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You are here: Home / Patent application process / Before filing a patent application / Bars to Patentability / On sale bar applies even if offer doesn’t publicly disclose details of invention

On sale bar applies even if offer doesn’t publicly disclose details of invention

May 18, 2017 by James Yang

On Sale BarIn Helsinn Healthcare v. Teva Pharmaceuticals (Fed. Cir. 5/1/17), the Federal Circuit held that under the America Invents Act (AIA), if the existence of the sale is public, the details of the invention need not be publicly disclosed for the on sale bar to apply. The Federal Circuit made clear that to the extent that the existence of an offer for sale of the invention is public, pre AIA law regarding the on sale bar still applies for patents / patent application governed by the AIA.

More particularly, when the America Invents Act (AIA) took effect in 2013, it was unclear whether the AIA changed the current state of the law in relation to the on-sale bar. Before the AIA, offers for sale that were made in secret or under a non disclosure agreement (i.e., non public offers for sale) was still considered an offer for sale which started the one year time period within which the inventor would have to file an application for patent or be barred from seeking patent protection for the invention.  The AIA added language that made it unclear whether Congress was trying to change the pre-AIA law or not in relation to whether secret offers for sale triggered the on sale bar.  In particular, the AIA stated that a patent would not be granted if the invention was subject to an offer for sale “or otherwise available to the public”. The USPTO and various patent attorneys questioned whether the addition of the phrase “otherwise publicly available” meant that the existence of an offer for sale held in secrecy would not start the one year time period of the on sale bar because the secret offer was not “otherwise available to the public.”

The patent owner in the Helsinn case advocated for an extreme position. In particular, the patent owner wanted the court to interpret the AIA so that the on sale bar applied only when existence of the offer for sale plus the details of the invention were public. The defendant took the other extreme position.  The defendant wanted the court to hold that the addition of the phrase “otherwise publicly available” did not change the state of the law pre-AIA.

In Helsinn, the Federal Circuit did not decide whether the AIA changed pre-AIA case law in relation to the on sale bar and whether or not a secret offer for sale would trigger the on sale bar. By declining to decide the issue more broadly than necessary, the Federal Circuit left open the issue of whether a secret offer for sale triggers the on sale bar when the existence of the offer for sale remains secret.

Currently, the USPTO rules state that a secret offer for sale does not trigger the on sale bar. See MPEP Section 2152.02(d).   However, this is only in relation to the practice of the USPTO and does not bind federal courts handling patent infringement lawsuits where the accused infringer seeks to invalidate the patent.  Because the Federal Circuit has declined to indicate its views on the broader issue for now, it is unknown whether or not secret offers for sale trigger the on sale bar. Since this is not a frequently litigated issue, it is a real possibility that the Federal Circuit in the future may be swayed by the settled expectations of the parties relying upon the interpretation of the AIA by the USPTO and thus hold that secret offers for sale are “not otherwise publicly available” and thus do not trigger the on sale bar.

Moving now to the facts and holding of the Helsinn case, the patent owner received a patent directed to intravenous formulations of palonosetron for reducing the likelihood of chemotherapy-induced nausea and vomiting (CINV). More than one year before it filed a patent application, the invention was the subject of a contract for sale. The contract for sale was disclosed in a public filing because the patent owner was a publicly traded company and the product involved a drug regulated by the FDA. The public filing identified the active ingredient claimed in the patent but did not identify the dosage of the active ingredient. Put simply, the public filing identified the subject matter of the invention but not the details of the invention as claimed in the patent.

The Federal Circuit specifically stated “we declined the invitation by the parties to decide this case more broadly than necessary.” The Federal Circuit stated that the issue was not whether a secret offer for sale triggered the on sale bar but whether the nondisclosure of details of the invention in the offer for sale could still trigger the on sale bar after the AIA. The Federal Circuit stated that it has always been rule that the details of the invention need not be disclosed for the on sale bar to apply. They noted that “our prior cases have applied the on sale bar even when there is no delivery, when delivery is set after the critical date, or even when, upon delivery, members of the public could not ascertain the claimed invention.” Accordingly, the Federal Circuit is merely reaffirming that the prior law still applies in this particular situation, and that even if the details of the invention are not publicly disclosed in the context of a public offer for sale of the invention, the on sale bar still applies because the existence of the offer for sale is publicly known. Hence, the Federal Circuit stated that “we conclude 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 the sale.”

Because the Federal Circuit did not make a broader statement of law or indicate its views on whether the “otherwise available to the public” addition to the statute changed the prior law, the Federal Circuit is inviting additional litigation on the issue so that they can further consider the ramifications of whether a secret offer for sale should trigger the on sale bar. But for now, the USPTO has interpreted the AIA under section 102 so that secret offers for sale do not trigger the on sale bar.

I invite you to contact me with your patent questions at (949) 433-0900. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

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James Yang is a patent attorney. For more than 16 years, James Yang has been representing clients to secure patent protection for their inventions and register trademarks to protect their brands. If you need help, call him at (949) 433-0900. Read More…

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