Will The "No Supplier Exception" to the On-Sale Bar Fall?

On November 13, 2015, the Federal Circuit granted a petition for rehearing en banc filed in The Medicines Company v. Hospira, Inc.  As we previously reported, the Federal Circuit held in that case that an order placed with a pharmaceutical contract manufacturer can be an offer for sale that will have an invalidating effect on a later-issued patent with claims that cover the subject of that sale.  This follows from established Federal Circuit precedent that there is no "supplier exception" to the on-sale bar of pre-AIA 35 U.S.C. § 102(b), provided the sale was not for experimental use.  See Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353 (Fed. Cir. 2001).  And in case you were wondering whether it is relevant that the commercial "offer for sale" was essentially made by the contract manufacturer (Ben Venue in this case), it is not.  See, e.g., Zacharin v. U.S., 213 F.3d 1366, 1371 (Fed. Cir. 2000) ("Finally, under this court's precedents, it is of no consequence that the sale was made by a third party, not by the inventor, or that the product was constructed and the sale made pursuant to the buyer's directions." [citations omitted]).

The order granting the petition requested the briefing of the parties to address the following issues:

(a) Do the circumstances presented here constitute a commercial sale under the on-sale bar of 35 U.S.C. § 102(b)?
    (i) Was there a sale for the purposes of § 102(b) despite the absence of a transfer of title?
    (ii) Was the sale commercial in nature for the purposes of § 102(b) or an experimental use?
(b) Should this court overrule or revise the principle in Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353 (Fed. Cir. 2001), that there is no "supplier exception" to the on-sale bar of 35 U.S.C. § 102(b)?

It is clear from this list that the Court is not only interested in reviewing the facts of the present case, but is also interested in reconsidering the wisdom of the rule against an exception for suppliers.  This rule, of course, impacts small companies or individuals that might not have the resources to manufacture their inventions themselves.  This is true even if the purchase order is not (or was not) publicly known or available.  For companies with the size and capabilities to keep the manufacturing in-house, there is no such similar concern -- even when the inventors are not located in the department responsible for production.  It is also clear from the questions presented that this case has the potential to impact industries outside of pharma and the life sciences.  Indeed, the "no supplier exception" rule has been applied in cases as disparate as surgical saw blades (Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 182 F.3d 888 (Fed. Cir. 1999)); slow cookers (Hamilton Beach Brands, Inc. v. Sunbeam Prods., Inc., 726 F.3d 1370 (Fed. Cir. 2013)); and automobile airbags (Special Devices).

What is not clear is whether any holding in the en banc decision will apply to on-sale bar considerations in post-AIA applications and patents.  Of course, the fact pattern of this case applies to pre-AIA activities, and therefore any such pronouncement will likely be limited to the statute as it read at the time.  However, even though the new section 102 also includes an "on-sale" bar, there is more of a focus on public availability ("A person shall be entitled to a patent unless -- (1) the claimed invention was . . . on sale, or otherwise available to the public before the effective filing date of the claimed invention.").  Therefore, it is possible that any holding in the en banc decision will not apply to current or future contract manufacturing orders.

Patent Docs will continue to monitor this case and provide any updates as warranted.