Introduction

In The Medicines Co v Hospira Inc,(1) the Federal Circuit en banc held that a contract manufacturer's sale to the patentee of manufacturing services, where both the title to the patented embodiments and the right to market them did not pass to the manufacturer, did not constitute an invalidating sale under 35 US Code Section 102(b) before the America Invents Act.(2) In so holding, the Federal Circuit asserted that commercial benefit is not enough to trigger the on-sale bar. Rather, the transaction must be one in which the product is commercially marketed (eg, the subject of a sale or offer that "bears the general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial Code").

Facts

The Medicines Co (MedCo) (the plaintiff) sued Hospira Inc (the defendant), alleging that Hospira's abbreviated new drug applications (ANDAs) for generic bivalirudin infringed MedCo's US Patent Numbers 7,582,727 (the '727 patent) and 7,598,343 (the '343 patent) for MedCo's drug Angiomax. The '727 and '343 patents contain product and product-by-process claims directed to pharmaceutical batches of bivalirudin that recite maximum levels of an impurity, Asp9-bivalirudin, generated during the compounding process.

Hospira raised several invalidity grounds, including that Section 102(b)'s on-sale bar was triggered when MedCo paid third-party contractor Ben Venue to manufacture Angiomax batches meeting the claim limitations more than one year before the filing date of the '727 and '343 patents. After the district court upheld the validity of both patents, a Federal Circuit panel reversed it, holding that Ben Venue's activities triggered the on-sale bar. MedCo sought en banc review of the panel decision.

En banc decision

In Pfaff v Wells Elecs Inc,(3) the Supreme Court held that Section 102(b)'s on-sale bar applies to invalidate a patent when, before the critical date, the claimed invention was:

  • the subject of a commercial offer for sale; and
  • ready for patenting.

The Federal Circuit's en banc decision in this case focused on the Pfaff test's first prong: whether the invention was the subject of a commercial sale or offer for sale.

The court offered three main reasons for holding that no invalidating sale had occurred based on Ben Venue's activities. First, the court held that:

"the mere sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor does not constitute a 'commercial sale' of the invention."

The court found that only Ben Venue's manufacturing services, and not MedCo's patented invention, were sold in this case. The patent claims at issue in this case were product and product-by-process claims, not process or method claims.

Second, the court held that stockpiling by the purchaser is not improper commercialisation under Section 102(b), but constitutes "pre-commercial activity in preparation for future sale". The court moreover emphasised that Section 102(b) is not triggered by a general commercial benefit, but rather requires a commercial sale or offer for sale.

Third, the court found that there was no invalidating commercial sale where the patentee maintained control of the invention (eg, where MedCo retained title to the Angiomax batches that Ben Venue manufactured and did not authorise Ben Venue to sell them to others).

The court's en banc decision overrules prior on-sale bar cases, such as Special Devices Inc v OEA Inc,(4) to the extent that they would have dictated a different result. However, the court stated that it still does not recognise a blanket supplier exception to the on-sale bar, and that the on-sale analysis focuses on the commercial nature of the transaction, rather than on the parties' identities. Thus, the court noted as obiter dicta that a transfer from a supplier to an inventor could constitute an invalidating sale if the supplier had:

  • title to the patented product or process;
  • blanket authority to market the product or disclose the manufacturing process to others; or
  • sold the product at full market value.

For further information on this topic please contact Christopher E Loh or Erin JD Austin at Fitzpatrick, Cella, Harper & Scinto by telephone (+1 212 218 2100) or email (cloh@fchs.com or eaustin@fchs.com). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.

Endnotes

(1) Slip Op 2014-1469, 2014-1504, Fed Cir July 11 2016.

(2) Congress amended 35 USC Section 102 in 2011 as part of the America Invents Act. The court's opinion addresses the pre-act version of the statute applicable in this case, not whether or to what extent Section 102(b) may differ post-act.

(3) 525 US 55 (1998).

(4) 270 F3d 1353, Fed Cir 2001.

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