by Dennis Crouch
In the pending case of Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., et al., No. 17-1229 (Supreme Court 2018), the petitioner has asked the Supreme Court to offer its statement on whether Congress altered the “on sale bar” to now apply only to non-confidential sales or offers.
Question Presented: Whether, under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.
In its decision, the Federal Circuit held that the on sale bar attaches even if the details of the invention are kept secret. In this particular case, the sale was partially public – i.e., although the details of the invention were kept secret, the existence of the sale was publicly known.
The Supreme Court held its first conference regarding Helsinn on June 14, 2018 and took no action in the case — likely relisting it for a later conference. Most petitions for writ of certiorari are denied immediately following the first conference — and so this is an important step toward certiorari in this case. I expect that the next step in the case would be CVSG — seeking views of the Trump Administration.
The On Sale Bar has its origin in Justice Story’s decision in Pennock v. Dialogue, 27 U.S. 1 (1829). There, Story wrote:
If an inventor should be permitted to hold back from the knowledge of the public the secrets of his invention; if he should for a long period of years retain the monopoly, and make, and sell his invention publicly, and thus gather the whole profits of it * * * and then, and then only, when the danger of competition should force him to secure the exclusive right, he should be allowed to take out a patent * * * it would materially retard the progress of science and the useful arts, and give a premium to those who should be least prompt to communicate their discoveries.
IN 1836, the rule was expressly stated in the revision of the patent laws:
Sec. 6. That any person or persons having discovered or invented any new and useful art, machine, manufacture, or composition of matter . . . not known or used by others before his or their discovery or invention thereof, and not, at the time of his application for a patent, in public use or on sale, with his consent or allowance, as the inventor or discoverer; . . . may make application in writing . . . and the Commissioner, on due proceedings had, may grant a patent therefor.
Since then, and even before, secret sales were seen as a bar to patenting (except when within the grace period). In Metallizing Engineering, Judge Learned Hand expanded the doctrine to encompass any commercial exploitation by the inventor:
[H]e shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy, or legal monopoly. It is true that for the limited period of two years he was allowed to do so, possibly in order to give him time to prepare an application; and even that has been recently cut down by half. But if he goes beyond that period of probation, he forfeits his right regardless of how little the public may have learned about the invention; just as he can forfeit it by too long concealment, even without exploiting the invention at all.
Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2d Cir. 1946).
Third Party Sales: In an interesting question – not at issue directly in Helsinn — involves secret sales by third parties. 1985 footnote, the Federal Circuit explained its position that the on sale bar is only directed at activities by the inventor:
The “on sale” provision of 35 U.S.C. § 102(b) is directed at precluding an inventor from commercializing his invention for over a year before he files his application. Sales or offers made by others and disclosing the claimed invention implicate the “public use” provision of 35 U.S.C. § 102(b).
In re Caveney, 761 F.2d 671, 676 (Fed. Cir. 1985); explanation restated in ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010). On the other hand, other cases have applied the on-sale bar to activities by third parties. See In re Epstein, 32 F.3d 1559 (Fed. Cir. 1994). Professor Carl Moy aptly explained the situation in his treatise: “The current authorities plainly evidence a difference of opinion about the underlying purpose of the on-sale bar.” 2 Moy’s Walker on Patents § 8:227 (4th ed.).