United States: Integra v Merck: Is There A Safe Harbor For Research

Intellectual property lawyers frequently encounter scientists who believe their work cannot infringe another’s patent because they only do "research." This position is contrary to the statutory definition of infringement, which specifically includes making and using a patented invention within the definition of infringing acts.¹ There are only two potential exceptions for research: the common-law "Experimental Use Exception" and the statutory "U.S. Food and Drug Administration (FDA) Exemption."² Both are circumscribed in their applicability, however, and recent case law has further limited their application.

The common law Experimental Use Exception derives from the 19th century case of Wittamore v. Cutter, which stated that "it could not have been the intention of the legislature to punish a man" who constructed a patented device "merely for philosophical experiments."³ Recently, the U.S. Court of Appeals for the Federal Circuit, in Madey v. Duke University,⁴ considered the applicability of the exception to potentially infringing activities undertaken in the course of student education and faculty research. The Court held that the Experimental Use Exception does not apply to work which is "undertaken in the guise of scientific inquiry but has definite, cognizable and not insubstantial commercial purposes" and furthers "the alleged infringer’s legitimate business." ⁵ The Court emphasized that the "narrow and strictly limited experimental use exception" does not immunize activities even at a not-for-profit educational institute.⁶ Madey dealt a severe blow to the application of the common law research exception. It is now clear that this exemption provides very little protection in today’s world, where even non-profit institutions are held to have business purposes.

The FDA Exemption, codified at §271(e)(1), Title 35, United State Code, is applicable only to biomedical research activities undertaken to obtain governmental regulatory approval under the U.S. Federal Food, Drug and Cosmetic Act.⁷ §271(e)(1) provides that it "shall not be an act of infringement to make, use or sell 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."⁸ Although the statutory FDA Exemption was enacted by Congress to rectify a specific inequity relating to generic and patented drugs, the language of the statute was not so limited.⁹ Numerous defendants have invoked the FDA Exemption as a shield from claims of infringement. However, because the language of the statute is far from clear, courts have differed in their interpretations, leading to confusion and inconsistency. Generally, however, the courts have broadened the scope of the FDA Exemption beyond its original legislative purpose. Despite almost 20 years of judicial construction, questions remain as to the appropriate application and scope of the FDA Exemption.

In its most recent consideration of the FDA Exemption, Integra LifeSciences v. Merck KGaA, the Federal Circuit had to determine "whether the pre-clinical research...is exempt from liability for infringement."¹⁰ The issue before the Court was whether the FDA Exemption "reaches back down the chain of experimentation to embrace development and identification of new drugs that will, in turn, be subject to FDA approval."

The Integra case involved biological molecules, called peptides, containing the amino acid sequence Arg-Gly-Asp (otherwise abbreviated as RGD), which were discovered at the Burnham Institute. RGD peptides are involved in the adhesion of cells to other cells and to extracellular matrix proteins. Cell adhesion is fundamental to such varied pathologies as cardiovascular disease, where cells inappropriately adhere to form blood clots, and metastasis, where malignant cells detach from each other to seed tumors at other locations in the body. The Burnham Institute exclusively licensed to Integra LifeSciences the RGD peptides themselves along with their receptors and various methods of their use.

After their initial description in the scientific literature, RGD peptides became the subject of extensive scientific research, resulting in hundreds of publications in peer-reviewed scientific journals. A scientist working at The Scripps Research Institute discovered that RGD peptides are involved in the growth of new blood vessels, a process known as angiogenesis. Published and patented by Scripps, this discovery caught the attention of Merck KGaA, which was interested in the practical application of RGD peptides to inhibit angiogenesis and effectively starve solid tumors. Merck KGaA entered into a sponsored research agreement with The Scripps Research Institute to select the best drug candidate among several closely related RGD peptides.

Integra and the Burnham Institute sued Scripps for infringing their RGD patents and Merck for inducing Scripps’ infringement. Merck and Scripps asserted the FDA Exemption as a defense. The research allegedly protected by the FDA Exemption involved in-vitro screening of certain RGD peptides for anti-angiogenesis activity as well as testing the RGD peptides on fertilized chicken eggs to determine their effect on blood vessel development.

After a 27-day trial, the jury was asked to determine whether the infringing acts were "reasonably related" to FDA approval so as to be exempt. The jury was instructed that the defendants must prove by a preponderance of the evidence "that it would be objectively reasonable for a party in Merck’s and Scripps’ situation to believe that there was a decent prospect that the accused activities would contribute, relatively directly, to the generation of the kinds of information that are likely to be relevant in the process by which the FDA could decide whether to approve the product in question."¹¹ The jury found that the defendants had not satisfied this factual standard and that the FDA Exemption did not apply to the research at issue.

On appeal to the U.S. Court of Appeals for the Federal Circuit, Merck attacked the judgment by arguing, inter alia, that the FDA Exemption applied as a matter of law to the research at issue and that the damage award was supported by sufficient evidence. Merck proposed that the FDA Exemption should be construed to exempt all experimentation that could serve as a "rational predicate" for subsequent experimentation leading to information directly pertinent to FDA review for safety and efficacy. Integra, on the other hand, argued that the FDA Exemption should be limited to activities bearing "relatively directly" on the generation of information relevant to the FDA.

