Pre-patent sales curbed

SCOTUS decision clears up rules on secret commercial deals

These days it is rare for nine individuals to agree completely on any one issue, much less nine lawyers. Luckily, in the context of patent law, the U.S. Supreme Court came to a unanimous decision and provided clarity on an issue that could affect New Hampshire businesses interested in patenting their inventions.

In the case Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc., decided on Jan. 22, the court provided clear guidance regarding actions that can cause a company to lose the right to patent their invention.

Before diving into this particular case, it is important first to understand that U.S. patent law places some restrictions on obtaining a patent, even when an invention is new, useful and non-obvious. These restrictions are commonly referred to as “statutory bars.”

Statutory bars exist for inventions that are described in a printed publication, in public use or on sale before a patent application is filed. Some statutory bars include a grace period that permits a patent application to be filed within one year from the statutory bar date.

These statutory bars serve multiple purposes. For example, the statutory bars encourage prompt invention disclosure to the U.S. Patent and Trademark Office while still providing a limited time for an inventor to evaluate commercial viability of an invention. The statutory bars also allow the public to have confidence that certain inventions have entered the public domain after a given period of public use.

In 2011, the Leahy-Smith America Invents Act (commonly identified as the AIA) was signed into law. The AIA rewrote the statutory bar provisions, and there was a question of whether the statutory bar framework governing patent law had been altered by the AIA. Before the AIA, the law was clear that both public and private (or otherwise secret) sales triggered a one-year grace period after which patent protection was precluded. However, the language of the new statute left some doubt as to whether a non-public/secret sale or a sale protected by a confidentiality agreement would trigger a statutory bar.

In its Helsinn decision, the Supreme Court clarified that the AIA did not alter the statutory bar for secret or private sales.

In the Helsinn case, Helsinn developed a treatment for chemotherapy-induced nausea and vomiting using a particular chemical called palonosetron. While Helsinn was developing its palonosetron product, it entered into two agreements (a license agreement and a supply and purchase agreement) with another company, granting that company the right to distribute, promote, market and sell a 0.25 mg dose of palonosetron in the United States. The agreements required the company to keep any proprietary information received under the agreements confidential.

Nearly two years after the license and supply/purchase agreements were signed, Helsinn filed a provisional patent application covering a 0.25 mg dose of palonosetron. The Supreme Court ultimately affirmed the invalidation of the Helsinn patents, noting that a commercial sale to a third party that is required to keep the invention confidential can place an invention “on sale” under the relevant patent statute.

Given the potentially devastating repercussions from a loss of patent rights, businesses should be mindful of the on-sale bar before engaging in commercialization activities for a new product. This Supreme Court decision further reinforces that care should be taken to promptly file patent applications for inventions that may be of interest, especially when the invention is offered for any type of sale, even in a distribution or marketing agreement.

Relatedly, public disclosures, such as trade show exhibits, industry publications, press releases and Kickstarter campaigns, may also trigger statutory bars, and care should be exercised to ensure all patent applications are filed within the applicable grace period.

Nine out of nine justices agree — one mistake can cost you a patent.

Circumstances surrounding offers for sale can be complex and, when in doubt, consult a patent attorney to help evaluate whether a disclosure triggering a statutory bar has been made.

Rebecca C. Christon is a patent attorney at the law firm of Hayes Soloway, Manchester. Attorney Todd A. Sullivan the managing partner of Hayes Soloway.

Categories: Legal Advice