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At Long Last: Supreme Court Agrees to Hear AIA Secret Sales Case

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In 2011, Congress adopted the Leahy-Smith America Invents Act (AIA), marking a significant shift in the country’s patent laws. Ever since its introduction in Congress, the AIA has left unanswered the question of whether “secret sales” — sales where the technical details of the invention are kept confidential — trigger the on-sale bar to patentability. The on-sale bar prevents an invention from being patented if it was on sale for more than one year before the filing date.1 Recently, the Supreme Court granted a petition for certiorari for Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. to clarify this aspect of the on-sale bar.

Background
Before the AIA, an invention was patentable unless it was “patented or described in a printed publication . . . or in public use or on sale in this country, more than one year prior to the date of application.”2 Traditionally, the on-sale bar applied if two conditions were met: (1) the product is the subject of a commercial offer for sale, and (2) the invention is ready for patenting.3 Under the pre-AIA standard, the first condition was met even if the offer for sale and/or technical details about the invention sold was kept secret.4 But after the AIA was adopted, the statutory language that defined the on-sale bar changed. Under the AIA, an invention is entitled to a patent unless “the claimed invention 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.”5 Helsinn focuses on the significance of the addition of the phrase “otherwise available to the public” and its bearing on the meaning of “on sale.”

In Helsinn, the petitioner Helsinn Healthcare entered into an agreement to distribute and sell its drug more than one year before filing a patent application for the drug.6 Some details about the sale were made public, including the price, method of payment, and method of delivery. However, technical details about the invention were kept private. Helsinn maintained that, based on the phrase “otherwise available to the public”, details about the invention must be made public to trigger the on-sale bar post-AIA.7 The Federal Circuit disagreed, holding that the on-sale bar applies even if only the existence of the sale is made public, because holding otherwise would have created a “foundational change in the theory of the statutory on-sale bar.”8 The Federal Circuit maintained “[i]f Congress intended to work such a sweeping change to our on-sale bar jurisprudence . . ., it would [have done] so by clear language.”9 Helsinn appealed the decision, and in June 2018, the Supreme Court agreed to hear the case.10

Issues and Likely Arguments Before the Supreme Court
The Supreme Court will determine whether, under the AIA, “an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.”11 One reason why the Supreme Court may have decided to accept this case is because the Federal Circuit’s opinion contradicts the U.S. Patent and Trademark Office’s (PTO) current interpretation. According to the PTO’s prosecution guidelines, the adoption of the AIA changed the meaning of “on sale” so that “the sale must make the invention available to the public.”12 The Federal Circuit’s contrary decision created much confusion. As Helsinn highlighted in their petition for certiorari, the Federal Circuit’s decision affected what qualifies as prior art. Several organizations, including the American Intellectual Property Law Association, the Intellectual Property Owners Association, and US Inventor, Inc., filed amicus briefs also asking the Supreme Court to take the case and clarify the on-sale bar.13

In their petition for certiorari, Helsinn asked the Supreme Court to adopt the PTO’s interpretation of the on-sale bar. The primary argument that Helsinn makes in favor of reversing the Federal Circuit is based on statutory interpretation.14 That is, Helsinn maintains that the “plain language” of the statute, read in its entirety, supports their interpretation of the on-sale bar. Helsinn first focuses on the last three categories of prior art listed in Section 102(a)(1), where the claimed invention is “in public use, on sale, or otherwise available to the public.”15 Helsinn argues that because the final phrase “otherwise available to the public” can apply to the earlier phrases surrounding it, rules of statutory interpretation requires the final phrase be applied to all phrases.16 Under this reasoning, the phrase “otherwise available to the public” implies that a claimed invention that is “on sale” must be made public in order to qualify as prior art.17 Next, Helsinn turns to Section 102(b)(1) in response to an argument that the opposing party made before the Federal Circuit. Section 102(b)(1) provides exceptions for certain disclosures that would otherwise qualify as prior art under Section 102(a)(1).18 Even though Section 102(b)(1) refers to both “disclosure[s]” and “public[] disclos[ures],” Helsinn argues that “the term ‘public[]’ in that provision does nothing to undermine [Helsinn’s interpretation] that all Section 102(a)(1) prior art must be ‘available to the public.’”19

Helsinn makes two additional arguments in its petition to the Supreme Court for why the on-sale bar should not be triggered where technical details of an invention are not made public. First, Helsinn focuses on the change in the U.S. patent system from first-to-invent to first-to-file with the AIA.20 One of the reasons for adopting the AIA and the first-to-file system was to bring the American patent system more in line with the patent systems used in most other countries.21 Helsinn points out that no other country includes secret sales in their prior art, so the Federal Circuit’s decision regarding the on-sale bar goes against the broader statutory structure.22 Second, Helsinn contends that the Federal Circuit’s decision is inconsistent with the purpose of the patent system — that is, “[t]he basic quid pro quo . . . for granting a patent monopoly is the benefit derived by the public from an invention with substantial utility.”23 The purpose of prior art is to prevent taking a useful invention away from public use. Because a sale that fails to publicly disclose technical details about the invention does not put it in the public domain, Helsinn argues that such a sale should not qualify as prior art.24

