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The Medicines Company v. Hospira, Inc.

The Medicines Company (“MedCo”) appealed findings of no infringement made by the United District Court for the District of Delaware. Hospira cross-appealed the district court’s finding that a distribution agreement did not constitute an invalidating “offer for sale” under 35 U.S.C. § 102(b). In a decision rendered by United States Court of Appeals for the Federal Circuit on February 6, 2018, the Court affirmed the district court’s non-infringement findings and remanded the case for the district court to determine if the on-sale bar applies.

MedCo asserted two patents, U.S. Patent Nos. 7,582,727 and 7,598,343, covering its Angiomax drug product against Hospira, a generic drug maker who filed Abbreviated New Drug Application (“ANDA”) with the Food and Drug Administration. Although Angiomax has been available for decades, MedCo developed a new method of formulating Angiomax to reduce impurities. This formulation was the subject of the asserted patents, both of which were filed on July 27, 2008. Prior to filing the patents, MedCo entered into a distribution agreement on February 27, 2007 with Integrated Commercialization Solutions, Inc. (“ICS”) to distribute the new Angiomax formulation. The agreement stated that MedCo “desire[d] to sell the Product” to ICS and ICS “desire[d] to purchase and distribute the Product.” Under the agreement, title passed to ICS upon receipt of the Product at the distribution center. The district court concluded that the patents were neither infringed nor invalid. The district court found that the invention was ready for patenting at the time of the agreement, but was not sold or offered for sale before the critical date of July 27, 2008 because the distribution agreement between MedCo and ICS did not constitute an offer to sell. Both parties appealed.

Regarding the non-infringement decision, the Federal Circuit affirmed, finding that Hospira does not infringe the patented method because it does not perform “efficient mixing” that is required by new Angiomax formulation.

Regarding the validation decision, the Federal Circuit reversed and remanded, finding that the terms of the distribution agreement show that the agreement was an offer for sale. In particular, the terms included a statement that MedCo desired to sell the product and that ICS desired to purchase the product. The agreement also included the commercial price of the product, the purchase schedule and the transfer of title to ICS. MedCo argued the agreement was not an offer for sale because it permitted MedCo to reject all purchase orders submitted by ICS. The Federal Circuit noted, however, that the agreement required MedCo to use “commercially reasonable efforts” to fill the purchase orders, and MedCo would be unlikely to reject an order because ICS had exclusive distribution rights under the agreement and Angiomax constituted the majority of MedCo’s revenues. Therefore, the Federal Circuit held that the distribution agreement did not constitute an optional sales arrangement, and instead provided all of the necessary terms and conditions to constitute a commercial offer for sale. The Federal Circuit remanded for the district court to determine whether the distribution agreement covered the patented invention.

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Brad M. Scheller is an attorney who handles patent disputes for Mintz clients in industries ranging from electronics and software to consumer goods and cosmetics. He represents clients in federal district courts, in the US Court of Appeals for the Federal Circuit, and at the Patent Trial and Appeal Board.