Sponsored post: Lowering the (on sale) bar

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Sponsored post: Lowering the (on sale) bar

The Federal Circuit limits the reach of the on-sale bar and provides guidance to pharmaceutical companies that rely on the use of contract manufacturers. Bruce Haas and Lauren Zuffante of Fitzpatrick Cella Harper & Scinto discuss

Zuffante-Lauren-200
Haas_Bruce_200

In The Medicines Company v Hospira, Inc, decided on July 11 2016, the Federal Circuit held that “to be ‘on sale’ under 35 USC § 102(b), a 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 Uniform Commercial Code.

A unanimous en banc court found that the sale of contract manufacturing services relating to the drug Angiomax did not invalidate The Medicine Company’s (MedCo) patents.

Sale of manufacturing services not a commercial sale

MedCo does not have in-house manufacturing facilities and contracted Ben Venue Laboratories to manufacture batches of bivalirudin, the API in Angiomax, in late 2006. Once manufactured, these batches were placed in quarantine pending FDA approval of Angiomax. The batches were released from quarantine and made available for sale in August 2007, after the July 2007 critical date.

Hospira alleged that the sale of manufacturing services to Ben Venue constituted an invalidating sale under § 102(b). The Federal Circuit found that Ben Venue sold contract manufacturing services to MedCo, not the patented invention. The court found the absence of title transfer and the confidential nature of the transactions to be factors supporting its conclusion that the on sale bar had not been triggered.

Welcome news for brand-name pharmaceutical companies

This decision is good news for brand-name pharmaceutical companies. The decision limits the reach of the on sale bar and provides helpful insight to companies that seek to contract out manufacturing services. Whenever appropriate, agreements and invoices should be drafted to identify the services rendered as a sale of manufacturing services.

Agreements should also state that title to the products does not pass to the contract manufacturer. The court noted that Ben Venue “was not free to use or sell the claimed products or to deliver the patented products to anyone other than MedCo".The Uniform Commercial Code describes a ‘sale’ as ‘the passing of title from the seller to the buyer for a price'. The court found the passage of title to be “a helpful indicator of whether a product is ‘on sale'”.

Additional takeaways



  • The court also addressed the issue of whether stockpiling, or the building of an inventory, constitutes a commercial sale under § 102(b). Hospira argued that use of the contract manufacturing services would allow MedCo to stockpile its invention, conferring a commercial benefit by allowing MedCo to “restock its long depleted commercial pipeline". The court stated that it is not a commercial benefit that triggers § 102(b) – there must be a commercial sale or an offer for sale. Thus, stockpiling alone, without an actual sale or offer for sale, does not trigger § 102(b). 

  • The court pointed out that the patents-in-suit were directed to a product as opposed to a process or method. The outcome may be different when a contract manufacturer performs the steps of a patented process. 

  • The court noted that applying the on sale bar to the transaction at issue would create different sets of rules for those companies that contract out manufacturing services and those that manufacture in-house. Such a result would be arbitrary and would penalize a company for relying on the services of a contract manufacturer.

  • Although MedCo focuses on pre-AIA patents, it is likely that the outcome would be the same for post-AIA patents since the language of pre-AIA 35 USC § 102(b) is similar to AIA 35 USC § 102(a)(1). The Patently-O blog agrees and notes that it seems clear that “the limits here are equally applicable to post-AIA patents”.




more from across site and SHARED ros bottom lb

More from across our site

With the INTA Annual Meeting drawing to a close, we asked attendees for their top tips on how to close business after a meeting
Senior UK judges discussing the impact of AI on the judiciary, and the role of in-house IP lawyers during corporate transactions and carve-outs were among the top talking points
Tarun Khurana, founding partner of Khurana & Khurana, discusses juggling tasks, why every hour has a value, and the importance of ‘trusting the process’
Annual Meeting hears that IP firms are targeting hires with technical literacy in a fragmented landscape, and that those that build an online presence will distinguish themselves from the digital chaos
How law firms can secure themselves in a technology-driven IP landscape and how IP teams can develop future leadership were among the top talking points
The variety of winners demonstrates that the UPC is now a core benchmark rather than an experimental consideration, while junior lawyers are becoming more deeply involved in key work
The Indian government announcing a fee waiver for sports-related IP registrations, and the US adding the EU to its IP 'watch list' were also among major developments
Sources say the judge could return to a disputes or mediation-focussed role, though others have questioned whether the Texas court will remain a litigation hotspot in his absence
Sheppard, which has hired 14 IP partners in the last 12 months, has cited client demand for expert counsel in SEP, ITC, and district court disputes
Tingxi Huo joins our ‘Five minutes with’ series to discuss boosting the value of clients’ IP and the importance of reflection
Gift this article