By Cheryl Beise, J.D.
The federal district court in Wilmington, Delaware, correctly determined that two patents owned by The Medicines Company in connection with its anti-coagulant drug Angiomax were not infringed by Hospira’s generic bivalirudin product, the U.S. Court of Appeals for the Federal Circuit has held. However, the court’s finding that the patents were not invalid for violation of the on-sale bar was reversed. The court correctly held that the invention was ready for patenting, but erred in finding that a distribution agreement between The Medicines Company and a third party did not constitute a commercial offer for sale. The case was remanded to the district court for the purpose of determining the sole remaining question—whether the distribution agreement in fact covered the patented invention (The Medicines Company v. Hospira, Inc., February 6, 2018, Hughes, T.).
The Medicines Company (TMC) owns U.S. Patent Nos. 7,582,727 and 7,598,343, covering a process for manufacturing a drug product of bivalirudin, a synthetic peptide used as an anti-coagulant. Both patent applications were filed on July 27, 2008. For over 20 years, TMC has marketed its bivalirudin product under the brand name Angiomax. Seeking to market a generic version of Angiomax, Hospira submitted an Abbreviated New Drug Application to the Food and Drug Administration (FDA).
TMC filed suit in the District of Delaware, alleging infringement of the ’727 and ’343 patents. In response, Hospira asserted that the patents were invalid, including for violation of the on-sale bar of 35 U.S.C. §102(b). The district court determined that the claimed invention did not violate the on-sale bar, but a three-judge panel of the Federal Circuit reversed the district court’s ruling, holding that TMC had commercially exploited the patented invention. The panel found that bivalirudin batches manufactured for TMC by Ben Venue Laboratories before the critical date were sold for a commercial, rather than experimental, purpose.
The Federal Circuit later granted Hospira’s petition for rehearing en banc. In a July 11, 2016 decision("Medicines I"), the en banc court concluded that the transactions between Ben Venue and TMC did not trigger the on-sale bar. The court explained that "a contract manufacturer’s sale to the inventor of manufacturing services where neither title to the embodiments nor the right to market the same passes to the supplier does not constitute an invalidating sale under § 102(b)." The case was remanded.
On remand, and after a bench trial, the district court concluded that the patents were neither infringed nor invalid for violation of the on-sale bar. This time, the court concluded that a February 27, 2007, Distribution Agreement between TMC and Integrated Commercialization Solutions, Inc. (ICS) was only an agreement for ICS to be the U.S. distributor of Angiomax and was not an offer to sell Angiomax. Both parties appealed.
Infringement. The Federal Circuit agreed with the district court that Hospira did not infringe the patented method because Hospira’s mixing process did not satisfy the claimed "efficient mixing" limitation. The record showed that Hospira added the pH-adjusting solution in three portions, rather than at a controlled rate. Hospira also used a single paddle mixer at 560 rpm, but the claimed method requires using a paddle mixer in conjunction with a homogenizer. The Federal Circuit affirmed the district court’s noninfringement findings.
On-sale bar. A patent is invalid under the on-sale bar if, before the critical date, (1) the product is the subject of a commercial offer for sale, and (2) the invention is ready for patenting. The district court found that the invention was ready for patenting but was not sold or offered for sale before the critical date of July 27, 2008.
The district court found that the invention was ready for patenting before the critical date because the master batch record "disclose[d] how to use the process according to the invention." The Federal Circuit agreed. Ben Venue used the master batch record to produce batches of Angiomax using the patented process. Furthermore, Ben Venue reduced the invention to practice by following the master batch record.
The Federal Circuit, however, disagreed with the district court’s conclusion that TMC’s Distribution Agreement with ICS was not a commercial offer for sale. The court pointed out several key terms that evidenced "an agreement to sell and purchase the product," including: (1) a statement that The Medicines Company "now desire[d] to sell the Product" to ICS and ICS "desire[d] to purchase and distribute the Product"; (2) the price of the product; (3) the purchase schedule; and (4) and the passage of title from The Medicines Company to ICS.
The court rejected TMC’s argument that the Distribution Agreement was not an offer for sale because the agreement permitted TMC reject all purchase orders submitted by ICS. First, TMC agreed to sell Angiomax to ICS, and ICS agreed to purchase it and ICS took title to the product upon receipt at the distribution center. Second, despite TMC’s apparent blanket ability to reject all purchase orders, the Distribution Agreement actually required The Medicines Company to use "commercially reasonable efforts" to fill the purchase orders. The court noted that TMC had to fill the orders because sales of Angiomax provided over 90 percent of TMC’s revenues and ICS was TMC’s sole purchaser in the United States for a three-year period. TMC "did not enter into the type of optional sales arrangement with ICS that might not qualify as an offer for sale," the court said. "It, instead, entered into an exclusive distribution agreement that provided all of the necessary terms and conditions to constitute a commercial offer for sale."
Medicines I emphasized that the on-sale bar does not exempt commercial agreements between a patentee and its supplier or distributor. "The focus must be on the commercial character of the transaction, not solely on the identity of the participants," the court said. Unlike the contract manufacturing services agreement between TMC and Ben Venue that was at issue in Medicines I, the terms of TMC’s Distribution Agreement with ICS dictated the sale of product, including the "commercial price" of the product and the transfer of title to ICS.
The Federal Circuit concluded that the TMC/ICS Distribution Agreement constituted a commercial offer for sale. However, a question remained whether the agreement in fact covered the patented invention. The case was remanded for the district court to determine whether the Distribution Agreement covered the Angiomax created by the patented process.
The case is Nos. 2014-1469 and 2014-1504.
Attorneys: Edgar Haug (Haug Partners LLP) for The Medicines Company. Bradford Peter Lyerla (Jenner & Block LLP) for Hospira, Inc.
Companies: The Medicines Company; Hospira, Inc.
MainStory: TopStory Patent FedCirNews
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