On June 25, 2018, the Supreme Court granted certiorari on Helsinn Healthcare's petition to overturn the Federal Circuit's decision in Helsinn Healthcare v. Teva Pharmaceuticals that its patents were invalid by application of the on-sale bar under 35 U.S.C. 102(b).  The Question Presented in the petition was as follows:

Whether, under the Leahy-Smith America Invents Act, an inventor's sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc., Docket No. 17-1229.

The issue is specifically related to the question of whether the AIA changed the application of the on-sale bar.  By granting cert., the Court opens up the possibility for a decision that extends further than that (see, for example, AMP v. Myriad Genetics).

To recap, the case arose over ANDA litigation regarding Teva's intention to market a generic version of Helsinn's intravenous formulations of palonosetron used to reduce chemotherapy-induced nausea and vomiting ("CINV").  There were four patents-in-suit:  U.S. Patent Nos. 7,947,724, 7,947,725, 7,960,424, and 8,598,219; only the '291 patent was allowed and granted under the AIA changes in U.S. patent law.

A prior art patent (U.S. Patent No. 5,202,333) taught that palonosetron was useful for treating CINV; the patents-in-suit were directed to novel formulations comprising "unexpectedly low concentrations of palonosetron."  Claim 2 of the '725 patent is representative of the pre-AIA patents-in-suit:

2.  A pharmaceutically stable solution for reducing emesis or reducing the likelihood of emesis comprising:
    a)  0.05 mg/mL palonosetron hydrochloride, based on the weight of the free base, in a sterile injectable aqueous carrier at a pH of from 4.5 to 5.5;
    b)  from 0.005 mg/mL to 1.0 mg/mL EDTA; and
    c)  mannitol in an amount sufficient to tonicify said solution, in a concentration of from about 10 mg/ml to about 80 mg/ml.

Claim 1 is representative of the '219 patent (post-AIA):

1.  A pharmaceutical single-use, unit-dose formulation for intravenous administration to a human to reduce the likelihood of cancer chemotherapy- induced nausea and vomiting, comprising a 5 mL sterile aqueous isotonic solution, said solution comprising:
    palonosetron hydrochloride in an amount of 0.25 mg based on the weight of its free base;
    from 0.005 mg/mL to 1.0 mg/mL EDTA; and
    from 10 mg/mL to about 80 mg/mL mannitol,
    wherein said formulation is stable at 24 months when stored at room temperature.

It is undisputed that each asserted claim covers the 0.25 mg dose of palonosetron.  In order to simplify the relevant discussion, we refer to the patents as covering the 0.25 mg dose.  Helsinn entered into contract for supplying the claimed formulation prior to critical date, but contingent on FDA approval (which was not obtained until after the critical date).

The District Court found a sale or offer for sale prior to the critical date, but that the invention was not ready for patenting with regard to the pre-AIA patents, and that the AIA had changed the on-sale bar to require a public sale or offer for sale.  Although the existence of the agreement and its terms were publicly known, the parties had not disclosed the 0.25 mg palonosetron dose before the critical date.  The District Court thus rejected Teva's invalidity contentions based on the § 102(b) on-sale bar.

The Federal Circuit reversed, in an opinion by Judge Dyk joined by Judges Mayer and Moore.  Using the framework set forth by the Court in Medicines Co. v. Hospira, the panel found that the invention was "on sale" prior to the critical date by applying "the law of contracts as generally understood" and "those activities that would be understood to be commercial sales and offers for sale 'in the commercial community.'"  Under this analysis, the Court had little difficulty deciding that there had been a sale before the critical date.  The contingent nature of FDA approval did not refute this conclusion, the Court saying that commercial practice, exemplified by provisions o f the Uniform Commercial Code, contemplate "purported present sale of future goods . . . [which] operates as a contract to sell," UCC § 2– 105(2), and that "[a] contract for sale that includes a condition precedent is a valid and enforceable contract," citing BG Grp., PLC v. Republic of Argentina, 134 S. Ct. 1198, 1207 (2014).  The opinion also cited the Court's own precedent regarding the existence of a sale despite the presence of conditions precedent to commercial transfer of goods, such as Enzo Biochem, Inc. v. Gen-Probe, Inc., 424 F.3d 1276 (Fed. Cir. 2005), and C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340 (Fed. Cir. 1998).

The Court also rejected Helsinn's contention that the AIA changed the on-sale bar calculus to limit its application to public sales.  Noting that confidential sales did not per se prevent application of the on-sale bar prior to enactment of the AIA (citing, inter alia, In re Caveney, 761 F.2d 671, 673–74 (Fed. Cir. 1985)), the opinion rejected arguments by Helsinn and amici (including the U.S. government) that the AIA changed the law based almost exclusively on statements from the Congressional record (which were directed not to on-sale activities but to public use).  It did not help Helsinn's argument in this regard that the panel identified Supreme Court precedent directly contrary to their position, i.e., Pennock v. Dialogue, 27 U.S. (2 Pet.) 1, 19 (1829).  Accordingly, the opinion states that "[w]e conclude that, after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale" and thus invalidity of the '219 patent was not properly determined by the District Court.

With regard to the question of whether the invention claimed in the patents in suit was "ready for patenting" prior to the critical date, the panel decided that it was, based on the invention having been reduced to practice before the critical date.  This decision depended, in part, on the parties' stipulation that "they would contest ready for patenting 'only with respect to the limitations and intended uses of "reducing emesis or reducing the likelihood of emesis" and '"to reduce the likelihood of cancer chemotherapy-induced nausea and vomiting" of the asserted claims' and not "'or any other reason.'"  The panel noted that its case law distinguished the standard needed to show reduction to practice with regard to whether a pharmaceutical invention would work for its intended purpose and the standard for FDA approval of a new drug, citing Scott v. Finney, 34 F.3d 1058, 1063–64 (Fed. Cir. 1994).  Specifically, the standard is that the invention "works for its intended purpose 'beyond a probability of failure' but not 'beyond a possibility of failure.'"  The Federal Circuit found the District Court erred by applying the FDA standard rather than the proper patent standard in making its (erroneous) determination that the invention was not "ready for patenting" before the critical date.  This conclusion was supported Helsinn's own documents (including portions of the patents' prosecution histories), pre-litigation statements and testimony.  And the opinion notes that, if the standard applied by the District Court was correct, Helsinn could not have filed a valid application prior to the critical date, and "[s]uch a standard would preclude the filing of meritorious patent applications in a wide variety of circumstances."

(It is important to note that this case is another example of patentees making statements before the Patent Office aimed at validating priority claims and overcoming prior art that are at odds with positions they need to take in litigation, here to overcome invalidation under the § 102(b) on-sale bar.)

The Court is expected to hear the case during its October 2018 term, with a decision prior to this time next year.