25 Jul 2016 in Newsletter
Recent CAFC Decision Clarifies the “On-Sale” Bar
Patent applicants and owners have sometimes been surprised to find their patent endangered by prior art that is not a publication or patent. One such type of invalidating prior art, often characterized as a “trap for the unwary,” is an “on-sale bar.” There are actually two forms of the on-sale bar, depending whether the patent application has an effective filing date before or after March 16, 2013, the date when provisions of the Smith-Leahy America Invents Act (“AIA”) became effective. The Federal Circuit recently issued a major decision about the pre-AIA on-sale bar, and another pending appeal may answer a major question concerning the post-AIA on-sale bar.
Although patent applications filed today are governed by the AIA, many issued patents and even pending patent applications were filed before March 16, 2013, so that case law interpreting the pre-AIA on-sale bar remains important. Before the AIA, one could not have a patent if “the invention was . . . on sale in this country, more than one year prior to the date of application for patent in the United States.” 35 USC § 102(b) (emphasis added). Applying this rule in different situations turned out to be fairly complicated, and there are quite a few cases determining whether an invention was “on sale” in different circumstances.
In an important decision, the Federal Circuit en banc clarified the criteria for determining whether any invention is “on sale.” The Medicines Co. v. Hospira, No. 2014-1469, 2014-1504 (Fed. Cir. July 11, 2016). More than a year before filing its patent application, The Medicines Company had hired a third-party supplier to provide batches of its drug, Angiomax. The legal question was whether this supply contract constituted a commercial offer for sale sufficient to trigger the on-sale bar of pre-AIA § 102(b). The Federal Circuit held that “to be ‘on sale’ under § 102(b), a product must be the subject of a commercial sale or offer for sale, and that a commercial sale is one that bears the general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial Code.” The Court explained that “commercial benefit—even to both parties in a transaction—is not enough to trigger the on-sale bar of § 102(b); the transaction must be one in which the product is ‘on sale’ in the sense that it is ‘commercially marketed’.” The Court found that no such invalidating commercial sale occurred in this case. The written opinion summarizes the history and purpose of the on-sale bar and explains how this test applies to previous cases, and thus provides guidance on whether a transaction triggers the on-sale bar. While not decided in this case, it seems likely that this requirement for commercial marketing will also apply to the post-AIA on-sale bar.
After the AIA took effect, the on-sale bar changed (in confusingly numbered 35 USC § 102(a)) to provide that one cannot have a patent if “the claimed invention was . . . on sale, or otherwise available to the public before the effective filing date of the claimed invention” (emphasis added). For patents with effective filing dates on or after March 16, 2013,
- the sale no longer must be in this country, but rather can be anywhere in the world,
- there is no longer a one year grace period, and
- the relevant date is the “effective filing date,” defined in 35 USC § 100(i)(1), rather than the more limited “date of application for patent in the United States.”
A controversial question is the meaning imparted by the comma in the phrase “on sale, or otherwise available to the public.” Does it mean that the on-sale event must be available to the public? Or are “on sale” and “otherwise available to the public” two separate independent types of prior art? This question is important because there have been situations, so-called “secret prior art,” in which transactions that were confidential and unknown to the public triggered the on-sale bar. Did the passage of the AIA eliminate secret prior art?
This important question may be resolved in an appeal currently pending at the Federal Circuit. The case is Helsinn Healthcare S.A. et al. v. Teva Pharmaceuticals USA, Inc. et al. (Nos. 2016-1284, -1787). One patent in this case is a post-AIA pate\nt, and the district court held that certain transactions involving that patent did not trigger an on-sale bar because they were not available to the public. The question on appeal is whether an alleged sale of a post-AIA invention can trigger an invalidating on-sale bar if it is not available to the public. This issue has drawn several amicus briefs, with the government and organizations such as PhRMA and BIO arguing that the post-AIA on-sale bar requires availability to the public, and a group of 42 law school intellectual property professors arguing that it does not, so that secret sales can still trigger the on-sale bar. Oral argument is expected in the fall of 2016.
 E.g., D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 1148-50 (Fed. Cir. 1983); Metallizing Eng’g Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516, 518-20 (2d Cir. 1946).