The USPTO has asserted that under the AIA secret sales or use of an invention do not invalidate a patent. See Fed. Reg., Vol. 78. No. 31, 11059 at 11062:

Therefore, the Office views the ‘‘or otherwise available to the public’’ residual clause of the AIA’s 35 U.S.C. 102(a)(1) residual clause of the AIA’s 35 U.S.C. 102(a)(1) as indicating that secret sale or use activity does not qualify as prior art. [Citation omitted]

The views of the USPTO are easily dismissed by reference to the constitution which authorized the grant of patents only for a limited term. Article 1, section 8 provides:

To 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; [Emphasis added]

The Supreme Court in Pennock v Dialogue, 27 U.S. 1, 16 (1829) cited this provision as one of the reasons why the sale of an invention by the patentee prior to filing for a patent invalidated the patent even though the sale did not enable the practice of the invention. To have found otherwise would have placed the limit on the monopoly at the discretion of the inventor and not the patentee. Judge Learned Hand in Metallizing Engineering Co. v Kenyon Bearing & AP Co., 153 F.2d 516, 520 (Cir 2nd 1946) viewed Pennock as prohibiting the competitive exploitation of an invention after it is ready for patenting:

But if he goes beyond that period of probation [grace period], he forfeits his right regardless of how little the public may have learned about the invention; just as he can forfeit it by too long concealment, even without exploiting the invention at all. [Citation omitted]

None of the authors asserting that the AIA makes the secret commercialization not an invalidating act have tried to square their interpretation with the Constitutional restriction on Congresses power that the period is to be limited. In Metallizing, the commercial exploitation of the invention had made the invention available to the public.

However, while the Federal Circuit did recognize the Constitution’s limitation on the patent term, it failed to consider whether the activity of entering into a contract for a future sale of the patented product acted as a forfeiture of the right to a patent. Here Helsinn was establishing the channels through which its product would be sold to the public once it had the necessary FDA approval. The public, here those in need of the drug, did not obtain access to the drug until after the Helsinn patent’s filing date. That is, the “sale” did not take anything from the public. The public had no expectation of being able acquire or use Helsinn’s product until it was sold.

In Pennock the patentee had authorized the sale of his patented fire house connection for 7 years before filing for a patent. Over 13,000 feet of hose was sold to the fire companies in Philadelphia. The fire companies were the public to whom the hose was directed and they had come to use it as a matter of right. Under these circumstances the Court decided that such commercial exploitation was inconsistent with the validity subsequently filed patent since it placed the time limit on the life of the patent in the hands of the patentee and not Congress.

In contrast, here the public gained nothing by the contract between Helsinn and MGI Pharma who had contracted with Helsinn for the right to sell the drug. The drug wasn’t sold. The Helsinn-MGI contract provided for MGI to purchase the drug from Helsinn and then to resell it to the public. Had this been a simple agency contract where title to the goods did not pass to MGI it seems that the court would not have found an on-sale bar. Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., 855 F.3d 1356, 1366. These inconsistent results make no sense in the real world. Both are designed to allow Helsinn at a future point in time to sell the product to the public. The Constitutional provision granting Congress the power to “further the useful arts” was drawn from the British experience with Crown selling “patents” which granted to the patentee the right to exclude others from practicing the patented concept even though it had been previously freely practiced. The Statute of Monopolies brought the practice to an end and placed a firm time limit on the patents which were to be granted in the future and then only for new inventions. The public use and on-sale provisions of our law are designed to achieve the same result plus placing a firm time limit on the patent life. Here, the public gained nothing from the “sale” and Helsinn and MGI made no sales to the public and it was not publicly available to the public – those in the need of the drug. There was no exploitation of the patented technology.

To be sure, MGI had an enforceable contract, just like it would have had under an agency agreement, but how did that document place the invention in the possession of the public as it had in Pennock? How did it result in a commercial exploitation of the invention?

The Supreme Court’s Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998) does not support the Federal Circuit’s decision. In Pfaff, the inventor testified that he only built product to order and he considered the product ready for sale. In this case, the public was companies like Texas Instruments who placed an order for the Pfaff invention more than one year prior to the patent filing date for future delivery. There was no question under the facts that Pfaff commercially exploited his invention outside the grace period.

In my opinion, the Helsinn decision should be reversed because the invention had not been commercially exploited prior to the patent filing date.