July 11, 2016

Sale of Manufacturing Services Does Not Trigger On Sale Bar Under Pre-AIA §102

By Bryan K. Wheelock, Principal

In The Medicines Company v. Hospira, Inc., [2014-1469, 2014,1504] (July 11, 2016), the en banc Federal Circuit reversed a panel decision finding that U.S. Patent Nos. 7,582,727 and 7,598,343 were invalid under the on-sale bar of §102(b), because of the sales activities of the patent owner’s contract manufacturer,

The Federal Circuit reviewed this history of the §102(b) bar, and the Supreme Court’s two-part Pfaff test, under which the challenger must show (1) the invention was subject to a commercial sale, and (2) the invention was ready for patenting.  Unlike most cases which focus on the second prong of the test, this case focused on the first prong.  The Federal Circuit clarified that the mere sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for an inventor does not constitute a “commercial sale” of the invention.  The Federal Circuit identified three reasons for its decision:

  1. only manufacturing services were sold to the inventor, the invention was not
  2. the inventor maintained control of the invention, retaining title, and the manufacturer was not authorized to sell to third parties
  3. “stockpiling” inventory without more does not trigger the on-sale bar

Even though this case applies to the pre-AIA version of §102, it will have relevance for many years until the last of the pre-AIA patents expire.