Source: https://www.manatt.com/Insights/Newsletters/Intellectual-Property-Law/Supreme-Court-Holds-Sale-Requiring-Confidentiality
Timestamp: 2019-04-18 23:01:20+00:00

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The Leahy–Smith America Invents Act (AIA) bars a person from receiving a patent on an invention that was “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). This case requires us to decide whether the sale of an invention to a third party who is contractually obligated to keep the invention confidential places the invention “on sale” within the meaning of § 102(a).
More than 20 years ago, this Court determined that an invention was “on sale” within the meaning of an earlier version of § 102(a) when it was “the subject of a commercial offer for sale” and “ready for patenting.” . . . We did not further require that the sale make the details of the invention available to the public. In light of this earlier construction, we determine that the reenactment of the phrase “on sale” in the AIA did not alter this meaning. Accordingly, a commercial sale to a third party who is required to keep the invention confidential may place the invention “on sale” under the AIA (quoting Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 67, 119 S.Ct. 304, 142 L.Ed.2d 261 (1998)).
A person shall be entitled to a patent unless . . . the claimed invention 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 (quoting 35 U.S.C. § 102(a)(1) (2012 ed.) (emphasis added)).
(b) the 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, more than one year prior to the date of the application for patent in the United States (quoting 35 U.S.C. §§ 102(a)-(b) (2006 ed.)) (emphasis added).
The Court explained that the Constitution empowers Congress “[t]o 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.” Art. 1, § 8, cl. 8.
Every patent statute since 1836, the Court explained, has prevented patents with an on-sale bar. The AIA also included the on-sale bar, but added the catchall phrase “or otherwise available to the public” (quoting 35 U.S.C. § 102(a)(1) (2012 ed.) (“A person shall be entitled to a patent unless” the “claimed invention was . . . in public use, on sale, or otherwise available to the public . . .”). The issue was whether these changes to 35 U.S.C. § 102 altered the meaning of the “on sale” bar. The Court held that they did not.
Because we determine that Congress did not alter the meaning of “on sale” when it enacted the AIA, we hold that an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under § 102(a).
The Helsinn decision has significant implications, particularly for companies that license inventions to others for testing during the development process. Companies will need to be cognizant of where a product is in the development cycle, and monitor interactions outside the company that might be construed as marketing or selling the product. The decision also highlights the need for companies to file their patent applications as early as possible, which is consistent with the “first-inventor-to-file” system also enacted by the AIA.
Irah Donner is a partner in Manatt’s intellectual property practice and is the author of Patent Prosecution: Law, Practice, and Procedure, Tenth Edition, With 2018 Supplement, published by Bloomberg Law/BNA. This case analysis will be included in the next edition of the treatise.
1Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., ---- S.Ct. ----, 2019 WL 271945 (U.S., Jan. 22, 2019).

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