A frequent issue facing many software, pharmaceutical, and biotechnology companies are circumstances under which a product produced pursuant to the claims of a product-by-process patent is “on sale” under 35 U.S.C. § 102(b). This is important because, if “on sale” more than one year before the filing of an application for a patent on the governing claims, any issued patent is invalid and the right to exclude others from making, using, and selling the resulting product is lost.
Courts have held that the sale of products made using patented methods triggers the statutory on- sale bar, even though title to the claimed method itself did not pass, as when the literal subject matter of the claims is incapable of being sold.
Sales of software licenses to end-users can trigger the on-sale bar when a sale of an interest that entitles the purchaser to possession and use of the machine, unrelated to any patent present or future right, such as a license. Certain transactions framed as a license, but that are directed to an embodiment of the claimed invention, likewise may be tantamount to a sale such as standard computer software license. The case law as to specifically what conduct qualifies as “on sale” under 35 U.S.C. § 102(b) has provided few guidelines for these statutory bar assessments.
A recent Federal Circuit holding uses and provides a familiar framework for any on-sale bar assessment in certain circumstances. The Hospira decision concludes that, to be “on sale” under § 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 pursuant to Section 2-106 of the Uniform Commercial Code (“UCC”). In Hospira, the Federal Circuit found that a third-party contract manufacturer’s sale of pharmaceutical manufacturing services to the inventor, where neither title to the embodiments nor the right to market the same passes to the supplier, does not constitute an invalidating sale under § 102(b), as these actions did not trigger the on-sale bar under UCC standards or analysis.
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 The Medicines Company v. Hospira, Inc., Fed. Cir. 2014-1469 (July 11, 2016)