The America Invents Act did not make over patent law’s “on sale” bar, the Supreme Court ruled Tuesday.
The justices unanimously held that, despite some wording changes in the 2011 law, sales of a new invention, whether public or confidential, will trigger the one-year statutory clock on obtaining a patent.
“Given that the phrase ‘on sale’ had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase to upset that body of precedent,” Justice Clarence Thomas wrote for the court.
Helsinn Healthcare v. Teva Pharmaceuticals will disappoint small pharmaceutical operations, which told the court they benefit from the freedom to strike confidential distribution deals before obtaining a patent on new drugs and formulations.
In Helsinn Healthcare’s case, the family-owned Swiss company entered into a licensing and distribution agreement with Minnesota-based MGI Pharma Inc. in 2001 for formulations of palonosetron, the active ingredient in Helsinn’s drug for treating chemotherapy-induced nausea and vomiting. The deal was contingent on Food and Drug Administration approval, which Helsinn eventually obtained. Only then did Helsinn patent its 0.25 milligram formulation, more than a year after its deal with MGI.
Helsinn argued the America Invents Act clarified the on-sale bar applies only to public sales. Its Williams & Connolly lawyers pointed to language that says an invention can be patented unless it’s been “described in a printed publication, or in public use, on sale, or otherwise available to the public.”
Williams partner Kannon Shanmugam argued the addition of “otherwise available to the public” in the AIA made clear that private sales don’t trigger the on-sale bar.
But the Supreme Court agreed with Teva Pharmaceuticals Industries Ltd., which was represented by Goodwin Procter partner William Jay, tech companies and a group of law professors led by Stanford’s Mark Lemley, which argued the on-sale bar was well-established in Supreme Court and Federal Circuit precedent, and the mere addition of the “otherwise” phrase wasn’t enough to overrule all of it.
Thomas’ nine-page ruling looked all the way back to the 1829 case Pennock v. Dialogue, which said an inventor may not “sell his invention publicly” and later “take out a patent” and “exclude the public from any farther use than what should be derived under it.”
“Although this court has never addressed the precise question presented in this case, our precedents suggest that a sale or offer of sale need not make an invention available to the public,” he wrote.
And the U.S. Court of Appeals for the Federal Circuit “has made explicit what was implicit in our precedents. It has long held that ‘secret sales’ can invalidate a patent,” Thomas wrote.
“In light of this earlier construction, we determine that the reenactment of the phrase ‘on sale’ in the AIA did not alter this meaning,” Thomas wrote. “Accordingly, a commercial sale to a third party who is required to keep the invention confidential may place the invention ‘on sale’ under the AIA.”