## Facts

- The Medicines Company (MedCo) sold Angiomax® (bivalirudin) but did not have its own manufacturing facilities and used Ben Venue Laboratories (Ben Venue) to make commercial-scale product.
- After batches showed high levels of the Asp9-bivalirudin (Asp9) impurity, MedCo developed an improved compounding process aimed at reducing Asp9 levels.
- MedCo obtained U.S. Patent Nos. 7,582,727 and 7,598,343, which claim, among other things, pH-adjusted bivalirudin pharmaceutical batches with a maximum Asp9 level not exceeding about 0.6% (measured by HPLC).
- MedCo filed the patent applications on July 27, 2008, making July 27, 2007 the pre-AIA 35 U.S.C. § 102(b) critical date.
- In late 2006, before the critical date, MedCo paid Ben Venue about $347,500 to manufacture three commercial-scale batches using the improved process; the combined market value of these batches was far higher (reported as well over $20 million).
- Ben Venue’s invoices described charges to manufacture bivalirudin lots; MedCo retained title to the batches, which were placed into MedCo’s quarantine inventory and were not made available for sale to customers until after the critical date (August 2007).
- Hospira filed ANDAs seeking FDA approval to market generic bivalirudin, prompting MedCo to sue in the District of Delaware.
- Hospira argued that the Ben Venue transactions put the invention “on sale” before the critical date and therefore invalidated the asserted claims under § 102(b).
- After a bench trial, the district court concluded the invention was ready for patenting before the critical date but held that the Ben Venue transactions did not constitute a commercial sale or offer for sale under § 102(b).
- A Federal Circuit panel initially reversed on the on-sale bar; the Federal Circuit granted rehearing en banc, vacated the panel decision, and issued the en banc opinion.

## Issues

1. Under pre-AIA 35 U.S.C. § 102(b) and *Pfaff*, what qualifies as a “commercial sale or offer for sale” of an invention?
2. Do transactions in which a patentee pays a contract manufacturer to produce embodiments for the patentee’s own inventory—where title does not pass and the manufacturer lacks authority to market the product—constitute an invalidating on-sale event?
3. Does pre-filing “stockpiling” of manufactured product, without a pre-critical-date sale or offer to customers, trigger the § 102(b) on-sale bar?

## Decision

- The en banc Federal Circuit affirmed the district court’s judgment that the asserted claims were not invalid under the § 102(b) on-sale bar based on MedCo’s pre-critical-date dealings with Ben Venue.
- The court held that, to be “on sale” under § 102(b), the invention must be the subject of a commercial sale or offer for sale, and that a commercial sale is one bearing the general hallmarks of a sale as reflected in UCC § 2-106.
- The court concluded the Ben Venue transactions were purchases of manufacturing services, not commercial sales of the patented product, because MedCo retained title and the arrangement did not place the invention on the market.
- The court rejected the argument that manufacturing and holding inventory for later sale, without a pre-critical-date sale or offer to customers, is itself an invalidating on-sale event.
- The court vacated the earlier panel approach and clarified that prior Federal Circuit precedent would not be read to treat contract manufacturing arrangements as automatic triggers of the on-sale bar.

## Legal Principles

- Under pre-AIA § 102(b), *Pfaff* requires (1) a commercial sale or offer for sale and (2) readiness for patenting before the critical date.
- A “commercial sale” for § 102(b) purposes must bear the general hallmarks of a sale (as in UCC § 2-106), including the type of transaction in which property or title is transferred for consideration.
- Paying a contract manufacturer to make product for the patentee, where the patentee retains title and the manufacturer is not authorized to sell the product to others, is generally a sale of services rather than a commercial sale of the invention.
- The on-sale bar targets pre-filing commercial marketing of the invention; internal preparation and inventory build-up are not enough without a qualifying commercial sale or offer for sale of the invention.
- Prior decisions suggesting that commercial outsourcing alone could satisfy § 102(b)’s commercial-sale requirement were limited to the extent inconsistent with the en banc court’s commercial-sale framework.

## Conclusion

In *The Medicines Co. v. Hospira, Inc.*, the en banc Federal Circuit held that MedCo’s pre-critical-date payments to a contract manufacturer to produce commercial-scale batches for MedCo’s own inventory—without transfer of title and without a pre-critical-date sale or offer of the patented product to customers—did not constitute an invalidating “on sale” event under pre-AIA § 102(b), even though the invention was ready for patenting before the critical date.


{"search_query": [{"q": "The Medicines Co. v. Hospira, Inc. 2008 edicines case citation"}]}The Medicines Co. v. Hospira, Inc., 827 F.3d 1363 (Fed. Cir. 2016)