SUPREME COURT HOLDS THAT AIA ON-SALE BAR APPLIED TO SECRET SALES

By Reza Mollaaghababa
In an inter-partes review proceeding (IPR), a challenger can rely only on patents and printed publications to challenge the validity of a patent claim. In contrast, in a post grant review (PGR) proceeding, a challenger can rely on any ground related to patentability, including prior sale, to challenge a patent claim.  In particular, 35 U.S.C. §102(a)(1) bars a person from receiving a patent on an invention that was “in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.”

Recently, in Helsinn Healthcare S.A. v. Teva pharmaceuticals USA, Inc., et al.,  the U.S. Supreme Court held that the on-sale bar under AIA applies to a sale that was publicly disclosed even though the details of the invention embodied in the sold item was not.  This decision can expand the options available to a challenger in a PGR proceeding.  Moreover, this decision may have implications on IPR proceedings as well when the patentee files a motion to amend.

Helsinn Healthcare S.A. (Helsinn) makes a treatment for chemotherapy-induced nausea and vomiting using the chemical palonosetron.  In 2013, nearly two years after Helsinn had entered into an agreement with MGI Pharma, Inc. (MGI) for distributing, promoting, marketing, and selling a 0.25 mg dose of palonosetron in the United States, Helsinn filed a provisional patent application covering a 0.25 mg dose of palonosetron.  Over the following ten years, Helsinn filed four patent applications claiming priority to the 2013 filing. The fourth application in this series was filed in 2013 and hence is covered by AIA. This application, which claims a fixed dose of 0.25 mg of palonosetron in a 5 ml solution, was issued as U.S. Patent No. 8,598,219 (“the ‘219 Patent”).

In 2011, Teva sought approval to market a generic 0.25 mg palonosetron. Helsinn sued Teva for infringing its patents including the ‘219 Patent. Teva argued that the ‘219 Patent was invalid under  the “on sale” provision of the AIA.  The District Court, however, held that the “on sale” provision of AIA did not apply in this case because the agreements between Helsinn and MGI did not disclose the 0.25 mg dosage of palonosetron.  The Federal Circuit disagreed and held that “if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale” to fall within the AIA’s on-sale bar.

The Supreme Court affirmed the judgement of the Federal Circuit. The  Supreme Court reasoned that its precedents make clear that an “offer for sale could cause an inventor to lose the right to a patent, without regard to whether the offer discloses each detail of the invention.”  The Court further indicated that the Federal Circuit, following the Court’s precedents, has long held that “secret sale” can invalidate a patent.

Notwithstanding such precedents, the Court still had to consider whether the Congress had intended to change the meaning of the “on-sale” bar under AIA. The Court concluded that the Congress intended to adopt the earlier judicial construction of the on-sale bar. In particular, the Court noted that the new statute retained the same language used in the previous statute and added only a new catchall phrase (“or otherwise available to the public”).  The Court held that “Given that the phrase “on sale” had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase to upset the body of precedent.”

In a PGR proceeding, a challenger can challenge a patent claim based on any statutory ground related to patentability, including on-sale bar. As such, the Court’s decision expands the scope of prior art available for use in a PGR proceeding.

In contrast to PGR, in an IPR proceeding, a challenger can rely only on patents and printed publications for challenging a patent claim. In a recent PTAB decision, the Board, however, held that a Petitioner can oppose substitute claims proposed by a Patent Owner in a motion to amend as being directed to non-statutory subject matter under 35 U.S.C. §101. In particular, in a Decision to response to a motion for rehearing filed by the Patent Owner, the Board held that although the statute limits a petitioner to requesting cancellation of existing claims  based on §102 and §103 (i.e., anticipation and obviousness), it “does not, however, limit the grounds of unpatentability that can be raised in response to proposed substitute amended claims presented in a motion to amend.”  The Board further explained that “the statutory provision providing a right to a motion to amend, 35 U.S.C. §316(d), does not prevent us from considering unpatentability under sections other than §102 and §103 with respect to substitute claims.”

Accordingly, it appears that petitioners may be able to raise public use and/or on-sale bars in opposing substitute claims presented by a patent owner in a motion to amend.

The Court’s decision, thus, can expand the petitioner’s arsenal for challenging a patent not only in a PGR but also in an IPR proceeding.

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