Federal Circuit Clarifies On-Sale Bar for Patented Subject Matter in Chemo Drug Case

The U.S. Court of Appeals for the Federal Circuit's rulings set patent precedent for the entire country and are closely watched by lawyers and scholars. Its decision in the Helsinn case is no exception.

In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2017), the U.S. Court of Appeals for the Federal Circuit recently clarified the application of the so-called "on-sale bar" in patent law. In so doing, it invalidated four pharmaceutical patents. The court held that public disclosure of the existence of a sale of a patented item may be enough to invalidate the patented item under the on-sale bar, regardless of whether the invention's details are publicly disclosed.

Background Facts of Helsinn Case

This case centered around four patents owned by Helsinn Healthcare S.A., which involve intravenous versions of a drug called palonosetron, which is designed to reduce nausea during chemotherapy.

When Teva Pharmaceuticals filed its Abbreviated New Drug Application (“ANDA”), Helsinn sued, arguing that ANDA constituted an infringement of various claims of Helsinn's four patents. Teva argued that the claims in Helsinn's four patents were invalid under the so-called on-sale bar provision of 35 U.S.C. § 102.

The trial court, the U.S. District Court for the District of New Jersey, found that the four patents were valid. Specifically, it found that there was a commercial offer for sale, but that the overall invention was not ready for patenting. The U.S. Court of Appeals for the Federal Circuit reversed the trial court's findings.

Legal Analysis of Helsinn Case

The U.S. Court of Appeals for the Federal Circuit has jurisdiction over many critical patent appeals, and its rulings set patent precedent for the entire country. Consequently, patent lawyers and scholars watch its decisions closely. Its decision in Helsinn was no exception.

The legal analysis involved a change to the tech of 35 U.S.C. § 102(b), which covers the so-called "on-sale bar" of the Patent Act. For decades, courts have held that for the provision's "bar" on patent protection to be triggered, the invention must be the subject of a commercial contract for sale, and the invention must be ready for patenting at the time of that contract.

The provision was amended with the 2011 passage of the Leahy-Smith America Invents Act. Before the amendment, Section 102(b) prohibited patents on inventions that were available for sale in the U.S. "more than one year prior to the date of the application for patent.” The amended passage provides that patents on inventions are barred when that invention is "on sale, or otherwise available to the public before the effective filing date of the claimed invention."

The different phrasing created uncertainty as to whether the on-sale bar period had now changed. Some argued that the provision should now be read to mean that the on-sale bar came into being as soon as the invention was offered for sale and/or publicly disclosed.

The Federal Circuit rejected the district court's interpretation, however. It held that the amendment to the language of Section 102(b) did not actually change the meaning with respect to the circumstances of Helsinn. Instead, the Court found that a "supply and purchase agreement" between Helsinn and MGI Pharma (a distributor) qualified as a commercial sale within the meaning of the Patent Act. Because of the date of that agreement, and the fact that the claimed inventions had not yet received patent protection, they were then barred.

Takeaways From Court's Decision

Many patent law experts view the Helsinn decision as helpful in clarifying a new provision of the 2011 America Invents Act. The holding is important in the pharmaceutical industry in particular, where distribution and sales agreements can come before the finalization of a patent. Inventors should take notice of the Federal Circuit's interpretation.

Effective Date: May 1, 2017