On January 22, 2019, the United States Supreme Court unanimously held that “secret sales” of an invention subject to confidentiality provisions can invalidate patent rights under the “on-sale bar” of 35 U.S.C. § 102(a)(1).
Helsinn Healthcare S. A. v. Teva Pharmaceuticals USA, Inc., 586 U. S. ____ (2019). This hotly debated decision reinforces long-settled precedent regarding the on-sale bar and clarifies its understanding under the AIA.
A patent can be denied in the United States if an invention was “on sale” prior to the effective filing date of a patent application for a claimed invention. The America Invents Act, enacted in 2011, added the language “or otherwise available to the public” to this section. Whether this additional language changed the meaning of “on sale” was up for debate in this case. The Supreme Court unanimously decided that the additional language is a catch-all and does not alter the well-established meaning of “on sale” which was continued in the AIA.
As this case makes clear, a commercial sale to a third party – even one who is required to keep the invention confidential – may still place the invention “on sale” under 35 U.S.C. § 102(a) and prevent or invalidate later patent rights. License agreements are considered commercial sales for this purpose. The Court also indicates offers for sale similarly need not make the details of the invention available to the public to bar patent protection.
Here, Helsinn entered into a license agreement with a third party for the “right to distribute, promote, market and sell” the drug palonosetron in various dosages. The license agreement required the third party to keep confidential any proprietary information obtained under the agreement. The existence of the agreement was publicly disclosed in a joint press release and SEC Form 8-K filings, but the confidential dosages were not publicly disclosed. Nearly two years later, Helsinn filed the first of numerous patent applications for the licensed drug and dosages. The license agreement was ultimately held by the Supreme Court to be a commercial sale that invalidated the patents notwithstanding the fact that the confidential details were not disclosed prior to filing the patent applications.
The moral of the story is the same as it has been: file patent applications before entering into agreements concerning an invention, such as licenses, sales, supply or manufacturing agreements. Failure to do so could prevent you from obtaining patent protection on the invention or risk invalidating patents later, even if confidentiality is maintained.
This post was written by Jessica Hauth.