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News / Jan 24, 2019

BREAKING: U.S. Supreme Court Says AIA Did Not Change Meaning of "On Sale" Bar

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Article by Clyde Shuman 

The U.S. Supreme Court has ruled that America Invents Act (“AIA”) did not change the scope of the on-sale bar in patent cases. In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. et al., No. 17–1229, in a unanimous opinion, the Court affirmed an earlier Federal Circuit ruling that invalidated a Helsinn Healthcare SA patent on the nausea drug Aloxi, which Helsinn had accused Teva Pharmaceuticals USA Inc. of infringing with a planned generic version.

The on-sale bar holds that sales of an invention that occur more than a year before a patent application is filed are prior art that can be used to invalidate the patent.

By way of background, Helsinn Healthcare S. A. makes a treatment for chemotherapy-induced nausea and vomiting using the chemical palonosetron. While Helsinn was developing its product, it entered into two agreements with another company, granting that company the right to distribute, promote, market, and sell a 0.25 mg dose of palonosetron in the U.S. The agreements required that the company keep confidential any proprietary information received under the agreements. Almost two years later, Helsinn filed a provisional patent application covering a 0.25 mg dose of palonosetron. Over the next 10 years, Helsinn filed four patent applications that claimed priority to the provisional application, including a fourth application in 2013. The patent resulting from that application (called “the ‘219 patent”) covered a fixed dose of 0.25 mg of palonosetron in a 5 ml solution and is subject to the AIA.

In 2011, before the 2013 application, Teva Pharmaceutical Industries, Ltd., and Teva Pharmaceuticals USA, Inc. (collectively Teva), sought approval to market a generic 0.25 mg palonosetron product. Helsinn sued Teva for patent infringement, including the ’219 patent. Teva argued that the ’219 patent was invalid under the “on sale” provision of the AIA, because the 0.25 mg dose was “on sale” more than one year before Helsinn filed the provisional patent application in 2003. The district court held that the AIA’s “on sale” provision did not apply because the public disclosure of the agreements did not disclose the 0.25 mg dose. The Federal Circuit reversed, holding that the sale was publicly disclosed, regardless of whether the details of the invention were publicly disclosed in the terms of the sale agreements.

Here, the Supreme Court agreed with the Federal Circuit, holding that the addition of the catchall phrase “or otherwise available to the public” to the pre-AIA verson of the “on sale” bar, 35 U.S.C. § 102(a), was not enough of a change for the Court to conclude that Congress intended to alter the meaning of “on sale.” The Court noted that “[e]very patent statute since 1836 has included an on sale bar” and that the version of the bar in effect immediately before the AIA prevented a person from receiving a patent if, “more than one year prior to the date of the application for patent in the United States,” “the invention was . . . on sale” in the United States. 35 U. S. C. §102(b). The AIA retained the on-sale bar and added the catchall phrase “or otherwise available to the public.” §102(a)(1) (“A person shall be entitled to a patent unless” the “claimed invention was . . . in public use, on sale, or otherwise available to the public . . . ”). The Court noted that its precedents “suggest that a sale or offer of sale need not make an invention available to the public.” The Court said:

For instance, we held in [Pfaff v. Wells Electronics, Inc., 525 U. S. 55, 67 (1998)] that an offer for sale could cause an inventor to lose the right to patent, without regard to whether the offer discloses each detail of the invention. Other cases focus on whether the invention had been sold, not whether the details of the invention had been made available to the public or whether the sale itself had been publicly disclosed.

The Court continued, “In light of this settled pre-AIA precedent on the meaning of ‘on sale,’ we presume that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase.” The Court referenced the argument of amicus U.S., that if “on sale” had a settled meaning before the AIA was adopted, then adding the phrase “or otherwise available to the public” to the statute “would be a fairly oblique way of attempting to overturn” that “settled body of law.”

The Court held, “The addition of ‘or otherwise available to the public’ is simply not enough of a change for us to conclude that Congress intended to alter the meaning of the reenacted term ‘on sale.’” The Court explained its reasoning:

Like other such phrases, “otherwise available to the public” captures material that does not fit neatly into the statute’s enumerated categories but is nevertheless meant to be covered. Given that the phrase “on sale” had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase to upset that body of precedent.

The Court concluded, saying, “Because we determine that Congress did not alter the meaning of ‘on sale’ when it enacted the AIA, we hold that an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under §102(a).”



 

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