Addressing what qualifies as an invalidating offer for sale under 35 USC 102(b), the US Court of Appeals for the Federal Circuit reversed a district court finding that a distribution agreement was not a commercial offer for sale. The Medicines Co. v. Hospira, Inc., Case Nos. 14-1469; -1504 (Fed. Cir., Feb. 6, 2018) (Hughes, J).
The Medicines Company (TMC) owns two patents covering pharmaceutical bivalirudin, an anti-coagulant synthetic peptide branded and sold as Angiomax. More than a year before filing the patents, TMC entered into an exclusive distribution agreement with Integrated Commercialization Solutions, Inc. (ICS). The distribution agreement stated that TMC desired to sell Angiomax to ICS and that title would pass to ICS upon receipt of Angiomax at the distribution center. The agreement also permitted TMC to reject all purchase orders submitted by ICS. ICS received the first batch of Angiomax less than one year before the filing of the patents.
Seeking to market a generic version of Angiomax, Hospira filed an abbreviated new drug application seeking US Food and Drug Administration approval. TMC sued for patent infringement. In response, Hospira alleged that the asserted patents were invalid because a distribution agreement between TMC and ICS was signed prior to the critical date and thus constituted an invalidating “sale” under § 102(b). The district court found that the distribution agreement was not an invalidating sale because the agreement was for ICS to be a distributor of Angiomax and was not an offer to sell Angiomax. Finding no offer for sale, the district court did not reach whether the distribution agreement covered the patented invention. Hospira appealed the invalidity finding.
The Federal Circuit reversed the district court’s invalidity finding. In a prior appeal involving the parties, the Court explained that the framework for determining whether there is an offer for sale requires focusing on activities that would be understood to be commercial sales and offers for sale in the commercial community (IP Update, Vol. 19, No. 8). The Court found that under this framework, the distribution agreement was an agreement to sell and purchase Angiomax. TMC argued that the distribution agreement was not an offer for sale because it permitted TMC to reject all of ICS’s purchase orders. The Court rejected TMC’s argument because the agreement explicitly stated that TMC desired to sell Angiomax to ICS, that TMC was required to use “commercially reasonable efforts” to fill the purchase orders, and that TMC was unlikely to reject any purchase orders because ICS had exclusive distribution rights. The Court found that the distribution agreement was a commercial offer for sale and remanded to the district court to determine if the distribution agreement covered the patented invention.