The Medicines Company v. Hospira, Inc.

827 F.3d 1363 (2016)

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Nature of the Case

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Facts

D sought FDA approval to sell generic bivalirudin drug products before the expiration of the patents-in-suit: the '727 patent and the '343 patent. The two patents-in-suit are listed in the FDA's Orange Book as covering Angiomax, the trade name of a form of bivalirudin that P markets in the United States. The patents-at-suit have nearly identical specifications. Bivalirudin drug products are used to prevent blood from clotting and are regarded as highly effective anticoagulants for use during coronary surgery. The bivalirudin active pharmaceutical ingredient is too acidic for human injection. P prepares Angiomax using a compounding process in which it creates a bivalirudin solution, adjusts the solution's pH with a base, and then freeze-dries the solution. A potential adverse consequence of the compounding process used to make the product is the degradation of bivalirudin, which may form impurities such as Asp9-bivalirudin (Asp9). The bivalirudin may become unusable if high levels of Asp9 form. The manufacture of batches with unacceptably high Asp9 levels led to the creation of the patented solution. Ben manufactured a batch of bivalirudin with an Asp9 level of 3.6%, which exceeded the FDA's approved maximum level of 1.5%. P shut down production and hired a peptide specialist to investigate and resolve the issue. A new compounding process was invented and claimed in the patents-in-suit. According to P, the new compounding process produces an improved Angiomax product that does not have randomly high Asp9 levels but instead has a maximum Asp9 level of 0.6%. The '727 and '343 patents contain product and product-by-process claims, respectively, for pharmaceutical batches of the improved drug product with a maximum impurity level of Asp9 of 0.6%. The applications for the '727 and '343 patents were filed on July 27, 2008. The critical date from which the on-sale bar of § 102(b) must be measured from that date. July 27, 2007. In late 2006, P paid Ben $347,500 to manufacture three batches of bivalirudin according to the patents-at-issue. Ben Venue completed the first such batch on October 31, 2006, for $67,500. On November 21 and December 14, 2006, Ben completed two more batches of bivalirudin for $140,000 each. The three batches had a market value of well over $20 million. Once manufactured by Ben, the batches were placed in quarantine with P's distributor and logistics coordinator, pending FDA approval. P and ICS entered into a Distribution Agreement effective February 27, 2007. The Distribution Agreement made ICS the exclusive authorized distributor of Angiomax in the United States and stated that title and risk of loss would pass to ICS following release from quarantine. It was not until August 2007, after the July 27, 2007, critical date, that MedCo released the three batches from quarantine and made them available for sale. On August 19, 2010, P sued D alleging infringement. D alleged in part that the invention was sold or offered for sale before the critical date under §102(b) based on two sets of transactions. D contends that the on-sale bar was triggered when P paid Ben to manufacture Angiomax before the critical date. D also claims a breach from P's offer to sell to its distributor before the critical date. D also asserted that the claims were obvious under §103 and invalid under § 112 because they lack written description, are not enabled, and are indefinite. The district court concluded that the first prong of Pfaff was not met because the claimed invention was not commercially offered for sale prior to the critical date. The court identified the purpose of §102(b) as precluding attempts by an inventor or its assignee to profit from the commercial use of an invention for more than a year before filing for a patent. Because the batches were for 'validation purposes,' the court held-sua sponte-that the batches were not made for commercial profit, but were for experimental purposes, thereby avoiding the on-sale bar. As for the distribution agreement, it held that the agreement was merely 'an agreement for ICS to be the sole U.S. distributor of Angiomax.' The contract was merely 'a contract to enter into a contract' for future sales of the Angiomax product. The court also held that the asserted claims were not obvious under § 103(a) and satisfied the written description and enablement requirements of, and were not indefinite under §112. The court found the patents not invalid and not infringed. Both parties appealed. A merits panel of this court agreed with D and reversed the district court's ruling regarding the applicability of the on-sale bar. The panel acknowledged that Ben invoiced the sale as manufacturing services and title to the pharmaceutical batches did not change hands, but disagreed with the district court's conclusion that Ben's sale of services did not constitute a commercial sale of the claimed product. The panel found no distinction between the offer to sell products prepared by a patented method and the commercial sale of services that result in a patented product-by-process. The panel also found that the district court erred in applying the experimental use exception to Ben's batches. The panel concluded that the inventor could not have been experimenting to determine whether the process by which the product was formulated achieved the desired results. The court addressed the issues en banc.