United States: A Sale Is Still A Sale Under The AIA

At least so far, the meaning of "on sale" under AIA 35 U.S.C. §102(a)(1)1  has not changed from pre-AIA 35 U.S.C. §102(b) following a decision by the Federal Circuit in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., Nos. 2016-1284 and 2016-1787 (Fed. Cir. May 1, 2017).  The Federal Circuit held that in enacting the AIA, "Congress did not change the meaning of the on-sale bar or disturb settled law."2

The patentee, Helsinn, argued that the change in language in the AIA from the predecessor statute (pre-AIA 35 U.S.C. §102(b)) imparted a new requirement that a sale of an invention must be disclosing.  According to Helsinn's interpretation, the public disclosure must include details of the invention to be "on sale" under AIA §102(a)(1); otherwise, the on-sale bar does not apply.  Helsinn's argument revolved around ambiguity in §102(a)(1) introducing the "otherwise available to the public" language to the statute.  Helsinn argued that this requires a statutory interpretation that "otherwise available to the public" modifies "on sale," and was not merely introducing a new catchall category of prior art.  Some have used this statutory interpretation to suggest that the on-sale bar is not triggered by secret commercialization, such as secret sales, that are not available to the public.  On this rationale, the United States Patent and Trademark Office (USTPO) adopted the interpretation that the AIA §102(a)(1) does not cover secret (non-public) sales or offers for sale.3

Here, Helsinn had a suite of pre-AIA and post-AIA patents subject to abbreviated new drug application (ANDA) patent infringement litigation related to its ALOXI® (palonosetron HCl) injectable pharmaceutical compositions for reducing chemotherapy-induced nausea and vomiting.

Well over a year before the priority patent application was filed, Helsinn entered into several agreements with a distributor, including a Supply and Purchase Agreement specifying details about the product, requirements, price, method of payment, and method of delivery.  The Federal Circuit found that this agreement bore the hallmarks of a commercial sale.  A partially redacted version of the agreement was publicly disclosed in SEC filings and in a press release over a year prior to the earliest priority date of the patent applications.  However, the publicly disclosed version redacted the dosage amounts and some other details, like pricing.  Thus, Helsinn argued that by withholding details of the invention (i.e., dosage), it avoided a public disclosure under the statute and therefore did not trigger the on-sale bar.

The Federal Circuit rejected Helsinn's argument, stating:

"[A]n 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 details of the invention be disclosed in the terms of sale."4

Under the AIA, an offer to sell or sale that is made public triggers the on-sale bar as it would under pre-AIA case law, regardless of whether the specific details of the invention are made public. To this end, "the AIA did not change the statutory meaning of 'on sale.'"5 For example, the two-step framework in Pfaff v. Wells Electronic, 525 U.S. 55 (1998) still applies to determine whether an invention was ready for patenting when a sale or offer for sale was made that could trigger the on-sale bar.6

Here, the pharmaceutical composition was found to be ready for patenting and offered for sale in a publicly disclosed transaction over one year before the earliest filing date of the priority application. Therefore all of the patents were invalid, whether under pre-AIA §102(b) or the AIA §102(a)(1).

The Federal Circuit was careful to limit the holdings of this case to publicly disclosed sales and offers for sale, declining to extend the holding beyond the facts presented. Thus, despite an invitation to do so, the court declined to decide the impact of the AIA language on pre-AIA case law regarding secret commercialization or sales.  Under pre-AIA case law, secret commercialization and sales without public disclosure could trigger the on-sale bar.  As noted above, the statutory interpretation that secret commercialization does not trigger the on-sale bar relies on interpreting "otherwise available to the public" as modifying "on sale."   While the Helsinn holding did not extend to secret sales, it would appear that under the reasoning in this decision, the statutory interpretation that a sale must be public to trigger the on-sale bar under the AIA is now on shaky ground.  Thus, the Helsinn holding may require the USPTO to revisit its interpretation of AIA §102(a)(1).

Another unresolved question pertains to whether the grace period exceptions under §102(b)(1)7  apply to sales activity.  §102(b)(1) indicates that a disclosure made one year or less before the effective filing date of the claimed invention is not prior art under certain conditions.  The AIA does not define "disclosure" and it is unclear whether the term encompasses sales activity, especially if sales are covert.  The USPTO has taken the position that the activities listed under §102(a)(1), including sales or offers for sale, fall under the term disclosure and are thus exempted under §102(b)(1) from being prior art8 — but the courts may not agree. Additionally, this decision raises a question about the extent to which a public disclosure of sales activity without details about the invention can serve as prior art against third parties.

We will continue to track this case for possible en banc review or certiorari to the U.S. Supreme Court and closely monitor upcoming cases involving sales activity of an AIA patent to further resolve these open questions and clarify the interpretation of AIA §§102(a)(1) and 102(b)(1).

Footnotes

1 AIA 35 U.S.C. 102(a)(1) provides "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." Id. (emphasis added).

2 Helsinn v. Teva, Nos. 2016-1284 and 2016-1787, slip. op. at 19 (Fed. Cir. May 1, 2017).

3 See, e.g., MPEP §2152.02(d).

4 Emphases added. Helsinn v. Teva, Nos. 2016-1284 and 2016-1787, slip. op. at 23 (Fed. Cir. May 1, 2017)

5 Helsinn v. Teva, Nos. 2016-1284 and 2016-1787, slip. op. at 19 (Fed. Cir. May 1, 2017)

6 Under Pfaff, application of the on-sale bar requires: that (1) the product must be the subject of a commercial offer for sale; and (2) the invention must be ready for patenting.

7 §102(b)(1): DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—

(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

8 MPEP §2152.04.

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.

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.