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Nobody Knows Just We Two – Patents, Sales and Confidentiality

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secretThe differences between US and European patent law can often trip up practitioners unless they are careful – while most European patent law is (fairly) well harmonised, US patent law is quite different.  While the two are closer in some ways than they have been – obviousness in the US has become much more like inventive step in Europe since KSR v. Teleflex, for example – there are some sharp differences.  One subtle one is the interplay between confidentiality and sale.  The recent decision in Helsinn Healthcare S.A: v. TEVA Pharmaceuticals USA INC., et al., reported here in IPKat, shows that one very real trap still exists.

One extremely well-known difference between US and European patent law is in the existence of a grace period.  In the US, public disclosures originating from the inventor are graced for a period of up to a year under s.102(b) of the Patents Act, whereas in Europe, a public disclosure is citable for novelty and inventive step against any subsequently filed application.  This means that there are a number of inventions that can be protected in the US, but not in Europe, by virtue of the grace period after a disclosure has been made without due care and attention to the patent process.  A slightly less well-known difference is also found in s.102 – the on-sale bar.  This gives rise to concerns about protection in the US for inventions readily protectable in Europe.

Prior art is defined in s.102(a) as preventing entitlement to a patent if “the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public” prior to the effective filing date (unless graced by s.102(b)).  This “on sale bar” prevents protection if it is more than a year before filing (ie is too early to be graced).  Key words here are “on sale, or otherwise available to the public…”  Does this mean that any sale is considered “available to the public”?  What if the sale were confidential, with the buyer not free to disclose details of the invention to any other party?  This is not, on the face of it, a public disclosure, so how can it be covered?

In Europe, while there is minor variance in patent law in this area, the position is generally that this is a confidential disclosure, and not a public one, and consequently that it does not form part of the prior art.  EPO case law is clear that a single sale is sufficient to render an article sold available to the public provided that the buyer was not bound by an obligation to maintain secrecy.  Cases such as T1022/99 and T897/07 make it clear that this has a limited effect, but it still makes it clear that there are some inventions that may be legitimately patented at the EPO even if there has been a sale over a year before the effective filing date.

Does the US have the same position, or is the on sale bar absolute?  As the wording of the America Invents Act made a subtle change to s.102(a), this has not been fully clear, though practitioners in my experience have always taken a cautious approach and treated the on sale bar as absolute.  Helsinn Healthcare v. Teva Pharmaceuticals has now cleared this up.  The District Court had originally held that the on sale bar would only be applicable if the sale or offer to sell made the invention “available to the public”, which as information exchanged under the relevant sale agreement was confidential, it was not – essentially the European position.  The FCAC – now affirmed by the Supreme Court on appeal – took a different view.  The FCAC concluded that “if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale” for the on sale bar to apply.

This ruling may not make the on sale bar absolute – if the existence of a sale is itself secret, it appears to fall outside the reasoning of the FCAC – but it does make it clear that a number of situations of practical interest may be caught by the on sale bar.  One such is where an invention has not been disclosed by a sale – for example, an invention provided as a service where the technical nature of the invention is not disclosed to the recipient of the service.  The prior art status of such a sale may be the subject of debate in Europe, but in the US it appears pretty clear that it would be caught by the on sale bar as interpreted in Helsinn Healthcare v. Teva Pharmaceuticals.  As always, it is important for any patent attorney to realise that the traps and pitfalls in other jurisdictions can be different from those in their own corner of the patent laws.

Richard Lawrence 5 February 2019


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