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“On-Sale” Bar Doesn’t Apply to Sales to Inventor

“On-Sale” bar can stop
a patent being issued —
but what is a “sale”?

The “on-sale bar” is a limitation on the patentability of an invention under 35 U.S. Code § 102, which says:

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;

There’s an exception for disclosures and sales made one year or less before the effective filing date of the patent application.

The Federal Circuit recently ruled that this bar doesn’t apply to a manufacturer’s sale to the inventor of the patented manufacturing process.

The case of The Medicines Company v. Hospira, Inc. arose from the submission of two Abbreviated New Drug Applications (“ANDAs”) by Hospira.

The Medicines Company (MedCo) paid a third-party manufacturer to make a version of one of its drugs using an improved process. Once made, the batches of the drug were placed in quarantine pending FDA approval.

MedCo filed a patent for the process.

MedCo sued Hospira, claiming that the ANDA filings infringed several claims of the patent for the improved process.

Hospira argued that MedCo’s invention was invalid because the on-sale bar was triggered when MedCo paid the manufacturer to make the drug, and because MedCo offered to sell the drug to its distributor.

The district court found that the batches manufactured for MedCo didn’t trigger the on-sale bar because

The court agreed with MedCo that the transactions between MedCo and [the manufacturer] were sales of contract manufacturing services in which title to the [drug] always resided with MedCo.

The court also held that the distribution agreement was not a sale.

On appeal, the Federal Circuit noted that the patent was for a process — not a product, and that the manufacturer “sold contract manufacturing services—not the patented invention—to MedCo.”

Also,

The absence of title transfer further underscores that the sale was only of [the] manufacturing services. Because [the manufacturer] lacked title, it was not free to use or sell the claimed products or to deliver the patented products to anyone other than MedCo, nor did it do so.

Takeaway

In order to protect patent rights, it’s important to be aware of the various acts and transactions that will — or won’t — trigger the on-sale bar.

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