April 27, 2017

Federal Circuit Clarifies Application of Post-AIA On-Sale Bar in Helsinn Healthcare v. Teva Pharmaceuticals

7 min

On May 1, 2017, a Federal Circuit panel in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., Appeal Nos. 2016-1284, 2016-1787, held four pharmaceutical patents invalid under the on-sale bar of 35 U.S.C. § 102(b). Three patents were governed by the version of 102(b) that existed prior to the passage of the 2011 America Invents Act ("AIA"). A fourth was governed by the post-AIA version of 102(b). With the Helsinn decision, the Federal Circuit clarified that, under the post-AIA version of 102(b), public disclosure of the existence of the sale of a patented item may suffice to invalidate patent under the on-sale bar, even if "the details of the invention" are not "publicly disclosed in the terms of sale."


Under both pre- and post-AIA versions of 102(b), and the Supreme Court's precedent in Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), a patent may be found invalid pursuant to the so-called "on-sale bar," where the patented subject matter (i) is the subject of a commercial sale or offer for sale prior to the critical date of the patent, and (ii) is "ready for patenting."

Prior to the AIA, 102(b) barred patents for inventions that were "on sale in this country, more than one year prior to the date of the application for patent." Upon passage of the AIA, however, the language of 102(b) was changed to bar patents for inventions that were "on sale, or otherwise available to the public before the effective filing date of the claimed invention" (emphasis added). The new "or otherwise available to the public" language raised speculation by some that the on-sale bar for post-AIA patents could only be triggered by sales or offers for sale wherein the details of the commercial transaction, as well as the patented invention itself, were publicly disclosed. The Federal Circuit's Helsinn decision, however, rejects that particular interpretation of the post-AIA law.

Helsinn is the owner of four patents directed to formulations containing 0.25 mg of the drug palonosetron for reducing chemotherapy-induced nausea and vomiting ("CINV"). Three of those patents are governed by the pre-AIA version of 102(b) and the fourth—the "'219 patent"—is governed by the post-AIA version. All four patents share a critical date of January 30, 2002, before which a commercial sale or offer for sale may be found to trigger the 102(b) on-sale bar.

On April 6, 2001, while FDA trials for the use of palonosetron to treat CINV were ongoing, Helsinn entered into a license agreement and a supply and purchase agreement with a third party, MGI, to supply palonosetron in 0.25 mg and 0.75 mg doses, or whichever of the two doses were approved by the FDA. The supply and purchase agreement specified the price, method of payment and method of delivery. Both agreements could be terminated if the FDA did not approve the sale of either dose. Both agreements were publicly disclosed before the critical date in MGI's Form 8-K filing with the SEC, with two exceptions: the price terms and the 0.25 mg and 0.75 mg dosage strengths were not disclosed.

Helsinn subsequently sued Teva in the District of New Jersey for infringement of its CINV palonosetron patents, and Teva defended on the ground that the patents were invalid under the 102(b) on-sale bar. The district court rejected those defenses and upheld the validity of Helsinn's patents. As to the three pre-AIA patents, the district court concluded that the invention was not "ready for patenting" prior to the critical date, in view of the fact that a full analysis of the results from the FDA's Phase III clinical trials for Helsinn's 0.25 mg palonosetron formulation were not complete as of the critical date. As to the '219 patent, the district court concluded that passage of the AIA, and the addition of the "or otherwise available to the public" language to 102(b), changed the law of the on-sale bar. Teva appealed.

The Federal Circuit Decision

On May 1, 2017, Justices Dyk, Mayer and O'Malley of the Federal Circuit reversed the district court's judgment and found that the patents "were subject to an invalidating contract for sale prior to the critical date of January 30, 2002, and the AIA did not change the statutory meaning of 'on sale' in the circumstances involved here. The asserted claims were also ready for patenting prior to the critical date."

The Federal Circuit first determined that the patented inventions were the subject of a commercial sale or offer for sale, i.e., Helsinn's supply and purchase agreement with MGI. According to the Federal Circuit, that agreement "bears all the hallmarks of a commercial contract for sale." For example, it "obligated MGI to purchase exclusively from Helsinn and obligated Helsinn to supply MGI's requirements" and "included other specific terms, such as price, method of treatment, and method of delivery." The Federal Circuit noted that, while the agreement was conditional upon FDA approval of the 0.25 mg dose, "[a] contract for sale that includes a condition precedent is a valid and enforceable contract," and that "[i]t has been implicit in our prior opinions that the absence of FDA or other regulatory approval before the critical date does not prevent a sale or offer for sale from triggering the on-sale bar."

The Federal Circuit also distinguished its recent decision Medicines Co. v. Hospira, Inc., 827 F.3d 1363 (Fed. Cir. 2016). There, the Federal Circuit, sitting en banc, found that an agreement in which a patentee, Medicines Co., had enlisted a third party, Ben Venue, to engage in contract manufacturing for the patented drug did not trigger the on-sale bar. In Helsinn, by contrast, the Federal Circuit noted that "Helsinn did not contract for MGI's confidential marketing or distribution services as Medicines [Co.] contracted for Ben Venue's confidential manufacturing services. Instead, the Supply and Purchase Agreement between Helsinn and MGI unambiguously contemplated the sale by Helsinn of MGI's requirements of the claimed invention."

Next, the Federal Circuit addressed the question of whether the AIA changed the meaning of 102(b) "so that there was no qualifying sale as to the '219 patent." As to this question, the Federal Circuit reviewed its pre-AIA precedent to note that, before the passage of the AIA, confidential sales in some instances were found to trigger the on-sale bar. The Federal Circuit then noted that, even if the AIA or Congressional "floor statements" thereon indicated an intent to overrule such confidential-sale precedent, "that would have no effect here since those cases were concerned with whether the existence of a sale or offer was public. Here, the existence of the sale—i.e., the Supply and Purchase Agreement between Helsinn and MGI—was publicly announced in MGI's 8-K filing with the SEC. The 8-K filing also included a copy of the contract for sale as an attachment, albeit partially redacted. Detailed information about palonosetron, its benefits and uses in treating CINV, were also disclosed."

The Federal Circuit then rejected Helsinn's arguments that the lack of public disclosure of the 0.25 mg dose precluded application of the on-sale bar to the '219 patent, noting that:

  • "Requiring such disclosure as a condition of the on-sale bar would work a foundational change in the theory of the statutory on-sale bar";
  • "Our cases explicitly rejected a requirement that the details of the invention be disclosed in the terms of the sale"; and
  • "We have also not required that members of the public be aware that the product sold actually embodies the claimed invention."

Thus, the Federal Circuit concluded that, "after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the term of sale."

Last, as to the "ready for patenting" requirement of the on-sale bar, the Federal Circuit found that Helsinn's 0.25 mg formulation met that requirement. The Federal Circuit noted that the parties had stipulated that the formulation had been made and was stable as of the January 30, 2002 critical date, and that there was "overwhelming" evidence that the formulation would work for its intended purpose. In reaching that conclusion, the Federal Circuit noted that "[t]he district court clearly erred by applying too demanding a standard. The completion of Phase III studies and final FDA approval are not pre-requisites for the invention here to be ready for patenting." The Federal Circuit, however, was quick to limit that statement to the facts of the case, noting that "there is no general rule that Phase III trials must be completed before a product is ready for patenting, just as there is no general rule that Phase III trials are irrelevant. Each case must be decided on its own facts."