The Supreme Court last week heard oral arguments in a case centered on whether confidential drug sales activate the one-year period in which drugmakers can apply for a patent.
Just updated: Your cheat sheets for understanding health care's legal landscape
The case before the Supreme Court is based on the 2011 Leahy-Smith America Invents Act (AIA), which redefined the U.S. patent system. AIA allows inventors to file patent applications for products that are for sale, in public use, or otherwise publicly available for up to one year after the product's initial release. Under AIA, inventors cannot file patent applications after that one-year period. Before AIA became law, the federal government did not impose the one-year restriction on products that were "otherwise publicly available," according to Inside Health Policy.
The case involves the pharmaceutical companies Helsinn Healthcare and Teva Pharmaceuticals. Helsinn in 2001 had entered into a confidential sales agreement with MGC Pharma for Aloxi, a drug that treats chemotherapy-related nausea. Helsinn then filed patent applications for Aloxi in 2003.
Teva later filed an application to market a generic version of Aloxi, and Helsinn in 2011 filed a lawsuit alleging Teva infringed on its patents for Aloxi.
However, Teva argued that the confidential sales agreement Helsinn had entered with MGC Pharma in 2001 invalidated Helsinn's patent for Aloxi because Helsinn had applied for the patents more than one year after Aloxi was made available to MGC Pharma. Helsinn countered that the confidential sales agreement did not invalidate the patents because the agreement did not publicly disclose any of the drug's proprietary information.
A U.S. district court ruled that Helsinn's patents for Aloxi were valid and prohibited Teva from selling generic versions of Aloxi until the patents expire in 2024.
However, the U.S. Court of Appeals for the Federal Circuit reversed the district court's decision and invalidated Helsinn's patents, ruling that the confidential sales agreement should have initiated the one-year period in which Helsinn was permitted to apply for patents for Aloxi. As such, the appeals court ruled that the patents Helsinn sought in 2003, two years after the agreement had begun, were invalid.
Helsinn appealed the ruling to the Supreme Court.
SCOTUS questions the meaning of 'on sale'
During oral arguments, the Supreme Court's justices focused their questions on whether confidential sales are subject to AIA's one-year restriction on patent applications.
Justice Sonia Sotomayor said the term "on sale" historically has not required that an invention be on sale publicly for one year to be subject to AIA's patent application restrictions. She said, "You're sort of giving 'on sale to the public' its meaning, but those are not the words used by Congress. Congress could have said 'on sale to the public,'" but she added, "Congress just said 'on sale.'"
Justice Stephen Breyer said the one-year restriction on patent applications is intended to keep inventors from commercially exploiting the sales of their products beyond the protected period under the patent. Breyer said if confidential sales are not subject to the restriction, inventors could bypass federal law by choosing to sell products strictly through confidential agreements.
However, Justice Samuel Alito expressed doubt that the one-year restriction under AIA should apply to both private and public sales.
Justice Neil Gorsuch questioned whether the court should take into account the U.S. Patent and Trademark Office's definition of "on sale," which states a sale "must make the invention available to the public."
The Massachusetts Biotechnology Council in an amicus brief said there will be a "devastating effect" on "essential collaboration" in the drug industry if the Supreme Court rules in favor of Teva. The Council said such a ruling would result in larger companies hesitating to collaborate with smaller companies to develop drugs, because their collaboration could activate the one-year patent application period.
However, the Association for Accessible Medicines in an amicus brief said a ruling in favor of Helsinn could delay the entry of generic drugs in the U.S. market (Cohrs, Inside Health Policy, 12/6 [subscription required]; Cohrs, Inside Health Policy, 11/11 [subscription required]; Jahner, Bloomberg Law, 12/3; SCOTUSblog, accessed 12/11).
Your cheat sheets for understanding health care's legal landscape
To help you keep up with the ever-changing regulatory environment, we recently updated our cheat sheets on some of the most important—and complicated—legal landmarks to include a brand new one-pager on the new tax law.
Check out the cheat sheets now for everything you need to know about MACRA, the Affordable Care Act, antitrust laws, fraud and abuse prevention measures, HIPAA, and the two-midnight rule.
Get the Cheat Sheets
Next in the Daily Briefing
How 2 New York women just wiped out the medical debt of 1,284 people