by Dennis Crouch
Helsinn v. Dr. Reddy’s and Teva (D.N.J. 2016)
The America Invents Act of 2011 (AIA) amended the definitions of prior art under 35 U.S.C. § 102 – up for grabs in this case is whether the changes included a narrowing of the ‘on-sale bar.’ Prior to the AIA, the ‘on sale’ bar blocked patenting of inventions that had been “on sale in this country.” Although not specific in the statute, courts interpreted the on-sale bar to include secret sales or offers-to-sell. These typically include closed-door business-to-business and custom sales rather than retail sales. The AIA amended the statute in a number of ways – most pertinent here is addition of the ‘otherwise available to the public’ clause to Section 102(a)(1). The provision now reads:
Novelty; Prior Art.—A person shall be entitled to a patent unless—(1) 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; or
The question in this case is how to interpret the statutory phrase “on sale, or otherwise available to the public.” The otherwise available to the public language suggests that the ‘on sale’ activity is also available to the public. That reading, however, conflicts with the history of the on sale bar. Which construction is correct?
The district court in Helsinn sided with the USPTO’s interpretation of the statute – that the AIA modified the definition of on-sale so that it now only includes publicly available sales activity. This allowed the patentee in the case to avoid an invalidity finding based upon its own prior sales of the patented drug. On appeal, Teva offers its set of arguments to retain the old-meaning:
- In ordinary usage, an item is “on sale” whether sold privately or publicly.
- Courts have treated “on sale” as a term of art for almost two centuries for sound policy reasons grounded in the Constitution.
- Congress did not change the settled meaning of “on sale” by adding the phrase “otherwise available to the public.”
- The district court’s reading of “on sale” would render meaningless the crucial word “public” in [102(b)(1)(B)].
- A Committee Report and floor statements of two senators cannot accomplish what they failed to accomplish in the statute itself.
- The PTO’s interpretation is not entitled to deference.
Professors Mark Lemley (Stanford) and Robert Merges (Berkeley) along with 39 other law professors have filed a brief in support of Teva’s arguments here – arguing that the new interpretation “would radically rewrite the law of prior art.”
The key legal question in the case is simple: did Congress mean to sweep away scores of established cases under the 1952 Act even though it reenacted language unchanged since 1870, merely because it added the phrase “or otherwise available to the public” to the list of prior art categories in the new AIA section 102? We think not. We have three primary reasons. First, the district court’s reading is inconsistent with the language and structure of the AIA. Second, it is inconsistent with Congressional intent in readopting the “on sale” and “public use” language in section 102. Finally, it would sweep away scores of cases decided over two centuries and radically rewrite a host of patent doctrines.
[TevaProfAmicusBrief] Moving forward, Helsinn’s responsive brief will be due April 21.
Of course, the issues here have been substantially debated already with commentators coming out on both sides of the debate:
- Paul Morgan, The Ambiguity in Section 102(a)(1) of the Leahy-Smith America Invents Act, 2011 Patently-O Patent Law Review 29.
- Joseph Matal, A Guide to the Legislative History of the America Invents Act: Part I of II, 21 Fed Cir BJ 435 (2011-2012).
- Dmitri Karshted, Did Learned Hand Get it Wrong?: The Questionable Patent Forfeiture Rule of Metallizing Engineering, 57 Vill. L. Rev. 261 (2012).
- Stephen Elkind, Secrets, Secrets Are No Fun! Balancing Patent Law & Trade Secret Law Under the America Invents Act, 22 Fed. Cir. B.J. 431 (2012) (no secret prior art).
- Robert P. Merges, Priority and Novelty Under the AIA, 27 Berkeley Tech. L.J. 1023 (2012).
- Daniel Taskalos, Metallizing Engineering’s Forfeiture Doctrine After the America Invents Act, 16 Stan. Tech. L. Rev. 657 (2013).
- Mark A. Lemley, Does Public Use Mean the Same Thing It Did Last Year?, 93 Tex. L. Rev. 1119, 1129-30 (2014).
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AIA expanded the scope of prior art in a number of ways. This is one area, however, where it potentially shrunk the body of potential prior art. Innovative entities with a robust business involving private-transactions and those who rely upon third-party manufacturers are the most likely to benefit by a changed-law.
An important policy question (that could also influence is the construction) is whether eliminating secret sales as prior art would actually allow an innovator secretly commercialize its patent for years and then subsequently obtaining patent rights.
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 The Federal Circuit has also include a manufacture-supply agreement. (E.g., a supplier seeking for to manufacture and supply your custom inventory). This issue is currently being reconsidered by the Federal Circuit in the en banc case of Medicines Co. v. Hospira.
 The statute also eliminating the ‘in this country’ limitation for on-sale prior art and limited the one-year grace period associated with the on sale bar.