“On sale” bar of § 102(b) triggered only by commercial sale or offer for sale pursuant to Section 2-106 of the Uniform Commercial Code

Medicines Company v. Hospira, Inc., Nos. 2014-1469 and 2014-1504 (Fed. Cir. July 11, 2016)

The plaintiff, The Medicines Company (MedCo), sued in the District of Delaware alleging that the defendant’s Abbreviated New Drug Application (ANDA) filings infringed certain claims of the patents-in-suit, including two product-by-process claims. The plaintiff appealed the district court’s findings on claim construction and non-infringement, and the defendant cross-appealed several district court findings—including that the asserted claims of the patents-in-suit were not on-sale for purposes of § 102(b). A merits panel of the Federal Circuit reversed the district court’s ruling, and the plaintiff petitioned the panel for rehearing en banc.

Under 35 U.S.C. § 102(b), a patent is invalid if the product embodying the patent claims is “on sale” more than one year before the filing of an application for a patent. The applications for the patents-in-suit were filed on July 28, 2008, making the critical date for the on-sale bar under § 102(b) July 27, 2007. In late 2006, prior to the one-year on-sale bar date, the patentee contracted with a third party to create three batches of a product according to the product-by-process claims of the patents-in-suit. The three batches were then tested and quarantined and finally released for commercial sale in August 2007, after the July 27, 2007 on-sale bar date.

The defendants argued that the patentee contract to manufacture the product in question before the critical date triggered the on-sale bar. A merits panel of the Federal Circuit agreed, finding no distinction between the offer to sell products prepared by a patented method and the commercial sale of services that result in a patented product-by-process.

The Federal Circuit, sitting en banc, affirmed the district court’s conclusion that the transactions between the plaintiff and the third-party manufacturer did not constitute a commercial sale of the patented product, holding that to be “on sale” under § 102(b) a product must be the subject of a commercial sale or offer for sale, and that a commercial sale is one that bears the general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial Code. In this case, the transaction between the plaintiff and the third-party manufacturer was not a commercial sale because: (1) only manufacturing services were sold to the inventor—the invention was not; (2) the inventor maintained control of the invention; and (3) “stockpiling,” standing alone, does not trigger the on-sale bar.

A copy of the opinion can be found here ►