Federal Circuit Clarifies On-Sale Bar to Patentability for “Secret Sales”

2 Min Read By: Joseph Marinelli

U.S. patent laws bar patentability of an invention if it was “on sale” more than one year before a patent application is filed, but what if the invention was on sale in a nonpublic way? For decades, courts have held that even so-called secret sales of an invention may still trigger a bar to patentability. In 2011, however, the American Invents Act (AIA) modified patent laws in a way that many argued precluded secret sales from serving as a bar to patentability.

In May 2017, the Federal Circuit partly addressed this dispute in Helsinn Healthcare S.A. v Teva Pharmaceuticals USA, Inc., concluding that even after the enactment of the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale for the sale to bar patentability. In other words, the Federal Circuit determined that the AIA did not change how secret sales are evaluated as bars to patentability. Helsinn petitioned the Federal Circuit for a rehearing of the issue, but it denied Helsinn’s request on January 16 of this year. Helsinn must now petition for review by the U.S. Supreme Court if it wishes to further challenge the ruling.

The January 16 denial of rehearing was accompanied by a concurring opinion from Judge Kathleen O’Malley, which addressed what she considered “mischaracterizations” in Helsinn’s petition and in amici briefs. Judge O’Malley rejected the contention that the Federal Circuit concluded that all public sales will trigger the on-sale bar: “All that our panel opinion held was that the particular agreement at issue triggered the on-sale bar, in part—but not exclusively—because it was made public.” Judge O’Malley also noted that although the court concluded that the particular transaction in Helsinn triggered an on-sale bar, it did not hold that all supply-side arrangements for future sales will trigger a bar. Judge O’Malley also rejected Helsinn’s legislative-interpretation argument that the AIA changed decades of law regarding on-sale bars.

Although the Federal Circuit has ruled that secret sales may still trigger an on-sale bar, an open question remains whether an entirely secret sale, the existence of which is not even public, can trigger an on-sale bar. Moreover, if Congress intended for the AIA to change the law surrounding secret sales, as some argue, then either the Supreme Court must intervene, or Congress must modify the statute.

By: Joseph Marinelli


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