US Supreme Court says confidential sales can invoke on-sale bar
Companies that sell their inventions to third parties under confidential agreements may still end up invalidating their own patents based on the “on-sale” provision, the US Supreme Court said today.
The court ruled unanimously that the America Invents Act (AIA) did not change the meaning of the on-sale doctrine under which patent protection cannot be granted for an invention that was “on sale” before the effective filing date of the application.
The nation’s highest court therefore affirmed an earlier ruling by the US Court of Appeals for the Federal Circuit.
Justice Clarence Thomas, who wrote the opinion for the court, said the ruling was supported by earlier Supreme Court precedent.
The case was brought by Swiss company Helsinn Healthcare after the Federal Circuit invalidated claims of four patents directed to Aloxi (palonosetron hydrochloride), a treatment for chemotherapy-induced nausea and vomiting.
Helsinn had sued Teva, the respondent in the case, for patent infringement after Teva sought approval to market a generic version of Aloxi in 0.25 mg form. Teva counterclaimed that one of the patents was invalid under the on-sale doctrine because the 0.25 mg dose was “on sale” more than one year before Helsinn filed the provisional patent application in 2003.
However, according to Helsinn’s agreements with US company MGI Pharma that had allowed it to sell the 0.25 mg product in the US, MGI was required to keep confidential any proprietary information it received. The district court found that the on-sale provision did not apply, before the Federal Circuit reversed that ruling in 2017.
The Supreme Court therefore had to decide whether confidential sales can qualify as patent-invalidating prior art under the on-sale doctrine.
Justice Thomas said that Supreme Court precedent interpreting the on-sale provision supports the view that a sale or offer of sale does not need to make an invention available to the public.
He added that the Federal Circuit had even “made explicit what was implicit in this court’s pre-AIA precedent, holding that ‘secret sales’ could invalidate a patent”.
Given this settled pre-AIA precedent, Thomas said, the Supreme Court applied the presumption that when Congress re-enacted the same “on sale” language in the AIA, it adopted the earlier judicial construction of that phrase.
“The addition of the catchall phrase ‘or otherwise available to the public’ is not enough of a change for the court to conclude that Congress intended to alter the meaning of ‘on sale’,” he concluded.
The decision goes against the predictions of several lawyers who previously spoke to WIPR.
More to follow.
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