U.S. Supreme Court
Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc.
139 S. Ct. 628
2019
Justice THOMAS delivered the opinion of
the Court.
The Leahy-Smith America Invents Act
(AIA) bars a person from receiving a patent on an invention that was "in
public use, on sale, or otherwise available to the public before the effective
filing date of the claimed invention." 35 U.S.C. § 102(a)(1). This case
requires us to decide whether the sale of an invention to a third party who is
contractually obligated to keep the invention confidential places the invention
"on sale" within the meaning of § 102(a).
More than 20 years ago, this Court
determined that an invention was "on sale" within the meaning of an
earlier version of § 102(a) when it was "the subject of a commercial offer
for sale" and "ready for patenting." Pfaff v. Wells Electronics,
Inc., 525 U.S. 55, 67, 119 S.Ct. 304, 142 L.Ed.2d 261 (1998). We did not
further require that the sale make the details of the invention available to
the public. In light of this earlier construction, we determine that the
reenactment of the phrase "on sale" in the AIA did not alter this
meaning. Accordingly, a commercial sale to a third party who is required to
keep the invention confidential may place the invention "on sale"
under the AIA.
I
Petitioner Helsinn Healthcare S.A.
(Helsinn) is a Swiss pharmaceutical company that makes Aloxi, a drug that
treats chemotherapy-induced nausea and vomiting. Helsinn acquired the right to
develop palonosetron, the active ingredient in Aloxi, in 1998. In early 2000,
it submitted protocols for Phase III clinical trials to the Food and Drug
Administration (FDA), proposing to study a 0.25 mg and a 0.75 mg dose of
palonosetron. In September 2000, Helsinn announced that it was beginning Phase
III clinical trials and was seeking marketing partners for its palonosetron
product.
Helsinn found its marketing partner in
MGI Pharma, Inc. (MGI), a Minnesota pharmaceutical company that markets and
distributes drugs in the United States. Helsinn and MGI entered into two
agreements: a license agreement and a supply and purchase agreement. The
license agreement granted MGI the right to distribute, promote, market, and
sell the 0.25 mg and 0.75 mg doses of palonosetron in the United States. In
return, MGI agreed to make upfront payments to Helsinn and to pay future
royalties on distribution of those doses. Under the supply and purchase
agreement, MGI agreed to purchase exclusively from Helsinn any palonosetron product
approved by the FDA. Helsinn in turn agreed to supply MGI however much of the
approved doses it required. Both agreements included dosage information and
required MGI to keep confidential any proprietary information received under
the agreements.
Helsinn and MGI announced the agreements
in a joint press release, and MGI also reported the agreements in its Form 8-K
filing with the Securities and Exchange Commission. Although the 8-K filing
included redacted copies of the agreements, neither the 8-K filing nor the
press releases disclosed the specific dosage formulations covered by the
agreements.
On January 30, 2003, nearly two years
after Helsinn and MGI entered into the agreements, Helsinn filed a provisional
patent application covering the 0.25 mg and 0.75 mg doses of palonosetron. Over
the next 10 years, Helsinn filed four patent applications that claimed priority
to the January 30, 2003, date of the provisional application. Helsinn filed its
fourth patent application — the one relevant here — in May 2013, and it issued
as U.S. Patent No. 8,598,219 ('219 patent). The '219 patent covers a fixed dose
of 0.25 mg of palonosetron in a 5 ml solution. By virtue of its effective date,
the '219 patent is governed by the AIA. See § 101(i).
Respondents Teva Pharmaceutical
Industries, Ltd., and Teva Pharmaceuticals USA, Inc. (Teva), are, respectively,
an Israeli company that manufactures generic drugs and its American affiliate.
In 2011, Teva sought approval from the FDA to market a generic 0.25 mg
palonosetron product. Helsinn then sued Teva for infringing its patents,
including the '219 patent. In defense, Teva asserted that the '219 patent was
invalid because the 0.25 mg dose was "on sale" more than one year
before Helsinn filed the provisional patent application covering that dose in
January 2003.
The AIA precludes a person from
obtaining a patent on an invention that was "on sale" before the
effective filing date of the patent application:
"A person shall be entitled to a
patent unless ... 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." 35 U.S.C. §
102(a)(1) (emphasis added).
See also § 102(b)(1) (exception for certain
disclosures made within a year before the effective filing date). Disclosures
described in § 102(a)(1) are often referred to as "prior art."
