The Medicines Company v. Hospira (Fed. Cir. 2015)

McDonnell Boehnen Hulbert & Berghoff LLP

There have been many voices raised in recent years against the patent system for a variety of political, policy, or personal reasons.  Indeed, there is even a book entitled Don't File a Patent that sets out the authors' reasons against patenting.  But if ever there was a company who would have a right to be disgruntled by the patent system it has to be The Medicines Company.  TMC resembled the Job of patent law before seeing two of its formulation patents struck down by a Federal Circuit panel earlier this month.

It is a tale well told (here and elsewhere) about TMC's travails during one of the longest patent law sagas that reached an end last year.  That case involved TMC's efforts to obtain a patent term extension (PTE) pursuant to 35 U.S.C. § 154 for U.S. Patent No. 5,196,404 which claimed TMC's anticoagulant drug bivalirudin (sold under the brand name Angiomax®).  After several years petitioning the U.S. Patent and Trademark Office and then pursuing its remedies in the courts, TMC received a PTE of 1,728 days for the '404 patent, which expired on December 15, 2014 at the end of the extension period.

The most recent case involved two other TMC patents, U.S. Patent Nos. 7,582,727 and 7,598,343; the following claim from each patent is representative:

Claim 1 of the '727 patent:

Pharmaceutical batches of a drug product comprising bivalirudin (SEQ ID NO: 1: [Phe Pro Arg Pro Gly Gly Gly Gly Asn Gly Asp Phe Glu Glu Ile Pro Glu Glu Tyr Leu]) and a pharmaceutically acceptable carrier for use as an anticoagulant in a subject in need thereof, wherein the batches have a pH adjusted by a base, said pH is about 5-6 when reconstituted in an aqueous solution for injection, and wherein the batches have a maximum impurity level of Asp9-bivalirudin that does not exceed about 0.6% as measured by HPLC.

Claim 1 of the '343 patent:

Pharmaceutical batches of a drug product comprising bivalirudin (SEQ ID NO: 1: [Phe Pro Arg Pro Gly Gly Gly Gly Asn Gly Asp Phe Glu Glu Ile Pro Glu Glu Tyr Leu]) and a pharmaceutically acceptable carrier, for use as an anticoagulant in a subject in need thereof, said batches prepared by a compounding process comprising: (i) dissolving bivalirudin in a solvent to form a first solution; (ii) efficiently mixing a pH-adjusting solution with the first solution to form a second solution, wherein the pH-adjusting solution comprises a pH-adjusting solution solvent; and (iii) removing the solvent and pH-adjusting solution solvent from the second solution; wherein the batches have a pH adjusted by a base, said pH is about 5-6 when reconstituted in an aqueous solution for injection, and wherein the batches have a maximum impurity level of Asp9-bivalirudin that does not exceed about 0.6% as measured by HPLC.

The patents claimed bivalirudin formulations for intravenous injections, wherein the pH is adjusted to make the formulation less acidic than a simple water or saline solution would be.

TMC had a long-standing (1997-2006) relationship with Ben Venue Laboratories to make bivalirudin for commercial sale.  Its own attempts to produce formulations of the drug for commercial sale were less fruitful, the company being unable to produce batches of the drug that satisfied FDA criteria.  These failures led the company to hire a consultant to "investigate" why there were problems making the drug, and in these efforts determined that there were certain ways of adjusting the pH that reduced the impurity levels to less than 0.6%; these discoveries resulted in the '343 and '727 patents.

However, prior to the critical date (i.e., more than one year prior to the filing date of the applications that resulted in the '343 and '727 patents), "The Medicines Company hired Ben Venue to prepare three batches of bivalirudin using an embodiment of the patented method."  Importantly for the outcome, these were invoiced for services in preparing bivalirudin lots, "marked with a commercial product code and a customer lot number, and [] released to The Medicines Company for commercial and clinical packaging."

Thereafter TMC and Hospira became embroiled in ANDA litigation and in a bench trial the District Court found that Hospira's proposed product would not infringe and that TMC's patents were not invalid.

