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Federal Circuit Clarifies Section 102(b) On-Sale Bar for Product-By-Process Patents
Practical Law Legal Update w-002-7738 (Approx. 5 pages)
Federal Circuit Clarifies Section 102(b) On-Sale Bar for Product-By-Process Patents
by Practical Law Intellectual Property & Technology
| Published on 12 Jul 2016 • USA (National/Federal) |
In The Medicines Company v. Hospira, Inc., an en banc panel of the US Court of Appeals for the Federal Circuit vacated its 2015 panel decision and affirmed the district court's holding that the product-by-process patent claims at issue were not subject to 35 U.S.C. Section 102(b)'s on-sale bar, clarifying that a commercial sale or offer for sale under the statute is one that bears the general hallmarks of a sale under Section 2-106 of the Uniform Commercial Code (UCC).
On July 11, 2016, in The Medicines Company v. Hospira, Inc., the US Court of Appeals for the Federal Circuit vacated its 2015 panel decision and affirmed the US District Court for the District of Delaware's holding that there had been no commercial sale that would invalidate the patents-in-suit under 35 U.S.C. Section 102(b) ( (Fed. Cir. Jul. 11, 2016)). The court held that:
- A commercial sale under Section 102(b) is one that bears the general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial Code.
- A contract manufacturer's sale to the inventor of manufacturing services where neither title to the product nor the right to market the products passes to the supplier is not an invalidating sale under Section 102(b).
The Medicines Company (MedCo) owns two patents-in-suit that include product-by-process claims covering pharmaceutical batches of bivalirudin, an anticoagulant drug product manufactured by a compounding process and marketed by MedCo under the trade name Angiomax. The patents' applications were filed on July 27, 2008 and therefore have a Section 102(b) critical date of July 27, 2007.
Because MedCo is not capable of manufacturing its bivalirudin product in-house, in 1997 it began contracting with Ben Venue Laboratories, Inc. to manufacture commercial quantities of bivalirudin formulations. To address purity issues with early batches, MedCo developed its patented process in 2006, and Ben Venue manufactured three batches using the patented process in late 2006, prior to the patents' critical date.
The three batches were then placed on a quality hold for testing, and subsequently quarantined pending FDA approval with Integrated Commercialization Solutions (ICS), MedCo's exclusive distributor. Significantly, under MedCo's distribution agreement with ICS:
- ICS was made the exclusive authorized distributor of Angiomax in the US.
- Title and risk of loss would pass to ICS following the batches' release from quarantine.
- MedCo would not release the three batches from quarantine until August 2007, after the patents' July 2007 critical date.
In August 2010, MedCo filed a Hatch-Waxman action against Hospira Inc. after Hospira filed two Abbreviated New Drug Applications (ANDA) seeking approval to market generic bivalirudin drug products. Among other arguments, Hospira asserted that the invention was "on sale" and therefore barred under Section 102(b) based on MedCo's pre-critical date activities with Ben Venue and ICS.
The district court found the patents not infringed and not invalid. With respect to Hospira's Section 102(b) argument, it applied the two-step framework of Pfaff v. Wells Electronics, Inc. and found that the three batches Ben Venue manufactured for MedCo did not trigger the on-sale bar (525 U.S. 55 (1998)). On appeal in 2015, a Federal Circuit panel reversed, holding the claims were barred by Section 102(b) because the inventor "commercially exploited" the invention before the critical date.
In its en banc decision, the Federal Circuit changed course and affirmed the district court, holding that the transactions between MedCo and Ben Venue and ICS in 2006 and 2007 did not constitute commercial sales of the patented product. After examining Section 102(b) precedent, the court clarified that under two-prong Pfaff test, the on-sale bar applies when a claimed invention:
- Is the subject of a commercial offer for sale.
- Is ready for patenting.
After laying out the framework, the court:
- Clarified the law relating to on-sale bar, explaining that:
- where the patent is to a product, the court has never held that performing an unclaimed process is a commercial sale of a claimed product;
- 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;
- stockpiling by the purchaser of manufactured embodiments is not improper commercialization under Section 102(b); and
- commercial benefit—even to both parties in a transaction—is not enough to trigger the on-sale bar and the transaction must be one in which the product is on sale in the sense that it is commercially marketed.
- Found that the on-sale bar had not been triggered in this case because:
- only contract manufacturing services were sold to the inventor—the invention was not;
- the inventor maintained control of the invention, as shown by the retention of title to the embodiments and the absence of any authorization to Ben Venue to sell the product to others; and
- the stockpiling, standing alone, did not trigger the on-sale bar.
- Distinguished the cases argued by Hospira because they involved process or method patents.
Because the court held that there was no commercial sale, it declined to address MedCo's secondary argument that its actions fell within the experimental use exception to the Section 102(b) bar.