On May 1 2017 a Federal Circuit panel in Helsinn Healthcare SA v Teva Pharmaceuticals USA, Inc held four pharmaceutical patents invalid under the on-sale bar of 35 USC Section 102(b).(1) Three patents were governed by the version of Section 102(b) that existed before the passage of the 2011 America Invents Act. A fourth was governed by the post-America Invents Act version of Section 102(b). In Helsinn the Federal Circuit clarified that, under the post-America Invents Act version of Section 102(b), public disclosure of the existence of the sale of a patented item may suffice to invalidate a 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-America Invents Act versions of Section 102(b) and the Supreme Court's precedent in Pfaff v Wells Electronics, Inc a patent may be found invalid pursuant to the so-called 'on-sale bar' where the patented subject matter:
- is the subject of a commercial sale or offer for sale before the critical date of the patent; and
- is "ready for patenting".(2)
Before the American Invents Act, Section 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". However, upon passage of the act, the language of Section 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.) This new language raised speculation by some that the on-sale bar for post-America Invents Act patents could be triggered only by sales or offers for sale wherein the details of the commercial transaction, as well as the patented invention itself, were publicly disclosed. However, the Federal Circuit's Helsinn decision rejects that particular interpretation of the post-America Invents Act law.
Helsinn owns four patents directed to formulations containing 0.25 milligrams (mg) of the drug palonosetron for reducing chemotherapy-induced nausea and vomiting (CINV). Three of those patents are governed by the pre-America Invents Act version of Section 102(b) and the fourth – the '219 patent – is governed by the post-America Invents Act 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 Section 102(b) on-sale bar.
On April 6 2001, while Food and Drug Administration (FDA) trials for the use of palonosetron to treat CINV were ongoing, Helsinn entered into a licence 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 was approved by the FDA. The supply and purchase agreement specified:
- the price;
- the method of payment; and
- the 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 Securities and Exchange Commission, with the following two exceptions:
- The price terms were not disclosed.
- 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 Section 102(b) on-sale bar. The district court rejected those defences and upheld the validity of Helsinn's patents. As to the three pre-America Invents Act patents, the district court concluded that the invention was not "ready for patenting" before the critical date, as a full analysis of the results from the FDA's Phase III clinical trials for Helsinn's 0.25 mg palonosetron formulation was not complete as of the critical date. As to the '219 patent, the district court concluded that passage of the America Invents Act and the addition of the "or otherwise available to the public" language to Section 102(b), changed the law of the on-sale bar. Teva appealed.
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 [America Invents Act] 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 (ie, 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 on 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 in Medicines Co v Hospira, Inc.(3) In this decision, the Federal Circuit, sitting en banc, found that an agreement in which 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 America Invents Act changed the meaning of Section 102(b) "so that there was no qualifying sale as to the '219 patent". As to this question, the Federal Circuit reviewed its pre-America Invents Act precedent to note that, before the passage of the act, confidential sales in some instances were found to trigger the on-sale bar. The Federal Circuit then noted that, even if the act 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 as follows:
- "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 [America Invents Act], if the existence of the sale is public, the details of the invention need not be publicly disclosed in the term of sale".
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."
However, the Federal Circuit 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."
For further information on this topic please contact Christopher Loh at Fitzpatrick, Cella, Harper & Scinto by telephone (+1 212 218 2100) or email ([email protected]). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.
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Endnotes
(1) Helsinn Healthcare SA v Teva Pharmaceuticals USA, Inc, Appeal 2016-1284, 2016-1787.
(2) Pfaff v Wells Electronics, Inc, 525 US 55 (1998).
(3) Medicines Co v Hospira, Inc, 827 F3d 1363 (Fed Cir 2016).
