On-Sale Bar Applies to Secret Sales

In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc.,[1]the Supreme Court recently clarified that the on-sale bar to patentability under 35 U.S.C. §102 can apply to secret sales.  Under the Leahy–Smith America Invents Act (AIA), §102(a)(1) bars patentability 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 invention.”  Helsinn contended that the AIA changed the on-sale bar provision of §102 with the addition of the phrase “otherwise available to the public” thereby limiting the preceding terms, including the on-sale provision, to disclosures that make the claimed invention available to the public.[2]  Helsinn argued unsuccessfully that its AIA patent is not invalidated by a sale made more than one year before filing that included a confidentiality agreement regarding proprietary information.[3]

The Supreme Court held “that an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under §102(a).”[4]  In rejecting Helsinn’s arguments, the Supreme Court stated that their precedents suggest a sale or offer of sale does not require the invention to be publicly available to constitute a bar to patentability.[5]  Further, the Supreme Court stated, “[t]he Federal Circuit—which has ‘exclusive jurisdiction’ over patent appeals, 28 U. S. C. §1295(a)—has made explicit what was implicit in our precedents.  It has long held that ’secret sales’ can invalidate a patent.”[6]  Due to the settled pre-AIA precedent, there is a presumption that Congress adopted the earlier judicial construction of the phrase “on sale” by reenacting the same language in the AIA.[7]  The Supreme Court also stated that the “addition of ‘or otherwise available to the public’ is simply not enough of a change for us to conclude that Congress intended to alter the meaning of the reenacted term ‘on sale.’”[8]

[1]Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., et al., 586 U.S. ___ (2019) (slip op.), https://www.supremecourt.gov/opinions/18pdf/17-1229_2co3.pdf

[2]Id. at p. 8.

[3]Id. at p. 2.  See 35 U.S.C. §102(b)(1) (exceptions for certain disclosures made one year or less before the effective filing date).

[4]Id. at p. 9.

[5]Id. at p. 6.

[6]Id. at p. 7.

[7]Id.

[8]Id. at p. 8.