Supreme Court to Decide Whether “Secret Sales” are Prior ArtSeptember 12, 2018

Prior art is any publication or activity that can be cited to find a claimed invention invalid as not new or as a merely obvious combination of existing elements. Until recently, the law had been settled that any sale (within the United States) of a product that included claimed features of an invention is prior art, even if the sale did not publicly disclose those claimed features. In other words, patentees were not allowed to extend their exclusive period by making secret sales before filing a patent application. This had the positive effect of encouraging inventors to file patent applications early, rather than withholding the details of their invention from the public. On the downside, it also meant that inventors could, unless they structured the transaction properly, inadvertently create prior art by purchasing their own invention from a fabricator before making the invention public.

The old rule was based on a law that defined prior art as something that was “described in a printed publication in this or a foreign country or in public use or on sale in this country”. In 2013, the statutory language was changed to read “described in a printed publication, or in public use, on sale, or otherwise available to the public”. The addition of the phrase “or otherwise available to the public” could mean that that the listed categories must make the invention “available to the public” to qualify as prior art. This would exclude secret sales from being prior art.

Old Language: “described in a printed publication in this or a foreign country or in public use or on sale in this country”

New Language: “described in a printed publication or in public use, on sale, or otherwise available to the public”

In the case of Helsinn Healthcare v. Teva Pharmaceuticals USA the Supreme Court agreed to answer the question whether secret sales qualify as prior art under the new law. In Helsinn, the patentee agreed to purchase its own drug from a manufacturer before the drug was approved for sale to the public. The agreement was subject to a confidentiality agreement. The Court of Appeals for the Federal Circuit found that the new language in the 2013 Act did not change the meaning of what qualified as being on sale and held the patent invalid in light of the product being on sale before the critical date. Briefing at the Supreme Court will conclude this fall with a decision likely sometime next spring.

Michael C. Gilchrist is a patent attorney in the Mechanical and Litigation practice groups. Mike has been an intellectual property attorney at McKee, Voorhees & Sease for 10 years, serving clients’ intellectual property needs.