(Synopsis By Kurt Buechle)

On January 22, 2019, a unanimous U.S. Supreme Court decided that a sale of an invention more than one year prior to the filing of an application for a patent on that invention was sufficient to invalidate the resulting patent even though the details of the invention sold had not been made public.  In so holding, the Court indicated that a “secret sale” prevents one from obtaining a patent on what was sold under the current U.S. patent statute, the American Invents Act (AIA), as had been the case under the previous statute (pre-AIA).  The Court reached this decision even though the current statute (AIA) added the language “or otherwise available to the public” immediately following “on sale,” in the statute effective March 16, 2013.  Moreover, everything else besides “on sale” in the relevant statutory clause relates to something that is public and not private, namely, a patent, a printed publication, and public use.  Thus, the explicit language of the statute appears to indicate that the sale must be a public one.  Nevertheless, the Court believed that there was insufficient evidence that Congress intended to change the meaning or scope of “on sale” when it passed the current statute (AIA).  In so finding, the Court stated that “on sale” had developed a well-settled meaning that was not altered by the AIA.  The Court relied heavily on its own precedent, while indicating that it had never addressed the precise issue before it in this case.

The case involved the sale of U.S. marketing rights of a pharmaceutical from a European company (Helsinn) to a U.S. company (MGI Pharma) in the form of two agreements—a licensing agreement, and a supply and purchase agreement.  Both of these agreements required the U.S. company to keep any proprietary information confidential, thus, the “secret” nature of the sale. The parties did announce that the agreements had been made in a joint press release, as well as in filings with the Securities and Exchange Commission (SEC), but without disclosing details of the invention.  Teva asserted that the patent at issue was invalid during litigation following its application with the FDA to market a generic version of the pharmaceutical.  The District Court determined that the on sale bar did not apply, but that holding was overturned by the Federal Circuit.  The Federal Circuit reversed on the grounds that the publication of the existence of the sale was sufficient and that there need not be any public disclosure of the details of the invention.  The U.S. Supreme Court then upheld the Federal Circuit’s finding of patent invalidity.  However, the Court did not appear to make a distinction based on whether or not the existence of the sale was made public.  Thus, that a sale did occur appears to be sufficient for the on sale bar to apply under the Court’s holding.  The decision can be accessed by clicking here.

(The above memorandum is for informational purposes only and does not constitute legal advice in any way, and also does not serve as the basis for forming an attorney-client relationship.)