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Like Some Bad Horror Movie: The Return of the Secret Prior Art

May 17, 2017 – In the first Federal Circuit decision on the meaning of 35 U.S.C. §102 under the new AIA law (Helsinn Healthcare v. Teva (Appeal Nos. 2016-1284 and 2016-1787)), the Court addressed whether a sale which did not make the claimed invention known to the public qualified as "on sale" prior art under 35 U.S.C. §102.

The question of whether AIA changed the law with respect to the need (or not) that a sale under the “on sale bar” be known to the public or make the invention known to the public has been hotly debated since AIA became law. The importance of this issue was indicated by the fact that there were dozens of attorneys involved in this case and seven amicus briefs filed in the case including one by the Government giving the USPTO’s position, a separate one by a Congressman and one by the AIPLA. The pre-AIA version of 35 U.S.C. §102 had long been held by Courts to not require that the sale under the “on sale” provision be public or that the sale make the claimed invention known to the public. This situation gave rise to what was referred to as “secret prior art.”

The current AIA version of 35 U.S.C. §102(a)(1) states: A person shall be entitled to a patent unless - (1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention

The otherwise available to the public language is new to the AIA statute compared to the old statute. There was great uncertainty on whether this added language meant that all of the previously recited acts (including the “on sale” act) would have to be those that were known to the public and/or made the invention known to the public. Many felt that a plain reading of the “otherwise” clause only made sense if all the previously recited acts, including on sale, were acts known to the public. Significantly, the USPTO took the position (as they stated in their examining manual, MPEP §2152.02(d)) that: “The phrase ‘on sale’ in AIA 35 U.S.C. 102(a)(1) is treated as having the same meaning as ‘on sale’ in pre-AIA 35 U.S.C. 102(b), except that the sale must make the invention available to the public.”

The Court’s Holding

The Federal Circuit held that a sale or offer for sale under the “on sale” provision of 35 U.S.C. §102 does not need to make the claimed invention available to the public to be prior art. Note that the Court specifically did not answer the question of whether knowledge of the existence of the sale had to be publically known. In this case, the existence of the sale was clearly publically known but the sale did not make the specifics of the claimed invention public.

The Details of the Decision

The following is an exemplary claim in the Helsinn case:
A pharmaceutically stable solution for reducing emesis or reducing the likelihood of emesis comprising: a) 0.05 mg/mL palonosetron hydrochloride, based on the weight of the free base, in a sterile injectable aqueous carrier at a pH of from 4.5 to 5.5; b) from 0.005 mg/mL to 1.0 mg/mL EDTA; and c) mannitol in an amount sufficient to tonicify said solution, in a concentration of from about 10 mg/ml to about 80 mg/ml

The concentrations of the ingredients were critical to the patentability of the invention.

More than a year before the effective filing date of the patent in question (thus, eliminating the possibility of excluding the prior art under 35 U.S.C. §102(b)(1)(A)), Helsinn had entered into a marketing and distribution agreement with respect to formulations of the drug in question. The agreement was announced in a press release and published in a Form 8-K filing with the SEC, the latter of which included a partially redacted copy of the agreement. It was not disputed that the agreement (evidencing a sale) was for formulations having the concentrations as claimed. But the announcement and published redacted copy of the agreement did not indicate these critical concentrations. The lower court had found that the agreement did not create invalidating “on sale” prior art because it did not make the invention known to the public. Particularly, what had been made public did not indicate the concentrations which were a critical element of the claimed invention.

The lower court relied on the new “otherwise” language added by the AIA and statements made by those in the Congress when the AIA law was passed to conclude that the sale must make the invention known to the public to be prior art under the AIA.