The patent statute in effect before the
passage of the AIA included a similar proscription, known as the "on-sale
bar":
"A person shall be entitled to a
patent unless —
"(a) the invention was known or
used by others in this country, or patented or described in a printed
publication in this or a foreign country, before the invention thereof by the
applicant for patent, or
"(b) the invention was patented or
described in a printed publication in this or a foreign country or in public
use or on sale in this country, more than one year prior to the date of the
application for patent in the United States." 35 U.S.C. §§ 102(a)-(b)
(2006 ed.) (emphasis added).
The District Court determined that the
"on sale" provision did not apply. It concluded that, under the AIA,
an invention is not "on sale" unless the sale or offer in question
made the claimed invention available to the public. Helsinn Healthcare S.A. v.
Dr. Reddy's Labs. Ltd., ___ F.Supp.3d ___, ___, ___, 2016 WL 832089, *45, *51
(D.N.J., Mar. 3, 2016). Because the companies' public disclosure of the
agreements between Helsinn and MGI did not disclose the 0.25 mg dose, the court
determined that the invention was not "on sale" before the critical
date. Id., at ___-___, at *51-*52.
The Federal Circuit reversed. 855 F.3d
1356, 1360 (2017). It concluded that "if the existence of the sale is
public, the details of the invention need not be publicly disclosed in the
terms of sale" to fall within the AIA's on-sale bar. Id., at 1371. Because
the sale between Helsinn and MGI was publicly disclosed, it held that the
on-sale bar applied. Id., at 1364, 1371.
We granted certiorari to determine
whether, under the AIA, an inventor's sale of an invention to a third party who
is obligated to keep the invention confidential qualifies as prior art for
purposes of determining the patentability of the invention. 585 U.S. ___, 138 S.Ct.
2678, 201 L.Ed.2d 1070 (2018). We conclude that such a sale can qualify as
prior art.
II
A
The United States Constitution
authorizes Congress "[t]o promote the Progress of Science and useful Arts,
by securing for limited Times to Authors and Inventors the exclusive Right to
their respective Writings and Discoveries." Art. 1, § 8, cl. 8. Under this
grant of authority, Congress has crafted a federal patent system that
encourages "the creation and disclosure of new, useful, and nonobvious
advances in technology and design" by granting inventors "the
exclusive right to practice the invention for a period of years." Bonito
Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 151, 109 S.Ct. 971, 103
L.Ed.2d 118 (1989).
To further the goal of "motivating
innovation and enlightenment" while also "avoiding monopolies that
unnecessarily stifle competition," Pfaff, 525 U.S., at 63, 119 S.Ct. 304
Congress has imposed several conditions on the "limited opportunity to
obtain a property right in an idea," Bonito Boats, supra, at 149, 109
S.Ct. 971. One such condition is the on-sale bar, which reflects Congress'
"reluctance to allow an inventor to remove existing knowledge from public
use" by obtaining a patent covering that knowledge. Pfaff, supra, at 64, 119
S.Ct. 304; see also Pennock v. Dialogue, 2 Pet. 1, 19, 7 L.Ed. 327 (1829)
(explaining that "it would materially retard the progress of science and
the useful arts" to allow an inventor to "sell his invention
publicly" and later "take out a patent" and "exclude the
public from any farther use than what should be derived under it").
Every patent statute since 1836 has
included an on-sale bar. Pfaff, supra, at 65, 119 S.Ct. 304. The patent statute
in force immediately before the AIA prevented a person from receiving a patent
if, "more than one year prior to the date of the application for patent in
the United States," "the invention was ... on sale" in the
United States. 35 U.S.C. § 102(b) (2006 ed., Supp. IV). The AIA, as relevant
here, retained the on-sale bar and added the catchall phrase "or otherwise
available to the public." § 102(a)(1) (2012 ed.) ("A person shall be
entitled to a patent unless" the "claimed invention was ... in public
use, on sale, or otherwise available to the public ..."). We must decide
whether these changes altered the meaning of the "on sale" bar. We
hold that they did not.
B
Congress enacted the AIA in 2011 against
the backdrop of a substantial body of law interpreting § 102's on-sale bar. In
1998, we determined that the pre-AIA on-sale bar applies "when two
conditions are satisfied" more than a year before an inventor files a
patent application. Pfaff, 525 U.S., at 67, 119 S.Ct. 304. "First, the
product must be the subject of a commercial offer for sale." Ibid.
"Second, the invention must be ready for patenting," which we
explained could be shown by proof of "reduction to practice" or
"drawings or other descriptions of the invention that were sufficiently
specific to enable a person skilled in the art to practice the invention."
Id., at 67-68, 119 S.Ct. 304.
