Helsinn Healthcare S. A. v. Teva Pharms. United States, Inc., 139 S. Ct. 628 (2019)
This decision addresses the question of whether secret sales trigger the on sale bar under the new Section 102(a)(1) of the AIA. The lesson is that activities under a technology license or joint research agreement can unknowingly trigger the on sale bar and its one year deadline by which patent applications need to be filed to avoid forfeiting patent rights.
Many years later, TEVA sought FDA approval for a generic 0.25 mg form of the Aloxi product. Helsinn promptly sued TEVA for infringing the ‘219 patent. TEVA defended on grounds that secret sales from Helsinn to MGI Pharma occurred under the license and supply agreements more than one year prior to the filing of the priority application. According to TEVA, the secret sales triggered the one-year on sale bar, which ran before the Helsinn priority application was filed.
35 U.S.C. 102(A) NOVELTY; PRIOR ART
A person shall be entitled to a patent unless— (1) 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;
Section 102(a)(1) does not authorize a one year grace period, and on its face indicates that patent rights are immediately lost if one of the listed events occurs. However, Section 102(b) establishes the one-year grace period with respect to events in Section 102(a), such as an on sale event.
Does the phrase “otherwise available to the public” mean that all the events in the 102(a)(1) list, including the on sale event, necessarily must incorporate a public aspect in order to trigger the one year deadline? This is a tough question to answer, indeed, as the different courts developed different answers first in the District Court, then on appeal to the Federal Circuit, and then on appeal to the U.S. Supreme Court.
The district court and the Federal Circuit applied two, completely different viewpoints and reached opposite results. The Supreme Court next applied a third judicial viewpoint, which of course controls how this issue is interpreted. The Supreme Court determined that the phrase “otherwise available to the public” in the new statute is too vague to have incorporated a public aspect into all the events listed in the statute. Hence, according to the Court, the old law with regard to secret sales and the on sale bar remained intact after passage of the AIA. This meant that secret sales trigger the on sale bar of Section 102(1)(a), just as was the case under the old law. Helsinn lost its patent to these secret sales, opening the way for TEVA to enter the market with a competing, generic product.
Public knowledge of the transactions might have been relevant to the Federal Circuit, but not to the Supreme Court. This means that secret sales whose existence is secret still trigger the on sale bar under Helsinn.
The result is that any technology-related agreement can unknowingly trigger the on sale bar during pre-commercialization phases of the relationship. This can be particularly problematic under joint research relationships when a product might not exist at the outset, but then is developed and ready for patenting at some intermediate time long before commercialization to third parties occurs. Parties need to stay on top of this issue by either closely monitoring progress and promptly patenting to avoid the running of the one year grace period and/or by placing agreements that do not prematurely setup supply obligations and or material transfers that trigger the on sale bar.