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BarJournal INTELLECTUAL PROPERTY

JULY/AUGUST 2015
FEATURE IS YOUR PATENT AT RISK

Secret Sales and Patent Validity

BY SHANNON V. MCCUE

was an associate fresh out of law Whether, under the Leahy-Smith America public sale, and that the invention was not
school when a partner asked me to Invents Act (AIA), an inventor’s sale of an ready for patenting when the sale was made.
handle a new client meeting. Right invention to a third party that is obligated The Federal Circuit, however, suggested
before I went into the conference to keep the invention confidential qualifies that the AIA did not change the meaning of on
I room, he said, “…and don’t forget to as prior art for purposes of determining the sale within Section 102 to exclude secret sales.
warn them about an on-sale bar.” patentability of the invention. The court disagreed that the invention was not
An “on-sale bar” refers to the fact that ready for patenting, and held that the sale to
if an invention is “on sale” for more than a Helsinn owns four patents relating to the MIG reported in the SEC filing created an on-
year before the inventor or company applies use of specific quantities of palonosetron to sale bar invalidating the ’219 patent. Helsinn
for a patent on the same invention, the reduce nausea induced by chemotherapy. requested a rehearing en banc. The Federal
invention cannot be patented. The on-sale All four patents stem from a provisional Circuit denied the request. Of interest in the
bar trips up inventors of all sizes and shapes. patent application filed on Jan. 30, 2003. denial of a rehearing en banc, Justice O’Malley
Consequently, even if you are not a patent On April 6, 2001, nearly two years before wrote that there was no issue of whether the
practitioner, it is important to understand filing the provisional application, Helsinn sale was a “secret sale” because the SEC filing
that a sale or offer for sale can impact your and MGI Pharma executed a license and made the sale public.
client’s ability to seek patent protection in a supply agreement obligating Helsinn to
the U.S. and abroad for its developments. supply MGI with all of its requirements for The policies underlying the on-sale bar
To that end, this article considers the the drug once it was approved by the Food Historically, patent law has limited the
Helsinn Healthcare v. Teva Pharmaceuticals and Drug Administration. On April 25, 2001, ability of an inventor to apply for a patent
case, in which at issue was a so-called secret Helsinn reported in a Securities and Exchange after putting the invention in public use or
sale. The unique factual scenario of this Commission filing that the parties had entered on sale. A fundamental policy in patent law
case demonstrates the issues involved in into the agreements, the use of the palonosetron is to encourage inventors to disclose their
on-sale bar questions, and the question that as the active ingredient, and the drug’s chemical inventions to the public through patenting
the Supreme Court will consider during its structure, but redacted the price and dosage to promote the progress of science and
2019 term. levels, ostensibly to comply with the agreement’s the useful arts. In Pennock v. Dialogue, the
confidentiality provisions. Supreme Court considered a secret sale of
The issue in Helsinn The district court held that the post-AIA the invention, indicating that failing to find
In Helsinn, the Supreme Court will review version of the on-sale bar applied to only such a sale invalidating would materially
the Federal Circuit’s decision that Helsinn’s the ’219 patent. It ruled that all four patents retard the progress of science and the useful
fund-raising activities triggered an on sale- were valid, and specifically held that the arts, and give a premium to those who
bar invalidating its patents. Specifically, the on-sale bar did not apply to the ’219 patent should be least prompt to communicate
Court granted cert. on the question: because the post-AIA version required a their discoveries.
The Court in Pennock also expressed a policy
against allowing the inventor to commercially
For over forty-five years we have become renowned statewide benefit by selling an invention before filing for a
for providing timely, high quality title and escrow patent, stating, “If the public, with the knowledge
closing services at competitive prices in all 88 counties. and tacit consent of the inventor, be permitted
to use the invention, without opposition, it is
a fraud on the public afterwards to take out
a patent.” In Metallizing Engineering, Judge
Learned Hand viewed the policy described in
Pennock as a condition upon the inventor’s
right that he shall not exploit his discovery
competitively after it is ready for patenting, and
M Beachwoodeachwood must content himself with “either secrecy, or a
Middleburg Heightsiddleburg Heights
B
440.886.6141 p40.886.6141 p
4 216.360.9099 p16.360.9099 p legal monopoly.” Metallizing Engineering Co. v.
2
4
440.886.7160 f40.886.7160 f 2 216.360.0530 f16.360.0530 f Kenyon Bearing Auto Parts, 153 F.2d 516, 520
info@ohiotitlecorp.com | www.ohiotitlecorp.com (2d Cir. 1946).
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