“Private” Sale of Invention Bars Patents

Last month, the Federal Circuit issued a decision confirming that a “private” sale of an invention, more than one year before the effective filing date of a patent application for that invention, invalidates the resultant patent. The case, captioned Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., addressed the “on-sale bar” in 35 U.S.C. § 102 and verified that the America Invents Act (AIA) did not change the pre-AIA statutory meaning of “on sale.”

Helsinn owns four patents directed to reducing the likelihood of chemotherapy-induced nausea and vomiting (CINV), which is a serious side effect of chemotherapy. Helsinn sued Teva Pharmaceuticals, which was attempting to market a similar product, for patent infringement. In response, Teva asserted that the patents were invalid due to the on-sale bar. Under U.S. patent law, the sale of an invention more than one year prior (i.e., the “critical date”) to the effective filing date of a patent application for that invention can invalidate any patent claim to the invention.

All four of Helsinn’s patents at issue had established a “critical date” of January 30, 2002, due to a priority claim to a provisional patent application filed on this date. However, in April 2001, almost two years before applying for a patent, Helsinn had entered into a Supply and Purchase Agreement with MGI Pharma. Under the agreement, MGI agreed to purchase certain dosages of the products covered by the patents, depending on which were approved for sale by the FDA.

During a bench trial, the district court held that Teva infringed all the patents in question and that the patent claims were valid. Three of the patents were subject to pre-AIA law, under which the district court recognized that the MGI Supply and Purchase Agreement would constitute a “sale,” although the district court further found that the claimed invention was not ready for patenting until after the critical date, the Federal Circuit later reversed on this point. The fourth patent was governed under the provisions of the AIA and here the court held that the AIA had changed the meaning of the on-sale bar to require a public sale or offer for sale of the invention. Since the MGI Supply and Purchase Agreement did not publicly disclose the details of the invention, the district concluded that there was no sale.

In its decision last month, the Federal Circuit reversed. With regard to the fourth patent, governed by the AIA, the Federal Circuit held that the AIA did not change the meaning of the on-sale bar under § 102. In doing so, the Federal Circuit rejected Helsinn’s argument that the inclusion of new language (“or otherwise available to the public”) in the AIA suggested that the on-sale bar required that the details of the claimed invention be publicly disclosed. The Federal Circuit declined to implement such a “foundational change” to the theory of the statutory on-sale bar, relying upon the U.S. Supreme Court’s discussion in 1829 of commercial exploitation in Pennock v. Dialogue. Accordingly, even Helsinn’s “private” sale of its invention prior to its critical date was sufficient to invalidate the relevant claims in the fourth patent.

While patent applicants in the U.S. have the benefit of a one-year grace period for filing a patent application after novelty-destroying disclosures, this case underscores the hazards of relying upon that grace period. Recommended practice is to meet the absolute novelty requirements generally applicable worldwide and thus avoid any issues in the U.S. as well.

W. Edward Ramage