The Supreme Court is expected to hear the Helsinn case later in 2018, which will provide more clarity on this issue. Much of the Court’s focus will likely center on Helsinn’s primary statutory interpretation argument, where the Justices must consider both strict language construction and the policy consideration of overturning decades of precedent. In at least one recent patent case before the Supreme Court, the conservative bloc of the Court favored strict construction while the liberal wing of the Court was more swayed by policy arguments. In April 2018, the Supreme Court held in SAS that when the PTO institutes an inter partes review (IPR), it must decide the patentability of all the claims the petitioner has challenged.25 Justice Gorsuch wrote the 5-4 majority opinion in which he focused on interpreting the “plain meaning” of the relevant statutory language. Chief Justice Roberts and Justices Kennedy, Thomas, and Alito also joined Justice Gorsuch in the majority opinion.26 Justices Ginsburg, Breyer, Sotomayor, and Kagan dissented.27 Justice Breyer’s dissent referred to Congress’s intent and would have held that partial inter partes review appropriate.28 If a similar trend occurs in Helsinn, one might expect the Justices of the conservative bloc to find the appellant’s arguments persuasive.

With Justice Kennedy’s retirement, it is possible that a new Justice will join the Supreme Court before the October 2018 Term begins. President Trump has nominated D.C. Circuit Judge Brett Kavanaugh who has focused on the legislative text in his previous decisions involving statutory interpretation.29 If Judge Kavanaugh replaces Justice Kennedy, his views on statutory interpretation would be expected to fall in line with Justice Gorsuch’s SAS opinion and the rest of the conservative bloc on the Supreme Court.

Open Questions and Best Practices
Even if the Supreme Court adopts Helsinn’s definition of the on-sale bar, an open question likely will remain as to whether that applies to entirely secret sales, i.e., sales in which both the technical details of the invention and the existence of the sale itself are kept confidential. The PTO’s guidance indicates that the AIA does not cover these types of secret sales or secret offers for sale—that is, where the existence of the sale is a secret.30 However, the Supreme Court will likely not reach this issue in Helsinn since the existence of the sale at issue in that case was clearly made public. The forthcoming Helsinn decision may provide more guidance on this issue, but in the meantime, patent owners and applicants should consider a secret sale as a trigger for the one-year grace period to avoid any issues with the AIA on-sale bar in the future.


1 See 35 U.S.C. § 102 (2012).

2 35 U.S.C. § 102(b) (2006).

3 Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998).

4 See, e.g., In re Caveney, 761 F.2d 671, 675 (Fed. Cir. 1985).

5 35 U.S.C. § 102(a)(1) (2012) (emphasis added).

6 Petition for Writ of Certiorari at 9-10, Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., No. 17-1229 (U.S. Feb. 28, 2018).

7 Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., 855 F.3d 1356, 1368 (Fed. Cir. 2017).

8 Id. at 1369-70.

9 Id. at 1371 (quoting Dir., OWCP v. Perini N. River Assocs., 459 U.S. 297, 321 (1983)).

10 Jan Wolfe, Supreme Court Agrees to Clarify “On Sale” Bar in Helsinn Patent Case, Reuters (June 25, 2018), https://www.reuters.com/article/helsinn-patent/supreme-court-agrees-to-clarify-on-sale-bar-in-helsinn-patent-case-idUSL1N1TR20D.

11 Petition for Writ of Certiorari, supra note 6, at I.

12 MPEP § 2152.02(d) (9th ed. rev. Aug. 2017).

13 Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., No. 17-1229, United States Supreme Court.

14 Petition for Writ of Certiorari, supra note 6, at 15.

15 Id. at 15-16.

16 Id. at 17-18.

17 Id. at 15.

18 Id. at 19.

19 Id. at 19-20.

20 Id. at 23.

21 Id.

22 Id.

23 Id. at 26 (quoting Brenner v. Manson, 383 U.S. 519, 534 (1966)).

24 Id.

25 SAS Institute Inc. v. Iancu, 138 S. Ct. 1348, 1355 (2018). 

26 Id. at 1350.

27 Id.

28 Id. at 1364-65 (Breyer, J., dissenting).

29 Van Lindberg, Judge Kavanaugh on Intellectual Property, Law360 (July 16, 2018, 3:30 PM EDT), https://www.law360.com/articles/1063708/judge-kavanaugh-on-intellectual-property.

30 MPEP § 2152.02(d) (9th ed. rev. Aug. 2017).

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