The Medicines Company v. Hospira, Inc. , 791 F.3d 1368 ( 2015 )

United States Court of Appeals
for the Federal Circuit
______________________
THE MEDICINES COMPANY,
Plaintiff-Appellant
v.
HOSPIRA, INC.,
Defendant-Cross-Appellant
______________________
2014-1469, 2014-1504
______________________
Appeals from the United States District Court for the
District of Delaware in No. 1:09-CV-00750, Judge Richard
G. Andrews.
______________________
Decided: July 2, 2015
______________________
EDGAR HAUG, Frommer Lawrence & Haug LLP, New
York, NY, argued for plaintiff-appellant. Also represent-
ed by PORTER F. FLEMING, ANGUS CHEN.
BRADFORD PETER LYERLA, Jenner & Block LLP, Chi-
cago, IL, argued for defendant-cross-appellant. Also
represented by SARA TONNIES HORTON, AARON A. BARLOW.
______________________
Before DYK, WALLACH, and HUGHES, Circuit Judges.
2 THE MEDICINES COMPANY v. HOSPIRA, INC.
HUGHES, Circuit Judge.
The Medicines Company appeals the U.S. District
Court for the District of Delaware’s claim construction
and non-infringement findings. Hospira, Inc. cross-
appeals the district court’s determination that the assert-
ed claims are not invalid under the on-sale bar, obvious-
ness, or indefiniteness. We conclude that the district
court clearly erred in finding that the bivalirudin batches
prepared by Ben Venue Laboratories before the critical
date were not sold to The Medicines Company and were
prepared primarily for an experimental purpose. Accord-
ingly, we reverse the district court’s validity determina-
tion and hold the asserted claims invalid under the on-
sale bar.
I
The Medicines Company owns U.S. Patent No.
7,582,727 and U.S. Patent No. 7,598,343. The patents
relate to the drug bivalirudin, a synthetic peptide used as
an anti-coagulant. Bivalirudin is generally mixed with
saline or water and administered intravenously. Because
bivalirudin’s acidity in saline or water makes it undesira-
ble for injection, its pH is adjusted during compounding to
make it more alkaline.
The Medicines Company sells a bivalirudin drug for
injection under the Angiomax® brand. From 1997 to
October 2006, The Medicines Company purchased phar-
maceutical batches of Angiomax® from Ben Venue Labor-
atories. In 2005, Ben Venue created a batch of
bivalirudin with levels of Asp9-bivalirudin impurity that
exceeded the Food and Drug Administration’s approved
maximum of 1.5%. Accordingly, The Medicines Company
could not use the batch.
After another batch failure, The Medicines Company
hired a consultant, Dr. Musso, to investigate and resolve
the issue. Dr. Musso discovered that certain methods of
THE MEDICINES COMPANY v. HOSPIRA, INC. 3
adding a pH-adjusting solution during the compounding
process minimize the Asp9-bivalirudin impurity to less
than 0.6%. In July 2008, The Medicines Company filed
applications for the ’343 and ’727 patents, which include
product-by-process claims describing this discovery.
Over one year before filing these applications, howev-
er, The Medicines Company hired Ben Venue to prepare
three batches of bivalirudin using an embodiment of the
patented method. Each invoice for these services identi-
fies a “charge to manufacture Bivalirudin lot.” See
JA17177–79. Each invoice also states that the bivalirudin
lot was or will be released to The Medicines Company.
JA17177 (“Release pending final validation report.”);
JA17178 (same); JA17179 (“Batch released and held at
Ben Venue pending shipping instructions.”). Each lot was
marked with a commercial product code and a customer
lot number, and was released to The Medicines Company
for commercial and clinical packaging.
On August 19, 2010, The Medicines Company sued
Hospira, Inc., alleging that two of Hospira’s ANDA filings
infringe claims 1–3, 7–10, and 17 of the ’727 patent and
claims 1–3 and 7–11 of the ’343 patent. The district court
construed the asserted claims and, after a bench trial,
found the patents not infringed and not invalid as obvi-
ous, indefinite, or under the on-sale bar. The Medicines
Company appeals the district court’s claim construction
and finding of non-infringement. Hospira appeals the
district court’s holdings on obviousness, indefiniteness,
and the on-sale bar. We have jurisdiction under 28 U.S.C.
§ 1295(a)(1).
