Helsinn v Teva made it to Supreme Court arguments on December 4. The justices repeatedly praised both sides’ briefs as “excellent,” but appeared to find Helsinn’s arguments – supported by the United States and a majority (11) of other amici curiae – most compelling.
Two years before applying for a patent, Helsinn, a small Swiss company, licensed its nausea-reducing invention to a larger pharmaceutical company with the ability to manufacture the valuable drug. Details of the invention remained private, but the fact of the sale itself was made public through the company’s SEC filings. The Federal Circuit ruled in 2017 that this partial disclosure was enough to bar Helsinn’s invention from being patented.
Before the AIA amended the US patent statute in 2011, it was generally accepted that inventions that were “on-sale” – whether the information was public or not – were barred from being patented if they did not apply within a year of being on sale.
On Tuesday, Helsinn argued that while the AIA did not change the law per se, the language it added – which bars issuance of an patent on an invention “in public use, on sale, or otherwise available to the public” – merely clarified that in fact, the on-sale bar only ever should have applied to publicly available information.
Sandip Patel, partner at Marshall Gerstein, says Justices Kavanaugh, Breyer and Kagan in particular “really tested the bounds of both sides,” but that ultimately “the respondent [Teva] got the tougher test.”
Irena Royzman, partner at Patterson Belknap, says “at the outset, [the justices gave] significant pushback in terms of the precedent being settled … It felt on track to affirm at the beginning.” They challenged Helsinn’s assertion that their interpretation was “consistent with the predominant objective of the on-sale bar as repeatedly articulated by this court; namely, to preserve the public’s access to inventions that have entered the public domain.”
Chief Justice Roberts shot back: “It might not be consistent with the actual meaning of the word sale, though, right?” Helsinn assured the justices that the court’s precedent would not be challenged if it adopted Helsinn’s interpretation.
The heat on Helsinn let up, however, when the arguments turned to examine the meaning of the word ‘otherwise’ in the context of “or otherwise available to the public.” Teva argued that “on sale” has a plain meaning regardless of context, and it could refer to either public or secret sales.
Justice Alito didn’t buy it. He questioned: “Suppose that the statute had been amended to read just the way it does, except with one exception. If it said the claimed invention was patented, described in a printed publication, or in public use, on sale publicly or on sale privately, or otherwise available to the public. That would be nonsense, wouldn't it?”
Justice Kagan further challenged Teva to demonstrate how “otherwise” could be as meaningless as Teva claimed in a different context. She said: “Suppose I say, ‘Don't buy peanut butter cookies, pecan pie – this is the key one, ready – brownies, or any dessert that otherwise contains nuts. Do I violate the injunction if I buy nutless brownies?”
Teva agreed that Kagan could buy nutless brownies without violating it, “[b]ut I don’t think you have that permissible reading of ‘on sale’ here … One sale to one willing purchaser has always been an invalidating sale.”
Royzman at Patterson Belknap says the court seemed more compelled by the brownie comparison than Teva’s point. “With all of the analogies they came up with,” she says, “‘otherwise’ did have import in a way that’s helpful for Helsinn.”
The USPTO’s 2013 guidance clearly also supports Helsinn’s position. It states: “secret sale or use activity does not qualify as prior art. These examination guidelines also indicate that an activity (such as a sale, offer for sale, or other commercial activity) is secret (non-public) if, for example, it is among individuals having an obligation of confidentiality to the inventor.”
Jake Holdreith, partner at Robins Kaplan, says the decision will ultimately depend on the intent of the on-sale bar. “If the on-sale bar is meant to prevent sales prior to a patent application to avoid extending the inventor’s monopoly,” he says, “the patent might be invalid based on the prior agreement to sell the drug.
“On the other hand, if the on-sale bar is meant to prevent a patent only if the public already knows about the invention, the patent might not be barred because the announcement of the agreement, without disclosing details about the drug, might not inform the public how to make the invention. In that case, the public might still be willing to grant a patent in exchange for teaching the public how to make the invention.”
If the Supreme Court affirms, Mark Whitaker, partner at Morrison & Foerster, imagines “small bio companies will have a harder time competing with larger companies, because they often need partners to get sales out.” However, he expects the decision to go the other way. “Typically when the Supreme Court takes cert from the Federal Circuit on patent law,” he says, “they want to reverse it.”
How important is this issue? A recent study by Steve Yelderman, law professor at Notre Dame, found that 4% of all patent invalidations were based on non-public sales. Still, companies who have a practice of licensing their inventions for development are watching this case.
Royzman, of Patterson Belknap, explains: “There’s a heightened awareness of this issue that there wasn’t before. These types of transactions occur quite frequently, but people didn’t really think about them until the Federal Circuit’s decision came down and it seemed like there might be a problem. These days, there’s thought being given about reaching a deal with marketing and commercialisation partners prior to filing a patent application.”
Will those types of confidential deals count as disqualifying prior art? The Supreme Court will answer in short order. Marshall Gerstein’s Patel expects to see a decision in just a few months “because it is a simple statutory construction case,” he says. “Something the Supreme Court is designed to handle.”
Kannon Shanmugam, partner at Williams & Connolly, argued for Helsinn, while Goodwin partner William Jay argued for Teva. Malcolm Stewart, deputy solicitor general at the DOJ, supported Helsinn as amicus curiae.
