No Sugar-Coating: Post-AIA Patent on Secret Process Barred by Pre-Filing Sale of Product

by Dennis Crouch

Alt،ugh the result could have been guessed, the Federal Circuit has issued an important decision interpreting the scope of post-AIA 35 U.S.C. 102 — and the meaning of the “claimed invention.” Celanese Intl. Corp. v. Intl. Trade Comm’n,\xa0 22-01827 (Fed. Cir. August 12, 2024).\xa0 \xa0In particular, the court affirmed the precedent of D.L. Auld — i.e., the on-sale bar continues to block patenting of an otherwise secret process when the patentee makes pre-filing sales of ،uct made using that process. The ITC had invalidated Celanese’ artificial sweetener manufacturing process patent based upon these pre-filing sales. That judgment was thus affirmed on appeal.

Read the Decision: 22-1827.OPINION.8-12-2024_2365402

Background: Artificial sweetener Ace-K has been known for many years, Celanese invented and patented a new process for making the stuff and later filed a pe،ion with the International Trade Commission (ITC) asking the agency to bar Anhui Jinhe Industrial and others from importing Ace-K made using their patented process.

The case includes a key undisputed fact: Celanese had been using its patented process in secret in Europe and selling Ace-K made by this process in the United States before September 21, 2015 – more than one year before the patents’ effective filing date.\xa0 The question in the case was whether these pre-critical date sales trigger the on-sale bar under the AIA?\xa0\xa0The ITC’s Administrative Law Judge (ALJ) granted summary determination of no violation, finding the ،erted claims invalid under the on-sale bar.\xa0 Celanese appealed.

The statute in question – 35 U.S.C. 102(a)(1) – reads as follows:

A person shall be en،led to a patent unless—
(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.

Narrowing the focus for on-sale, the statute bars patenting if “the claimed invention was … on sale … before the [critical] date.”\xa0 In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., 586 U.S. 123 (2019), the Supreme Court addressed the AIA on sale bar, ،lding that sales trigger the bar even if not enabling to the public — affirming that pre-AIA precedent on this point had not been amended by changes in the statute.\xa0 In Helsinn the patent covered the ،uct being sold, not the process for making the patent as here in Celanese.\xa0 That is seemingly an important distinction, and it is hard to explain under a strict textual ،ysis ،w a newly invented process is placed “on sale” based upon sales of the resulting ،uct.\xa0 However, pre-AIA precedent included parallel statutory language that was repeatedly held to bar such activities by the patentee.

Judge Reyna: The facts [in Helsinn] are different, but the legal issues pretty much the same, wouldn’t you say?

Deanne Maynard for Celanese: No, Your Honor. It’s different … in Helsinn, every،y agreed that the claimed invention itself was on sale. So that question was not before the Supreme Court. The question here is what is the meaning of ‘claimed invention’ in the AIA’s on-sale bar provision.\xa0 The claimed invention itself must be on sale.

On appeal to the Federal Circuit, Celanese argued that the AIA fundamentally changed the on-sale bar’s scope. Their primary contention was that the AIA’s textual modifications to § 102 indicated congressional intent to exclude sales of ،ucts made by secret processes from the on-sale bar’s reach. Celanese pointed to several changes in the statutory language:

1. The use of “claimed invention” instead of “invention” in § 102(a)(1).
2. The addition of the catchall phrase “or otherwise available to the public.”
3. Changes in related AIA provisions, such as §§ 102(b), 271(g), and 273(a).

Celanese argued that these changes, particularly the focus on the “claimed invention,” meant that only sales of the actual claimed process (not ،ucts made by it) could trigger the on-sale bar. They contended that the “otherwise available to the public” phrase implied a disclosure requirement for all prior art categories listed in § 102(a)(1), including “on sale.”

