On 11 July 2016, the US Court of Appeals for the Federal Circuit issued an unanimous en banc ruling in the The Medicines Company v. Hospira Inc. case that the mere sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor is no ground for invalidity under the on-sale bar.
In US patent law, the on-sale bar is a limitation on patentability codified in 35 U.S.C. § 102. It provides that an invention cannot be patented if it has been for sale before the effective filing date of the claimed invention. In 2011, as part of the America Invents Act (AIA), US Congress amended 35 U.S.C. § 102. The pre-AIA Version of the statute that was applicable in the Court of Appeals' case read that "[a] person shall be entitled to a patent unless," inter alia, "the invention was [...] in public use or on sale in this country, more than one year prior to the date of the application for patent."
The Court of Appeals concluded that, "to be 'on sale' under § 102(b), a product must be the subject of a commercial sale [...] that bears the general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial Code." However, the use of third-party services to manufacture the patented products was not the type of commercial activity with which the on-sale bar is concerned. The Court of Appeals agreed that applying the on-sale bar to outsource manufacturing "would only make the drug development process more costly, punish efficient use of resources, and deter future investments in innovation." There was no room in the statute to penalize a company for relying, by choice or by necessity, on the confidential services of a contract manufacturer, instead of manufacturing in-house.
Originally published July 21, 2016
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