On appeal, Helsinn contended that the lower court was correct that the law was changed by the AIA such that an on sale bar only applied if the sale made the claimed invention known to the public. Helsinn argued that the phrase “otherwise available to the public” had to mean that all the prior listed acts were acts that made the invention available to the public. The published parts of the Agreement did not meet this requirement because the concentrations required in the claims were not included. Further, Helsinn pointed to statements made in Congress by those who wrote the AIA law, such as:

“[S]ubsection 102(a) was drafted in part to do away with precedent under current law that private offers for sale or private uses or secret processes practiced in the United States that result in a product or service that is then made public may be deemed patent-defeating prior art. That will no longer be the case.”
and
“The word ‘otherwise’ makes clear that the preceding clauses describe things that are of the same quality or nature.”

The Court dismissed the statements in Congress as not being reliable to interpret the law. The Court also stated that Congress was referring to the issue of “public use” when making these statements, although these quoted statements clearly pertain to the “on sale” clause also. In concluding, the Court found that the statute was not totally clear on this point and that, if the intent was to make such a significant change in the law (citing a history of cases on the law of secret sales prior to AIA), then the Congress would have been more clear in writing the statute.

It should be noted that the Court explicitly indicated that it was not deciding on the issue of whether the existence of the sale or offer for sale had to be public or not. In this case, the existence of the sale was clearly public, only the details of what was actually sold were not public. However, the reasoning of the Court would seem to indicate that the existence of the sale also does not need to be publically known for on sale prior art to be established.

There were also two issues raised due to the facts that the sale was contingent on the formulation receiving FDA approval and that FDA approval did not happen until less than a year before the effective filing date. If, due to the contingency, the sale was not considered a sale before the FDA approval, then its prior art effect could have been excluded under the 35 U.S.C. §102(b)(1)(A) one year grace period. Further, the formulation may not have been considered “ready for patenting” until FDA approval, which again would allow the prior art effect to be excluded under the 35 U.S.C. §102(b)(1)(A) one year grace period.

Regarding the contingency on FDA approval in the agreement, the Court pointed to precedent making clear that there is still a contract for sale even if there is a condition precedent to the sale.

The ready for patenting issue turned on whether the inventors had determined that the invention would work for its intended purpose which, according to the claims, is “reducing the likelihood” of emesis (vomiting) and CINV (nausea) from chemotherapy. The standard the Court applied was whether the invention works for its intended purpose “beyond a probability of failure” but not “beyond a possibility of failure.” The Court pointed out that ready for patenting for a pharmaceutical does not require that it be FDA approved, which is a more demanding standard. It was sufficient that the data prior to the critical one year date showed that the formulations (in the concentration as claimed) were effective to “suppress” or showed “some efficacy” against emesis and CINV. Prior to the critical date, Helsinn had prepared preliminary data tables analyzing the results from the first Phase III trial, stating: “[T]he preliminary data for Complete Response, which is the primary efficacy outcome measure for acute CINV, as 81.0% (153/189) for palonosetron 0.25 mg.” The 81% effectiveness in a large sample size was sufficient to show that the invention worked for its intended purpose “beyond a probability of failure.” Helsinn’s own expert stated that these results showed that the formulation was effective to reduce the likelihood of emesis and CINV from chemotherapy. The Court distinguished the Omeprazole, 536 F.3d 1361 (Fed. Cir. 2008), case where it was found that the invention was not ready for patenting until after Phase III trials were complete. The Court said that Omeprazole did not hold that Phase III trials had to be complete in all cases for a pharmaceutical to be ready-for-patenting. In Omeprazole the other data and information was such that no conclusion could be made regarding efficacy until after Phase III was completed and that was not the case here.

Conclusion:

A sale or offer for sale under the “on sale” provision of the new AIA version of 35 U.S.C. §102 is still effective as prior art even if it does not make the claimed invention available to the public. While the Court said they were not answering the question of whether knowledge of the existence of the sale had to be publically known, the reasoning of the Court would suggest that the existence of the sale could be secret as well. Thus, it would appear that secret prior art based on non-public sales is alive and well, i.e., AIA did not change the law regarding “on sale” prior art in this respect.

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