The On-Sale Bar Debate

Authored by Babak Akhlaghi on September 6, 2024.  Celanese International Corporation recently challenged Anhui Jinhe Industrial Co., Ltd. and Jinhe USA LLC at the U.S. International Trade Commission (ITC). The dispute revolves around Celanese’s claim that these entities were importing Ace-K, an artificial sweetener, using a process that infringes on Celanese’s patents. The key patents in question were filed on September 21, 2016, and fall under the America Invents Act (AIA).  A pivotal issue in this case is the on-sale bar provision under 35 U.S.C. § 102(a)(1).

The On-Sale Bar Debate

Jinhe argued for a summary decision of no patent infringement, claiming that Celanese’s sales of Ace-K in the U.S., made more than a year before the patent filing date (prior to September 21, 2015), invalidated the patents under the on-sale bar. Celanese acknowledged that under pre-AIA law, sales of products made with a secret process could indeed trigger this bar. However, they contended that the AIA had changed this precedent, arguing their prior sales should not invoke the on-sale bar.

ITC Case Decision

In the ITC proceedings, the Administrative Law Judge (ALJ) rejected Celanese’s argument. The judge determined that Celanese’s prior Ace-K sales did indeed trigger the on-sale bar and that the AIA did not change established pre-AIA precedent. The ALJ referred to the Supreme Court’s decision in Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., 586 U.S. 123 (2019), which clarified that the AIA did not modify the on-sale bar provision. According to the Supreme Court, by reenacting the same language in the AIA, Congress upheld the previous judicial interpretation. Celanese appealed to the Federal Circuit.

Federal Circuit’s Verdict

The key question before the Federal Circuit was whether the AIA changed the on-sale bar under Section 102 concerning Celanese’s pre-2015 Ace-K sales using a secret process. In alignment with the Supreme Court’s ruling in Helsinn, the Federal Circuit concluded that the AIA did not alter the long-standing pre-AIA precedent. Celanese International Corporation, et al. v. International Trade Commission, Case No. 22-1827 (Fed. Cir. Aug. 12, 2024) (Reyna, Mayer, Cunningham, JJ.)

Federal Circuit’s Pre-AIA and Post-AIA Analysis

Historically, under Section 102(b) of the previous statute, sales of products made with a secret process before the critical date would bar patentability. The Court noted that this principle is rooted in the Supreme Court precedent from Pennock v. Dialogue, 27 U.S. 1, 19–24 (1829). Despite the 2011 AIA shifting the patent system from “first-to-invent” to “first-inventor-to-file,” it retained similar language about the on-sale bar. The Helsinn case reaffirmed that a sale need not disclose invention details publicly to trigger the on-sale bar, indicating Congress’s intent to maintain existing judicial interpretation.

Celanese’s Argument

Celanese argued that the AIA was intended to modify the on-sale bar to prevent their pre-2015 Ace-K sales from invalidating later patent claims. They pointed to changes in Section 102 of the AIA, such as the use of “claimed invention” instead of “invention” and the inclusion of “otherwise available to the public.” Celanese believed these changes suggested that sales without public disclosure should not trigger the on-sale bar. However, the crux of their argument lies in whether “claimed invention” necessitates the sale of the process itself to trigger the bar, a point they argue represents a significant shift from pre-AIA precedent.

Federal Circuit’s Response and Holding

The Federal Circuit found that the addition of “claimed” does not support the fundamental change Celanese proposed. Whether the term is “invention” or “claimed invention,” the statutory language consistently refers to the same “invention” that an applicant wishes to patent. Legal precedent has treated “claimed invention” and “invention” as interchangeable when addressing the on-sale bar.

Accordingly, the Court held that the AIA did not fundamentally alter the statutory on-sale bar regarding sales involving a secret process. As a result, Celanese’s pre-2015 Ace-K sales using its secret process trigger the on-sale bar and invalidate their subsequent patent claims on that process.

Takeaway and a Question for Patent Attorneys

This case reinforces the understanding that the America Invents Act (AIA) did not change the established on-sale bar doctrine. It underscores the vital need for strategic patent filing and sales practices to effectively protect intellectual property rights. Interestingly, the case also draws attention to the product’s secret use by Celanese in Europe before the critical date. This raises a compelling question for seasoned patent practitioners: Could secret commercial use be classified as public use, potentially affecting patentability?

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