IP Law Daily Anti-nausea drug patents invalid under ‘on-sale’ bar, despite confidentiality agreement
Tuesday, January 22, 2019

Anti-nausea drug patents invalid under ‘on-sale’ bar, despite confidentiality agreement

By Thomas Long, J.D.

Addition of "or otherwise available to the public" to 35 U.S.C. §102(a) by the America Invents Act did not change the meaning of "on sale" from its pre-AIA meaning, which did not require disclosure to the public.

A commercial sale to a third party who is required to keep the invention confidential may place the invention "on sale" for purposes of 35 U.S.C. §102(a), the U.S. Supreme Court has held in a unanimous decision written by Justice Clarence Thomas. Section 102(a), as amended by the America Invents Act (AIA), provides that a patent may not be obtained on an invention that 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. According to the Court, Congress did not did not alter the statutory meaning of "on sale" by adding the catchall phrase "or otherwise available to the public" to the post-AIA version of Section 102(a). Left standing is a decision of the U.S. Court of Appeals for the Federal Circuit, holding that four Helsinn Healthcare S.A. patents directed to formulations for treating chemotherapy-induced nausea were invalid for violating the on-sale bar because they were subject to a contract for sale and were ready for patenting prior to the critical date (Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., January 22, 2019, Thomas, C.).

Swiss pharmaceutical company Helsinn makes Aloxi, a treatment for chemotherapy-induced nausea and vomiting using the chemical palonosetron. In early 2000, Helsinn submitted protocols for Phase III clinical trials to the Food and Drug Administration (FDA), proposing to study a 0.25 mg and a 0.75 mg dose of palonosetron. Helsinn began a marketing partnership relationship with MGI Pharma, Inc. (MGI), a Minnesota pharmaceutical company that markets and distributes drugs in the United States, and the companies entered into two agreements: a license agreement and a supply and purchase agreement. The license agreement granted MGI the right to distribute, promote, market, and sell the 0.25 mg and 0.75 mg doses of palonosetron in the United States, in exchange for up-front payments and payments of future royalties. The supply and purchase agreement provided that MGI would exclusively purchase from Helsinn any palonosetron product approved by the FDA. Helsinn agreed to supply MGI however much of the approved doses that MGI required. Both agreements included dosage information and required MGI to keep Helsinn’s proprietary information confidential.

Nearly two years later, Helsinn filed a provisional patent application covering the 0.25 mg and 0.75 mg doses of palonosetron. Over the next 10 years, Helsinn filed four patent applications that claimed priority to the January 30, 2003, date of the provisional application. The fourth patent application—the one relevant to this case—was filed in May 2013, and it issued as U. S. Patent No. 8,598,219 ("the ’219 patent"). The ’219 patent covered a fixed dose of 0.25 mg of palonosetron in a 5 ml solution. By virtue of its effective date, the ’219 patent was governed by the AIA. In 2011, drug makers Teva Pharmaceutical Industries, Ltd., and Teva Pharmaceuticals USA, Inc. ("Teva") sought approval from the FDA to market a generic 0.25 mg palonosetron product. Helsinn then sued Teva for infringing its patents, including the ’219 patent. Teva argued that the asserted claims were invalid under the on-sale bar provision of 35 U.S.C. §102. Following a bench trial, the district court ruled that the asserted claims of the patents-in-suit were not invalid and were infringed by Teva’s ANDA product. With respect to the ’219 patent, governed by the AIA version of §102, the district court concluded that there was no commercial offer for sale because the AIA changed the relevant standard. Teva appealed to the Federal Circuit, which reversed. The Supreme Court granted Helsinn’s petition for certiorari.

The Court affirmed the Federal Circuit’s decision. Writing for the Court, Justice Thomas explained that more than 20 years ago, the Court determined that an invention was "on sale" within the meaning of the pre-AIA version of Section 102(a) when it was "the subject of a commercial offer for sale" and "ready for patenting." Pfaff v. Wells ElectronicsInc., 525 U. S. 55, 67 (1998). The Court did not further require that the sale make the details of the invention available to the public. In light of this earlier construction, the Court determined that the reenactment of the phrase "on sale" in the AIA did not alter this meaning. Therefore, a commercial sale to a third party who is required to keep the invention confidential may make the invention subject to the Section 102(a) on-sale bar.

The Court also noted that the Federal Circuit had long held that "secret sales" can invalidate a patent. In light of the settled pre-AIA precedent on the meaning of "on sale," the Court presumed that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase. The new version of Section 102 retained the same language as the old version ("on sale") and merely added a catchall clause ("or otherwise available to the public").

"The addition of ‘or otherwise available to the public’ is simply not enough of a change for us to conclude that Congress intended to alter the meaning of the reenacted term ‘on sale,’" the Court said. "Given that the phrase ‘on sale’ had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase to upset that body of precedent."

This case is No. 17–1229.

Attorneys: Kannon K. Shanmugam (Williams & Connolly LLP) for Helsinn Healthcare S.A. William McGinley Jay (Goodwin Procter, LLP) and Steffen Nathanael Johnson (Winston & Strawn LLP) for Teva Pharmaceuticals USA, Inc.

Companies: Helsinn Healthcare S.A.; Teva Pharmaceuticals USA, Inc.

MainStory: TopStory Patent

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