Appeals Court Backs Invention Contract Manufacturing
The full Appeals Court for the Federal Circuit has rejected application of the on-sale bar to contract manufacturers, paving the way for specialty companies to use outside vendors to manufacture their inventions. (An on-sale bar provides that an invention cannot be patented if it was for sale more than a year before the patent filing.) Three Paul Hastings attorneys write in an online blog post that the full court reversed the decision of a three-judge Federal Circuit panel in a case brought by The Medicines Co. against Hospira.
The Medicines Co. makes Angiomax, a branded form of the anticoagulant bivalirudin. Since 10/2006 it has contracted with Ben Venue Laboratories to produce commercial quantities of the drug. The company contracted with Ben Venue for three batches of bivalirudin according to its patented novel process. The company’s patent applications were filed 7/27/08, and it released the batches from quarantine in 8/2007. The post says that the manufacturing protocol covering the transaction specified that the vials were for commercial use and would be quarantined until fully tested and FDA approved.
When Hospira filed two ANDAs seeking approval to sell generic bivalirudin drug products, The Medicines Co. filed suit in Delaware federal court for patent infringement. Hospira claimed that The Medicines Company’s activities with Ben Venue before the critical on-sale bar date of 7/27/08 constituted invalidating sales. The district court ruled that the patents were ready for patenting but not the subject of a commercial offer for sale and therefore not invalid. In said that the transactions between The Medicines Co. and Ben Venue involved sales of contract services in which title to Angiomax always resided with The Medicines Co. and such an arrangement did not run counter to the on-sale bar. A three-judge Federal Circuit panel reversed the district court, and then was itself reversed by the full court, which held that the transaction between The Medicines Co. and Ben Venue did not constitute a commercial sale sufficient to trigger the bar.
The attorneys write that in holding that a contract manufacturing organization’s production of an invention covered by a product or product-by-process claim does not trigger the on-sale bar, the court rejected a distinction between companies that have such capabilities in-house and those that require outside assistance for production activities. “That decision will allow companies to focus their efforts on research and development, as appropriate, without having to confront potential patentability issues post-invention,” they conclude. “The breadth of the court’s ruling, however, remains to be decided. While the court sanctioned the use of contract manufacturers, the (three-judge) panel still needs to address the remanded issue of contract distributors. The court’s language equating services performed in-house and those performed by contract service providers (as well as its focus on factors such as confidentiality and whether the third party has the ability to freely market the invention before the critical date) should provide guidance to the panel.”