The Federal Circuit, addressing only the question of whether the on-sale bar invalidated TMC's patents, reversed in an opinion by Judge Hughes, joined by Judges Dyk and Wallach.  The panel considered this question de novo (Robotic Vision Sys., Inc. v. View Eng'g, Inc., 249 F.3d 1307, 1310 (Fed. Cir. 2001)) and applied the Supreme Court's standard for applying the on-sale bar enunciated in citing Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67–68 (1998).  Specifically, the on-sale bar applies if the activities in question occur before the critical date and the claimed invention "(1) was the subject of a commercial offer for sale; and (2) was ready for patenting."  The District Court found that, while the invention was ready for patenting the circumstances surrounding the transfer of the drug from Ben Venue labs to TMC did not amount to a commercial offer for sale.  The District Court's basis for its determination that there was no commercial sale was that "(1) Ben Venue only sold manufacturing services, not pharmaceutical batches; and (2) the batches fall under the experimental use exception."  In the Federal Circuit's opinion, the panel agreed that Ben Venue "invoiced the sale as manufacturing services and title to the pharmaceutical batches did not change hands," but this was not dispositive.  According to the opinion, the purpose of the on-sale bar must be considered, which is "to preclude attempts by the inventor or his assignee to profit from commercial use of an invention for more than a year before an application for patent is filed," citing D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 1147 (Fed. Cir.1983).  What determines whether the on-sale bar has been breached is when an inventor has commercially exploited the invention before the critical date.  Applying this and other precedent (including W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540 (Fed. Cir. 1983)), the panel found "no principled distinction between the commercial sale of products prepared by the patented method []and the commercial sale of services that result in the patented product-by-process" that occurred in this case.  Interestingly, the panel identified what was sold as the services themselves, whereas the claims are directed to pharmaceutical batches.  The lynchpin of the argument equating the activities the panel considered were sufficient to trigger the on-sale bar appears to be the Court's interpretation of these claims as being "product-by-process" claims.  The opinion also states that "the sale of the manufacturing services here provided a commercial benefit to the inventor more than one year before a patent application was filed," thus implicating the policy considerations the panel identified as motivating the on-sale bar.  It did not help (but it is unclear why it was considered relevant) that Ben Venue labeled the batches it provided with "commercial product codes and customer lot numbers" or that each batch was worth $10 million.

According to the Court, "[t]o find otherwise [i.e., that this was not a commercial sale] would allow The Medicines Company to circumvent the on-sale bar simply because its contracts happened to only cover the processes that produced the patented product-by-process."

The panel also distinguished the facts at bar with cases where "the inventors have requested another entity's services in developing products embodying the invention without triggering the on-sale bar," citing Trading Techs. Int'l, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1361–62 (Fed. Cir. 2010).  The Court contrasted the "secret, personal use[s]" at issue in the Trading Technologies case (where no on-sale bar violation was found) with the "commercial exploitation" (emphasis in the opinion) in the case at bar.

The opinion also notes that whether or not TMC knew that the product "inherently" contained the claimed properties ("maximum impurity level[s] of Asp9-bivalirudin that does not exceed about 0.6% as measured by HPLC") was "irrelevant" to the on-sale bar question, citing Abbott Labs. v. Geneva Pharm., 182 F.3d 1315, 1319 (Fed. Cir. 1999).

With regard to the District Court's application of the experimental use exception, the panel cited In re Cygnus Telecomm. Tech., LLC Patent Litig. for the proposition that "experimental use cannot occur after a reduction to practice."  536 F.3d 1343, 1356 (Fed. Cir. 2008).  In rejecting TMC's argument that it "did not appreciate the maximum impurity level limitation of the claimed invention until after twenty-five batches of bivalirudin were manufactured according to [the] new process," the Court avoided the argument that an invention cannot be "ready for patenting" if it has not yet been conceived.  The Court also avoided the fact that there cannot be nunc pro tunc conception by seemingly begging the question, stating "where an invention is on sale, conception is not required to establish reduction to practice," citing Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321, 1331 (Fed. Cir. 2001), and that "[t]he sale of the [invention] in question obviates any need for inquiry into conception" citing Abbott Labs.  (The opinion further limits the applicability of these citations to the question before it, by admitting that these cases did not involve experimental use, and conceding that the experimental use exception may be raised "even if the invention had been reduced to practice if the inventor was unaware that the invention had been reduced to practice (i.e., worked for its intended purpose) and continued to experiment," citing New Railhead Mfg., L.L.C. v. Vermeer Mfg. Co., 298 F.3d 1290, 1297 (Fed. Cir. 2002).)  Because "[t]his is not a situation in which the inventor was unaware that the invention had been reduced to practice, and was experimenting to determine whether that was the case" and "[t]he batches sold satisfied the claim limitations, and the inventor was well aware that the batches had levels of Asp9-bivalirudin well below the claimed levels of 0.6%" the Court held that the experimental use exception did not apply.

Finally, the panel rejected TMC's argument that the invention was not ready for patenting, stating that "because the invention was sold, for the reasons described [elsewhere in the opinion], we find that the Ben Venue batches reduced the invention to practice" and "[t]hus, the district court did not clearly err in finding the invention was ready for patenting."  While consistent with the rest of the opinion, this reasoning seems to collapse the Pfaff two-prong test into the sole question of whether there was a commercial sale, because according to the opinion the existence of such a commercial sale means that the invention was reduced to practice and thus ready for patenting (and as stated above, without regard to whether the inventor conceived the invention or not).

As a practical matter TMC is faced with the situation (with regard to Hospira) that it faced before:  because Hospira's product was adjudged not to infringe that company should be able to obtain FDA approval and enter the marketplace with a generic bivalirudin to compete with Angiomax®.  All of the patents related to the '404 patent have expired (according to PTO records) and neither the '727 nor the '343 patents appear to have any related patents or patent applications in a priority chain.  TMC's valiant pursuit of the PTE to which it was entitled gained them an additional 1,726 days of exclusivity but it appears that whatever protection the patent system afforded them is now over.

The Medicines Company v. Hospira (Fed. Cir. 2015)
Panel: Circuit Judges Dyk, Wallach, and Hughes
Opinion by Circuit Judge Hughes

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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