Under U.S. patent law, it is considered improper to market a product and, after realizing the product's commercial viability, to then receive patent protection under U.S. patent law. A mechanism of U.S. patent law designed to prevent improper commercialization is the "On Sale Bar" found in 35 U.S.C. § 102. Basically, the On Sale Bar prevents a party from receiving a U.S. patent when the claimed invention has been "on sale" (subject to a sale or offer for sale) for more than one year before the filing of a U.S. Patent Application.

Thus, the critical date for the On Sale Bar is one year before the filing date of the patent application. Since evidence of a claimed invention being "on sale" before the critical date can defeat patentability, it is important to understand the characteristics of being "on sale" and when the claimed invention was first "on sale". Generally, the term "sale" pertains to the passing of title from a buyer to a seller for a price, consistent with the Uniform Commercial Code.

In Medicines Company v. Hospira, Inc. (July 11, 2016), the Federal Circuit, in a precedential opinion, clarified whether certain activities trigger the On Sale Bar. Plaintiff Medicines Company owned two patents for a drug sold under the trade name Angiomax® and had contracted for the manufacture of batches of the drug with a manufacturing company more than one year prior to filing the two U.S. patent applications. Medicines Company also contracted with a distributor for exclusive distribution rights of the drug, again more than one year prior to filing the U.S. patent applications. The manufactured drug batches were then stockpiled, but not released, for sale until after the critical date.

Defendant Hospira, Inc. contended that, due to the commercial transaction for manufacturing services and the establishment of a sole distributor via contract taking place more than one year before the filing of the U.S. patent applications, Medicines Company had triggered the On Sale Bar and thus Hospira would not be liable for patent infringement.

The Federal Circuit (en banc) held that, while both Medicines Company and the manufacturing company would have benefited from the manufacturing contract for producing the drug, the contracting of manufacturing services for production of the drug did not constitute the drug as being "on sale" in any commercial sense. The manufacturing contract pertained to an unclaimed process to create the drug, not the drug itself, and the manufacturing company never held title to the drug. The Federal Circuit further held that a contract establishing a sole distributor also did not, on its own, constitute the drug being "on sale." Nor did stockpiling in preparation for sales, on its own, constitute the drug being "on sale."

Ultimately, the Federal Circuit held that there are preparatory steps for commercial sales that do not, on their own, constitute placing a claimed invention "on sale." Parties should take care to investigate potential bars to patentability prior to attempts to commercialize an invention so as to not inadvertently give away intellectual property rights. Patent applications should be filed as soon as possible to avoid activities that may be considered an "on sale bar."

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