On Tuesday, December 4th, oral arguments were held before the U.S. Supreme Court in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA. The nation’s highest court will determine whether a secret sale of an invention, or a sale of a technology under terms that require the invention to remain confidential, triggers the on-sale bar under 35 U.S.C. § 102(a)(1), thereby preventing the invention from being patented. With this question squarely before the Supreme Court, several members of the legal industry who are watching this case offer their views on the major takeaways and the potential consequences of the Supreme Court’s decision, which will issue next year.
“The Federal Circuit decided that the America Invents Act (AIA) version of the on-sale bar is practically no different than the pre-AIA version despite different wording, despite legislative history that arguably suggests the provision is different, and despite administrative guidance (i.e., Patent Office’s examination guidelines) that the AIA version is different. Each involved party unsurprisingly advocates for a decision that serves its self-interests. But the decision, like others the Court issues, will have more far-reaching consequences than those interests. And fortunately, the avalanche of amicus briefs—notably the ones from bar and industry trade associations and the Department of Justice—offers an objective assessment the Court ought to carefully consider. A decision affirming the Federal Circuit may well undermine the simplicity and predictability that the AIA sought to impart in our patent system.”
Sandip H. Patel is a partner with Marshall Gerstein & Borun LLP, where he represents clients relating to chemical and chemical engineering inventions. He has broad patent litigation experience in the district and Federal Circuit courts, and extensive experience in leading interferences, reexaminations, and inter partes reviews before the Patent Office.
“The case involves a (relatively) small pharmaceutical development company in Switzerland that claims it needed funding to complete development of a valuable drug. The Swiss company agreed to sell the drug to a U.S. company prior to filing patent applications, to generate revenue needed to complete the development of the drug. The companies announced the agreement, but kept some details about the drug secret.
“The case thus pits the two rationales against each other. If the on-sale bar is meant to prevent sales prior to a patent application to avoid extending the inventor’s monopoly, the patent might be invalid based on the prior agreement to sell the drug. On the other hand, if the on-sale bar is meant to prevent a patent only if the public already knows about the invention, the patent might not be barred because the announcement of the agreement, without disclosing details about the drug, might not inform the public how to make the invention. In that case, the public might still be willing to grant a patent in exchange for teaching the public how to make the invention.
“The basic issue in the case involves a principle that is over 200 years old in U.S. law: that an inventor must apply for a patent before selling a product that includes the invention. Many companies have a standard practice of checking to ensure that patent applications are on file before allowing a product to be shown or offered for sale. The doctrine is known as the ‘on-sale bar’ because it often bars the grant of a patent when the patent application is filed after the invention is on sale.
“Conventional wisdom is that the Supreme Court frequently reverses the Court of Appeals for the Federal Circuit on patent matters, and that the Supreme Court may decide that the additional language in the patent statute has changed the law and that inventors may make confidential sales prior to filing a patent application, as long as they don’t make a public disclosure of the details of the invention.”
Jake Holdreith is a partner with Robins Kaplan LLP, and leads the firm’s Health and Life Sciences Industry Group and serves as a member of the firm’s Executive Board. Mr. Holdreith counsels clients and tries complex lawsuits including intellectual property, regulatory and constitutional litigation.
“In Helsinn, the issue before the Court is whether an invention is ‘on sale’ and prior art under the America Invents Act even when the invention is not available to the public. The Federal Circuit found that a license and distribution agreement to a medical invention whose existence was public could invalidate a patent even if the invention itself was not public and was not made public by the agreement. The decision is particularly problematic for the bio/pharma industry where many innovations are made by small companies that need to partner with established pharmaceutical companies in order to bring their inventions to patients. The decision impacts both the small bio/pharma companies that need funds to develop and patent their inventions as well as bio/pharma companies of all sizes that pour in billions of dollars to develop the medicines. The U.S. is urging the Supreme Court to reverse the Federal Circuit’s decision and to limit the ‘on sale’ bar to products that embody the invention and can be purchased by customers. As is, the Federal Circuit’s decision is inconsistent with congressional intent and chills needed innovation.”
Irena Royzman is a partner with Patterson Belknap Webb & Tyler LLP, where she concentrates on pharmaceutical and biotech patent litigation and is Co-Chair of the Firm’s Biotechnology Practice. She holds a Ph.D. in Biology from the Massachusetts Institute of Technology and the Whitehead Institute, where she was a National Science Foundation fellow.
“Patent invalidity for an on-sale bar is a common defense to a charge of infringement, and parties frequently expend significant time and money on the issue. For example, in our case Honeywell Intl Inc., et al v. Nikon Corporation, et al, 04-cv-01337-JJF, on behalf of co-defendant Fujifilm Corporation, we invalidated the asserted patent on these grounds.
“The on-sale bar under pre-AIA law was an important factor in invention monetization and patent filing strategies. If the AIA is found to have changed the law such that sales maintaining the invention as confidential are not prior art, greater attention will be placed on the structure of licenses and sales of the invention.
“Under the AIA, priority with respect to an invention goes to the first inventor to file a patent application. Thus, even if the AIA is found to have changed the law regarding on-sale bars, there is an incentive to file early.
“The Court’s decision may put significant patents at risk. Companies like Helsinn, who may have relied on the revised wording of the AIA and thus considered pre-filing, confidential sales to not be prior art, may be at risk of having patents invalidated.”
Ian G. DiBernardo is Co-Practice Group Leader of Stroock’s Intellectual Property and Technology Department and Co-Head of Stroock’s FinTech practice. He counsels both emerging and established companies, focusing on complex intellectual property and technology transactions and intellectual property litigation.