Supreme Court Holds: AIA Does NOT Change Patent “On – Sale Bar” Doctrine

There has been a nagging question regarding the status of the on-sale bar ever since passage of the AIA in 2011. The Supreme Court has unanimously answered the question in the negative in the slip opinion in Helsinn Healthcare v. Teva No. 17–1229. Argued December 4, 2018—Decided January 22, 2019. See opinion here: https://www.supremecourt.gov/opinions/18pdf/17-1229_2co3.pdf

Justice Thomas wrote for the unanimous court to affirm the Federal Circuit ruling and the summary of same is here. Even a “secret sale” can trigger the bar. The Court framed the issue:

“We granted certiorari to determine whether, under the AIA, an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention. 585 U. S. ___ (2018). We conclude that such a sale can qualify as prior art.”

“Held: A commercial sale to a third party who is required to keep the invention confidential may place the invention “on sale” under §102(a). The patent statute in force immediately before the AIA included an on-sale bar. This Court’s precedent interpreting that provision supports the view that a sale or offer of sale need not make an invention available to the public to constitute invalidating prior art. See, e.g., Pfaff v. Wells Electronics, Inc., 525 U. S. 55, 67. The Federal Circuit had made explicit what was implicit in this Court’s pre-AIA precedent, holding that “secret sales” could invalidate a patent. Special Devices, Inc. v. OEA, Inc., 270 F. 3d 1353, 1357. Given this settled pre-AIA precedent, the Court applies the presumption that when Congress reenacted the same “on sale” language in the AIA, it adopted the earlier judicial construction of that phrase. The addition of the catchall phrase “or otherwise available to the public” is not enough of a change for the Court to conclude that Congress intended to alter the meaning of “on sale.” Paroline v. United States, 572 U. S. 434, and Federal Maritime Comm’n v. Seatrain Lines, Inc., 411 U. S. 726, distinguished. Pp. 5–9. 855 F. 3d 1356, affirmed.”

Posted by Henry M. Sneath, Esquire Co-Chair Litigation Practice Group and Chair of the IP Practice Group: Houston Harbaugh, P.C.  401 Liberty Avenue, Pittsburgh, Pa. 15222. Sneath is also an Adjunct Professor of  Law teaching two courses; Trade Secret Law and the Law of Trademarks and Unfair Competition at Duquesne University School of Law. Please contact Mr. Sneath at 412-288-4013 or sneathhm@hh-law.com.