FEDERAL CIRCUIT: Helsinn Healthcare v. Teva Pharmaceuticals; ‘On Sale’ Bar alive and well for ‘secret sales’; still no clarity on meaning of “otherwise available to the public”

May 10, 2017

In our report of the original decision, we had asked if this was RIP for the On Sale Bar, in the sense that if it no longer covered ‘secret sales’, then this reduced On Sale bar adds little to the other elements of Section 102.

On Appeal, the Federal Circuit has effectively held the “On Sale” bar to be alive and well, and declined to provide a broad ruling on the how the “On Sale” provision in the post-AIA law is impacted by the “otherwise available to the public” test, here identified as OATTP, a wholly new provision introduced by the AIA amendments.

The AIA amendments to Section 102 added the new OATTP category. This creates two problems. Firstly, Section 102(1)(a) now comprises dissimilar elements, as it has a list of actions that result in disclosure of an invention carried over from the previous law, and the new OATTP category, which is a broad, general principle, rather a specific action.

The second problem is that it is not clear if the new OATTP category modifies the other categories or elements in § 102(1)(a), or, as has been argued, is a disjunctive phrase that defines a residual category of publicly available prior art.

A clear advantage to retaining elements of the previous novelty standard, and a reason for retaining them, is that there is a large body of case law interpreting provisions relating to ‘on sale’, ‘public use’, etc. Equally, there is a clear disadvantage in retaining older case law when introducing a wholly new provision, as it is unclear if this new provision OATTP should be interpreted independently, or interpreted to follow the old, large, nuanced and multifaceted body of case law. The tension here is exemplified in the two Court decisions. The lower Court in interpreting the OATTP provision referred extensively to standard canons of statutory construction; the Federal Circuit, on the other hand, referred exclusively to case law interpreting the carried over provisions of §102, particularly those addressing the ‘On Sale’ bar.

In the present case, it is suggested that there should be two separate questions: (i) what exactly is the meaning of OATTP (“otherwise available to the public”), and is it to be interpreted in the light of existing case law; and (ii) is the “on sale” bar modified by the OATTP category, or is to be interpreted only with reference to existing case law? Remarkably, the Courts have managed to address the second question without squarely and independently addressing the first.

From a foreign perspective, what is striking is that this new OATTP category, while central to the analysis and similar to the novelty standard in many countries, has not been subject to any independent definition by the Federal Circuit or the lower Court. This phrase and related terms, such as “public domain” and “disclosure”, appear to be given elastic and broad meanings. An amicus brief by a group of law professors recognized this deficiency, but their proposed interpretation was not adopted.

The phrase “available to the public” can be interpreted in at least three different ways, namely:

(1) A disclosure of enabling information, that enables a notional skilled person in the art to carry out the invention;

(2) making the benefits and advantages of the invention available to the public, even if the public do not have sufficient information to otherwise carry out or practice the invention, e.g. sale of the product of a process, where the invention resides in a new process; and

(3) as in this case, the mere publication or the notification of the simple existence of a sale or other contract relating to the invention.

The professors’ amicus brief suggested a further alternative, namely “otherwise available to the public” can be a residual category meant to capture all publicly accessible prior art that does not otherwise fit into one of the other numerated categories; e.g. a digital file that, when downloaded, enables a 3D printer to print out a design, but itself might not be a “publication” and mere downloading might not be “use”.

The first definition given above, disclosure of enabling information, is a definition that is commonly used in many other countries, including Canada. It is, perhaps, best understood by considering an extreme scenario, where, after disclosure, use etc., of an invention, the inventor, the inventors co-workers, and all notes, equipment etc. are lost in a catastrophic disaster.  If the earlier use and disclosure of the invention has made enabling information available to the public, so that the public can continue to make and use the invention, then there has been an “enabling disclosure”. If not, and it would require, a later, independent reinvention by a second inventor, for the public to regain the invention, then the invention was not “available to the public”. 

In the present case, one Patent was governed by the post-AIA law, so the Court had to address the question as to whether and to what extent the new OATTP category impacted interpretation of the other elements of Section 102, carried over from the pre-AIA Act. The Court declined “the invitation by the parties to decide this case more broadly than necessary”. Helsinn, the government and other amici had argued that the OATTP provision changed the meaning of the “on sale” bar, relying primarily on floor statements made by individual members of Congress. The Court was not prepared to follow these and noted that at most the floor statements show an intent to “do away with precedent under current section [§ 102] law” (The Court could have further noted that, as one commentator has remarked, the floor statements amount to “faux legislative history”, that was created after the Bill was passed).

The Court continued:

The floor statements do not identify any sale cases that would be overturned by the amendments. Even if the floor statements were intended to overrule those secret or confidential sale cases discussed above and cited…., that would have no effect here since those cases were concerned entirely 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 … 8-K filing with the SEC.

It is questioned whether this comment is correct. Surely, many of the earlier cases were concerned with whether the invention itself was made public, not whether the existence of a sale or offer to sell, (with no disclosure of the invention itself) was public. 

Refusing to accept that the AIA overruled the “secret sale” cases, the Court said:

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.

….

So too under our cases, an invention is made available to the public when there is a commercial offer or contract to sell a product embodying the invention and that sale is made public. Our cases explicitly rejected a requirement that the details of the invention be disclosed in the terms of sale.

Again, this is taking a generous and broad interpretation of “available to the public” to include, as here, the case where mere knowledge of a commercial offer or contract to sell is available to the public, without any knowledge of enabling information of the invention itself.

In a following argument for a “primary rationale for the on sale bar”, the Court used the term “public domain”, but in a broad and expansive sense, e.g to cover sales that were never consummated and where no enabling information of the invention was disclosed to the public. The Court then concluded that:

if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale.

This generous interpretation is highlighted in a further comment in a floor statement by Senator Kyl:

Senator Kyl himself seems to have agreed with this proposition, stating explicitly that “once a product is sold on the market, any invention that is inherent to the product becomes publicly available prior art and cannot be patented.”….. There are no floor statements suggesting that the sale or offer documents must themselves publicly disclose the details of the claimed invention before the critical date.

Surely, Senator Kyl, with his reference to “inherent to the product” did indeed mean that details of the invention would have been disclosed, in a sense of enabling disclosure. Yet, the Court was able to conclude that none of the floor statements require there to be a public disclosure of “details on the claimed invention”.

Finally, the Court 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 terms of sale”.

On its face, this now means that, if a sale or offer for sale is entirely secret, with not even details of the sale or the offer to sell being in anyway public, this will not fall within section 102, but this awaits further clarification. As the Court declined to address a broader question, it is also unclear if the OATTP standard limits or ‘clarifies’, a term used in committee reports, the other elements of Section 102, to give a single and uniform standard. A review of, e.g., MPEP (MPEP 2152) shows that there are subtle and important differences in the level of disclosure required for each of the elements in Section 102, carried over from the previous law, indicating that there is no uniform standard.

It is, therefore, suggested that the Courts have a lot of work to clarify what exactly is meant by “otherwise available to the public” and to what extent this element of Section 102 impacts or limits the other elements carried over from the pre-AIA law.

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Author(s):

H. Samuel Frost H. Samuel Frost
B.A. (Eng. Sci.), M.Sc. (Nucl. Eng.)
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