Federal Circuit Declines to Clarify Secret Sales Under § 102

In December of last year, we wrote about the interpretation of “otherwise available to the public” as was being litigated before the U.S. Court of Appeals for the Federal Circuit (CAFC) in Helsinn Healthcare, S.A. v. Teva Pharmaceuticals USA, Inc. Helsinn brought suit against Teva in district court, alleging infringement of four of Helsinn’s patents directed to intravenous formulations of palonosetron. Teva argued that Helsinn’s patent claims were invalid as being statutorily barred under 35 U.S.C. § 102. The district court disagreed, holding that all four of Teva’s patents were valid. Three of the patents-in-suit were analyzed under the version of § 102 in existence before the America Invents Act (AIA), while the fourth was governed by AIA § 102. Last month, in a 3-0 decision, the CAFC reversed, holding that all four patents are invalid, regardless of whether pre-AIA § 102 or AIA § 102 governs.

The § 102 critical date for all four patents-in-suit is January 30, 2002. On April 6, 2001, Helsinn entered into a license agreement and a supply-and-purchase agreement with MGI Pharma, Inc. Both agreements were publicly announced in a joint press release and disclosed in filings with the SEC.

Patent Nos. 7,947,724, 7,947,725 & 7,960,424 (Pre-AIA § 102)

Teva argued, and the district court agreed, that the three patents governed by pre-AIA § 102 were valid because, although a commercial offer for sale was made prior to the critical date, the claimed inventions were not ready for patenting. The Helsinn panel reversed, reasoning that, in light of the framework it set forth in Medicines Co. v. Hospira, Inc., 827 F.3d 1363 (Fed. Cir. 2016), an offer of commercial sale was made as would be generally understood under the principles of contract law. The panel reiterated that “[a] sale occurs when there is a ‘contract between parties to give and to pass rights of property for consideration which the buyer pays or promises to pay the seller for the thing bought or sold’” (citing Trading Techs. Int’l., Inc. v. eSpeed, Inc., 595 F.3d 1340, 1361 (Fed. Cir. 2010)).

Patent No. 8,598,219 (AIA § 102)

With respect to the fourth patent at issue, the district court reasoned that the AIA created a new standard for the on-sale bar – specifically, that a sale must publicly disclose the details of the claimed invention to be invalidating. The district court reasoned that, although the MGI supply-and-purchase agreement disclosed the terms of the sale (e.g., price and payment and delivery methods), the agreement did not publicly disclose the claimed 0.25 mg dose of palonosetron. CAFC reversed, holding that the phrase “or otherwise available to the public” added by the AIA did not change the meaning of § 102 to permit publicly disclosed sales that did not disclose details of the claimed invention. CAFC reasoned that only the existence of the sale must be made public to trigger the on-sale bar under the AIA.

Ambiguity Remains

It is enough that a sale be publicly disclosed to be barring, even if it does not disclose details of the invention. However, and perhaps frustratingly, CAFC’s decision in Helsinn does not clearly answer the question of whether purely secret sales are immune from AIA § 102 (i.e., those which are not publicly disclosed in the first place, but which take place prior to the critical date). Rather, the CAFC opted to not decide this case “more broadly than necessary.” Accordingly, in the meantime, patent applicants should take caution when considering whether to license or sell prior to filing.