Background
The Medicines Company (MedCo) marketed Angiomax, a blood-thinning drug containing bivalirudin, which was used in cardiac surgery. MedCo held patents on a particular process for manufacturing Angiomax that avoided a specific impurity formation problem (related to a “Asp9-bivalirudin” impurity). More than a year before filing its patent application, MedCo entered into a contract with Ben Venue Laboratories — a third-party contract manufacturer — to produce three batches of Angiomax using the patented process. Ben Venue produced the batches, which had a combined market value exceeding $20 million, though MedCo paid Ben Venue approximately $350,000 for the manufacturing services. MedCo retained title to the product throughout.
Hospira, seeking to market a generic version of Angiomax, challenged MedCo’s patents in district court and argued that the 2006 manufacturing arrangement triggered the on-sale bar of 35 U.S.C. § 102(b) — which provides that a patent is invalid if the invention was “on sale in this country, more than one year prior to the date of the application.” Hospira argued that Ben Venue’s sale of manufacturing services to MedCo — more than one year before MedCo filed its patent applications — constituted a sale of the patented invention. The district court disagreed, finding no on-sale bar. An earlier Federal Circuit panel had reversed, but the Federal Circuit granted en banc rehearing to resolve the issue definitively.
The Court’s Holding
The unanimous en banc Federal Circuit held that the manufacturing contract did not trigger the on-sale bar. The court clarified that the on-sale bar is activated only when the patented invention is the subject of a “commercial sale” — one that involves the typical commercial hallmarks of a sale, including transfer of title or the right to market the product. A contract manufacturer’s sale of manufacturing services to an inventor, where the inventor retains title to the resulting product and does not transfer marketing rights, is not a “commercial sale” of the invention itself.
The court explained the distinction: the bar covers the commercialization of the invention, not every transaction touching on the invention. When an inventor hires a contract manufacturer to produce quantities of a product — even large quantities with significant commercial value — the inventor is purchasing manufacturing services, not selling the invention. The key is the direction of the transaction: is the inventor receiving manufacturing services or selling the invention? Here, MedCo was paying for services; it was not selling Angiomax to Ben Venue. The court also held that stockpiling inventory — pre-manufacturing quantities of a product before commercializing it — is not an improper commercialization that triggers the bar, so long as the product is not offered for sale or sold to others.
Key Takeaways
- The on-sale bar requires a “commercial sale” of the invention — contract manufacturer arrangements where an inventor pays for manufacturing services and retains title to the product do not qualify as commercial sales of the invention.
- Stockpiling inventory before commercial launch is permissible and does not trigger the on-sale bar, as long as the product is not being offered for sale to the public or to third parties in a commercial transaction.
- The critical distinction is whether the inventor is commercializing (selling) the invention or procuring services for its own use — one triggers the bar, the other does not.
- The decision has significant practical importance for pharmaceutical and biotech companies that use contract manufacturing organizations (CMOs) to produce drug batches during development, allowing them to manufacture and stockpile product without inadvertently starting the statutory clock through those manufacturing arrangements.
Why It Matters
The Medicines Company v. Hospira clarified one of the most practically important aspects of the on-sale bar for pharmaceutical and biotechnology companies. Drug development is a long, expensive process that often requires manufacturing clinical trial material, regulatory submission batches, and commercial launch inventory years before a patent application is actually filed. If every contract manufacturing arrangement constituted a commercial sale that triggered the bar, drug companies would face constant tension between their need to manufacture product and their patent filing timelines.
The en banc ruling gave drug and biotech companies the clarity they needed: hiring a contract manufacturer to produce product — even at large scale and significant value — does not constitute a sale of the invention if title remains with the inventor. However, the ruling does not protect all pre-commercial activities. If a company begins taking commercial orders, enters into supply agreements, or allows the CMO to sell the product to third parties, the on-sale bar may be triggered. The case also predated the Supreme Court’s Helsinn Healthcare v. Teva Pharmaceuticals decision (2019), which addressed the on-sale bar under the AIA (post-2013 applications), confirming that secret sales can still trigger the bar even after the AIA’s “otherwise available to the public” language.