The Medicines Co (MedCo) v. Hospira, Inc. (Fed. Cir. 2018)
In its 2016 en banc opinion in this case, the Federal Circuit limited the scope of the on sale bar of 35 U.S.C. § 102 (pre-AIA) – holding 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).”
In the litigation, Hospira argued both (1) that the MedCo patents were invalid and (1) that Hospira’s proposed generic Angiomax drug would not infringe. The district court sided with MedCo on the first point (patents not invalid) but with Hospira on the second (patents not infringed). On appeal, the Federal Circuit has affirmed the non-infringement ruling but reversed on the on sale issue. The interesting portion is the on sale question.
On Sale Bar: The 2016 en banc decision affirmed the district court’s holding that a set of transactions between Ben Venue and MedCo “did not trigger the on-sale bar.” On remand, the district court stuck to that ruling – holding that the patent was not invalid. On appeal here, however, the panel analyzed a separate agreement – this time a Distribution Agreement between MedCo and ICS. The agreement specifically included a commercial price list, an order mechanism, and statement that title to the drugs transferred “upon receipt of product.” The Court explains:
Under the standards established by Medicines I
(en banc), the terms of the Distribution Agreement make clear that the Medicines Company and ICS entered into an agreement to sell and purchase the product. Those relevant terms include: 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,” the price of the product, the purchase schedule, and the passage of title from The Medicines Company to ICS.
The on-sale bar generally requires both (1) that a product covered by the patent is subject of a commercial offer for sale; and (2) that the invention is ready for patenting (both before the patent critical date). The paragraph above explains the commercial offer for sale. The court went on to explain that a “master batch agreement” available at the time explained how to use the claimed process.
Infringement: The claims require “efficient mixing” of the raw ingredients to form the drug solution – and that approach is defined by an example provided in the patent specifications. On appeal, the court affirmed that Hospira’s process cannot infringe since it does not perform all of the steps of the example.
Jurisdiction: The court does not explain why it has jurisdiction to decide the on sale bar question after finding no infringement (moot point?).
The point about potential mootness was resolved by Cardinal Chemical twenty-five years ago. Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83 (1993). The Court said strong policy reasons require the court to rule on validity even after a finding of no infringement.
Thanks Jane.
BTW that Cardinal Chemical case also contains J. Scalia complaints about an appellate proceeding with no adverse [opposing] counsel, and what should be done about that. Of possible interest to the PTO Solicitor “intervention” article discussed in the blog below?
“Jurisdiction: The court does not explain why it has jurisdiction to decide the on sale bar question after finding no infringement (moot point?).”
See Cardinal Chemical Co. v. Morton Int’l, Inc., 508 US 83 (1993)
Yes, Jane! The Cardinal case would permit resolution of the validity issue. Hospira did file a cross-appeal when this first went up. Technically, though, it would depend on whether Hospira filed a declaratory judgment of invalidity as a counterclaim rather than simply as an affirmative defense (however, the CAFC could overlook that procedural defect, I imagine, if it exists: it’s good to be the CAFC-King). If a DJ counterclaim was filed, the CAFC has the power to decide validity (despite a finding of non-infringement) due to the importance to the public at large of resolving questions of patent validity. See Cardinal Chem v. Morton Int’l, 508 U.S. 83, 102-103 (1993) (“In rejecting the Federal Circuit’s practice we acknowledge that factors in an unusual case might justify that court’s refusal to reach the merits of a validity determination — a determination which it might therefore be appropriate to vacate. A finding of noninfringement alone, however, does not justify such a result. Nor does anything else in the record of this case. The two patents at issue here have been the subject of three separate lawsuits, and both parties have urged the Federal Circuit to resolve their ongoing dispute over the issue of validity; it would be an abuse of discretion not to decide that question in this case.”).
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