Full Federal Circuit Curbs On Sale Bar's Threat to Patents

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Biotech and pharmaceutical companies received critical guidance from the Federal Circuit yesterday, when the en banc court exempted a broad category of common manufacturing and supply arrangements from the reach of the patent law’s “on sale” bar. In The Medicines Company v. Hospira, Inc., App. No. 14-1469 (Fed. Cir. 2016) (en banc), the Federal Circuit ruled unanimously that “the mere sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor does not constitute a ‘commercial sale’ of the invention” and does not create a potential bar to patentability under 35 U.S.C. § 102(b). The decision reduces the IP risk that smaller pharmaceutical companies faced when contracting out for manufacturing services during commercial development, and provides in-house counsel with signposts to craft agreements that will stay clear of the on sale bar.

BACKGROUND -

The Medicines Company (MedCo) is a specialty pharmaceutical company that does not have its own manufacturing facilities and is not capable of making its products in-house. MedCo contracted with Ben Venue Laboratories (“Ben Venue”) to manufacture its Angiomax® (bivalirudin) drug product. During production, MedCo developed a new process that reduced impurities in the drug product. MedCo paid Ben Venue to manufacture three commercial batches of the drug product in late 2006 for validation testing and ultimately commercial sale. Once manufactured by Ben Venue, the batches were placed in quarantine with MedCo’s distributor (ICS) while testing was completed, and they were released from quarantine and made available for sale to consumers in August 2007.

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