II
On appeal from a bench trial, we review a district
court’s legal determinations de novo and factual findings
for clear error. Braintree Labs., Inc. v. Novel Labs., Inc.,
749 F.3d 1349, 1358 (Fed. Cir. 2014). Invalidity under the
on-sale bar is a question of law with underlying questions
4 THE MEDICINES COMPANY v. HOSPIRA, INC.
of fact. Robotic Vision Sys., Inc. v. View Eng’g, Inc., 249
F.3d 1307, 1310 (Fed. Cir. 2001).
The on-sale bar under 35 U.S.C. § 102(b) applies
when, before the critical date, the claimed invention
(1) was the subject of a commercial offer for sale; and
(2) was ready for patenting. Pfaff v. Wells Elecs., Inc., 525
U.S. 55, 67–68 (1998).
The district court found that the claimed invention
was ready for patenting but not commercially offered for
sale before the critical date. Hospira disputes the district
court’s finding that the claimed invention was not com-
mercially offered for sale, and The Medicines Company
disputes the district court’s finding that the claimed
invention was ready for patenting.
A
The district court concluded that no commercial sale
occurred because: (1) Ben Venue only sold manufacturing
services, not pharmaceutical batches; and (2) the batches
fall under the experimental use exception.
While the district court is correct that Ben Venue in-
voiced the sale as manufacturing services and title to the
pharmaceutical batches did not change hands, that does
not end the inquiry. As we have explained, “the intent of
[invalidating claims under the on-sale bar] is to preclude
attempts by the inventor or his assignee to profit from
commercial use of an invention for more than a year
before an application for patent is filed.” D.L. Auld Co. v.
Chroma Graphics Corp., 714 F.2d 1144, 1147 (Fed. Cir.
1983). To ensure the doctrine is not easily circumvented,
we have found the on-sale bar to apply where the evidence
clearly demonstrated that the inventor commercially
exploited the invention before the critical date, even if the
inventor did not transfer title to the commercial embodi-
ment of the invention. For example, in D.L. Auld Co., we
found the on-sale bar to apply where, before the critical
THE MEDICINES COMPANY v. HOSPIRA, INC. 5
date, an inventor sold products made by the patented
method. Id.; see also W.L. Gore & Assocs., Inc. v. Garlock,
Inc., 721 F.2d 1540, 1550 (Fed. Cir. 1983); cf. Kinzenbaw
v. Deere & Co., 741 F.2d 383, 390–91 (Fed. Cir. 1984)
(finding a third party’s testing of the “warrantability,
durability, and acceptability” of a commercial embodiment
of a patented product before the critical date was an
invalidating public use under § 102(b) because it “served
Deere’s commercial purposes”).
We find no principled distinction between the com-
mercial sale of products prepared by the patented method
at issue in D.L. Auld Co. and the commercial sale of
services that result in the patented product-by-process
here. The Medicines Company paid Ben Venue for per-
forming services that resulted in the patented product-by-
process, and thus a “sale” of services occurred. See Spe-
cial Devices, Inc. v. OEA, Inc., 270 F.3d 1353, 1355 (Fed.
Cir. 2001) (“A ‘sale’ under th[e on-sale bar] occurs when
the parties offer or agree to reach ‘a contract . . . to give
and pass rights of property for consideration which the
buyer pays or promises to pay the seller for the thing
bought or sold.’” (quoting Zacharin v. United States, 213
F.3d 1366, 1370 (Fed. Cir. 2000))). As in D.L. Auld Co.,
the sale of the manufacturing services here provided a
commercial benefit to the inventor more than one year
before a patent application was filed. Ben Venue’s ser-
vices were performed to prove to the FDA that The Medi-
cines Company’s product met the already-approved
specifications for finished bivalirudin product. Addition-
ally, Ben Venue marked the batches with commercial
product codes and customer lot numbers and sent them to
The Medicines Company for commercial and clinical
packaging, consistent with the commercial sale of phar-
maceutical drugs. This commercial activity was not
insignificant; The Medicines Company admits that each
batch had a commercial value of over $10 million.
6 THE MEDICINES COMPANY v. HOSPIRA, INC.
Accordingly, we find that the district court clearly
erred in finding the Ben Venue sale of services did not
constitute a commercial sale. To find otherwise would
allow The Medicines Company to circumvent the on-sale
bar simply because its contracts happened to only cover
the processes that produced the patented product-by-
process. This would be inconsistent with our principle
that “no ‘supplier’ exception exists for the on-sale bar.”
Special Devices, 270 F.3d at 1357.
