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Intellectual Property: What Type of Sale Constitutes an On-Sale Bar?

An invention cannot be patented if it was ready for patenting and was subject to a commercial offer for sale more than one year before the application was filed. This so-called “on-sale bar” can also be used to invalidate a patent. On July 11, 2016, the Federal Circuit in The Medicines Co. v. Hospira Inc. addressed what types of sales constitute an on-sale bar and ruled specifically that a barring sale must include a transaction that “bears the general hallmarks of a sale.”

The Court found that The Medicines Co.’s patent covering methods of making a drug, Angiomax, was not invalid due to The Medicines Co.’s transactions with a supplier, Ben Venue Laboratories, more than a year before filing for the patent. The transactions included The Medicines Co. hiring Ben Venue Laboratories more than one year before it filed its patent applications to prepare three batches of Angiomax using the patented method to ensure it met requirements set by the FDA. The Medicines Co. did not actually sell Angiomax to the public until some time later.

The Federal Circuit sitting en banc unanimously remanded the appeal to the merits panel of the Court, which had decided last year that The Medicines Co.’s transactions with Ben Venue did in fact constitute an on-sale bar and thus rendered two of Medicines Co.’s patents invalid. In its opinion issued on Monday, the Court stated that to be on-sale for constituting an on-sale bar, the product “must be the subject of a commercial sale or offer for sale, and that a commercial sale is one that bears the general hallmarks of a sale under the Uniform Commercial Code.” The Court added that “the mere sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor does not constitute a ‘commercial sale’ of the invention.” In addition, the Court noted that any commercial benefit, even to both parties, is not enough to trigger the on-sale bar and that the transaction must be one in which “the product is ‘on sale’ in the sense that it is ‘commercially marketed.”

Here, even though The Medicines Co. contracted with Ben Venue to make batches of the drug because it did not have the manufacturing resources to do so itself, the Court still noted that even if a company outsourced and did have the resources to manufacture in-house, the same on-sale bar rules apply. According to the Court, what makes a sale “commercial” in “the most well-understood sense of that term” is an important consideration in determining whether a sale is barring and “distinct from merely obtaining some commercial benefit from a transaction.”

While this case provides guidance as to what constitutes an on-sale bar, it is still best to err on the side of caution and file an application covering the invention before allowing a year to pass from a first transaction involving the invention to ensure patentability.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume VI, Number 195
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About this Author

Monique Winters Macek, Health, Medical Devices Lawyer, Mintz Levin, Patent Prosecution & Strategic Counseling Patent Opinions Patent Portfolio Strategy Patent Prosecution
Associate

Monique’s practice is focused on the areas of medical devices, systems, and methods.

Prior to joining Mintz Levin, Monique served as a patent agent for Grant Anderson, LLP; Tandem Diabetes Care, Inc.; and NuVasive, Inc. In these roles she participated in all aspects of patent applications and collaborated on patent strategy development and analysis. She has also worked as a patent agent and bio-mechanical engineer for Flex Partners, Inc. Her engineering work also revolved around medical devices such as cardiac ablation catheters, eye sensor...

858.314.1542
Brad Scheller Patent Litigation Attorney Mintz Law Firm
Member

Brad Scheller is a trial attorney who focuses his patent litigation practice on representing clients in the automotive devices, thermoplastics, electronic components and consumer products industries in federal district court, before the Patent Trial and Appeal Board and at the International Trade Commission. With a background in mechanical engineering and over 14 years of experience practicing law, Brad has successfully represented patent owners in enforcing their rights against infringers and protecting those rights from challenges of invalidity, and has also successfully defended and negotiated settlements for client innovators accused of infringement and unfair commercial practices.

Brad focuses his litigation practice on patent disputes in Federal District Courts, including the Eastern District of Texas, Southern District of California, District of Delaware, Northern District of California and the Eastern District of New York, as well as at the International Trade Commission. Brad has handled disputes involving a variety of technologies, including electric motors, thermoplastics, electrical components, electronic payment and financial systems, computer software and various consumer products, including cosmetics, video game systems and personal watercraft.

Brad also has extensive experience in inter partes review (IPR) and covered business method patent review proceedings before the Patent Trial and Appeal Board and repeatedly defends and successfully preserves the rights of patent owners before this tribunal. He is well-versed in the particularities of post-grant proceedings from both the petitioner and patent owner perspective and provides comprehensive post-grant counseling to clients, including advising on post-grant proceedings concurrent with federal district court litigation and International Trade Commission investigations. As a registered patent attorney, Brad enjoys representing his clients in patent office proceedings on a variety of technologies.

Brad also counsels individual inventors and emerging ventures on product development strategies, renders patent clearance and validity opinions and manages the preparation and prosecution of patent applications and portfolios in various high-technology and consumer products fields.

Brad is Co-Editor for and contributor to the Mintz Global IP Matters blog and co-chairs the firm’s Post-Grant Working Group committee.

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