Wednesday, February 27, 2019

SCOTUS Finds An Inventor's Sale of Product to Third Party can Qualify as Prior Art 35 U.S.C. § 102(a)

In Helsinn Healthcare v. Teva Pharmaceuticals USA, the Court affirmed a Federal Circuit decision invalidating the patent for Helsinn=s nausea drug Aloxi, based on patent law=s Aon sale@ bar.  In short, the Court found that the sale of an invention to a third party who is obligated to keep the invention confidential by agreement may place the invention “on sale” for purposes of the Leahy‑Smith America Invents Act (AAIA@), which bars a person from obtaining a patent on an invention that was Ain public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.@  An exception to the on sale bar is made if a sale or offer to sell is made 1 year or less before the effective filing date of a claimed invention, and certain other conditions are met.  

The facts of the case are as follows.  While Helsinn was in development of a drug, which uses the active ingredient palonosetron to treat chemotherapy‑induced nausea and vomiting, it entered into two agreements with a third party, MGI Pharma, Inc., a license and supply and purchase agreement.  These agreements gave MGI the right to distribute, promote, market and sell two specific dosages of the palonosetron in the United States.  In exchange, MGI made up-front payments to Helsinn and agreed to future royalties on distribution.  Most importantly, the agreements required MGI to keep confidential any proprietary information regarding palonosetron.  The agreements were disclosed to the public in a joint press release and related filings with the SEC, but the specific dosage formulations covered by the agreements were not included in the disclosure.

On January 30, 2003, nearly two years later, Helsinn filed a patent application covering the two doses of palonosetron.  Over the next 10 years, it filed additional patent applications, all claiming priority to the January 30, 2003 date.  Years later, Teva Pharmaceuticals sought FDA approval to market a generic palonosetron at one of Helsinn=s dosages.  Helsinn brought suit claiming the product infringed its patent.  Teva argued that the fourth patent was invalid because the specific dose was Aon sale@ more than one year before Helsinn filed its initial patent application in 2003.  The District Court held that the “on sale” provision did not apply because the public disclosure of the agreements did not disclose the specific dosages.  The Federal Circuit court, however, reversed, and concluded that the sale was publicly disclosed, regardless of whether the details of the invention were publicly disclosed in the terms of the agreements.

            In a unanimous ruling, SCOTUS found that an inventor=s commercial sale of an invention to a third party invalidates the patent, even if the third party is obligated to keep the invention confidential due to the “on sale” bar.  The Court recognized that the pre-AIA statute included the “on sale” bar and noted the precedent that secret sales could invalidate a parent.  It then applied the presumption that Congress intended the same with the AIA, which includes the same “on sale” language.  Further, the Court found that the addition of the catchall phrase “or otherwise available to the public” is not enough of a change from the pre-AIA statute to conclude that Congress intended to alter the meaning of “on sale.”

The practical application and effect of this ruling is interesting to note.  On the one hand, a modest inventor can argue that upholding the Federal Circuit=s decision would discourage innovation in the biotech sector, particularly among small or start-up companies who lack resources to have their drugs developed and distributed in-house, as they frequently rely on third party investment and partnerships which can help with costs of further research and development. Third party investments and partnerships, however, subjects them to the “on sale” bar and can discourage them from engaging in time-consuming and costly research, because it causes them to lose the ability to receive patent protection.  Also, being forced to file costly patent applications for the sole purpose of avoiding future patentability issues will further discourage small businesses from entering the industry, especially when their invention has not been tested to be commercially viable.

On the other side, competitors can argue that the Aon sale@ bar is triggered only when the invention is at a stage when it is ready for patenting and sale, or when the inventor is ready to start making profits before patenting it, and thus, the Aon sale@ restriction is appropriate.  Further, a one-year grace period provided in the AIA is sufficient in which to assess commercial viability.

In any event, all inventors should be aware of the fact that this decision has vast implications for patent-holders in the United States as well as for investors intending to sell their invention pre-patent application.

