Helsinn Healthcare v. Teva Pharmaceuticals — AIA ‘On Sale’ Bar Includes Secret Sales

Background

Helsinn Healthcare developed a drug (palonosetron) to treat chemotherapy-induced nausea and vomiting. In January 2001, Helsinn entered into supply and license agreements with MGI Pharma for the drug — agreements publicly filed with the SEC, revealing the existence of the deal but keeping specific drug formulations confidential. Helsinn filed its first patent application in January 2003, more than two years after the supply agreement.

Teva sought to sell a generic version and challenged Helsinn’s patents as invalid under the “on sale” bar — the rule that an invention cannot be patented if it was “on sale” more than one year before the patent application. Helsinn argued that the AIA changed the law: by adding the phrase “or otherwise available to the public,” Congress required that a sale be public to trigger the bar, meaning confidential sales no longer counted.

The Court’s Holding

Justice Thomas, writing for a unanimous Court, rejected Helsinn’s interpretation and held that the AIA’s “on sale” bar is unchanged from pre-AIA law. The sale to MGI Pharma — a genuine commercial transaction even though specific formulation details were confidential — triggered the on-sale bar and invalidated Helsinn’s patents.

The Court reasoned that Congress is presumed to know the established meaning of terms it uses; “on sale” had a settled meaning in pre-AIA patent law that included secret sales, and nothing in the AIA’s text or legislative history clearly indicated Congress intended to narrow that meaning. The addition of “or otherwise available to the public” was meant to expand the prior art categories, not to limit what counted as an “on sale” event.

Key Takeaways

• Secret or confidential sales of an invention can trigger the on-sale bar and prevent patenting, even after the AIA.
• A patent applicant who enters into a commercial sale agreement for an invention must file a patent application before that sale (AIA) or within one year (pre-AIA) to avoid invalidating the patent.
• Drug and biotech companies that enter supply agreements or licensing deals before filing patent applications face significant invalidity risk under this rule.
• The ruling creates pressure to file patent applications very early in the commercialization process, before any commercial transactions occur.

Why It Matters

Many companies — particularly in pharmaceuticals and biotech — enter into early commercial agreements for drugs or technology while still going through the patent application process. This decision means those early deals can inadvertently start the clock on the on-sale bar, or in the post-AIA world, immediately create prior art that bars patenting. The inability to keep the “sale” clock secret is especially significant for companies conducting business development activities before their patent portfolios are locked in.

The practical lesson: consult a patent attorney before signing any commercial agreement relating to an invention, no matter how confidential the deal is structured to be.