Federal Court confirms that “secret sales” can trigger the AIA sales ban

On August 12, 2024, the Federal Circuit published its decision in Celanese International Corp. et al. v. International Trade Commission. The Federal Circuit concluded that patent claims under the America Invents Act (AIA) can be invalidated due to the sales ban if products made using the patented process were sold more than one year before the effective filing date of the asserted patents. This Client Alert focuses on the decision in Celanese and its potential impact on intellectual property rights holders. For a more comprehensive overview of the case history, the parties’ arguments, and oral argument, please visit WilmerHale’s Insights & Events page to access our March 2024 Client Alert: A Secret on Sale: When Trade Secrets and Invention Disclosure Collide.

ITC invalidates Celanese “secret sales” claims

In 2020, Celanese discovered that Anhui Jinhe Industrial Co. (Jinhe), a Chinese food additive manufacturer, was allegedly infringing Celanese’s patents to produce Ace-K (an artificial sweetener). Specifically, Celanese kept its Ace-K manufacturing process as a trade secret while selling the resulting sweetener product. More than a year after first commercializing Ace-K, Celanese applied for and eventually received several patents covering its previously secret manufacturing process. After discovering Jinhe’s alleged infringement, Celanese petitioned the International Trade Commission (ITC) to open an investigation into Jinhe’s activities. In January 2022, the ITC’s presiding administrative judge granted Jinhe’s motion for summary judgment, finding that Celanese’s prior sales prior to the critical date triggered the sales prohibition provision of 35 USC § 102(a)(1) and the asserted claims were therefore invalid. The ITC declined to review the ALJ’s original decision, and Celanese appealed to the Federal Circuit.

Federal court concludes that AIA did not change the provisions on bars for sale

The Federal Court of Justice concluded that “the sale of products manufactured before the critical date using a secret process would exclude the patentability of that process.”¹ arguing that his decision was “consistent with Supreme Court precedents dating back to the 19th century.”² In rejecting Celanese’s argument that the AIA overturned precedent before the AIA, the Federal Circuit relied on Helsinn Healthcare SA v Teva Pharmaceuticals USA, Inc.586 U.S. 123 (2019), in which the Supreme Court held that a sale or offer for sale “need not make an invention available to the public” to constitute invalidity of prior art under the sale provision.³ The Helsinn The court relied on “settled precedent from before the AIA” that “‘secret sales’ can invalidate a patent, assuming that when Congress reinstated the same ‘for sale’ language in the AIA, it adopted the earlier judicial interpretation of that language.”⁴ The Federal Circuit in Celanese relied on this logic and concluded that in Helsinn“The Supreme Court considered whether Congress modified the sales ban when it passed the AIA… (and) ruled that Congress did not.”⁵

In this ruling, the Federal Circuit rejected Celanese’s argument that the AIA’s use of the phrase “claimed invention” (instead of “invention” in the version of the sale clause used before the AIA) indicated Congress’s intent to change the scope or meaning of the sale clause in the AIA. Specifically, the Court found that “our case law regarding the sale ban has synonymously referred to the invention at issue as a ‘claimed’ invention” and that, therefore, “Congress’s decision to use the alternative ‘claimed invention,’ consistent with existing legal interpretation, is nothing more than a bureaucratic refinement of terminology for the same substantive meaning.”⁶

The Federal Circuit also declined to give credence to Celanese’s other statutory interpretation arguments, including (1) the language “or otherwise available to the public” in the AIA sales provision confirmed that that provision excludes sales of a product in which the invention process is not disclosed, (2) other sections of 35 U.S.C., including §102(b), §271(g), or §273(a), indicated an intent of Congress to affect the AIA sales provision, and (3) demonstrated Congress’ legislative intent to exclude sales similar to Celanese’s sales prior to the critical date from the scope of the AIA sales prohibition. The Federal Circuit summarized: “We hold that the adoption of the AIA did not constitute a fundamental change in the theory of the statutory sales ban provision, particularly §102(a)(1), to require that sales of products manufactured using a secret process cannot trigger the sales ban.”⁷

Insights

The decision of the Federal Court of Justice in Celanese clarifies that the scope of the AIA sales ban provision remains unchanged from the corresponding pre-AIA approach. Unless the decision is reviewed before the full Court or the Supreme Court, the fact remains that a sale of a product made using a secret process before the critical date will trigger the sales ban and invalidate later-filed patent claims on that process. Consequently, the Celanese The decision underlines that intellectual property rights holders seeking patent protection must carefully weigh the risks associated with the sale of their inventions, even if the sale is protected by confidentiality.