The On-Sale Bar: A Critical Concept in Patent Law
As the Supreme Court ruling in the on-sale bar case confirms, In the ever-evolving landscape of patent law, few concepts are as crucial and potentially devastating to inventors as the on-sale bar. This legal principle, which has been a cornerstone of patent law for over a century, received renewed attention with the Supreme Court’s landmark decision in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. in 2019. As a patent attorney, understanding the implications of this ruling is essential for protecting your clients’ intellectual property rights.
On January 22, 2019, the Supreme Court ruled that a commercial sale of a chemotherapy drug to a third party who agreed to keep the invention confidential, was enough to trigger the On-Sale Bar and prevented the inventor from suing for patent infringement. The sale of the invention placed the invention “on sale” and because a patent application was not filed within one year of the sale, cause the inventor to lose its patent rights.
The On-Sale Bar Explained
Patent Law Foundation
The founding fathers of the United States created an incentive for inventors in exchange for the disclosure to the public of their invention. Specifically, the United States Constitution promotes Science and the Useful Arts, by securing for a limited time to Authors and Inventors the exclusive right to make use and sale their invention during the term of their patent. Under the Constitution, the United States created a federal patent system that rewards inventors for the creation and disclosure of their invention to Society. As part of motivating inventors to innovate and enlighten society, while avoiding monopolies that stifle competition the federal patent system imposes several conditions on the ability to obtain a patent. One such condition is the on-sale bar.
On-Sale Bar
The reward of a patent is based on the fact that in order to be rewarded, the inventor must disclose a new invention in a patent application and the disclosure should be prior to offering the invention for sale or otherwise disclosing the invention to the public. An inventor should not be allowed to remove something already known from public use by obtaining a patent covering that knowledge and receiving some type of monopoly. To allow an inventor to patent something already known or publicly available would retard society versus promoting the progress of society. As an example, if a inventor publicly sells a product embodying the invention and then later decides to obtain patent protection. The patent would effectively allow them to exclude the product from society denying us the benefit of the disclosure of a new invention or technology. A patent would stifle innovation by denying the public the right to compete or learn something new when the knowledge related to the innovation was already known and available to the public prior to the patent. Therefore, every patent law since 1836 has included an on-sale bar which prevents an inventor from filing for a patent on something the inventor already sold or made public.
The on-sale bar is a provision in patent law that prevents inventors from obtaining a patent on an invention that has been on sale for more than one year prior to the filing date of the patent application. This rule serves to encourage prompt filing of patent applications and prevent inventors from extending their monopoly beyond the statutory period.
Helsinn v. Teva: A Game-Changing Decision
The Helsinn case brought the on-sale bar into sharp focus, particularly in the context of the America Invents Act (AIA) of 2011. The key question before the Supreme Court was whether the AIA had changed the meaning of the phrase “on sale” in the patent statute.
Background of the Case
Helsinn, a Swiss pharmaceutical company, had entered into a confidential agreement with MGI Pharma to distribute its anti-nausea drug palonosetron in 2001. Nearly two years later, Helsinn filed a patent application for the drug. When Teva sought to market a generic version of the drug, Helsinn sued for patent infringement. Teva countered that Helsinn’s patent was invalid due to the on-sale bar.
The Court’s Ruling
In a unanimous decision, the Supreme Court affirmed that the on-sale bar applies even to secret sales. Justice Thomas, writing for the Court, stated that the addition of the phrase “or otherwise available to the public” in the AIA did not alter the meaning of “on sale” as it had been interpreted in pre-AIA case law.
Implications of the Helsinn Decision
The Helsinn ruling has significant implications for inventors and businesses:
- Secret Sales Count: Even confidential sales agreements can trigger the on-sale bar.
- No Public Disclosure Required: The details of the invention need not be publicly disclosed for the on-sale bar to apply.
- Consistency with Pre-AIA Law: The Court’s decision maintains continuity with pre-AIA interpretations of the on-sale bar.
Navigating the On-Sale Bar in Light of Helsinn
Given the potential pitfalls of the on-sale bar, inventors and businesses must be vigilant in their patent strategies:
- File Early: To avoid triggering the on-sale bar, file patent applications as soon as possible after conception of the invention.
- Review All Agreements: Carefully examine any sales or license agreements, even confidential ones, to ensure they don’t inadvertently trigger the on-sale bar.
- Document Invention Development: Keep detailed records of the invention process to establish the timeline of development and any potential sales activities.
The Importance of Experienced Patent Counsel
Navigating the complexities of the on-sale bar, especially in light of the Helsinn decision, requires the expertise of an experienced patent attorney. A knowledgeable patent lawyer can:
- Assess whether any sales activities might trigger the on-sale bar
- Develop strategies to protect inventions while pursuing commercial opportunities
- Ensure timely filing of patent applications to avoid on-sale bar issues
- Defend against on-sale bar challenges in patent litigation
Take Action to Protect Your Inventions
The on-sale bar remains a critical consideration in patent law, and the Helsinn decision has only underscored its importance. Don’t let your valuable inventions fall victim to this complex legal principle. Our experienced patent attorneys are well-versed in the nuances of the on-sale bar and can help you navigate these treacherous waters. Contact our firm today to schedule a consultation with one of our expert patent attorneys. We’ll work with you to develop a comprehensive patent strategy that protects your innovations while maximizing your commercial opportunities. Don’t let the on-sale bar stand between you and the patent protection you deserve – reach out now and secure your intellectual property future. Contact us if you have questions about the sale, use, or commercialization of a product prior to applying for a patent.