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04 February 2019
On 22 January 2019 the Supreme Court in Helsinn Healthcare SA v Teva Pharms USA, Inc held that the sale of a patented invention to a third party that is contractually obligated to keep the invention confidential can trigger the on-sale bar of the Leahy-Smith America Invents Act. The Supreme Court's decision clarifies statutory language in the America Invents Act which has been a source of considerable confusion to patent litigants. The decision also requires that IP owners take care to ensure that public disclosure of their business dealings does not interfere with their patent rights.
Helsinn entered into agreements in 2001 with a third party, MGI, under which MGI agreed to:
The MGI agreements had been publicly disclosed in its 2001 8-K statement but were redacted to shield the price terms and the 0.25mg dose. Helsinn subsequently obtained four patents covering its 0.25mg dose, including US Patent 8,598,219 (the '219 patent), which had been filed after the March 2013 effective date of the America Invents Act and thus was subject to its provisions.
Helsinn then sued Teva in the District Court for the District of New Jersey for infringing the '219 patent. Teva countered that the '219 patent was invalid under the America Invents Act on-sale bar, which precludes a person from obtaining 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 invention".(1) The district court rejected Teva's argument, reasoning that the public disclosure of the agreements in MGI's 8-K did not trigger the America Invents Act on-sale bar because it did not disclose the 0.25mg dose, and thus did not disclose the patented invention. On appeal the Federal Circuit reversed, holding that the existence of the sale from Helsinn to MGI was publicly disclosed in the 8-K, and that this disclosure was sufficient to trigger the America Invents Act on-sale bar, even if the details of the patented invention were undisclosed.
In a unanimous decision authored by Justice Thomas, the Supreme Court affirmed the Federal Circuit. The Supreme Court began by observing that all patent statutes since 1836 have included an on-sale bar, and that a substantial body of law interpreting those statutes (including the Supreme Court's last on-sale bar decision in Pfaff v Wells Electronics, Inc(2) has held or suggested that "a sale or offer for sale need not make an invention available to the public" to trigger the bar. Therefore, the Supreme Court noted that the Federal Circuit "has long held that 'secret sales' can invalidate a patent".
Accordingly, the Supreme Court held that:
[i]n light of this settled pre-[America Invents Act] precedent on the meaning of 'on sale,' we presume that when Congress reenacted the same language in the [America Invents Act], it adopted the earlier judicial construction of the phrase.
The Supreme Court rejected Helsinn's argument that the addition of the language "otherwise available to the public" to the America Invents Act version of the on-sale bar limited the preceding term 'on sale' to disclosures that make the claimed invention available to the public. The Supreme Court characterised the 'otherwise' language in the America Invents Act as a catchall that: "captures material that does not fit neatly into the statute's enumerated categories but is nevertheless meant to be covered" and explained that:
[g]iven that the phrase 'on sale' had acquired a well-settled meaning when the [America Invents Act] was enacted, we decline to read the addition of a broad catchall phrase to upset that body of precedent.
For further information on this topic please contact Christopher Loh at Venable LLP by telephone (+1 410 244 7400) or email (firstname.lastname@example.org). The Venable LLP website can be accessed at www.venable.com.
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