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July 27, 2007

Patent-Free Research

The waves unleashed by recent Supreme Court decisions have swelled a sea change of judicial attitude that continue to erode patent protection, furthered today by appeals court carelessness. Integra Lifesciences sued Merck, Scripps, and researcher Dr. David Cheresh for infringing five patents. The defendants invoked 35 U.S.C. §271(e)(1), which exempts genetic experiments for new drug research from patent infringement. At issue was the breadth of the exemption. Back to the CAFC after a SCOTUS decision broadening the exemption, the CAFC inadvertently includes research tools, a ruling which could, according to the dissent, "shift all control of research and the patented tools that facilitate research to the insular pharmaceutical industry."

Integra Lifesciences, The Burnham Institute, and Telios Pharmaceuticals v. Merck KGaA, The Scripps Research Institute and Dr. David A. Cheresh (CAFC 02-1052c) precedential

Integra sued after Germany-based Merck set up animal trials for a promising cancer therapy, the first step in a decade-long plan leading towards possible FDA submission. The trial jury found infringement, reading the §271(e)(1) FDCA exemption as not extending to exploratory research; only human drug trials. The purported purpose of the exemption was to promote development of generic drugs.

35 U.S.C. 271 Infringement of patent.

(e)(1) It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

A 2-1 split CAFC panel affirmed, whereupon the defendants sought refuge before the anti-patent U.S. Supreme Court. Today's CAFC decision summarizes the SCOTUS opinion.

The Court, analyzing the statute, explained that §271(e)(1) "exempted from infringement all uses of patented compounds 'reasonably related' to the process of developing information for submission" to the FDA. Merck, 545 U.S. at 206 (emphasis in original). The Court explained that "reasonably related" includes uses in research that are conducted after the biological mechanism and physiological effect of a candidate drug have been recognized, such that if the research is successful it would appropriately be included in a submission to the FDA:

At least where a drugmaker has a reasonable basis for believing that a patented compound may work, through a particular biological process, to produce a particular physiological effect, and uses the compound in research that, if successful, would be appropriate in a submission to the FDA, that use is "reasonably related" to the "development and submission of information under . . . Federal law." '271(e)(1).

Id. at 207.

The Court observed that the FDA Exemption is not directed to basic scientific research unrelated to development of a particular drug:

Basic scientific research on a particular compound, performed without the intent to develop a particular drug or a reasonable belief that the compound will cause the sort of physiological effect the researcher intends to induce, is surely not "reasonably related to the development and submission of information" to the FDA.

Id. at 205-06. However, the Court did not thereby remove from the scope of the FDA Exemption all experiments that are not actually submitted to the FDA. The Court stated:

It does not follow from this, however, that §271(e)(1)'s exemption from infringement categorically excludes either (1) experimentation on drugs that are not ultimately the subject of an FDA submission or (2) use of patented compounds in experiments that are not ultimately submitted to the FDA.

Id. at 206. The Court remarked on "the reality that, even at late stages in the development of a new drug, scientific testing is a process of trial and error," id., stating that:

Properly construed, §271(e)(1)'s safe harbor leaves adequate space for experimentation and failure on the road to regulatory approval . . . .

Id. at 207.

The Court held that if it was reasonable to believe that the compound under study may work in the intended use and that the experiments will produce the types of information that are relevant to an IND, then the FDA Exemption applies to studies that are appropriate for submission. Id. at 208. The Court summarized:

§271(e)(1)'s exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA. . . . This necessarily includes preclinical studies of patented compounds that are appropriate for submission to the FDA in the regulatory process.

Id. at 202 (emphasis in original).

SCOTUS thus scotched patent enforcement on drug research aimed at FDA submission; but, the Court ruled, the exemption does not apply to drugs not submitted to the FDA, nor subject to FDA submission. The SCOTUS decision still left something for the appeals court to determine.

Thus the Court expressly rejected the three legal grounds mentioned by the district court as its reasons for sustaining the jury verdict: the ground that the purpose of an IND application is to establish safety for administration to humans, such that experiments not directed to human safety do not have the protection of '271(e)(1); the ground that only studies that meet the "good laboratory practices" protocol can be submitted to the FDA, thereby excluding the Scripps studies from '271(e)(1); and the ground that experiments not included in an IND are not subject to the safe harbor of '271(e)(1), whereby the Scripps experiments using other RGD peptides would be infringing. However, the Court did not undertake to review the accused experiments on the correct construction of '271(e)(1), the Court observing that this had not yet been done through the standard appellate process.

In yet another 2-1 split decision, increasingly a more common occurrence than unanimity in patent cases. In the majority, Judges Newman and Prost. As the CAFC observes -

At the jury trial, before the Court, and on this remand, Integra does not dispute that the accused experiments yielded data relating to efficacy, mechanism of action, pharmacology, or pharmacokinetics.

So the majority decides:

On the entirety of the record, for the reasons we have discussed, there was not substantial evidence on which to sustain the jury verdict on application of the Court's statutory construction. The challenged experiments, all of which were conducted after discovery of the anti-angiogenesis property of the experimental RGD peptide provided by Merck, meet the criteria of being reasonably related to research that, if successful, would be appropriate to include in a submission to the FDA. This statutory construction both recognizes the nature of the scientific process and implements the legislative purpose of encouraging the development of new drugs. On application of the law of 35 U.S.C. '271(e)(1), no reasonable jury could find other than that the challenged experiments are within the FDA Exemption. The district court's judgment of infringement is reversed.

