US Supreme Court: Secret Sale of an Invention May Qualify as Prior art under AIA

17.02.2019

By Adv. Yehuda Neubauer, Partner, Ehrlich, Neubauer & Melzer of Ehrlich Group.

In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. dated January 22, 2019, The United States Supreme Court unanimously held that the sale of an invention to a party that is obligated to keep the invention confidential may be considered “on sale” for the purposes of the Leahy-Smith America Invents Act of 2012 (“AIA“). The on-sale bar is a limitation on patentability according to which an invention that was “in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention” will be considered as prior art and therefore not patentable.

The AIA excludes a person from obtaining a patent on an invention that was “on sale” before the effective filing date of the patent application: “A person shall be 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.” (35 U. S. C. §102(a)(1)). The US patent statute in effect before the passage of the AIA included a similar exclusion, known as the on-sale bar: “A person shall be entitled to a patent unless— “(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or “(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States.

The Federal Circuit in Helsinn reversed the district Court’s decision determined that the “on sale” provision did not apply because Helsinn did not disclose specific information regarding the invention, but only the existence of the sale. The federal Court therefore concluded that if the existence of the sale is public, the details of the invention need not be publicly disclosed to fall within the AIA’s on-sale bar. The Supreme Court Affirmed. In a relatively short decision, the US Supreme Court started by explaining that the on-sale bar was a part of the US patent statute in force even before the AIA, following earlier decisions (such asPfaff v. Wells Electronics, Inc., 525 U. S. 55, 67 and Special Devices, Inc. v. OEA, Inc., 270 F. 3d 1353, 1357) that supports the view that a sale or offer of sale need not make an invention available to the public to constitute invalidating prior art. In fact, The Supreme Court stated that every US patent statute since 1836 has included an on-sale bar.

According to the decision, given the pre-AIA precedent holding that “secret sales” could invalidate a patent, the Supreme Court applied the presumption that when Congress reenacted the same “on sale” language in AIA, it adopted the earlier judicial construction of that phrase. Accordingly, the Supreme Court held that a commercial sale to a third party who is required to keep the invention confidential may place the invention “on sale” for the purposes of AIA.

While the Court made it clear that “Helsinn does not ask us to revisit our pre-AIA interpretation of the on-sale bar”, the language of the decision is somewhat cautious and vague (“a commercial sale to a third party who is required to keep the invention confidential may place the invention ‘on sale’ under the AIA” (emphasis added)). The decision in Helsinn left some questions unanswered. When exactly will it be considered on sale?  What if the existence of a sale was entirely confidential to the public? The decision does not provide answers. However, it is clear that the best practice is to file before selling.

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