Patent Watch: Dey, L.P. v. Sunovion Pharms., Inc.


“[A]n agreement of confidentiality, or circumstances creating a similar expectation of secrecy, may negate a ‘public use’ where there is not commercial exploitation” [even] when an unaffiliated third party is responsible for the allegedly public use.

On May 20, 2013, in Dey, L.P. v. Sunovion Pharms., Inc., the U.S. Court of Appeals for the Federal Circuit (Newman, Bryson,* O’Malley) reversed and remanded the district court’s summary judgment that U.S. Patents No. 7,348,362, No. 7,462,645, No. 7,465,756, No. 7,473,710 and No. 7,541,385, which related to the treatment of chronic obstructive pulmonary disease (COPD) by storing the compound formoterol in an aqueous solution and administering it through a nebulizer, were invalid under the public use bar of 35 U.S.C. § 102(b). The Federal Circuit stated:

An applicant may not receive a patent for an invention that was “in public use . . . in this country, more than one year prior to the date of the application for patent in the United States.” To decide whether a prior use constitutes an invalidating “public use,” we ask “whether the purported use: (1) was accessible to the public; or (2) was commercially exploited.” [T]he policies underlying the public use bar inform its scope and that one such policy is “discouraging the removal, from the public domain, of inventions that the public reasonably has come to believe are freely available.” [The] factors that may be helpful in analyzing the question of public use, include[e] “‘the nature of the activity that occurred in public; the public access to and knowledge of the public use; [and] whether there was any confidentiality obligation imposed on persons who observed the use.’” [A] public use may occur when “a completed invention is used in public, without restriction.” Such formulations are designed to capture the commonsense notion that whether an invention is “accessible to the public” or “reasonably . . . believe[d] [to be] freely available” depends, at least in part, on the degree of confidentiality surrounding its use: “[A]n agreement of confidentiality, or circumstances creating a similar expectation of secrecy, may negate a ‘public use’ where there is not commercial exploitation.”

The same is true when an unaffiliated third party is responsible for the allegedly public use. Although prior uses are often carried out by or at the direction of the inventor-patentee, we have held that “third party prior use accessible to the public is a section 102(b) bar.” But even in the case of third-party uses, being “accessible to the public” still requires public availability; secret or confidential third-party uses do not invalidate later-filed patents. For that reason, we have applied section 102(b) to invalidate a patent based on third-party use when the third party “made no attempt to maintain confidentiality or to deliberately evade disclosure,” made no “discernible effort to maintain the [invention] as confidential,” or “made no efforts to conceal the device or keep anything about it secret.”

The degree of confidentiality necessary to avoid a finding of public use naturally depends on the circumstances. For example, if there is no confidentiality agreement in place, the skill and knowledge of those observing an invention can shed light on the degree to which it was kept confidential. Even limited disclosure to those who are skilled enough to know, understand, and “easily demonstrate the invention to others,” may mean that there was no reasonable expectation of secrecy and that the invention was therefore in public use. By contrast, when disclosure is limited to a small number of uninformed observers there may be no reason to believe “that a viewer . . . could thereby learn anything of [the later-patented invention]” and disclose the invention to others. In such cases, a finder of fact might reasonably conclude that the third party’s use remained confidential and that the invention was not “accessible to the public.” . .

The district court held that Sunovion was entitled to summary judgment of invalidity because Sunovion’s own clinical trial constituted clear and convincing evidence of a third-party public use of Dey’s inventions. We disagree. Important issues of fact remain in dispute, principally whether sufficient precautions were taken to exclude members of the public from obtaining information about the potentially invalidating prior art (i.e., Batch 3501A).On the record of this case, we do not agree with the district court that no reasonable jury could return a verdict for Dey. . . . This case does not involve undisputed evidence of a complete lack of confidentiality protections . . . . And the fact that no formal obligation of secrecy was imposed on the study subjects does not automatically transform Sunovion’s clinical trial into a public use. We have never required a formal confidentiality agreement to show non-public use; in the absence of such an agreement, we simply ask whether there were “circumstances creating a similar expectation of secrecy.” The “public use” inquiry is replete with factual considerations, such as the (disputed) extent to which study participants were informed of and able to disclose the pertinent details of the claimed prior art. Because a finder of fact could conclude that the study was conducted with a reasonable expectation of confidentiality as to the nature of the formulations being tested, summary judgment on the public use issue was inappropriate. . . .

The district court’s decision was also premised on several misconceptions about the reach of section 102(b). First, the court found it significant that the patent holder, Dey, did not control Sunovion’s clinical studies and that study participants did not owe any obligation of confidentiality to Dey. [W]e measure the adequacy of the confidentiality guarantees by looking to the party in control of the allegedly invalidating prior use. In third-party use cases, that is the third party. . . . Because a secret third-party use is not invalidating, our task is to assess whether the third party’s use was sufficiently “public” to impose the section 102 bar. That Sunovion’s trial subjects owed no duty of confidentiality to Dey is, of course, true, but it does not bear on that question. . . .

During experimentation, the public might have knowledge of an invention (because they see it), but may not be using the invention within the meaning of the statute (because the inventor is experimenting). . . . Put another way, although Sunovion is correct that we do not ask for an “‘enablement-type inquiry’” under section 102(b), a court still must decide whether the “claimed features of the patents [were placed] in the public’s possession.” And here, a reasonable jury could conclude that if members of the public are not informed of, and cannot readily discern, the claimed features of the invention in the allegedly invalidating prior art, the public has not been put in possession of those features. . . .

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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