On May 01, 2017, Federal appeals court invalidated Helsinn Healthcare SA’s patents on its anti-nausea treatment Aloxi, clearing the way for Teva Pharmaceuticals Industries Ltd to launch a generic version of the drug. The U.S. Court of Appeals for the Federal Circuit said that four Helsinn patents [U.S. Patent Nos. 7,947,724; 7,947,725; 7,960,424 and 8,598,219] relating to palonosetron, Aloxi’s active ingredient, are invalid under the so-called on-sale bar, a statutory provision holding that inventions sold for more than a year before a patent application is filed are not patentable.
Helsinn Healthcare S.A. (“Helsinn”) is the owner of the four patents-in-suit directed to intravenous formulations of palonosetron for reducing or reducing the likelihood of chemotherapy-induced nausea and vomiting (“CINV”). Helsinn brought suit against Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries, Ltd. (collectively, “Teva”) alleging that the filing of Teva’s Abbreviated New Drug Application (“ANDA”) constituted an infringement of various claims of those patents. Teva defended, inter alia, on the ground that the asserted claims were invalid under the on-sale bar provision of 35 U.S.C. § 102. The district court found that the patents-in suit were not invalid. With respect to three of the patents, which are governed by the pre-Leahy-Smith America Invents Act (“pre-AIA”) version of § 102, the district court concluded that there was a commercial offer for sale before the critical date, but that the invention was not ready for patenting before the critical date. With respect to the fourth patent, which is governed by the AIA version of § 102, the district court concluded that there was no commercial offer for sale because the AIA changed the relevant standard and that, in any event, the invention was not ready for patenting before the critical date.
Facts & analysis:
On April 6, 2001, almost two years before applying for a patent, Helsinn and MGI Pharma, Inc. (“MGI”), an oncology-focused pharmaceutical company that markets and distributes in the United States, entered into two agreements: (1) a License Agreement and (2) a Supply and Purchase Agreement. Under the terms of the License Agreement, MGI agreed to pay $11 million in initial payments to Helsinn, plus additional future royalties on distribution of “products” in the United States. The parties agree that the “products” covered by the License Agreement were 0.25 mg and 0.75 mg doses of palonosetron. The License Agreement made reference to the ongoing clinical trials and stated that in the event that the results were unfavorable and FDA did not approve the sale of either dosage of the product, Helsinn could terminate the agreement. If the License Agreement were terminated, the Supply and Purchase Agreement would “terminate automatically.”
All of the above information about the transaction was publicly disclosed with two exceptions. The two features of the agreements that were not publicly disclosed were the price terms and the specific dosage formulations covered by the agreements—that is the 0.25 and 0.75 mg doses. After the signing of the agreements, and still before the critical date, Helsinn prepared preliminary statistical analysis of the earliest Phase III trial on January 7, 2002. The data showed that 81% of patients who received the 0.25 mg dose of palonosetron experienced relief from CINV for 24 hours. In September 2002, after the successful completion of all Phase III trials, Helsinn filed its New Drug Application for the 0.25 mg dose, but did not seek FDA approval of the 0.75 mg dose. On January 30, 2003, Helsinn filed a provisional patent application covering the 0.25 mg dose (and also the 0.75 mg dose).
The district court held a bench trial. The district court held that Teva’s 0.25 mg dose infringed all of the patentsin-suit. In addressing the on-sale issue, the court applied the two-step frameworkof Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), which requires that there was a sale or offer for sale and that the claimed invention was ready for patenting for the on-sale bar under 35 U.S.C. § 102 to apply. The court found that pre-AIA law applied under § 102(b) and that the MGI Supply and Purchase Agreement was a contract for a future sale of a commercial product embodying the 0.25 mg dose and therefore constituted a sale under § 102(b). But, the court found that the claimed invention was not reduced to practice before the critical date of January 30, 2002, and therefore was not ready for patenting under the second prong of Pfaff. The district court did not address whether the invention was ready for patenting on the alternative theory that Teva had shown that the inventor had created enabling descriptions before the critical date.
