Supreme Court to Hear Case on AIA “Secret Sales.”

What is the America Invents Act (AIA)?

The path to
patentability has many obstacles, and inventors’ own actions sometimes stand in
the way of the U.S. Patent and Trademark Office (USPTO) granting a patent for
their invention. In determining patentability, the USPTO compares a proposed
invention to prior art—relevant existing inventions.

The
Smith-Leahy America Invents Act (AIA) was enacted in 2011, shifting the patent
process from a “first to invent” to a “first inventor to file” system to
encourage inventors not to delay in filing after developing an invention. The
AIA adds new language regarding a person’s right to a patent, specifically when
the inventor makes it available to the public in some way. Both versions of 35 U.S.C.
§ 102 (pre- and
post-AIA) say a prior “public use” or sale can invalidate a patent, depending
on when they occur. The on-sale bar essentially prohibits a patent on an
invention that’s been available for sale for more than a year before the
application filing date.

This leads to
the question, “How ‘public’ does use have to be?” Under pre-AIA § 102, use is
usually public even if there are only a few people present, or the use falls
under an “experimental use” exception. Pre-AIA, even secret use by the inventor
is public use if it’s commercial. Similarly, secret sales by the inventor are
“on sale.” AIA language calls into question whether this is still true.

AIA § 102
adds the phrase “in public use, on sale, or
otherwise available to the public” (emphasis added). Some argue that this
added language means the treatment of secret commercial use by the inventor and
secret sales under pre-AIA § 102 are no longer valid. The implications of “or
otherwise available to the public” are uncertain, but questions could be
answered with Helsinn.

Helsinn Background

In 2007, the
Federal Circuit decided Helsinn
Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., a case
involving Helsinn Healthcare’s sale of a drug more than one year before filing
a patent application for the drug. Some
details about the
sale were made public, but technical details about the invention were kept
private. Helsinn argues that the phrase “or otherwise available to the public”
means the on-sale bar is not triggered when details of the invention are kept
private.

The
district court found
the patent was valid and would be infringed by Teva’s generic version. The
Federal Circuit reversed, holding
that the on-sale bar applies even if only the existence of the sale is made public, because holding
otherwise would have created a “foundational change in the theory of the
statutory on-sale bar.”

The
question before the Supreme Court is whether, under the AIA, “an inventor’s sale of an
invention to a third party that is obligated to keep the invention confidential
qualifies as prior art for purposes of determining the patentability of the
invention.”

In its appeal, one of Helsinn’s arguments is
the statutory interpretation of
the AIA. It maintains that the
“plain language” of the statute supports
their interpretation of the
on-sale bar. According to its petitioner
brief, Helsinn argues that the
final phrase in the AIA version of § 102, “or otherwise available to the public,”
should apply to the two previous categories “in public use” and “on sale,” meaning
the use or sale must be public to trigger the on-sale bar.

Possible Outcomes and Implications

One reason
the Supreme Court might have agreed to hear this case is because, as has
happened in the past, the Federal
Circuit’s opinion contradicts the USPTO’s. USPTO examining
procedure states that
“the sale must make the invention available to the public.”

Pre-AIA,
courts have typically held that secret sales trigger the on-sale bar to a
patent. The Supreme Court will have to decide if the phrase “or otherwise
available to the public” changes this interpretation. According to a Law360
article, because the Supreme
Court has often corrected the Federal Circuit’s interpretation of statutes,
it’s likely to reverse (Helsinn also has the USPTO’s support as well as a
Congressional AIA sponsor).  

Since Helsinn’s primary argument is one of statutory interpretation, the court will consider the meaning and structure of AIA § 102. A Baker Botts article explains that in at least one recent patent case before the Supreme Court, “the conservative bloc of the Court favored strict construction while the liberal wing of the Court was more swayed by policy arguments.” With this case not yet set for argument before the Supreme Court, the newly-appointed Justice Kavanaugh will have a chance to weigh in. Kavanaugh has had experience with intellectual property-related cases, though in recent pure patent cases before the Supreme Court, rulings have been unanimous. Whatever the court’s decision in Helsinn, the case is slightly unusual because it wasn’t completely secret—details of the sale, if not the invention, were made public. There may still be a lingering question about sales that are entirely confidential, meaning both the technical information about the invention and details about the sale are secret.

Paige Geier is a J.D. candidate, 2020, at NYU School of Law.