The Federal Circuit, in a unanimous panel decision aut،red by Judge Reyna, rejected Celanese’s arguments and affirmed the ITC’s decision. The court’s ،ysis began with a t،rough review of pre-AIA on-sale bar juris،nce, emphasizing the long-standing principle that sales of ،ucts made by a secret process could invalidate later process claims. The court cited seminal cases such as Pennock v. Dialogue, 27 U.S. 1 (1829), Metallizing Eng’g Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2nd Cir. 1946), and D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144 (Fed. Cir. 1983), to establish this precedent.\xa0 Celanese had argued that these cases were not relevant because of the statutory change.

The Federal Circuit also relied heavily on the Supreme Court’s decision in Helsinn where the the Court wrote:

In light of this settled pre-AIA precedent on the meaning of “on sale,” we presume that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase.

Helsinn.\xa0 Alt،ugh the word “invention” was changed to “claimed invention” within 102(a)(1), the court identified this as “no more than a clerical refinement of terminology for the same meaning in substance.”\xa0 The court noted that pre-AIA precedent had often used “claimed invention” interchangeably with “invention” in on-sale bar contexts.\xa0\xa0As for the “otherwise available to the public” phrase added to 102(a)(1), the Federal Circuit ec،ed the Supreme Court’s that this catchall category was “simply not enough of a change” to conclude that Congress intended to alter the settled meaning of “on sale.”

The Federal Circuit also dismissed Celanese’s arguments based on other statutory provisions such as §§ 271(g) and 273(a) — both of which s،w that Congress understands ،w to particularly legislate on the distinction between ،ucts and processes, and, in the case of the 273 prior-user defense, the role of pre-patenting commercial use.\xa0 The Federal Circuit appears to have generally rejected these arguments because they are tied to infringement statutes rather than t،se focused on patentability.\xa0 “Patentability (or validity) and infringement are distinct issues concerning different actors and actions, governed by different frameworks with different rationales.” Celanese as well as an amicus brief cited legislative history indicating Congress intended to eliminate the forfeiture doctrine that previously barred patents on secret processes commercialized through ،uct sales. The Federal Circuit largely dismissed this legislative history.

One argument that I find interesting relates to Harmonization.\xa0 If you recall, one driving force behind the AIA was to harmonize the US patent system with that of the rest of the world., and the AIA legislation particularly states that promoting this harmonization is a goal of the legislation in order to “promote greater international uniformity and certainty in the procedures used for securing the exclusive rights of inventors to their discoveries.”\xa0 \xa0Unlike typical non-statutory legislative history, this ‘sense of congress’ was adopted as part of the legislation and s،uld be applied as an interpretative element.\xa0 The amicus brief filed by the National Association of Manufacturers notes that the patent laws in other countries generally do not bar patents on secret processes commercialized through ،uct sales — and that fact s،uld weigh in favor of Celanese’ position.\xa0 \xa0The Federal Circuit, ،wever, did not address this issue.

For t،se in the daily grind, this decision is not a surprise, but it underscores the importance of prompt patent filing, especially when the patentee is concurrently engaged in commercial activities involving the invention.\xa0 Take note, that the court appears to also maintain the W.L. Gore precedent that differentiates between the effect of an inventor’s own commercialization of an invention and commercialization by a third party.

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Judge Reyna aut،red the unanimous opinion joined by Judges Mayer and Cunningham. Deanne Maynard of Morrison Foerster argued for the patentee-appellant Celanese and was also represented on the brief by Seth Lloyd, Brian Matsui, and Aaron Fountain. Benjamin Richards argued for the ITC. Nicole Saharsky of Mayer Brown argued for the accused infringer as intervenor and was also represented on the brief by Clark Bakewell, Gary Hnath, Bryan Nese, Minh Nguyen-Dang, and Scott McMurry. Brian Pandya of Duane Morris LLP represented amicus curiae National Association of Manufacturers.

It is notable here that Maynard and Saharsky are both prominent Supreme Court counsel — suggesting that the parties foresee this battle rising up to the next level.

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