On January 22, 2019, the Supreme Court decided Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., No. 17-1229, holding in a unanimous decision that an invention sold to a third party under a confidentiality agreement may place the invention “on sale” under the Leahy-Smith America Invents Act (AIA), 35 U.S.C. § 102(a)(1), such that no patent on the invention can be issued.
In the late 1990s, Helsinn Healthcare, a Swiss pharmaceutical company, developed a palonosetron drug called Aloxi to treat chemotherapy-induced nausea and vomiting. In 2001, Helsinn entered into agreements with Minnesota company MGI Pharma, granting MGI the right to distribute, promote, market, and sell the 0.25 mg and 0.75 mg doses of palonosetron in the United States. The agreements required MGI to keep confidential any proprietary information received under the agreements. Nearly two years after Helsinn and MGI entered into the agreements, Helsinn filed a provisional patent application covering the 0.25 mg and 0.75 mg doses of palonosetron, ultimately receiving a patent for the 0.25 mg dose in 2013.
In 2011, Teva Pharmaceutical Industries sought approval from the FDA to market a generic 0.25 mg palonosetron product. Helsinn then sued Teva for infringing its patents. Teva countered that Helsinn’s patent was invalid because the 0.25 mg dose was “on sale” more than one year before Helsinn filed the provisional patent application covering that dose. The district court held that the “on sale” provision did not apply because an invention is not “on sale” unless the sale makes the claimed invention available to the public, which did not happen with Helsinn’s invention since MGI Pharma agreed to keep the invention confidential. The Federal Circuit reversed, holding that the details of the sale need not be publicly disclosed to fall within the AIA’s on-sale bar.
The Supreme Court affirmed the Federal Circuit, holding that, under the AIA, an inventor’s sale of an invention to a third party under a confidentiality agreement qualifies as being “on-sale” for purposes of barring a patent on that invention.
The AIA precludes a person from obtaining a patent on an invention that was “patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.” 35 U.S.C. § 102(a)(1). As the Court explained, “Congress enacted the AIA in 2011 against the backdrop of a substantial body of law interpreting § 102’s on-sale bar,” as every patent statute since 1836 has included an on-sale bar. In 1998, the Court determined that the pre-AIA on-sale bar applies when (1) the invention is “the subject of a commercial offer for sale,” and (2) the invention is “ready for patenting.” The Court noted that its precedents suggest that a sale need not make an invention available to the public to fall under the on-sale provision, and the Federal Circuit explicitly holds that “secret sales” can still invalidate a patent.
In light of this settled pre-AIA precedent on the meaning of “on sale,” the Court concluded that when Congress reenacted the same language in the AIA in 2011, it “adopted the earlier judicial construction of the phrase.” The AIA “retained the exact language used in its predecessor statute” (“on sale”), adding only a new catchall clause (“or otherwise available to the public”). The Court found that the new clause “captures material that does not fit neatly into the statute’s enumerated categories but is nevertheless meant to be covered.” The Court rejected Helsinn’s argument that the AIA’s additional words “otherwise available to the public” limit the preceding terms in § 102 to disclosures that make the claimed invention available to the public. The Court concluded that this addition “is simply not enough of a change for us to conclude that Congress intended to alter the meaning of the reenacted term ‘on sale.’”
Justice Thomas delivered the opinion of a unanimous Court.