United States: Federal Circuit Considers Offers For Sale Under AIA, Suggests That Congress Did Not Discard All Pre-AIA Prior Art Definitions

Helsinn Healthcare, SA v. Teva Pharmaceuticals USA, Inc., No. 2016-1284 (Fed. Cir. May 1, 2017)

The Leahy Smith America Invents Act ("AIA") amended the Patent Act's novelty provisions for all applications having an effective filing date on or after March 16, 2013. The U.S. Patent and Trademark Office has instructed examiners that under the revised statute, public uses and offers for sale are available as prior art only if they make an invention available to the public, and secret or confidential uses and offers for sale are not prior art events. See, e.g., MPEP § 2152.02. In a recent case, a panel of the U.S. Court of Appeals for the Federal Circuit considered the AIA's impact on offers for sale as prior art. In a narrow decision, the court concluded that under the AIA, a prior art offer for sale need not publicly disclose a claimed invention if the offer itself is public. Further, the court's analysis suggests that it is likely to disagree with the USPTO's interpretation of the AIA in other respects, and may continue to apply pre-AIA case law governing prior art.


The Helsinn case arose from a dispute under the Hatch-Waxman Act, 35 U.S.C. § 271(e)(2). Helsinn obtained four patents covering products used to reduce nausea and other side effects of chemotherapy in cancer patients. Three of the patents resulted from applications filed prior to March 16, 2013, and thus were governed by pre-AIA § 102. The fourth patent, U.S. Patent No. 8,598,219, issued from an application filed after March 16, 2013 and was governed by AIA § 102(a)(1). Teva filed an Abbreviated New Drug Application seeking market approval for a generic form of Helsinn's product, and Helsinn responded by filing an infringement action asserting all four patents against Teva.

In the litigation, Teva contended that the Helsinn patents were invalid because the claimed inventions were the subject of a commercial offer for sale more than one year before the patent application filing dates. The district court ruled in favor of Helsinn on two grounds. First, the district court held that the invention was not "ready for patenting" more than one year before the application filing date, because the U.S. Food and Drug Administration ("FDA") did not approve the product for sale. Second, as to the '219 patent, the district court held that the alleged offer for sale did not qualify as prior art under the AIA because the offer did not publicly disclose the invention. Teva appealed to the Federal Circuit.

Federal Circuit Decision

In a panel decision written by Circuit Judge Timothy Dyk, the Federal Circuit reversed the district court and ruled that the Helsinn patents were invalid.

The court ruled that the three pre-AIA patents were invalid due to a statutory bar, pre-AIA 35 U.S.C. § 102(b). An on-sale bar requires (a) a commercial offer to sell the invention, and (b) that the invention is "ready for patenting," both more than one year before the application filing date. See Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998). Helsinn and a supplier had entered into a supply agreement for products covered by the patent claims, and the agreement was publicly disclosed as part of an SEC filing (although some technical details were redacted). The appeals court ruled that the supply agreement contained all the material terms for an enforceable agreement and thus was a prior art offer for sale, even though any actual sale of products was contingent on FDA approval.

Federal Circuit Addresses AIA Prior Art

The most significant discussion in the court's decision concerns the AIA's effect on the on sale bar defense. AIA 35 U.S.C. § 102(a)(1) states that:

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;

The district court held, consistent with the USPTO's interpretation of the AIA, that a reference is prior art under the AIA only if it is "available to the public." Thus, it ruled, confidential offers for sale cannot attain the status of prior art. In a narrow decision, confronting only the effect of the AIA on offers for sale as prior art, the Federal Circuit rejected that interpretation.

First, the Federal Circuit noted that for many years courts have considered public uses and offers for sale to be prior art even if they did not come to the attention of the public. In a famous case, for example, a new design for a corset worn under a dress was a public use, even though the invention was not visible when used. Egbert v. Lippman, 104 U.S. 333 (1881). The court traced the principle that a commercial use by an inventor is a prior art reference, even if it does not result in the disclosure of the invention to the public, back to Pennock v. Dialogue, 27 U.S. (2 Pet.) 1 (1829).

Second, the Federal Circuit was not persuaded by the legislative history of the AIA, including floor statements by legislators during debate, that Congress intended to abrogate the pre-AIA case law defining prior art. Some floor statements expressed an intent to eliminate private public uses as prior art, and even named Egbert and similar cases. The court noted, however, that none of the statements expressly called for overruling pre-AIA cases involving confidential offers for sale. Moreover, the court did not view the legislative history as strong enough to create the general requirement that prior art references must disclose the claimed invention to the public, since, "[r]equiring such disclosure as a condition of the on-sale bar would work a foundational change in the theory of the statutory on-sale bar." Slip op. at 22. It stated:

[O]ur prior cases have applied the on-sale bar even when there is no delivery, when delivery is set after the critical date, or, even when, upon delivery, members of the public could not ascertain the claimed invention. There is no indication in the floor statements that these [Congress] members intended to overrule these cases. . . . 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.

Slip op. at 26 (citation omitted). Thus, although the AIA unambiguously changed some requirements for prior art status, such as eliminating the pre-AIA requirement that public uses and offers for sale occur in the United States, the Act did not clearly withdraw prior art status from secret offers for sale.

Deciding the case narrowly, the Federal Circuit ruled that the Helsinn supply agreement was a prior art offer for sale because the agreement itself was available to the public, even though it did not disclose the claimed invention. In other words, "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." Slip op at 27.

Finally, the Federal Circuit disagreed with the district court's finding that the Helsinn invention was not "ready for patenting" more than one year prior to the application filing dates. The Federal Circuit noted that the district court erred in using FDA market approval as the appropriate standard. Instead, an invention is ready for patenting when it has been reduced to practice, which happens when "the inventor (1) constructed an embodiment . . . that met all the limitations and (2) determined that the invention would work for its intended purpose." In re Omeprazole Patent Litig., 536 F.3d 1361, 1373 (Fed. Cir. 2008). Since Teva proved that the Helsinn technology met that standard well prior to the application filing date, it was "ready for patenting" for purposes of the on sale bar.

Practical Significance

The Helsinn decision is significant for several reasons. First, it is the only Federal Circuit decision to date interpreting the controversial prior art provisions of the AIA. Given the issue's wide significance, the AIA's effect on defining prior art likely will be the subject of future panel and en banc decisions at the Federal Circuit, and ultimately review by the Supreme Court.

Second, Helsinn establishes that an offer for sale is prior art under the AIA if the sale itself is public, even if the details of the underlying invention are secret. That result is at odds with the USPTO's interpretation of AIA § 102(a)(1). The court did not address whether an offer for sale is prior art if both the offer and the invention details are secret, and that issue will remain uncertain until the courts confront it in a future case.

Finally, the court's analysis in Helsinn suggests a tendency to preserve the pre-AIA prior art case law, rooted in public policy concerns about preventing patents on inventions already available to the public, in the absence of unambiguous Congressional statements rejecting those rules. Although Helsinn did not concern a secret public use, such as the corset in Egbert, the same considerations may cause the court to preserve the long-standing rule that a secret public use is prior art. In addition, it remains unclear whether the AIA abrogated the Metallizing Engineering doctrine, which holds that an inventor's own commercial sale of a product made by a secret process is prior art available to defeated a patent on the process. See Metallizing Eng'g Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2d Cir. 1946). Although the USPTO has interpreted the AIA as rejecting that doctrine, the court's analysis in Helsinn could apply to preserve the doctrine.

Originally published May 04, 2017

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David A. Randall
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