The America Invents Act (AIA) did not change the well-established meaning of “on sale” from the pre-AIA version of 35 U.S.C. § 102. Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., No. 17-1229 (U.S. Jan. 22, 2019).1 The Supreme Court rejected the notion that secret sales (agreements for sales of inventions cloaked with confidentiality provisions) cannot be a bar to patentability. A sale or offer for sale of an invention to a third party, even one who is obligated to keep the invention confidential, can still qualify as prior art just as it did under pre-AIA law. Such activities do not need to be made public to qualify as prior art.
Sales or offers for sale cannot be shielded from potential bar dates by including confidentiality provisions in agreements regarding such sales or offers for sale. Accordingly, patent counsel should be kept informed of commercial activities regarding potentially patentable inventions, as it may be necessary to file a patent application prior to making any offer for sale or purchase of the invention, even if the sale or details of the sale are negotiated or executed under obligations of confidentiality.
Helsinn obtained a suite of pre-AIA and post-AIA patents (i.e., patents filed before and patents filed after the effective date of the AIA) subject to abbreviated new drug application (ANDA) patent infringement litigation related to its ALOXI® (palonosetron HCl) pharmaceutical compositions for reducing chemotherapy-induced nausea and vomiting. Well over a year before the priority patent application was filed, Helsinn entered into several agreements with a distributor. This included a Supply and Purchase Agreement specifying details about the product, requirements, price, method of payment, and method of delivery. The agreement was publicly disclosed in SEC filings and in a press release over a year prior to the earliest priority date of the patent applications. However, the publicly disclosed version redacted the dosage amounts and some other details, like pricing.
Teva sought approval from the FDA to market a generic palonosetron product. Helsinn sued Teva for infringement under both the pre-AIA patents and a post-AIA patent. In defense, Teva asserted that all of Helsinn’s patents were invalid because of the agreements to sell the patented product to the distributor. The District Court held that the pre-AIA patents were invalid as having been on sale more than one year prior to filing the priority patent application. However, the District Court held that the post-AIA patent was not invalid, based on a finding that the “on sale” provisions of AIA §102(a)(1) did not apply because the sale did not make the claimed invention public. The Federal Circuit reversed this finding, leading to the appeal to the Supreme Court.
Helsinn, argued that a change in language in the AIA 35 U.S.C. § 102(a)(1)2 from pre-AIA 35 U.S.C. § 102(b)3 imparted a new requirement that a sale of an invention must be publicly disclosed. According to Helsinn’s interpretation, the public disclosure must include details of the invention to be “on sale” under AIA § 102(a)(1); otherwise, the on-sale bar does not apply. Helsinn’s argument revolved around apparent ambiguity introduced to § 102(a)(1) by the addition of the “otherwise available to the public” language. Helsinn argued that this requires a statutory interpretation that “otherwise available to the public” modifies “on sale,” and was not merely introducing a new catchall category of prior art. Thus, Helsinn argued that by withholding details of the invention (i.e., dosage) it had avoided a public disclosure under the statute and therefore did not trigger the on-sale bar for the patent that fell under the AIA.
The Supreme Court rejected this argument: “[g]iven that the phrase ‘on sale’ had acquired a well-settled meaning when the AIA was enacted, we decline to read the addition of a broad catchall phrase to upset that body of precedent.”4 In particular, prior to enactment of the AIA, it was settled law that “secret sales” can invalidate a patent. The only two requirements for determining whether an invention was on sale were that it was (1) the subject of a commercial offer for sale and (2) that the invention ready for patenting.5 The focus of such an inquiry was never whether the invention was available to the public or whether the sale itself was publicly disclosed. Because the new AIA 35 U.S.C. § 102(a)(1) uses the same language — “on sale” — found in the earlier version of the statute, it is presumed that Congress likewise adopted the earlier judicial construction of that phrase. As such, the reenactment of “on sale” in the statute invokes the substantial body of well-settled law about the meaning of that term. Thus, a sale is still a sale under the AIA.
The Supreme Court noted that Helsinn failed to challenge the pre-AIA interpretation of the on-sale bar or the finding that the claimed invention was on sale within the meaning of the pre-AIA statute. In the lower courts, the pharmaceutical composition was found to be ready for patenting and offered for sale in a publicly disclosed transaction over one year before the earliest filing date of the priority application (albeit keeping details about the invention itself confidential). Therefore, the Supreme Court affirmed the Federal Circuit’s holding that all of the patents were invalid, whether under pre-AIA § 102(b) or under AIA § 102(a)(1).
Notably, the U.S. Patent & Trademark Office (USTPO) had taken the interpretation that AIA § 102(a)(1) did not encompass secret (non-public) sales or offers for sale. In view of the Supreme Court’s decision in Helsinn, the USPTO will need to update its definition of prior art.6
An unresolved question that remains is whether the grace period exceptions under § 102(b)(1)7 apply to sales activity. § 102(b)(1) states that a disclosure made one year or less before the effective filing date of the claimed invention is not prior art under certain conditions. The AIA does not define “disclosure” and it is unclear whether the term encompasses sales activity, especially if sales are covert. The USPTO has taken the position that the activities listed under § 102(a)(1), including sales or offers for sale and public use, fall under the term “disclosures” and were thus exempted under § 102(b)(1) from being prior art under certain circumstances. The Supreme Court did not directly address this issue, but obliquely indicated that disclosures described in § 102(a)(1) are often referred to as “prior art” and that § 102(b)(1) is an exception for certain disclosures made within a year before the effective filing date. Depending upon how these terms are construed , a pre-filing “public use” or “sale” that does not disclose the invention could bar patentability, while a pre-filing “public use” or “sale” that does disclose the invention would not – an odd result.
 Unanimous decision affirming the Federal Circuit’s decision in Helsinn v. Teva, Nos. 2016-1284 and 2016-1787, slip. op. at 19 (Fed. Cir. May 1, 2017).
 Post-AIA, 35 U.S.C. §102(a)(1) was changed to state, “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.” Emphasis added.
 Pre-AIA, 35 U.SC. §102(b) stated “A person shall be entitled to a patent unless … 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.” Emphasis added.
 Slip Op. at p. 8.
 Slip Op. at p. 6 quoting Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 67–68 (1998).
 See, e.g., MPEP § 2152.02(d) “The pre-AIA 35 U.S.C. 102(b) ‘on sale’ provision has been interpreted as including commercial activity even if the activity is secret. See MPEP § 2133.03(b), subsection III.A. AIA 35 U.S.C. 102(a)(1) uses the same ‘on sale’ term as pre-AIA 35 U.S.C. 102(b). The ‘or otherwise available to the public’ residual clause of AIA 35 U.S.C. 102(a)(1), however, indicates that AIA 35 U.S.C. 102(a)(1) does not cover secret sales or offers for sale. For example, an activity (such as a sale, offer for sale, or other commercial activity) is secret (non-public) if it is among individuals having an obligation of confidentiality to the inventor.”
 § 102(b)(1): DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—
(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or
(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.