Judge Radar dissents in part, finding patents for research tools crimped by an overarching majority ruling resulting from judicial sloth, namely, not bothering to examine any of the claims -

This decision casts a large shadow over patent protection by its overly expansive interpretation of the 35 U.S.C. § 271(e)(1) exemption. In particular, this court today expands the exemption beyond the Supreme Court's limits on the provision to eliminate protection for research tool inventions. The Supreme Court stated "that § 271(e)(1)'s exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the [Federal Food, Drug and Cosmetic Act (FDCA)]." Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005). Thus, the exemption covers activities that develop information that will ultimately be submitted to the FDA, not patented processes and tools beyond the scope of the "patented compounds" that the Supreme Court placed within the statutory exemption. In this case, two of the patents are research tools that deserve protection. This court should remand with instructions that the district court examine and protect these research tool patents.

Sadly this court does not even examine the patents at issue in this case. This court, noted for its emphasis on claims as definers of patent scope, ironically does not recite or analyze the claims of these patents in the slightest. Moreover this court speaks in broad terms about the experiments and results without specifying which patented compound or method was in use in the experiments. A careful examination of the patents shows that two of them have no application at all outside of a laboratory. If the patents in this case are not research tools, then of course this court could quickly construe the claims and show that they claim drugs or other products likely to undergo FDA clearance, not simply laboratory methods. Unfortunately even a cursory analysis of the patents (undertaken in this dissent) shows that two of them have no application outside the laboratory.

By treating these research tools the same as drugs potentially needing FDA clearance, this court's opinion poses a danger to the entire research tool industry.

[T]he Supreme Court included an important footnote:

We therefore need not - and do not - express a view about whether, or to what extent, § 271 (e) (1) exempts from infringement the use of "research tools" in the development of information for the regulatory process.

Id. at 205 n.7 (emphasis added). The Supreme Court simply did not intend to even address research tools, let alone, render research tools valueless for their one and only use - to test and ascertain information about candidate compounds.

A hypothetical example will help illustrate the importance of protecting research tool patent rights. Suppose a university professor or small independent research company invents and obtains a patent for a novel and extremely useful research tool. This invention represents the work of a lifetime for its inventors and perhaps most of the research budget for the university department or the small company - perhaps millions of dollars in investment. The only use of the invention tests other pharmaceutical compounds for effectiveness in fighting cancer. The invention does not itself fight cancer, but instead simply identifies the cancer fighting characteristics in other compounds. This patented invention would, of course, be of great use to the pharmaceutical industry. It would also benefit the public by identifying cancer treatments. The patent system of course would wish to protect this invention and give incentives for more investment in developing this kind of valuable research tool.

Sadly today's opinion misreads the Supreme Court's decision... This overbroad interpretation could obliterate all value for the hypothetical invention discussed above and with it the incentives for development of these inventions outside of the pharmaceutical industry itself. The pharmaceutical industry itself, of course, still needs these tools and will invest in their development, but outside that community, research tools will have no value. In other words, this opinion could shift all control of research and the patented tools that facilitate research to the insular pharmaceutical industry. Universities and independent researchers will have to understand that their work on research tools is likely to amount only to a charitable (but nondeductible) gift to the pharmaceutical industry.

The university professor or small company might expect a reward for the lifetime of labor and investment that produced the research tool. The inventor might also hope to use that reward to further his pioneer research. These benefits to the public and that inventor would flow from the patent's right to exclude that would produce reasonable royalties. However, under today's opinion, the exemption would swallow that lifetime of labor and investment because the nature of the use itself, without any concern for the object of the patented invention, would be the gauge upon which the exemption would be measured. See Majority Opinion, slip op. at 11. In effect, any use of the hypothetical invention would automatically translate to non-infringement based on this court's expansive application of 35 U.S.C. § 271(e)(1).

Posted by Patent Hawk at July 27, 2007 9:21 PM | Case Law


I'm not sure that Judge Rader's "the sky is falling dissent" is warranted; we need to wait and see a few more of these research tools cases to see if he's right. I agree that it's bizarre for the panel majority not to analyze the claims in detail. On the other hand, I find it strange that Rader relies on the legislative history in support of his position - compare to Eli Lilly v American Cyanamid, a 1996 case, where he flat-out refused to consider legislative history in interpreting 35 USC 271(g).

The panel majority went out of its way to point out that in this case, the patented methods were being used to determine which compounds out of an already defined subset were suitable for submission to the FDA. So it sounds to me like the door is still open for someone who develops a "research tool" and has a method claim protecting that "research tool" to nail someone else for infringement. Of course, under Bayer v Housey, if they practice that method abroad to identify drug candidates, and then send a list of identified candidate compounds to the USA, the importation isn't infringement; and under the new Integra v Merck decision, once those candidates have been identified, use of the method to collect further information for FDA submission isn't infringement. So although Judge Rader didn't say so, looks like there's now good incentive to use all research tools overseas to ID drug candidates.

Posted by: DJF at July 29, 2007 4:00 AM

Explain USC 35 271 (g) - "materially changed concept" with chemistry examples please

Posted by: R.Chandrasekaran at September 7, 2007 7:16 PM

ladder carrier

Posted by: Bill at August 23, 2010 11:40 AM