In The Medicines Company v. Hospira, Inc., the Federal Circuit held that a transaction with a contract manufacturer gave rise to an on sale bar that invalidated The Medicines Company’s Angiomax® patents.  Are the facts of this case unusual, or does this decision put other pharmaceutical patents at risk? Would the on sale bar of the AIA version 35 USC § 102 apply to a case like this?

The Angiomax® Patents At Issue

The patents at issue were U.S. Patent 7,598,343 and U.S. Patent 7,582,727, which are listed in the Orange Book for The Medicines Company’s Angiomax® (bivalirudin) product. The ‘343 patent claims a product made by a process that uses a pH-adjusting agent, while the ‘727 patent claims a pH-adjusted product.

According to the Federal Circuit opinion:

The Medicines Company hired Ben Venue to prepare three batches of bivalirudin using an embodiment of the patented method. Each invoice for these services identifies a “charge to manufacture Bivalirudin lot.” …. Each invoice also states that the bivalirudin lot was or will be released to The Medicines Company. …. Each lot was marked with a commercial product code and a customer lot number, and was released to The Medicines Company for commercial and clinical packaging.

The Federal Circuit Decision

The Federal Circuit decision arose from ANDA litigation between The Medicines Company and Hospira, brought after Hospira filed Abbreviated New Drug Applications seeking approval of generic versions of Angiomax®. The district court found the patents not infringed, not obvious, and not invalid under the on-sale bar.  The Federal Circuit opinion (authored by Judge Hughes and joined by Judges Dyk and Wallach) focused on the on-sale bar issue.

The on-sale bar at issue stems from the pre-AIA version of 35 USC § 102, which provides:

A person shall be entitled to a patent unless…

(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States.

The Federal Circuit cited the 1998 Supreme Court decision in Pfaff v. Wells Electronics, Inc., for setting forth this two part test for an on-sale bar:

The on-sale bar … applies when, before the critical date, the claimed invention (1) was the subject of a commercial offer for sale; and (2) was ready for patenting.

The district court found that the claimed invention was ready for patenting (which The Medicines Company challenged on appeal) but not commercially offered for sale before the critical date (which Hospira challenged on appeal).

The Federal Circuit determined that the transaction with Ben Venue amounted to a commercial sale even though it was invoiced as “manufacturing services” and even though “title to the pharmaceutical batches did not change hands” because:

• The Medicines Company paid Ben Venue for performing services that resulted in the patented product-by-process, and thus a “sale” of services occurred.

• [T]he sale of the manufacturing services here provided a commercial benefit to the inventor … [because] Ben Venue’s services were performed to prove to the FDA that The Medicines Company’s product met the already-approved specifications for finished bivalirudin product.

• Ben Venue marked the batches with commercial product codes and customer lot numbers and sent them to The Medicines Company for commercial and clinical packaging.

• [E]ach batch had a commercial value of over $10 million.

The Federal Circuit decision states that it is important that transfer of title not be required for the on-sale bar to be triggered “[t]o ensure the doctrine is not easily circumvented,” but isn’t it the statutory “on sale” language that only requires a commercial offer for sale?

The Federal Circuit decision relies heavily on D.L. Auld Co. v. Chroma Graphics Corp. (Fed. Cir. 1983), but in that case there was evidence that samples made on a laboratory scale by the patented process were offered for sale to commercial customers prior to the critical date. The Federal Circuit decision also cites Kinzenbaw v. Deere & Co. (Fed. Cir. 1984), but in that case, Deere had let farmers use a prototype for years before filing its patent application. Here, The Medicines Company paid Ben Venue to manufacture batches of its product. Is that really an analogous commercial transaction?

The one case cited in the Federal Circuit decision that appears to support the holding here is Special Devices, Inc. v. OEA, Inc. (Fed. Cir. 2001), which held that there is no “supplier” exception to the on-sale bar. Although the transaction in that case was “invoiced as a sale of product,” the Federal Circuit would not permit The Medicines Company “to circumvent the on-sale bar simply because its contract happened only to cover the processes that produced the patented product.”

On Sale Bar Under The AIA

In addition to raising questions for existing patents, the case reminds me of the uncertainty surrounding the on-sale bar under the AIA version of 35 USC § 102.

AIA § 102(a)(1) includes the following on-sale bar language:

(a) Novelty; Prior Art.— A person shall be entitled to a patent unless—

(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.

Does the “otherwise available to the public” clause tinge the “on sale” prong with a requirement that the invention have been offered to sale to the public? The USPTO’s Examination Guidelines take the position that a “secret sale” does not constitute prior art under § 102(a)(1). What does this mean for a contract manufacturing arrangement?

AIA 102(b)(1) includes the following exception to prior art under AIA § 102(a)(1):

(b) Exceptions.—

(1) Disclosures made 1 year or less before the effective filing date of the claimed invention.—

A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—

(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

Is a sale or offer for sale a “disclosure” that can fall under such an exception as long as it was made by the inventor within one year of the filing date? The USPTO’s Examination Guidelines take the position that anything that can qualify as prior art under § 102(a)(1) can qualify as a “disclosure” under § 102(b)(1), but what will the courts say?