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Supreme Court Confirms the AIA On-Sale Bar Covers Secret Sales—But Invites Controversy over What Is “Otherwise Available to the Public.”

The Supreme Court recently issued its closely-watched decision in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., which has direct implications regarding the scope of § 102 prior art under the America Invents Act (“AIA”).  While the decision provides clarity as to what the Court understands § 102 (AIA) to cover, the Court at the same time injected potential controversy by endorsing a “catch-all” category of § 102 prior art.

At issue in the case was whether a sale of an invention continues to qualify as prior art under revised § 102 (AIA), even where the details of what was covered by that sale were not public.  In a unanimous decision authored by Justice Thomas, the Court held that such sales qualify as prior art under the AIA.

The on-sale bar has long been a fixture in the patent statute, but relevant here the AIA added the phrase “otherwise available to the public” to 35 U.S.C. § 102:

 “A person shall be entitled to a patent unless . . . the claimed invention was patented, described in a printed publication, or in public used, on sale, or otherwise available to the public before the effective filing date of the claimed invention.”  (emphasis added).

In this case, Helsinn asserted a patent against Teva covering a fixed dose of 0.25 mg of palonosetron in a 5 mL solution.  Nearly two years before the patent’s priority date, Helsinn had entered into a license agreement and a supply and purchase agreement with another company, MGI Pharma Inc., granting MGI the right to distribute and market in the United States a 0.25 mg dose of palonosetron.  Those two agreements were referenced in MGI’s 8-K filing with the SEC and in press releases, without disclosing the specific dosage formulations. 

In the litigation, Teva contended that the patent-in-suit was invalid under the on-sale bar in view of the Helsinn-MGI agreements.  Seeking to disqualify those agreements as prior art, Helsinn argued that the phrase “otherwise available to the public” modifies the on-sale bar, such that secret sales or sales in which the relevant details are not public do not qualify as § 102 prior art. 

The District Court sided with Helsinn, but the Federal Circuit reversed, stating that “if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale” to fall within the on-sale bar under the AIA.

In its Opinion, the Supreme Court affirmed the Federal Circuit and explicitly held that the interpretation of the on-sale bar under § 102 is the same under the AIA as it was pre-AIA: even secret sales can trigger the on-sale bar. The Court cited numerous pre-AIA cases holding that, to implicate the on-sale bar, the invention must have been (1) the subject of a commercial offer for sale, and (2) ready for patenting.  There is no requirement that the invention be made available to the public, nor is it required that the sale itself be public. 

Based on this interpretation, the Helsinn-MGI agreements were prior art under the on-sale bar of § 102 (AIA).

Importantly, the Court left open what the phrase “otherwise available to the public” is intended to cover.  In rejecting Helsinn’s argument that “otherwise available to the public” imports an “available to the public” requirement into the on-sale bar, the Court explicitly stated that “‘otherwise available to the public’ captures material that does not neatly fit into the statute’s enumerated categories but is nevertheless meant to be covered.”  This would suggest that the Supreme Court envisions a type of § 102(a) prior art that is not “patented, described in a printed publication, or in public use, [or] on sale,” but the Court gave no examples or other explanation to circumscribe this language.

In its briefing, Teva suggested what “otherwise available to the public” prior art might entail.  Arguing that this language created a new category of prior art, Teva cited a case finding that an oral presentation was not considered pre-AIA prior art, even though it disclosed the invention publicly and in detail.  See In Re Klopfenstein, 380 F.3d 1345, 1349 n.4 (Fed. Cir. 2004).  As Teva argued, this is an example of prior art “otherwise available to the public.”

It remains to be seen how other courts going forward will interpret “otherwise available to the public,” and no doubt future litigants will find this fertile ground for creative advocacy.  In the meantime, Helsinnpresents a cautionary tale for patent applicants.  Principally, Helsinn warns against entering into sales agreements prior to the filing of at least a provisional application.  Patentees should not assume that the AIA softens the on-sale bar, but should instead presume that pre-application sales will be problematic in litigation.  Applicants should also consider whether an agreement—if it must be filed before patent application filing—can be styled, for example, as an agreement for distribution services, in order to preserve an argument that it is not an “offer for sale.”  Whether this would be sufficient to avoid the on-sale bar, of course, is an open question.

For the accused infringer, Helsinn confirms the strength of the on-sale bar even under the AIA and provides clarity for litigants.  Helsinn also illustrates the importance of a thorough prior art search performed by competent personnel.  The defendants astutely identified the prior art agreements among MGI’s SEC filings and press releases, no doubt based on diligent search strategies.  Accused infringers would indeed be wise to research regulatory filings to glean admissions that can be used in connection with discovery.  Of course, not every patentee will necessarily be obligated to file SEC or similar regulatory filings, and secret sales are by definition non-public and may be difficult to locate outside of litigation discovery.  In order to ensure that secret sales are identified, accused infringers will be well-served propounding discovery requests broad enough to cover any pre-patent filing agreements, bearing in mind patent applicants are likely to be creative in their structuring and characterization of these types of agreements. 

Wise parties will follow such strategies given Helsinn.  In the meantime, further insight will no doubt develop as courts interpret “otherwise available to the public” and its use as a “catch-all” category of prior art.

    © Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume IX, Number 30
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    About this Author

    John Snow Intellectual Property Attorney
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    John Snow understands that each case, and each client, requires its own approach, and partners with clients to develop a strategy to achieve their business goals in a cost-efficient manner. He practices law exclusively in the field of intellectual property, concentrating in the areas of pharmaceutical, biochemical, chemical litigation, and opinions, with an emphasis in patent litigation and consulting arising under the Hatch-Waxman Act. 

    John has served as trial counsel for various patent litigations in U.S. federal courts and thrives on formulating trial strategies. He also has...

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    Luke Shannon Intellectual Property Attorney
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    Luke Shannon believes that there is no “secret formula” for success; rather, success requires careful attention, informed analysis, and sensitivity to each client’s particular needs. He believes that each individual case presents unique strengths that can be leveraged against potential weaknesses. Luke’s industry experience and decade-plus of litigation practice allows him to identify and develop strengths and hedge against weaknesses in order to provide success to the client in the most cost-effective manner. His practice focuses on patent infringement suits arising under the Hatch-Waxman...

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    Randal Alexander Patent Litigator
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    Randal Alexander is a patent litigator dedicated to achieving positive and cost-effective results for clients, whether that entails litigating a case through trial or achieving a beneficial settlement. Randal’s practice focuses primarily on the Hatch-Waxman arena, but his experience also covers a variety of technologies, including medical devices, automotive, software, telecommunications, wireless communications, and manufacturing processes. He handles all facets of litigation ranging from pre-filing investigations through post-trial briefing, including managing discovery, participating in...

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