AIA On-Sale Bar Applies to Publicized Sales, Even When Knowledge of Sale Did Not Disclose the Underlying Invention

By Reza Mollaaghababa
The Court of Appeals for the Federal Circuit (CAFC) recently construed the on-sale bar provision of 35 U.S.C. 102(a) in a way that will make it easier for petitioners to challenge third party patents. While in an inter-partes review proceeding, a petitioner can rely only on prior art patents and printed publications to challenge the validity of one or more claims of a third-party patent, in a post-grant review proceeding, a petitioner can raise any statutory ground of invalidity including the on-sale bar provision of 35 U.S.C. 102(a).  This statutory provision, as modified by America Invents Act (AIA), bars patenting a claimed invention if 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 inventions.”

Prior to the enactment of AIA, it was well established that the sale of a claimed invention more than one year from the effective filing date of a patent application, even if the sale did not involve disclosing the underlying invention, would bar patenting the invention. However, the change in the wording of this statutory provision introduced by AIA, and particularly, the use of the phrase “otherwise available to the public” immediately following “on sale” created ambiguity about whether a sale of a claimed invention without disclosing the underlying invention would trigger the on-sale bar provision.

Recently, in the case of Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the CAFC cleared up this ambiguity and held that the on-sale bar provision of 35 USC 102(a) applies to the sale of a claimed invention even if the sale did not involve disclosing the underlying invention.  This decision can provide yet another tool for challenging patents in a post-grant proceeding.   

Helsinn is the owner of four patents directed to intravenous formulations of palonosetron for reducing chemotherapy-induced nausea and vomiting (CINV), namely, U.S. Patent Nos. 7,947,724; 7,947,725; 7,960,424; and 8,598,219.  While the ‘724, 725 and ‘424 patents were issued under the pre-AIA on-sale bar provision, the ‘219 patent was based on an application with different claims filed after March 16, 2013 (the effective of the relevant AIA provisions) and, hence, was governed by the new AIA on-sale bar provision.  As each of these four patents claimed priority to a provisional application filed on January 30, 2003, the critical date for the on-sale bar analysis is January 30, 2002.

The use of palonosetron for reducing CINV was not new. In fact, U.S. Patent No. 5,202,333 (the “’333 patent”) taught the use of palonosetron for treating CINV. Helsinn’s patents, however, purport to disclose novel intravenous formulations using unexpectedly low concentrations of palonosetron that were not taught in prior art. In particular, a number of claims of these patents relate to such formulations that include a 0.25 mg dose of palonosetron in a 5 mL solution.

In 1998, Helsinn acquired a license under the ‘333 patent from Roche to palonosetron and all intellectual property resulting from ongoing palonosetron research.  Roche and its predecessor, Syntex, had already conducted Phase I and Phase II clinical trials, which found the 0.25 mg dose to be effective in reducing CINV for 24 hours.  In early 2000, Helsinn submitted safety and efficacy protocols for Phase III clinical trials to FDA for the study of 0.25 mg and 0.75 mg dosages of palonosetron.

In April 2001, about two years prior to the filing date of the provisional application that matured into the patents, Helsinn entered into a license agreement as well as a Supply and Purchase Agreement with MGI Pharma, Inc., a pharmaceutical company.  Under the license agreement, MGI agreed to pay $11 million in initial payments to Helsinn plus additional future royalties for distribution of products that covered the 0.25 mg and 0.75 mg palonosetron.  Under the Supply and Purchase Agreement, MGI agreed to purchase exclusively from Helsinn and Helsinn in turn agreed to supply MGI’s requirements of whichever of the 0.25 mg or 0.75 mg palonosetron products that would be approved by the FDA.

The agreements were announced in a press release as well as in an SEC filing, but the price terms and the specific formulations covered by the agreements, including the 0.25 and 0.75 dosages, were not publicly disclosed.

In September 2002, Helsinn filed its New Drug Application for the 0.25 mg dose formulation, but did not seek FDA approval for the 0.75 mg dose formulation.  FDA issued approval for the 0.25 mg dose formulation in July 2003.

In 2011, Teva filed an ANDA seeking FDA approval of its 0.25 mg dose generic palonosetron product, which included a certification that the claims of the Helsinn’s patents were invalid and/or not infringed. Helsinn then sued Teva under the Hatch-Waxman Act, alleging infringement by Teva.

After a bench trial, the district court held that Teva’s 0.25 mg dose formulation infringed all of the patents-in-suit. With regard to the pre-AIA patents, the district court held that the claimed invention was not ready for patenting prior to the critical date of January 30, 2002 and hence the on-sale bar did not apply to those patents. With regard to the patent governed by AIA, the district court held that the on-sale bar under AIA requires a public sale or offer for sale of the claimed invention, and hence to be “public” under the AIA, “a sale must publicly disclose the details of the invention.”

The CAFC disagreed with the district court, and held that the Supply and Purchase Agreement triggered the on-sale bar, even for the patent governed by the AIA. The CAFC explained that the Supply and Purchase Agreement had all the hallmarks of a commercial contract for sale.  The CAFC pointed out that the Agreement “obligated MGI to purchase exclusively from Helsinn and obligated Helsinn to supply MGI’s requirements of the 0.25 and 0.75 mg doses if approved by FDA.”  In response to Helsinn’s argument that the Agreement was not invalidating because at the critical date it was uncertain whether FDA would approve the 0.25 mg dose, the CAFC emphasized that “[t]here can be no real dispute that an agreement contracting for the sale of the claimed invention contingent on regulatory approval is still a commercial sale as the commercial community would understand the term.”

The CAFC further addressed whether the AIA amendments to section 102 of the patent statute changed the meaning of the on-sale bar such that it would not encompass secret sales. Helsinn argued that the AIA on-sale bar does not apply unless the sale would disclose the invention to the public.  The CAFC did not agree and held that “after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale,” and hence the Supply and Purchase Agreement “constituted a sale of the claimed invention – the 0.25 mg dose – before the critical date, and therefore both the pre-AIA and AIA on-sale bars apply.”

The CAFC further held that the claimed invention was ready for patenting as of the critical date of January 30, 2002, notwithstanding the fact that FDA approved the 0.25 mg dose formulation after that date. The CAFC indicated that it was uncontested that the 0.25 mg formulation had been made and was stable prior to the critical date.  The CAFC further found that the evidence was overwhelming that before the critical date, “it was established that the patented invention would work for its intended purpose of reducing the likelihood of emesis.” The CAFC emphasized that the “completion of Phase III studies and final FDA approval are not pre-requisites for the invention here to be ready for patenting.”

One question that the Helsinn case did not answer is whether a sale or an offer for sale that is made under an obligation of confidentiality and whose existence is not disclosed to the public would trigger the AIA on-sale provision.

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