Supreme Court Affirms that Secret Sales Can Trigger the On-Sale Bar

We previously wrote, Federal Circuit Interprets AIA “On-Sale” Bar to Include Confidential Sales, Leaves Open Issue of Completely Secret Sale1, about a Federal Circuit decision, Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. (2018), which held that the patent on-sale bar is triggered by confidential sales of technology, even though the invention is not disclosed to the public, and that this law was not changed by the America Invents Act of 2011 (AIA).

The Supreme Court has now affirmed that ruling, holding that the long-standing construction of “on-sale” in the statute was not changed by the AIA.

It often happens that parties enter into confidential agreements for the commercial exploitation of technology that is intended to be patented. These parties need to be aware that these agreements might well be deemed a “sale,” triggering the one-year clock for the on-sale bar.

In deciding Helsinn, the Court noted that it had held in the 1998 case of Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998) that all that is required for the on-sale bar is that the product must be the subject of a commercial offer for sale, and the invention must be ready for patenting, i.e., reduced to practice. There was no requirement that the invention be disclosed to the public.

The patent owner argued that when Congress enacted the AIA, it amended the relevant statutory language to bar the patentability of an “invention [that] 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). This language, argued the patent owner, meant that “on-sale” must be of the type which makes the invention “available to the public.” But the Supreme Court rejected that argument – there was no indication that Congress had intended to overturn settled precedent by an oblique inclusion of the catchall phrase “otherwise available to the public.”

Although not directly addressed, the Supreme Court decision seems to resolve an issue left open by the Federal Circuit. In Helsinn, although the details of the invention were not disclosed to the public, the sale itself was publicly announced in SEC filings. The Federal Circuit’s decision left open whether the on-sale bar would apply in the absence of such an announcement.

But the Supreme Court’s citing to Pfaff and its statement that all that is required are two elements (commercial offer for sale and patentability) strongly implies that there is no requirement for any public disclosure at all.