Under AIA, A Sale is A Sale (and Invalidating), Even If Confidential

Written by: Christopher H. Blaszkowski

Today, the Supreme Court applied long-standing case law to the America Invents Act (2012) (“AIA”) in holding that a commercial sale, even if kept confidential, is invalidating as it places the invention “on sale” under 35 U.S.C. §102(a)(1).  Helsinn Healthcase S.A. (“Helsinn”) is a pharmaceutical company that developed and produced palonosetron, an anti-nausea medication for chemotherapy patients.  In 2001, Helsinn entered into several agreements in which its business partner agreed to exclusively purchase the anti-nausea medication from Helsinn.  The agreements bound the parties to confidentiality.  While public filings mentioned the business dealings, no details concerning the claimed palonosetron formulations were publicly disclosed.  Two years later, Helsinn filed a provisional patent application directed to palonosetron.

In subsequent patent litigation between Helsinn and Teva Pharmaceuticals concerning plonosetron, Teva alleged that the patents at issue were invalid as “on sale” due to Helsinn’s prior business dealings.  The District Court disagreed, but both the Federal Circuit and the Supreme Court found merit in Teva’s defense.

Prior to enactment of the AIA, it was well established that even confidential sales are invalidating as long as the invention is “ready for patenting.”  Pfaff v. Wells Electronics, Inc., 525 U. S. 55, 67 (1998).  Further Supreme Court precedent had never held that an offer must actually be “public” (i.e., publicly disclose the claimed subject matter) to trigger the “on sale” bar.  Because Congress used the same “on sale” language in both the AIA and the 1952 Act, the Supreme Court assumed Congress acquiescence to the previous judicial interpretation of that phrase.  Helsinn argued that the terminal phrase of 35 U.S.C. §102(a)(1) “or otherwise available to the public”—absent in the pre-AIA version of the statute—mandated a different outcome.  But the Supreme Court disagreed, finding that this phrase was just a catch-all that did not change the established meaning of “on sale” under AIA and pre-AIA statutes.