Last month, the United States Supreme Court granted a petition for a writ of certiorari in Helsinn Healthcare S.A., Teva Pharmaceuticals USA, Inc. In 2017, the U.S. Court of Appeals for the Federal Circuit held that a publicly disclosed commercial sale amounts to an invalidating act, even when the details of the invention are not publicly disclosed.
The United States Supreme Court will decide whether under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.
The outcome will be interesting, as sometime in 2019 the Supreme Court should provide some guidance on the scope of the on-sale bar (i.e., those acts and/or disclosures that occur prior to the filing date of a patent application, which could affect the validity of a patent). A different issue, which will not be in front of the U.S. Supreme Court for review, at least for a while, is whether a secret commercial sale amounts to an invalidating act.
In 2014, the Wisconsin Alumni Research Foundation (WARF) sued apple for infringement of U.S. Patent No 5,781,752 (the ‘752 Patent). In a related proceeding, the USPTO declined to institute an Inter Partes Review (IPR) brought by Apple to invalidate the ‘752 Patent. The ‘752 Patent is directed to computer architecture technology that can optimize processor performance. Specifically, a “predictor circuit” may anticipate user instructions based on previously stored data. WARF had alleged that its patented technology was being used on several products made by Apple, including the iPhone. In July of 2017, a U.S. District Judge in Wisconsin, William M. Conley, ordered Apple to pay over $506 million for infringement of several claims of the ‘752 Patent.
In October of 2015, following a two-week trial, a jury issued an award of over $234 million against Apple. Judge Conley’s order adds another $282 million in supplemental damages, ongoing royalties, interests, and costs. The order specified supplemental damages at the rate of $1.61 per infringing unit sold after October 26, 2015, and ongoing royalties at the rate of $2,74 per infringing unit thereafter and until December 26, 2016, the date expiration of the ‘752 Patent. The $282 million stem from Apple’s alleged continued infringement of the ‘752 Patent after the Jury's award in October of 2015.
In May of 2017, the U.S. Court of Appeals of the Federal Circuit in Helsinn Healthcare, S.A. v. Teva Pharmaceuticals USA, Inc., 855 F.3d 1356, clarified, to some extent, the scope of the on sale bar under the America Invents Act (AIA). The on sale bar invalidates a patent and is triggered if the invention is sold or otherwise offered for sale more than one year prior to the date of the filing of a patent application.
Helsinn owned four related patents (three pre-AIA and one post-AIA) covering a formulation of palonosetron, a drug for cancer patients that treats nausea. Approximately two years before filing a patent application at the USPTO, Helsinn entered into two different agreements for the purchase of the drug with MGI Pharma, Inc. The agreements did not specify whether the drug's dosage would be 25 mg or 75 mg. Further, the agreements were contingent upon obtaining FDA approval for the drug.
Subsequently, Teva filed an Abbreviated New Drug Application (ANDA) for a generic equivalent of palonosetron. Helsinn sued Teva for patent infringement under the Hatch-Waxman Act. The trial court found that under the AIA, a secret sale does not invalidate patent, and that the disclosure of the patent needs to be made public to trigger the on sale bar.
On appeal, the Federal Circuit found that all four patents were invalid both under the pre-AIA and post-AIA versions of the one sale bar. The Federal Circuit held that a sale of the patented goods had occurred and that the fact the agreements were contingent upon obtaining FDA approval did not alter this result. Under Pfaff v. Wells Electronics, Inc., 525 US 55 (1988), the on sale bar is triggered if an invention is the subject of a “commercial sale” and is also “ready for patenting.” Traditionally, courts have looked to the UCC to determine if there has been a commercial sale. With regard to the second prong of Pfaff, an invention is ready for patenting when there is actual reduction to practice or when there are appropriate disclosure for an ordinary person skilled in the art to practice the invention.
Following the Pfaff analysis, the Federal Circuit held that post-AIA, the details of an invention need not be revealed to the public to trigger the on sale bar. It is sufficient that there be a public sale. Here, the Federal Circuit also found that the present invention was ready for patenting notwithstanding the fact that further testing was being conducted. The Federal Circuit did not, however, address whether a private sale implicates the on sale bar under the AIA. This decision has significant repercussions because public transactions for the commercialization of an invention can trigger the on sale bar, even if the transaction itself does not disclose the details of the product or invention.
Inter Partes Review is a proceeding that the USPTO adopted in 2012 that allows a challenge to an issued patent based on obviousness or lack of novelty. Inter Partes Review has become an increasingly common tool to invalidate a patent as an alternative to litigation in Federal Court. In Covidien LP v. University of Florida Research Foundation Inc., the US Patent Trial and Appeal Board addressed the issue of whether sovereign immunity would extend to a state actor who owns rights to a patent being challenged in an administrative forum such as an Inter Partes Review. Under the 11th Amendment of the U.S. Constitution, the 50 States of the Union and their branches, have immunity from a lawsuit instituted by a private party. Court decisions interpreting the 11th Amendment have construed it broadly to extend this immunity not only to lawsuits in a court of law, but also to other adjudicative proceedings such as those of administrative agencies.
An Inter Partes Review in many way parallels a lawsuit in a court of law. For example, there is discovery, depositions, motions, and oral argument. Further, a panel of judges decide not only the outcome of the proceeding, but also whether the proceeding may even be instituted. In Covidien LP v. University of Florida Research Foundation Inc., the U.S. Patent Trial and Appeal Board ruled in favor of the University of Florida Research Foundation. The U.S. Patent Trial and Appeal Board decided that due to the similarities between civil litigation and an InterPartes Review, the University of Florida Research Foundation, being an arm of the State of Florida, was entitled to assert sovereign immunity as a defense to the institution of an Inter Partes Review. This decision may have an effect on the number of Inter Partes Reviews that are instituted against public research institutions, such as state universities.
Last year, the Federal Circuit decided UltimatePointer, LLC v. Nintendo Co., Ltd. UltimatePointer brought a patent Infringment suit against Nintendo for its Wii console which uses indirect-pointing remote control devices. The district court ruled for Nintendo on summary judgment concluding that direct-pointing devices, and not indirect-pointing devices, were within the scope of the claims of UltimatePointer’s patent. The Federal Circuit affirmed the district court’s ruling, reasoning that the specification of the patent repeatedly emphasize that the invention is directed to a direct-pointing device and that there are disadvantages with indirect pointing devices. This decision underscores the importance of the specification on how claims are construed. As seen in UltimatePointer, LLC v. Nintendo Co., Ltd., a court may limit the scope of a claim based on the content of the specification.