The Supreme Court held today in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. that a secret sale does qualify as prior art under the AIA, affirming the judgment of the Federal Circuit.

Earlier today the United States Supreme Court issued its decision in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. The single question presented by Helsinn was whether under the America Invents Act (AIA) 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 patentability. In other words, does a so-called secret sale qualify as prior art under the AIA. The Supreme Court held today that secret sales do qualify as prior art under the AIA.

In a relatively short, unanimous decision authored by Justice Thomas, the Court begins by explaining that twenty-years ago in Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 67 (1998) the Court determined that an invention was on sale within the meaning of pre-AIA § 102 if it was subject to a commercial offer for sale and it was ready for patenting. Moreover, Thomas recognized that prior to passage of the AIA the Federal Circuit had clearly established that a secret sale could invalidate a patent. Therefore, given the settled precedent, Justice Thomas explained that there was a presumption “that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase.” The Court also found the catch all phrase “or otherwise available to the public” was “simply not enough of a change… to conclude that Congress intended to alter the meaning of the reenacted term ‘on sale.’”

The speed with which the Supreme Court decided Helsinn will surprise some given that oral arguments were held just 7 weeks ago today. The fact that the Supreme Court affirmed the judgment of the Federal Circuit will likely also surprise many.

Also, of interest to many will be the Supreme Court citing precedent and the well-established expectations. Indeed, at one-point Justice Thomas writes: “In light of this settled pre-AIA precedent on the meaning of ‘on sale,’ we presume that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase.”

Where was this same concern for settled precedent when the Supreme Court overruled the primary holding in Diamond v. Chakrabarty and when the Supreme Court overruled the mandate in Diamond v. Diehr that one must not conflate novelty with patent eligibility? Both of those cases were over 30 years old when the Supreme Court unceremoniously chose to forge a different path with respect to patent eligibility; a path that now has the U.S. as one of the least favorable jurisdictions among developed nations for software, artificial intelligence, biotech, medical diagnostics and genetics.

The Supreme Court seems to have gotten Helsinn correct, and rather surprisingly affirmed the judgment of the Federal Circuit. The Supreme Court even provided a citation in the case explaining that the Federal Circuit has exclusive jurisdiction of patent matters. So, the question will be whether this signals a potential philosophical shift for the Court, or whether this is just the Supreme Court relying on precedent when it is convenient to achieve the end they prefer.

It is worth noting, however, that earlier this month the Supreme Court did issue a non-patent decision with great significance in the fight over patent eligibility. In a unanimous decision authored by Justice Kavanaugh in Henry Schein, Inc. v. Archer & White Sales, Inc., the Court explained there is no authority for the existence of judicial exceptions to the Federal Arbitration Act (FAA). “[W]e are not at liberty to rewrite the statute passed by Congress and signed by the President,” Kavanaugh wrote for the Court. See A New Court a New Fix for Alice.

Time will tell whether Helsinn and Schein are a blip on the radar, or whether they signal a Court that recognizes it has traveled too far from its Constitutional role. In the meantime, the language of both decision can and should be generously applied to the patent eligibility debate in briefs at the Patent Trial and Appeal Board (PTAB), in federal district court and at the Federal Circuit.

For more on Helsinn please see our prior coverage by viewing our Helsinn Archive.

Image Source: Photograph taken by Gene Quinn © 2009.