The Court of Appeals for the Federal Circuit (the “Federal Circuit”) held that under the revised Patent Act (as modified by the AIA), 35 U.S.C. §102(a)(1) now “requires a public sale or offer for sale of the claimed invention” and an offer for sale of the claimed invention occurs when
an invention is made available to the public, such as when there is a commercial offer or contract to sell a product embodying the invention and that sale is made public, and the invention is ready for patenting “by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention.” “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.” Helsinn Healthcare S.A., v. Teva Pharmaceuticals USA, Inc., Case No. 2016-1284 (Federal Cir. May 1, 2017) (Available Here).
Helsinn Healthcare S.A. (“Helsinn”) is the owner of the four patents-in-suit directed to intravenous formulations for reducing or reducing the likelihood of chemotherapy-induced nausea and vomiting. Helsinn brought suit against Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries, Ltd. (“Teva”) alleging that the filing of Teva’s Abbreviated New Drug Application (“ANDA”) constituted a patent infringement. Teva defended on the ground that the asserted claims were invalid under the on-sale bar under 35 U.S.C. 102.
The District Court found that some Helsinn patents were not subject to a commercial offer for sale before the critical date (one year prior to the filing of the patent application), because the invention was not ready for patenting before the critical date. The Federal Circuit reversed the lower court’s decision. “The asserted claims of the patents-in-suit were subject to an invalidating contract for sale prior to the critical date of January 30, 2002, and the AIA did not change the statutory meaning of ‘on sale’ in the circumstances involved here. The asserted claims were also
ready for patenting prior to the critical date.” See 35 U.S.C. § 102(a)(1); AIA, Pub. L. No. 112-29, § 3(n), 125 Stat. 284, 293 (2011).
The Helsinn entered into two agreements with a distributor that made reference to the ongoing
clinical trials and stated that in the event that the results were unfavorable and FDA did not approve the sale of either dosage of the product, Helsinn could terminate the agreement. After the signing of the agreements, and still before the critical date, Helsinn prepared preliminary statistical analysis of the earliest Phase III trial on January 7, 2002. The data showed that 81% of patients who received the 0.25 mg dose of palonosetron experienced relief. On January 30, 2003, Helsinn filed a provisional patent application.
One issue was whether the invention was “ready for patenting” before the critical date (Jan. 30, 2002). There is a two-step framework of Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), which requires that there was a sale or offer for sale and that the claimed invention was ready
for patenting for the on-sale bar under 35 U.S.C. § 102 to apply.
With respect to one of the Helsinn patents, the lower court held that the on-sale bar and § 102 was governed by the revised Patent Act, the AIA, and held that the AIA changed the meaning of the on-sale bar and § 102(a)(1) now “requires a public sale or offer for sale of the claimed invention.”
Per the Federal Circuit: “We recently had occasion to address the pre-AIA on-sale bar en banc in Medicines Co. v. Hospira, Inc., 827 F.3d 1363 (Fed. Cir. 2016). There we established a framework for determining whether there is an offer for sale. We explained that the question must be ‘analyzed under the law of contracts as generally understood’ and ‘must focus on those activities that would be understood to be commercial sales and offers for sale ‘in the commercial community.’‘ Id. at 1373 (quoting Grp. One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1047 (Fed. Cir. 2001)). While acknowledging that it is not of ‘talismanic significance’ to our inquiry, ‘[a]s a general proposition, we will look to the Uniform Commercial Code (‘UCC’) to define whether . . . a communication or series of communications rises to the level of a commercial offer for sale.’ 827 F.3d at 1373 (alteration in original) (quoting Grp. One, 254 F.3d at 1047). A sale occurs when there is a ‘contract between parties to give and to pass rights of property for consideration which the buyer pays or promises to pay the seller for the thing bought or sold.’ Trading Techs. Int’l, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1361 (Fed. Cir. 2010).”
Medicines also discussed other factors important to the onsale analysis but no factor is individually determinative. Like UCC itself, the absence of the passage of title, the confidential nature of a transaction, and the absence of commercial marketing of the invention all counsel against applying the onsale bar.
Helsinn commercially marketed its invention before the critical date. It publicly sought marketing partners for its patented product and ultimately contracted with a distributor to distribute, promote, market, and sell the claimed invention.
“There 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 that term. The UCC expressly provides that a ‘purported present sale of future goods . . . operates as a contract to sell.’ UCC § 2– 105(2) (defining ‘future goods’ as ‘[g]oods which are not both existing and identified’). This is true irrespective of whether those future goods have yet to receive necessary regulatory approval. A contract for sale that includes a condition precedent is a valid and enforceable contract. See BG Grp., PLC v. Republic of Argentina, 134 S. Ct. 1198, 1207 (2014).”
The Federal Circuit also confirmed the holding in Medicines that “stockpiling,” including purchases from a supplier, “does not trigger the on-sale bar.” Medicines, 827 F.3d at 1374. By enacting the AIA, Congress amended § 102 to bar the patentability of an “invention [that] 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). Helsinn argued that the on-sale bar under the AIA does not encompass secret sales and requires that a sale make the invention available to the public in order to trigger application of the on-sale bar. Teva asserted that by reenacting the existing statutory term, “on sale,” Congress did not change the meaning of the on-sale bar.
“Here, the existence of the sale — i.e., the Supply and Purchase Agreement between Helsinn and [distributor] MGI —was publicly announced in MGI’s 8-K filing with the SEC. The 8-K filing also included a copy of the contract for sale as an attachment, albeit partially redacted. Detailed information about [the invention] palonosetron, its benefits and uses in treating [the chemotherapy treatment] CINV were also disclosed. The statements disclosed the chemical structure of palonosetron and specified that the covered products were ‘pharmaceutical preparations for human use in [intravenous] dosage form, containing [palonosetron] as an active ingredient.’ … [T]he agreements disclosed all the pertinent details of the transaction other than the price and dosage levels.”
The Federal Circuit stated that an invention is made available to the public when there is a commercial offer or contract to sell a product embodying the invention and that sale is made public. Offering a product for sale that embodies the claimed invention places it in the public domain, regardless of when or whether actual delivery occurs. The patented product need not be on-hand or even delivered prior to the critical date to trigger the on-sale bar. “We have never required that a sale be consummated or an offer accepted.”
The Federal Circuit court concluded 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. For the reasons already stated, the Supply and Purchase Agreement between Helsinn and MGI 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. We do not find that distribution agreements will always be invalidating under § 102(b).”
As for whether the invention was ready for patenting as of the critical date of January 30, 2002, under Pfaff, “there are at least two ways in which an invention can be shown to be ready for patenting: ‘by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention.’ Pfaff, 525 U.S. at 67–68. We conclude that the invention here was ready for patenting because it was reduced to practice before the critical date.” There was considerable evidence supporting the Federal Circuit’s decision. These results consistently showed that the invention worked for its intended purpose, from the final report for the 1995 Phase II trial to the preliminary results in January 2002 from a Phase III trial.