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The Medicines Co. v. Hospira, Inc.

United States Court of Appeals, Federal Circuit

February 6, 2018

THE MEDICINES COMPANY Plaintiff-Appellant
v.
HOSPIRA, INC., Defendant-Cross-Appellant

         Appeals from the United States District Court for the District of Delaware in No. 09-CV-750-RGA, Richard G. Andrews, Judge.

          Edgar Haug, Haug Partners LLP, New York, NY, argued for plaintiff-appellant. Also represented by Porter F. Fleming, Angus Chen, Jason Ari Kanter, Laura Krawczyk, Catalin Sebastian Zonte, Damon Marcus Lewis.

          Bradford Peter Lyerla, Jenner & Block LLP, Chicago, IL, argued for defendant-cross-appellant. Also represented by Aaron A. Barlow, Sara Tonnies Horton.

          Before Dyk, Wallach, and Hughes, Circuit Judges.

          HUGHES, CIRCUIT JUDGE.

         The Medicines Company appeals findings of no infringement made by the United States District Court for the District of Delaware. Hospira cross-appeals the district court's finding that a distribution agreement did not constitute an invalidating "offer for sale" under 35 U.S.C. § 102(b). We affirm the district court's noninfringement findings and remand the case for the district court to determine whether the on-sale bar applies.

         I

         The Medicines Company owns U.S. Patent Nos. 7, 582, 727 and 7, 598, 343. Both patent applications were filed on July 27, 2008. The patents cover an improved process for manufacturing a drug product of bivalirudin, a synthetic peptide used as an anti-coagulant. For almost twenty years, The Medicines Company has marketed its bivalirudin product under the brand name Angiomax. Sales of Angiomax represent over 90% of The Medicines Company's revenues. J.A. 16050 at 70:15-22.

         The Medicines Company's original manufacturing process occasionally produced batches of Angiomax with unacceptably high levels of the impurity Asp9-bivalirudin. To solve this problem, The Medicines Company developed a new mixing method, which it incorporated in the master batch record on October 25, 2006. The Medicines Company's contract manufacturer, Ben Venue Laboratories, used this patented mixing method for all Angiomax batches manufactured since October 31, 2006. By using this process, Ben Venue consistently manufactures Angiomax batches with a maximum Asp9-bivalirudin impurity level of 0.6%. The overriding majority of Angiomax batches produced using The Medicines Company's original manufacturing method had impurity levels below 0.6%.

         On February 27, 2007, The Medicines Company entered into a Distribution Agreement with Integrated Commercialization Solutions, Inc. (ICS). That agreement stated that The Medicines Company "now desire[d] to sell the Product" to ICS and ICS "desire[d] to purchase and distribute the Product." J.A. 14674. Accordingly, title passed to ICS "upon receipt of Product at the distribution center." J.A. 14678 ¶ 4.1. The Distribution Agreement forbade The Medicines Company from selling Angiomax to any other party in the United States for the three-year duration of the contract. Notably, ICS had been providing distribution for The Medicines Company since September 2002, but ICS did not take title to the product under the previous distribution agreement.

         The Distribution Agreement included a "Commercial Price List" dictating the price of the product, J.A. 14697, and required ICS to place weekly orders "for such quantities of Product as are necessary to maintain an appropriate level of inventory based on customers' historical purchase volumes." J.A. 14676 ¶ 3.1. The Medicines Company agreed to "use its commercially reasonable efforts" to fill ICS's product orders within two days of order receipt. J.A. 14678 ¶ 4.2. ICS's orders were deemed accepted unless The Medicines Company rejected the order within two business days. ICS first received batches of Angiomax produced by the improved process in August 2007.

         Seeking to market a generic version of Angiomax, Hospira submitted an Abbreviated New Drug Application to the Food and Drug Administration. In Hospira's mixing process, the pH-adjusting solution is added to the bivalirudin solution in three equivalent portions. The first two portions are "added rapidly with about 2-minute mixing time, " and the third portion is "added gradually over a period of approximately 10 minutes." J.A. 13958. Hospira mixes the batches using a paddle mixer at 560 rpm.

         The Medicines Company filed suit in the District of Delaware alleging infringement of the '727 and '343 patents under 35 U.S.C. § 271(e)(2). In response, Hospira asserted that the patents are invalid. After a bench trial, the district court concluded that the patents were neither infringed nor invalid. The district court found that the invention was ready for patenting but was not sold or offered for sale before the critical date of July 27, 2008. The court concluded that the Distribution Agreement was only an agreement for ICS to be the U.S. distributor of Angiomax and was not an offer to sell Angiomax. Based on the holding that "there was no offer to sell, " the court did not reach "whether the Distribution Agreement concerned Angiomax made by the new method as opposed to Angiomax made by the original method." J.A. 26 n.14.

         Both parties appealed. This case is on remand from Medicines Co. v. Hospira, Inc. (Medicines I), 827 F.3d 1363 (Fed. Cir. 2016) (en banc). We have ...


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