Patent Law Alert: All Sales of the Invention, Including Secret Sales May Invalidate a Patent

Introduction

On January 22, 2019, the SUPREME COURT OF THE UNITED STATES issued a decision in HELSINN HEALTHCARE S. A. v. TEVA PHARMACEUTICALS USA, INC., ET AL., which addressed the question of whether secret sale of the invention that occurred more than one year before the effective filing date of the application for patent invalidated the issued patent under Leahy-Smith America Invents Act (AIA). The verdict? Yes, it does.

Background

The Leahy-Smith America Invents Act (AIA) bars a person from receiving a patent on an invention that was “in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.” 35 U. S. C. §102(a)(1). This case required the Court to decide whether the sale of an invention to a third party who is contractually obligated to keep the invention confidential places the invention “on sale” within the meaning of §102(a).

More than 20 years ago, the Court determined that an invention was “on sale” within the meaning of an earlier version of §102(a) when it was “the subject of a commercial offer for sale” and “ready for patenting.” Pfaff v. Wells Electronics, Inc., 525 U. S. 55, 67 (1998). The Court did not fur­ther require that the sale make the details of the inven­tion available to the public.

In this case, on January 30, 2003, nearly two years after Helsinn and its US distributor entered into a license agreement that granted the distributor the right to distribute, promote, market, and sell the 0.25 mg and 0.75 mg doses of palonosetron in the United States, Helsinn filed a provisional patent application covering the 0.25 mg and 0.75 mg doses of palonosetron. Over the next 10 years, Helsinn filed four patent applications that claimed priority to the January 30, 2003, date of the provisional applica­tion. Helsinn filed its fourth patent application—the one in dispute here—in May 2013, and it issued as U. S. Patent No. 8,598,219 (’219 patent). The ’219 patent covers a fixed dose of 0.25 mg of palonosetron in a 5 ml solution. Due to its effective date, the ’219 patent is governed by the AIA. See §101(i).

In 2011, Teva sought approval from the FDA to market a generic 0.25 mg palonosetron prod­uct. Helsinn then sued Teva for infringing its patents, including the ’219 patent. In defense, Teva asserted that the ’219 patent was invalid because the 0.25 mg dose was “on sale” more than one year before Helsinn filed the provisional patent application covering that dose in Janu­ary 2003.

Decision

Because the Court determined that Congress, by using the phrase “otherwise available to the public” did not alter the prior settled meaning of “on sale” when it enacted the AIA, the Court held 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), and thus, here, invalidate the ‘219 patent.

Takeaway

Inventors and their assignees need to be careful about activities engaged in before filing a patent application. Besides public disclosures and public use, a sale or offer for sale that occurs more than one year before the filing for patent, even when the sale is confidential, may invalidate the issued patent. 

Full Court’s decision can be read here: https://www.supremecourt.gov/opinions/18pdf/17-1229_2co3.pdf

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