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Federal Circuit Holds Non-Public Sales Can Still Satisfy the On-Sale Bar for Patents under the AIA

Posted in Patent Law

In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the United States Court of Appeals for the Federal Circuit recently ruled that the America Invents Act’s (“AIA”) did not change the meaning of the on-sale bar provision in 35 U.S.C. § 102.   The on-sale bar provision holds that sales of an invention one year prior to the patent filing are prior art even if the sale is made by the patent owner and does not publically disclose the invention.  Under Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), application of the on-sale bar requires satisfaction of a two-prong test that: (1) “the product must be the subject of a commercial offer for sale” and (2) “the invention must be ready for patenting.”eric_caliguiri_web

In the case, Helsinn Healthcare S.A. (“Helsinn”) brought suit against Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries, Ltd. (collectively, “Teva”) alleging that the filing of Teva’s Abbreviated New Drug Application (“ANDA”) constituted an infringement of various claims of four patents directed to reducing the likelihood of CINV. CINV is a serious side effect of chemotherapy treatment.  In defense, Teva argued the asserted claims were invalid under the on-sale bar provision of 35 U.S.C. § 102.

In addressing the on-sale issue, the district court applied the two-step framework of Pfaff and found that the patents-in-suit were valid.  With respect to three of the patents, all subject to pre-AIA § 102, the district court concluded that there was a commercial offer for sale before the critical date, but that the invention was not yet ready for patenting.  With respect to the fourth patent, which is governed by the AIA version of § 102, the district court concluded that there was no commercial offer for sale because the AIA changed the relevant on-sale bar standard, and the invention was not ready for patenting.

In coming to the conclusion that the AIA changed the on-sale bar standard, the district court reasoned that before the AIA, the on-sale bar provision of § 102 stated that a person was entitled to a patent unless the invention was patented or “in public use or on sale in this country, more than one year prior to the date of application.”  Thus, courts held that even confidential sales could potentially trigger the on-sale bar under that provision.  Congress amended the on-sale bar in the AIA, which applies to patents filed after March 2013.  The new § 102 states patents are allowed unless the claimed invention was patented or “in public use, on sale, or otherwise available to the public” before a patent is filed.

The district court thus reasoned that the “otherwise available to the public” phrase means that only public sales trigger the AIA’s version of the on-sale bar, unlike prior to the AIA when private sales could satisfy the on-sale bar. Thus, in effect, the district court held that the AIA changed the meaning of the on-sale bar and § 102 now “requires a public sale or offer for sale of the claimed invention.”  The district court concluded that, to be “public” under the AIA, a sale must publicly disclose the details of the invention.

The Federal Circuit reversed the district court and held the asserted claims of the patents-in-suit were subject to an invalidating contract for sale prior to the critical date, and the AIA did not change the statutory meaning of “on sale” in the circumstances involved. The Federal Circuit also found the asserted claims were ready for patenting prior to the critical date.

In first addressing the on-sale bar and whether the AIA requires that the details of the claimed invention to be publicly disclosed before the on-sale bar is triggered, the Federal Circuit held “requiring such disclosure as a condition of the on-sale bar would work a foundational change in the theory of the statutory on-sale bar.”  The Federal Circuit reasoned a primary rationale of the on-sale bar is that publicly offering a product for sale that embodies the claimed invention places it in the public domain, regardless of when or whether actual delivery occurs.  The patented product need not be on-hand or even delivered prior to the critical date to trigger the on-sale bar.

The Federal Circuit further explained that “prior cases have applied the on-sale bar when there is no delivery, when delivery is set after the critical date, or, even when, upon delivery, members of the public could not ascertain the claimed invention.”  The Federal Circuit found no indication Congress intended to overrule these cases. Instead, the Federal Circuit reasoned Congress, in stating that the invention must be available to the public, “meant that the public sale itself would put the patented product in the hands of the public.”  Thus, the Federal Circuit concluded that, after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale.

The Federal Circuit also addressed whether the invention was ready for patenting as of the critical date.  Under Pfaff, there are at least two ways in which an invention can be shown to be ready for patenting: “by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention.”   The Federal Circuit found the patented invention was ready for patenting because it was reduced to practice before the critical date.  Thus, the Federal Circuit also reversed the district court on this point, and invalidated the asserted claims of all four patents.