Docket No. 2016-1284, -1787
DYK, MAYER, O’MALLEY
May 1, 2017 (FC panel); June 25, 2018 (SCOTUS); Jan. 24, 2019 (SCOTUS)
Update 2 (Jan. 24, 2019): Update 2 (Jan. 24, 2019): SCOTUS affirmed the FC panel decision, holding that “a commercial sale to a third party who is required to keep the invention confidential may place the invention ‘on-sale’” under 35 U.S.C. § 102(a)(1) of the AIA (citing Pfaff, US 1998 (“the subject of a commercial offer for sale” and “ready for patenting”) (“…the AIA did not alter this meaning”); Special Devices, FC 2001 (“commercial stockpiling”); Woodland Trust, FC 1998).
Update 1 (June 25, 2018): SCOTUS granted certiorari (17-1229), the question presented being “[w]hether, under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.” Helsinn argued that the AIA change from the ““on sale in this country” to “on sale, or otherwise available to the public” means the claimed invention (the subject of the sale) must be available to the public in order to trigger the AIA on-sale bar (“If the decision below is allowed to stand, the United States would be the only industrialized country to invalidate patents on the basis of ‘secret’ prior art.”)
Brief Summary of original FC panel decision: FC panel reversed DC and found the asserted claims invalid under the § 102(b) on-sale bar, the “sale” being the covered by a confidentiality agreement. The FC panel concluded that the AIA did not change the meaning of the on-sale bar (it may “encompass secret sales”) and “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 the sale.”
Summary: Helsinn appealed DC findings that three of its pre-AIA patents were not invalid under the § 102 on-sale bar because while there was an offer for commercial sale, the invention was not ready for patenting, and a fourth AIA patent was not invalid because the AIA changed the relevant standard (i.e., AIA § 102(b) “requires a public sale or offer for sale of the claimed invention”). The FC panel disagreed with all of these conclusions. The Orange Book-listed patents (US 7,947,724; 7,947,725; 7,960,424; and 8,598,219) are directed to IV formulations of palonosetron for reducing or reducing the likelihood of chemotherapy-induced nausea and vomiting (“CINV”) “using unexpectedly low concentrations of palonosetron [0.25 mg and 0.75 mg] that were not taught by the prior art.” Teva’s 0.25 mg product was found by the DC to infringe the claims of the patents. The patents all claim priority to a provisional application filed on Jan. 30, 2003 (the § 102(b) critical date therefore being Jan. 30, 2002), and the parties agreed the AIA ‘219 patent has the same critical date as the pre-AIA patents (noting in FN1 that “[t]he one-year grace period in the AIA is less protective than under pre-AIA § 102(b) for reasons not relevant here”). Helsinn entered into a “binding” License Agreement and Supply and Purchase Agreement (SPA) with MGI Pharma, Inc. (“MGI”) on April 26, 2001 which obligated Helsinn to sell the 0.25 mg and 0.75 mg doses of palonosetron to MGI if approved by the FDA. The SPA “included…specific terms, such as price, method of payment, and method of delivery” and “[e]ven though MGI’s firm orders…were ostensibly ‘subject to written acceptance and confirmation by [Helsinn] before becoming binding”, “Helsin was nonetheless obligated to meet or designate a third party manufacturer to meet MGI’s firm orders.” It was publicly disclosed in MGI’s April 25, 2001 8-K filing “as obligating Helsinn to supply MGI’s ‘requirements of finished product” (the FC noting that under Enzo (FC 2005) “the fact that an agreement covered one party’s requirements as opposed to a specified quantity does not prevent application of the on-sale bar”). Helsinn argued the SPA was not invalidating because FDA approval was uncertain and “a condition precedent to the sale.” Under the UCC, however, the FC panel explained that “[a] contract for sale that inclused a condition precedent is a valid and enforceable contract” (BG Grp. US 2014). And “the absence of FDA or other regulatory approval before the critical date does not prevent a sale or offer for sale from triggering the on-sale bar”, although it “may be a relevant consideration depening on the other circumstances” (Enzo, FC 2005; C.R. Bard, FC 1998; Elan, FC 2004 (“purported offer concerned a product when and if it had been developed, and there was no price or quantity term”)). The FC panel also concluded the SPA “unambiguously placed the invention on sale” (Medicines, FC 2016 (en banc) (also noting, e.g., “‘stockpiling’, including purchases from a supplier, ‘does not trigger the on-sale bar’”).
The FC panel also considered whether the AIA changed the meaning of the on-sale bar, as concluded by the DC and found it did not. It explained that pre-AIA “§ 102(b) barred the patentability of an invention that was…‘on sale’” and that “[u]nder that earlier provision…although condfidentiality weighs against application of the on-sale bar…that fact alone is not determinative” (Medicines, FC 2016; see FN7 for additional cases). The AIA used the same term “on sale” but also “otherwise available to the public” which “Helsinn, the government, and other amici argue…changed the law” such that “the on-sale bar now does not encompass secret sales and requires that a sale make the invention available to the public in order to trigger” it, based in part on the legislative history. The FC panel disagreed this was relevant here since “[h]ere, the existence of the sale…was publicly announced in MGI’s 8’K filing”. Helsinn also argued the 0.25 mg dose (“the invention”) was not disclosed but the FC panel explained that its “cases explicitly rejected a requirement that the details of the invention be disclosed in the terms of the sale” (RCA Corp., FC 1989). Further, “[a] primary rationale of the on-sale bar is that publicly offering a product for sale that embodies the claimed inventin places it in the public domain, regardless of when or whether actual delivery occurs” and “we have never required that a sale be consummated or an offer accepted” (Pfaff, US 1998; Abbott, FC 1999 (“on sale” even where “at the time of the sale, neither party…knew whether the product sold embodied the claimed invention and had no easy way to determine what the product was”)). Thus, the FC concluded, “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 the sale.”
The FC panel also concluded the invention was ready for patenting as of the critical date (Jan. 30, 2002). Regarding a reduction to practice (RTP), the FC panel explained that “the only issue…[was] whether Helsinn had determined that the invention would work for its intended purpose”, the test for which “varies depending on ‘the character of the invention,’ including the claims language and the ‘nature and complexity of the problem’ the invention seeks to solve” (Scott, FC 1994 (“‘beyond a probability of failure’ but not ‘beyond a possibility of failure’”); Honeywell, FC 2007 (“Generally there must be some ‘demonstration of the workability or utility of the claimed invention.”); Atlanta Attachment, FC 2008 (“it is improper to conclude” no RTP “merely because further testing is being conducted”)). It concluded the DC “clearly erred by applying too demanding a standard” since “[t]he completion of Phase III studies and final FDA approval are not pre-requisites for the invention here to be ready for patenting” (Omeprazole, FC 2008) and the evidence “that the patented invention would work for its intended purpose or reducing the likelihood of emesis” is “overwhelming”. FN18 also explains that “post-contract developments are relevant such that even if an invention is not ready for patenting at the time of the offer or sale, it may become so before the critical date and thereby trigger application of the on-sale bar”.
Thus, the FC panel reversed the DC decision and found the asserted claims to be invalid under the § 102(b) on-sale bar.