with Helsinn filing suit against Teva alleging infringement of several of its patents directed to drugs for combating chemotherapy-induced nausea. At the District Court level, Teva argued that the patents were invalid under the on-sale bar due to a public sale more than a year before Helsinn applied for the asserted patents. The sale publicly disclosed the generalities of the invention but not key information such as the dosing necessary for successful administration. The District Court sided with Helsinn and the USPTO interpretation ruling that the phrase "otherwise available to the public" in the on-sale bar as modified by the America Invents Act required the sale to disclose the particulars of the invention to the public. As the sale at issue failed to do so, the on-sale bar was not triggered and the patents were found valid.

Helsinn v. Teva

On appeal, the Federal Circuit came to the opposite conclusion, that the rewording of the on-sale bar was not intended to change to the application of the on-sale bar to sales that do not disclose the details of the invention. In defending its position, Helsinn argued that floor statements made by members of Congress show an intent in allowing secret sales. For example, Helsinn pointed to comments made by Senator Leahy that the new on-sale bar would "do away with precedent under current law that private offers for sale or private uses or secret processes . . . may be deemed patent-defeating prior art." Notably, the Federal Circuit pointed out that these comments address secret sales, not the public, non-disclosing sales at issue in this case. The Federal Circuit thus discounted these comments while also refusing to rule on whether secret sales trigger the on-sale bar as amended.

Additionally, the Federal Circuit noted the long history of sales of any kind triggering the on-sale bar with cases at all levels beginning with the Supreme Court decision in Pennock v. Dialogue decided in 1829. That case and those stemming from it explain that to allow secret activities to avoid triggering the on-sale bar would be tantamount to allowing patentees to extend their monopoly beyond the time limit provided by Congress. In other words, an applicant for a patent could commercialize an invention such that the details are not disclosed to the public for a period of years, effectively enjoying a monopoly, and then followup with an application for a patent thereby continuing the monopoly. The Federal Circuit reiterated this public policy and found, quoting from Supreme Court precedent, that "if 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.' Dir., OWCP v. Perini N. River Assocs., 459 U.S. 297, 321 (1983)." The floor statements of some members of Congress and a slight rewording of the on-sale bar were insufficient to override long settled application of the on-sale bar and the public policy behind such an application.

Therefore, the Federal Circuit held that "if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale" in order to preclude patents stemming from applications filed one year after the sale. As a result, Helsinn's patents are invalid. 

Important steps to take now and more questions raised

Taking a step back, this case illustrates the unsettled state of patent law following the changes made by the America Invents Act. Although passed in 2011, the effects of the law are still unknown in key areas as patents continue to issue and be asserted that implicate changed provisions of the law.

More specifically, this case illustrates the importance of filing patent application in a timely manner. The best practice is filing, at minimum, a provisional application prior to any public disclosure, including any commercialization. Following this case, patent applications should be filed within one year of the date of any sale or disclosure regardless of whether the activity was secret or not.

These general best practices apply even though the Federal Circuit refused to rule on the effect of other activities such as secret sales where the sale itself is not public knowledge. Other arguably non-public activities which could trigger the on-sale bar depending on the interpretation of the statute as amended include non-disclosing public use, secret commercialization, etc. Patent applications should be put in place prior to these activities occurring and at the very least should be in place within one year of such activity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.