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Abstract

The purpose of the patent on-sale bar is to discourage inventors from misusing the patent system and unfairly extending their patent exclusivity period. In Helsinn Healthcare v. Teva Pharmaceuticals, the Federal Circuit has distorted this doctrine far beyond its purpose. By including non-public business transactions within the scope of the on-sale bar, the Federal Circuit’s decision contradicts legislative history and express statutory language from the America Invents Act (“AIA”). This interpretation also makes the U.S. the only major patent system where a non-public sale can lead to the forfeiture of an inventor’s patent rights. The inclusion of non-public agreements within the scope of invalidating prior-art is a particularly harsh result for small pharmaceutical companies. These companies routinely enter into private license and supply agreements both to raise capital and to ally with experienced industry players who can help them navigate through the challenging FDA approval process. The Federal Circuit’s Helsinn decision restricts the ability of small pharmaceutical companies to collaborate with others, and therefore impedes their ability to innovate. Helsinn also makes the on-sale bar inquiry extremely fact-specific and injects unnecessary uncertainty into routine business deals. This paper suggests that the Federal Circuit’s decision in Helsinn misinterprets the AIA’s statutory text, ignores significant legislative history, and is logically at odds with the economic realities of the pharmaceutical industry. This paper also provides some practical suggestions for how pharmaceutical companies can structure commercial transactions without stepping on the on-sale bar minefield.

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