This is not a case where the inventors have requested
another entity’s services in developing products embody-
ing the invention without triggering the on-sale bar. See
Trading Techs. Int’l, Inc. v. eSpeed, Inc., 595 F.3d 1340,
1361–62 (Fed. Cir. 2010). The batches were prepared for
commercial exploitation, and this is not the type of “se-
cret, personal use” described in Trading Technologies.
Indeed, the preparation of the batches was described as
an “Optimization Study,” and was performed because
“several opportunities for further optimization of the
formulation process were identified” after “successful[]
validat[ion] in a previous validation study.” J.A. 14882–
83.
Moreover, “[i]f a product that is offered for sale inher-
ently possesses each of the limitations of the claims, then
the invention is on sale, whether or not the parties to the
transaction recognize that the product possesses the
claimed characteristics.” Abbott Labs. v. Geneva Pharm.,
182 F.3d 1315, 1319 (Fed. Cir. 1999). There is no dispute
that the batches had the levels of Asp9-bivalirudin re-
quired by the claims. Thus, it is irrelevant whether The
Medicines Company knew that the process limitations of
the asserted claims reliably and consistently produced
levels of Asp9-bivalirudin below 0.6%.
The district court also clearly erred in finding that the
experimental use doctrine bars the application of the on-
sale bar to the Ben Venue batches. “[E]xperimental use
THE MEDICINES COMPANY v. HOSPIRA, INC. 7
cannot occur after a reduction to practice.” In re Cygnus
Telecomm. Tech., LLC Patent Litig., 536 F.3d 1343, 1356
(Fed. Cir. 2008). The Medicines Company asserts that it
had not reduced the invention to practice when the batch-
es were made because it did not appreciate the maximum
impurity level limitation of the claimed invention until
after twenty-five batches of bivalirudin were manufac-
tured according to The Medicine Company’s new process.
“However, we have held that where an invention is on
sale, conception is not required to establish reduction to
practice.” Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d
1321, 1331 (Fed. Cir. 2001) (citation omitted). In other
words, “[t]he sale of the [invention] in question obviates
any need for inquiry into conception.” Abbott Labs., 182
F.3d at 1318–19. To be sure, Abbott and Scaltech did not
involve experimental use, and the experimental use
defense may be available even if the invention had been
reduced to practice if the inventor was unaware that the
invention had been reduced to practice (i.e., worked for its
intended purpose) and continued to experiment. See New
Railhead Mfg., L.L.C. v. Vermeer Mfg. Co., 298 F.3d 1290,
1297 (Fed. Cir. 2002) (“‘When an evaluation period is
reasonably needed to determine if the invention will serve
its intended purpose, the § 102(b) bar does not start to
accrue while such determination is being made.’ . . .
Once an inventor realizes that the invention as later
claimed works for its intended purpose, further ‘experi-
mentation’ may constitute a barring public use.” (quoting
Seal-Flex, Inc. v. Athletic Track & Court Constr., 98 F.3d
1318, 1324 (Fed. Cir. 1996))). This is not a situation in
which the inventor was unaware that the invention had
been reduced to practice, and was experimenting to
determine whether that was the case. The batches sold
satisfied the claim limitations, and the inventor was well
aware that the batches had levels of Asp9-bivalirudin well
below the claimed levels of 0.6%.
8 THE MEDICINES COMPANY v. HOSPIRA, INC.
B
An invention is ready for patenting when, before the
critical date, the invention is reduced to practice; or is
depicted in drawings or described in writings of sufficient
nature to enable a person of ordinary skill in the art to
practice the invention. Hamilton Beach Brands, Inc. v.
Sunbeam Prods., Inc., 726 F.3d 1370, 1375 (Fed. Cir.
2013).
The Medicines Company argues that the district court
erred in finding its invention was ready for patenting
because there was no reduction to practice and the inven-
tors had not prepared drawings or written descriptions
sufficient to enable a person skilled in the art to practice
the invention. But because the invention was sold, for the
reasons described supra Section II(A), we find that the
Ben Venue batches reduced the invention to practice.
Thus, the district court did not clearly err in finding the
invention was ready for patenting.
III
Because the district court did not err in finding that
the claimed invention was ready for patenting, but clearly
erred in finding that the claimed invention was not com-
mercially offered for sale before the critical date, we
reverse the district court’s determination that the on-sale
bar does not apply. Accordingly, we hold the asserted
claims invalid, and decline to reach the other issues
raised by the parties.
REVERSED