A recent district court case, Helsinn Healthcare v. Dr. Reddy’s Labs., et al. (D.N.J. 2016), marks the first judicial interpretation of the America Invents Act of 2011 (“AIA”) on-sale bar standard for “secret” sales and “secret” offers-for-sale, bidding farewell to arguments that confidential sales and offers-for-sale preclude patentability.

Before 2011, Section 102(b) of the Patent Act created a bar to patentability if the claimed 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” (emphasis added). Historically, courts interpreted the “on-sale” portion as a bar encompassing even private commercial sales or offers that were kept from the public – the so-called “secret” sales or “secret” offers-for-sale.

The AIA rephrased the law to create a bar covering subject matter “patented, described in a printed publication, or in public use, on sale, or otherwise available to the public” (emphasis added).  The U.S.P.T.O., in turn, adopted the view that the AIA amendment limited the “on-sale” bar to only publicly available transactions.  That non-binding U.S.P.T.O. interpretation was effectively adopted by the District Court in the Helsinn case.  The Court decided that the AIA on-sale bar requires the existence of a sale (or offer for sale) of a claimed invention to be available to the public before the effective filing date of that claimed invention.

The Helsinn court resorted to a “common sense” approach to statutory construction, as well as a review of the AIA’s legislative history, before concluding that Section 102(a) requires a publicsale or offer for sale of the claimed invention.  The Court applied its interpretation to certain contracts and decided they were not “public” sales under the post-AIA standard because they were subject to, and performed under, a confidentiality agreement.  The Court also decided that disclosures in press releases and securities filings with the SEC  that a sales agreement existed regarding a specific drug, but not disclosing the claimed invention itself (i.e., the drug’s specific formulation), did not qualify as “public” sales of the claimed invention.  Some may find those rulings rather surprising.

Helsinn has been appealed to the Federal Circuit.  In the meantime, there may be renewed interest in  using non-disclosure agreements to avoid triggering the on-sale bar.  Barring a reversal by the Federal Circuit, secret commercial exploitation and delayed patenting may be the chosen course of action for some innovators.