There was a sale or offer for sale?
A primary rationale of the on-sale bar is that publicly offering a product for sale that embodies the claimed invention places it in the public domain, regardless of when or whether actual delivery occurs. The patented product need not be on-hand or even delivered prior to the critical date to trigger the on-sale bar. we have never required that a sale be consummated or an offer accepted for the invention to be in the public domain and the on-sale bar to apply, nor have we distinguished sales from mere offers for sale. We have also not required that members of the public be aware that the product sold actually embodies the claimed invention. For instance, in Abbott Laboratories v. Geneva Pharmaceuticals, Inc., 182 F.3d 1315 (Fed. Cir. 1999). Thus, our prior cases have applied the on-sale bar even when there is no delivery, when delivery is set after the critical date, or, even when, upon delivery, members of the public could not ascertain the claimed invention.
It is clear that the Supply and Purchase Agreement constituted a commercial sale or offer for sale for purposes of § 102(b) as to the asserted claims of the ’724, ’725, and ’424 patents. As the Supply and Purchase Agreement between Helsinn and MGI—was publicly announced in MGI’s 8-K filing with the SEC. An invention is made available to the public when there is a commercial offer or contract to sell a product embodying the invention and that sale is made public. Our cases explicitly rejected a requirement that the details of the invention be disclosed in the terms of sale. We 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.
Invention was ready for patenting?
An invention is reduced to practice when “the inventor (1) constructed an embodiment . . . that met all the limitations and (2) determined that the invention would work for its intended purpose.” In re Omeprazole Patent Litig., 536 F.3d 1361, 1373 (Fed. Cir. 2008). Thus, for instance, it is uncontested that the formulation had been made and was stable prior to the critical date. Accordingly, the only issue with respect to ready for patenting before the district court and on appeal is whether Helsinn had determined that the invention would work for its intended purpose, which, according to the claims, is “reducing the likelihood” of emesis and CINV.
Here, the district court based its finding that the invention was not reduced to practice before the critical date on insufficient testing for Helsinn to have “determined that the invention would work for its intended purpose.” The district court appeared to believe that Teva needed to meet the FDA standard, which requires finalized reports with fully analyzed results from successful Phase III trials. The district court was influenced particularly by the fact that FDA found the so called Study 2330insufficient to demonstrate efficacy. The district court clearly erred by applying too demanding a standard. The completion of Phase III studies and final FDA approval are not pre-requisites for the invention here to be ready for patenting. The evidence is overwhelming that before the critical date of January 30, 2002, it was established that the patented invention would work for its intended purpose of reducing the likelihood of emesis.
Indeed, the Study 2330 final report concluded that the relevant dose of palonosetron “was effective in suppressing” CINV. Under our cases this is sufficient to establish that the invention here would work for its intended purpose of reducing the likelihood of CINV. These results consistently showed that the invention worked for its intended purpose, from the final report for the 1995 Phase II trial to the preliminary results in January 2002 from a Phase III trial. There is simply no tenable argument that, before the critical date, Helsinn was unable to file a patent application that met the requirements of 35 U.S.C. § 112. We conclude that the invention was reduced to practice and therefore was ready for patenting before the critical date.
CONCLUSION: CAFC reversed. The asserted claims of the patents-in-suit were subject to an invalidating contract for sale prior to the critical date of January 30, 2002, and the AIA did not change the statutory meaning of “on sale” in the circumstances involved here. The asserted claims were also ready for patenting prior to the critical date. We hold that the asserted claims, claims 2 and 9 of the ’724 patent, claim 2 of the ’725 patent, claim 6 of the ’424 patent, and claims 1, 2, and 6 of the ’219 patent, are invalid under the on-sale bar.
Take-away: This is an important case for parties who have disclosed agreements and licensing deals prior to filing patent application describing subjects of those agreements/deals, even where that subject matter of the invention is referred to in the agreements/deals in onlyvague terms.
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