Authored by:

Jennifer T. Poochigian

Tuesday, February 19, 2019

8 Mistakes Inventors Make With Patent Attorneys

Coleman & Horowitt is a proud sponsor of Valley Innovators, a company dedicated to the advancement of knowledge, mentorship and development of capital for startups.  As part of our sponsorship, attorneys from Coleman & Horowitt participate in podcasts, to provide useful information to entrepreneurs and start-up companies.  Gary Shuster, an inventor and Coleman & Horowitt attorney who offers consulting services to entrepreneurs and start-up companies, was recently featured on a Valley Innovators Podcast where he discussed common mistakes inventors make with their patent attorneys. 

The podcast may be found at: 

Thursday, February 14, 2019

Practical Tips on Protecting Your Business from a Copyright Lawsuit

Have you ever uploaded an image from the internet and used it in your promotional brochure or found a perfect blog post and incorporated it into your own blog theme?  If the answer is yes, you may have inadvertently violated copyright law.

Copyright law, in a nutshell, protects any original creation, such as pictures, writings, creative efforts (dramatic, musical or choreographic works), computer software, architecture, etc., as well as any derivative work based on the original creation, by allowing the holder of the copyright exclusive control over who can reproduce, sell, disseminate or perform the protected work.  Names, phrases or slogans, facts, ideas, procedures and processes, etc., cannot receive copyright protection.

A copyright can be registered with the U.S. Copyright Office (which allows the holder certain advantages under the U.S. Copyright Act) but it is not required, as copyright automatically attaches once the work is created and fixed in a tangible form. In addition, copyright owners are not required to use the “©” symbol, even if there work is registered.  For these reasons, when you see an image or view a written work that has no distinguishing copyright marks, do not be fooled into thinking it is in the public domain and thus, free for any use.

Below are some tips that can help protect your start-up or existing business from the hassle and expense of a copyright infringement lawsuit:

1.  Do not take pictures or videos directly from the internet and use them for any purpose.  Just because a colorful, geometric design found through an internet search that would be perfect for your website lacks distinguishing copyright marks, does not mean it is in the public domain.  In fact, most images, pictures and/or videos on the internet are copyright protected.

2.  If you find a photo, art or video that you want to use on your website or printed materials, consider contacting the author and inquire whether you can use the work.  Many authors will permit you to post their picture or work with the stipulation that you reference the work’s origination.

3.  If you find something written on the internet that would be of good use in your promotional material, make sure to only take the general idea of the post and make sure you put the writing into your own words.

4.  Using someone’s work and providing a link back to the originator without express permission is still copyright infringement.  Implied permission is not sufficient so never assume permission has been given.

5.  Unless the work or image is expressly dedicated to the public domain, do not use it unless you obtain the owner’s permission.

Some electronic images may contain electronic “tags” that allow owners to track use of their copyright images. The owners of the images (or their attorneys) may then send a “cease and desist” letter to unauthorized users, demanding past and future licensing fees, and threatening litigation if the fees are not paid.  Unsuspecting small business owners who have downloaded images, believing them to be for public use, are often caught off-guard and incur expenses for which they have not budgeted and which may significantly impact their businesses.  Therefore, the guiding principal is, when in doubt, do not download.

If you receive a cease and desist letter for using an image or work that is purported to be copyright protected, contact an IP attorney to help you understand how best to proceed.  This will help you avoid costly litigation fees in defending the lawsuit from an overzealous plaintiff.

Authored by:
Jennifer T. Poochigian

Addendum added April 24, 2019: Be aware that even materials that can be used without paying may have licensing requirements.  The most common appears to be "attribution", meaning you use an image and credit the photographer. Failure to strictly comply with the licensing requirements can create liability or at least invite litigation that you will need to pay to defend.  Law professor Eric Goldman's blog discusses this further:

Wednesday, February 6, 2019

Coleman & Horowitt LLP World Ag Expo Reception

We are having a reception at the World Ag Expo, if you wish to attend the reception, please contact us to reserve your spot.