On February 6, 2018, an interesting ruling was handed down by the Court of Appeals for the Federal Circuit. In The Medicines Co. v. Hospira, Inc.,[1] the Fed Circuit held that a distribution agreement could constitute an on-sale bar for purposes of §102 invalidation. This appeal is a further remand of an earlier en banc decision of the Fed Circuit, Medicines Co. v. Hospira, Inc. (Medicines I), where the en banc panel held that in order for the on-sale bar to be triggered, there must a “commercial sale that bears the hallmarks of a sale,”[2] and found that the agreements between Medicines Co. and Ben Venue did not meet this standard. It was a different story with this renewed appeal.
The facts of the case are as follows.
Medicines owns U.S. Patent Nos. 7,582,727 and 7,598,343 for “Pharmaceutical formulations of bivalirudin and processes of making the same,” and both with a filing date of July 27, 2008. The patents claimed improved processes for manufacture of the anti-coagulant drug, bivalirudin, marketed under the trade name ANGIOMAX®. The improved process was a new compound mixing method which removed high levels of impurity from bivalirudin. Medicines entered into a Distribution Agreement with Integrated Commercialization Solutions, Inc. (ICS). The agreement specified a “desire to sell the Product” and “desire to purchase and distribute the Product,” forbade Medicines from selling Angiomax through another distributor other than ICS, included a “Commercial Price List,” and required ICS to commit to “weekly orders for such quantities of Product as are necessary to maintain an appropriate level of inventor based on customers’ historical purchase volumes.”[3]
Meanwhile, Hospira entered the anti-coagulant market with its own generic version of Angiomax, thereby precipitating the patent infringement case by Medicines against Hospira. Hospira argued that the ‘727 and ‘343 patents were invalid. After a bench trial, the district court found that the patents were neither infringed, finding that Hospira’s mixing process did not infringe Medicines’ process in ‘727 or ‘343, nor invalid, finding that the Distribution Agreement was not an offer for sale.[4] Both Medicines and Hospira appealed.
The Fed Circuit panel, consisting of Judges Hughes, Dyk, and Wallach, first ruled on the non-infringement issue. Because Medicines’ ‘727 and ‘343 patents involved “efficient mixing,” which was the improvement to earlier inventive processes, the panel held that Hospira did not infringe the patents because its process did not perform “efficient mixing.” Specifically, “Hospira adds the pH-adjusting solution in three portions, rather than at a controlled rate.”[5]
As to the invalidity issue, the panel first noted that:
[a] patent is invalid under the on-sale bar if, before the critical date, 1) the product is the subject of a commercial offer for sale, and 2) the invention is ready for patenting.[6]
In determining whether an offer for sale occurred, the panel looked to Medicines I for guidance. Specifically, a panel observed a commercial sale “is a contract between parties to give and to pass rights of property for consideration which the buyer pays or promises to pay the seller for the thing bought or sold.”[7] Under the Medicines I standard, the Distribution Agreement bore all the hallmarks of a commercial sale, including Medicines’ “desire to sell” Angiomax, and ICS’ desire to “purchase and distribute” it; a purchase price; a sales schedule; and title passage from Medicines to ICS. Therefore, the panel held there was an offer for sale. The panel went further to expressly state that the Distribution Agreement was very similar to the Helsinn[8] agreement, where another Fed Circuit panel held that the on-sale bar was triggered. An “on-sale bar does not exempt commercial agreements between a patentee and its supplier or distributor.”[9]
However, the panel demurred on whether the Distribution Agreement actually covered the patented invention, and remanded that decision back to the district court for further review. Notwithstanding, given this panel’s offer for sale analysis, it does not bode well for Medicines that the on-sale bar will not be triggered upon remand.
[1] 881 F.3d 1347 (Fed. Cir. 2018) (Medicines II), aff’g and remanding Medicines Co. v. Hospira, Inc. (Medicines I), 827 F.3d 1363 (Fed. Cir. 2016) (en banc), reversing 791 F.3d 1368 (Fed. Cir. 2015).
[2] See 791 F.3d at 1368.
[3] See Medicines II, supra (slip op. at 3).
[4] Id. (slip op. at 4).
[5] Id. (slip op. at 5).
[6] Id. (citing Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998)).
[7] Id. (slip op. at 6) (citing Medicines I, supra at 1373).
[8] See Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., 855 F.3d 1356 (Fed. Cir. 2017).
[9] See Medicines II, supra (slip op. at 9).