Although this Court has never addressed
the precise question presented in this case, our precedents suggest that a sale
or offer of sale need not make an invention available to the public. For
instance, we held in Pfaff that an offer for sale could cause an inventor to
lose the right to patent, without regard to whether the offer discloses each
detail of the invention. E.g., id., at 67, 119 S.Ct. 304. Other cases focus on
whether the invention had been sold, not whether the details of the invention
had been made available to the public or whether the sale itself had been
publicly disclosed. E.g., Consolidated Fruit-Jar Co. v. Wright, 94 U.S. 92, 94,
24 L.Ed. 68 (1877) ("[A] single instance of sale or of use by the patentee
may, under the circumstances, be fatal to the patent..."); cf. Smith &
Griggs Mfg. Co. v. Sprague, 123 U.S. 249, 257, 8 S.Ct. 122, 31 L.Ed. 141 (1887)
("A single sale to another... would certainly have defeated his right to a
patent ..."); Elizabeth v. Pavement Co., 97 U.S. 126, 136, 24 L.Ed. 1000
(1878) ("It is not a public knowledge of his invention that precludes the
inventor from obtaining a patent for it, but a public use or sale of it").
The Federal Circuit — which has
"exclusive jurisdiction" over patent appeals, 28 U.S.C. § 1295(a) —
has made explicit what was implicit in our precedents. It has long held that
"secret sales" can invalidate a patent. E.g., Special Devices, Inc.
v. OEA, Inc., 270 F.3d 1353, 1357 (2001) (invalidating patent claims based on
"sales for the purpose of the commercial stockpiling of an invention"
that "took place in secret"); Woodland Trust v. Flowertree Nursery,
Inc., 148 F.3d 1368, 1370 (1998) ("Thus an inventor's own prior commercial
use, albeit kept secret, may constitute a public use or sale under § 102(b),
barring him from obtaining a patent").
In light of this settled pre-AIA
precedent on the meaning of "on sale," we presume that when Congress
reenacted the same language in the AIA, it adopted the earlier judicial construction
of that phrase. See Shapiro v. United States, 335 U.S. 1, 16, 68 S.Ct. 1375, 92
L.Ed. 1787 (1948) ("In adopting the language used in the earlier act,
Congress `must be considered to have adopted also the construction given by
this Court to such language, and made it a part of the enactment'"). The
new § 102 retained the exact language used in its predecessor statute ("on
sale") and, as relevant here, added only a new catchall clause ("or
otherwise available to the public"). As amicus United States noted at oral
argument, if "on sale" had a settled meaning before the AIA was
adopted, then adding the phrase "or otherwise available to the
public" to the statute "would be a fairly oblique way of attempting
to overturn" that "settled body of law." Tr. of Oral Arg. 28.
The addition of "or otherwise available to the public" is simply not
enough of a change for us to conclude that Congress intended to alter the
meaning of the reenacted term "on sale." Cf. Holder v. Martinez
Gutierrez, 566 U.S. 583, 593, 132 S.Ct. 2011, 182 L.Ed.2d 922 (2012)
(determining that a reenacted provision did not ratify an earlier judicial
construction where the provision omitted the word on which the prior judicial
constructions were based).
Helsinn disagrees, arguing that our construction
reads "otherwise" out of the statute. Citing Paroline v. United
States, 572 U.S. 434, 134 S.Ct. 1710, 188 L.Ed.2d 714 (2014), and Federal
Maritime Comm'n v. Seatrain Lines, Inc., 411 U.S. 726, 93 S.Ct. 1773, 36
L.Ed.2d 620 (1973), Helsinn contends that the associated-words canon requires
us to read "otherwise available to the public" to limit the preceding
terms in § 102 to disclosures that make the claimed invention available to the
public.
As an initial matter, neither of the
cited decisions addresses the reenactment of terms that had acquired a
well-settled judicial interpretation. And Helsinn's argument places too much
weight on § 102's catchall phrase. Like other such phrases, "otherwise
available to the public" captures material that does not fit neatly into
the statute's enumerated categories but is nevertheless meant to be covered.
Given that the phrase "on sale" had acquired a well-settled meaning
when the AIA was enacted, we decline to read the addition of a broad catchall phrase
to upset that body of precedent.
III
Helsinn does not ask us to revisit our
pre-AIA interpretation of the on-sale bar. Nor does it dispute the Federal
Circuit's determination that the invention claimed in the '219 patent was
"on sale" within the meaning of the pre-AIA statute. Because we
determine that Congress did not alter the meaning of "on sale" when
it enacted the AIA, we hold that an inventor's sale of an invention to a third
party who is obligated to keep the invention confidential can qualify as prior art
under § 102(a). We therefore affirm the judgment of the Federal Circuit.
It is so ordered.