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Westlaw Journal Intellectual Property Quotes Brinks Shareholder Mark Remus
By Patrick H.J. Hughes
Published By Westlaw Journal Intellectual Property 12/19/2018

The U.S. Supreme Court grilled drugmakers on both sides of a debate over the Patent Act’s on-sale bar, which blocks the issuance of a patent, and attorneys have offered predictions based on the justices’ reaction to the Dec. 4 oral argument.

Helsinn Healthcare SA v. Teva Pharmaceuticals USA Inc. et al., No. 17-1229, oral argument held, 2018 WL 6329869 (U.S. Dec. 4, 2018).

Swiss pharmaceutical company Helsinn Healthcare SA defended its certiorari petition, arguing that a confidential deal with a drug distributor failed to qualify as a “public sale” that would otherwise trigger the bar.

Technology that was “on sale” more than one year before the inventor filed a patent application can invalidate a patent after issuance because the sale is considered prior art under the on-sale bar doctrine, according to U.S. patent law.

The U.S. government also argued for Helsinn’s case, saying ordinary people would interpret the language of the Patent Act, as amended through the 2011 Leahy-Smith America Invents Act, or AIA, to say private agreements are not putting the technology “on sale.”

Their positions were opposed by Teva Pharmaceuticals and other drugmakers seeking to uphold the bar in such circumstances to pave the way for noninfringing sales of generics. The U.S. Court of Appeals for the Federal Circuit ruled in favor of Teva in May 2017. Helsinn Healthcare SA v. Teva Pharm. USA Inc., 855 F.3d 1356 (Fed. Cir. 2017).

PREDICTIONS

Attorneys not involved in the case anticipate different outcomes when the Supreme Court finally resolves the dispute sometime before July.

Robert Maier, a partner with Baker Botts LLP, said the fact that Justice Neil Gorsuch mentioned that the patent office was siding with Helsinn demonstrated it was a “safe bet” that the U.S. Supreme Court would reverse and remand.

The Supreme Court will find “the new language added to the statute — ‘or otherwise available to the public’ — modifies the listing of terms that precedes it, such that sales must be public in order to constitute prior art under the AIA,” Maier predicted.

Irena Royzman, an attorney at Patterson Belknap Webb & Tyler, agreed with Helsinn that the Federal Circuit’s decision was “inconsistent with congressional intent.”

“The decision is particularly problematic for the bio/pharma industry, where many innovations are made by small companies that need to partner with established pharmaceutical companies in order to bring their inventions to patients,” she said.

Brinks Gilson & Lione attorney Mark Remus said that before the argument it was widely believed the court would reverse the Federal Circuit, but given some of the justices’ remarks, the court may affirm.

Remus noted that recently appointed Justice Brett Kavanaugh, “one of the more vocal judges,” demonstrated some opposition to Helsinn when the company argued that the added “or otherwise available” language was merely meant to clarify the existing law.

“If that was a clarification, it was a terrible clarification,” Kavanaugh said.

“I expect a split decision,” Remus predicted.

Robins Kaplan LLP attorney Jake Holdreith said that while the case raises a specific dispute over statutory language, it also pits “two rationales against each other.”

“Some have argued that allowing such confidential commercial arrangements before a patent is filed will help smaller companies fund innovation and will protect inventors,” Holdreith noted.

“Others have argued that Congress could not possibly have intended to make such a significant change to a long-standing patent doctrine without being more clear and explicit, and that the public would be harmed by allowing inventors to wait to file patents and to keep their exclusivity for a longer period of time,” he said.

ON-SALE BAR

Helsinn claims it needed funding to complete the development of its patents for treatment of nausea associated with chemotherapy, so in 2001 it entered into an agreement with a “financial intermediary” that was contingent on receiving FDA approval.

In 2002, after successful clinical trials, Helsinn submitted a new drug application to the FDA. In 2003 it filed several patent applications.

In 2011, when Teva and other companies filed applications with the FDA to make generic versions of the treatment, Helsinn filed suit.

Teva argued that Helsinn’s agreement with the “intermediary,” even if done in secret, initiated the on-sale bar.

When the lower court dismissed this argument, Teva appealed and won.

In February Helsinn filed its certiorari petition, which the Supreme Court granted in June.

‘NUTLESS BROWNIES?’

The justices’ questions focused on whether the on-sale bar requirements changed with the introduction of the AIA and its “or otherwise available” language.

At the onset of the oral argument, Chief Justice John Roberts asked Helsinn attorney Kannon K. Shanmugam about the meaning of the bar. “If something’s on sale, it doesn’t have to be on sale to everybody,” the chief justice said.

“The critical phrase, Mr. Chief Justice, is not ‘sale,’” Shanmugam said. “It is ‘on sale.’ And I do think that the more natural understanding of ‘on sale’ is that something has been made available for purchase by the public,” he said.

The AIA’s new language merely clarified that the Patent Act always allowed such “secret sales,” Shanmugam argued.

The U.S. government’s attorney Malcolm Stewart agreed, arguing primarily that it was the nature of the agreement that shielded it from becoming prior art.

Teva attorney William Jay presented the respondents’ interpretation of the AIA to support that the “or otherwise available” language did not upset the historical application of the on-sale bar.

Justice Elena Kagan formulated an analogy about brownies. “So suppose I say ‘don’t buy peanut butter cookies, pecan pie … brownies or any dessert that otherwise contains nuts’ …. Can I buy nutless brownies?” she asked.

“I think you can,” Jay admitted, but added that maybe he was misunderstanding the hypothetical question.

“We think that the best reading of this new category is that it creates a new set of invalidating prior art and it does not unsettle any of the prior categories, whether patented, described in a printed publication, in public use or on sale,” Jay said.

This article was originally published in the December issue of Westlaw Journal Intellectual Property.

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