Proveris Scientific v. Innovasystems (CAFC 2007-1428)

Congress enacted the Hatch-Waxman Act in order to eliminate two unintended distortions of the effective patent term resulting from the premarket approval required for certain products by the FDCA.

The first distortion was the reduction of effective patent life caused by FDA premarket approval. Because patent applications were filed early in the regulatory process, but market entry was delayed pending regulatory review, the early years of the patent term were spent obtaining premarket approval for the patented invention rather than generating profits. Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 669 (1990).

The second distortion was the de facto extension of effective patent life at the end of the patent term, which also resulted from FDA premarket approval requirements. Prior to the Hatch-Waxman Act, competitors' activities involving a patented invention during the patent term constituted an act of infringement, even if undertaken for the sole purpose of obtaining FDA regulatory approval. See Roche Prods., Inc. v. Bolar Pharms. Co., 733 F.2d 858 (Fed. Cir. 1984), cert. denied, 469 U.S. 856 (1984). Because such activities could not begin until patent expiration, patent owners enjoyed a de facto patent term extension while competitors spent time following patent expiration obtaining FDA premarket approval necessary for market entry. Eli Lilly, 496 U.S. at 670.

The Hatch-Waxman Act sought to eliminate these distortions via two key provisions, now codified at 35 U.S.C. §§ 156 and 271(e)(1). The first provision, section 156, sought to eliminate de facto patent term reduction by providing patent term extension for those patents claiming a "product" subject to regulatory delays caused by the FDA premarket approval process.2 For purposes of section 156, the term "product" means a "drug product" and "[a]ny medical device, food additive, or color additive subject to regulation under the [FDCA.]" 35 U.S.C. § 156(f).

The safe harbor provision is codified at 35 U.S.C. § 271(e)(1), which states in relevant part:

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 . . . 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.

The second provision, section 271(e)(1), sought to eliminate de facto patent term extension. It sought to do so by providing a safe harbor that immunized competitors from infringement on account of making, using, offering to sell, or selling within the United States or importing into the United States a "patented invention . . . 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." 35 U.S.C. § 271(e)(1). The basic idea behind this provision was to allow competitors to begin the regulatory approval process while the patent was still in force, followed by market entry immediately upon patent expiration. Thus, in Telectronics Pacing Systems v. Ventritex, Inc., 982 F.2d 1520 (Fed. Cir. 1992), we pointed out that, as a result of section 271(e)(1), "a competitor who anticipates coming into the marketplace with a product that utilizes a currently patented invention may make, use, and sell that product so long as it is '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.'" Id. at 1525.

The Supreme Court in Eli Lilly found that the safe harbor extended to medical devices.

The Court noted that interpreting the phrase "patented invention" in section 271(e)(1) to include all products listed in section 156(f) produced a "perfect 'product' fit" between the two provisions. Id. at 672. The Court pointed out that all of the products eligible for patent term extension under section 156 - including drugs, medical devices, food additives, and color additives - were subject to FDA premarket approval. Id. Conversely, all products subject to premarket approval that were not eligible for patent term extension under section 156(f) - such as new animal drugs and veterinary biological products - were excluded from the section 271(e)(1) safe harbor provision as well.4 Id. at 674.

Activities "reasonably related" to FDA approval tuck within safe harbor.

Precedent also has addressed which activities are sufficiently "reasonably related" to FDA approval for purposes of section 271(e)(1). In Telectronics, we held that demonstrating an implantable defibrillator at medical conferences was "reasonably related" to FDA approval because it facilitated the selection of clinical trial investigators. 982 F.2d at 1523. Most recently, in Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005), the Supreme Court interpreted "reasonably related" in determining whether section 271(e)(1) immunizes the use of patented inventions in preclinical research if the experimental results are never submitted to the FDA, id. at 195. In Merck, patented compounds were used in preclinical studies to identify and evaluate drugs useful for inhibiting angiogenesis. Id. at 198-99. The Court held that "reasonably related" activity does not require actual submission of information to the FDA; it also includes those situations in which a party 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 to include in a submission to the FDA . . . ." Id. at 206-07. On remand, we held that the preclinical research in question was "reasonably related" to FDA approval. Integra Lifesciences I, Ltd. v. Merck KGaA, 496 F.3d 1334, 1348 (Fed. Cir. 2007).

Innova's device "is not subject to FDA premarket approval." Hence, "Innova is not entitled to the benefit of the section 271(e)(1) safe harbor."

In short, Innova is not a party seeking FDA approval for a product in order to enter the market to compete with patentees. Because the OSA device is not subject to FDA premarket approval, and therefore faces no regulatory barriers to market entry upon patent expiration, Innova is not a party who, prior to enactment of the Hatch-Waxman Act, could be said to have been adversely affected by the second distortion. For this reason, we do not think Congress could have intended that the safe harbor of section 271(e)(1) apply to it. Put another way, insofar as its OSA device is concerned, Innova is not within the category of entities for whom the safe harbor provision was designed to provide relief.

Affirmed.