Rejecting the broad construction proposed by Merck, the Court stated that "§271(e)(1) simply does not globally embrace all experimental activity that at some point, however attenuated, may lead to an FDA approval process."¹² The Court noted that the work sponsored by Merck "was not clinical testing to supply information to the FDA, but only general biomedical research to identify new pharmaceutical compounds. The FDA has no interest in the hunt for drugs that may or may not later undergo clinical testing for FDA approval."¹³ The Court pointed out that "the FDA does not require information about drugs other than the compound featured" in an IND.¹⁴ Accordingly, the Court held that the Merck-sponsored research at Scripps, directed to selecting the best among several possible drug candidates, does not fall within the §271(e)(1) Exemption. "The safe harbor does not reach any exploratory research that may rationally form a predicate for future FDA clinical tests."¹⁵

The Federal Circuit relied heavily on the legislative history of the FDA Exemption in its decision. The FDA Exemption was enacted as part of the Drug Price Competition and Patent Term Restoration Act of 1984¹⁶ (the 1984 Act), also known as the Hatch-Waxman Act. The goals of the 1984 Act as a whole were two-fold: to provide an incentive for the development of patented drugs while promoting the availability of lower-cost generic alternatives. To this end, the 1984 Act contained provisions to promote the availability of low cost generic drugs, including expedited approval for generic drugs through Abbreviated New Drug Applications (ANDA).

At the time of the 1984 Act, generic drug manufacturers could not begin the studies required for FDA market approval during the term of patent protection on the innovator drug without the risk of being sued for infringement. In Roche v. Bolar¹⁷ Roche held a patent on the antianxiety drug flurazapam. Intending to market a generic version, Bolar imported quantities of the drug to begin the testing required for the FDA marketing approval prior to expiration of Roche’s patent. The Federal Circuit declined to apply the common law Experimental Use Exception to Bolar’s activities on the basis that they were being undertaken "solely for business reasons and not for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry" and thus held that Bolar infringed Roche’s patent.¹⁸

If generic drug manufacturers are prevented from performing studies necessary to obtain FDA approval until after the expiration of the patent on the innovator drug, the patent holder in effect obtains an extension of its term of exclusivity. Negating the holding of Roche, §202 of the 1984 Act (now codified as §271(e)(1)) obviated this patent term distortion by providing a safe harbor for otherwise infringing studies undertaken on generic drugs in order to obtain regulatory approval.

While §271(e)(1) was enacted specifically to allow generic drugs to enter the market simultaneously with the expiration of the innovator’s patent, the language of the statute was not so limited. It is not, for example, limited to generic drugs but refers rather to "patented invention[s]." The uncertainties inherent in the statutory language have also led to sometimes-conflicting judicial interpretations of its scope and applicability.

Whither Tool Patents?¹⁹

Many of the inventions that underlie the biotechnology revolution of the late 20th century relate to basic platform technologies, new materials or methods for discovering new products. Such platform, or "tool," technology has enormously increased the types of diagnostic and therapeutic products currently available. However, patents claiming the tools themselves, rather than the products obtained through the use of the tools, present novel issues. Among these is the question of whether otherwise infringing uses of tool patents can be shielded by the §271(e) Exemption.

In Integra, the Federal Circuit Court considered the effect of the "rational predicate" theory urged by Merck on "tool patents." The Court noted that extending the safe harbor of the FDA Exemption to cover the experiments at issue "would effectively vitiate the exclusive rights of patentees owning biotechnology tool patents... [and] would swallow the whole benefit of the Patent Act for some categories of biotechnological inventions."²⁰ Under the "rationale predicate" theory, all tool patents would be worthless. While the decision may be a bellwether of the Federal Circuit’s inclination to consider tool patents outside the scope of the §271(e) Exemption, the Integra decision should not be read to so hold.

The Integra decision did not hold that all pre-clinical research necessarily is outside the scope of the FDA Exemption. In fact, the court noted that some activities that do not themselves produce FDA information might nevertheless be exempted. However, biomedical research is not exempted merely because it may lead to new drugs; the experimental work must relate relatively directly to the submission of data to the FDA. As the Federal Circuit noted, "[t]he focus of the entire exemption is the provision of information to the FDA. Activities that do not directly produce information for the FDA are already straining the relationship to the central purpose of the safe harbor."²¹ The decision holds only that application of the §271(e) Exemption requires a specific factual showing of relatively direct relevance to core FDA concerns of safety and efficacy. While Merck failed to make a sufficient showing that the exemption should apply, a sufficiently direct connection between infringing pre-clinical experiments and FDA review to invoke the §271(e)(1) Exemption may well be made in other cases.

The decision in Integra reaffirms that application of the FDA Exemption will be determined under the Intermedics "reasonably related" standard. The exemption is not determined as a matter of law according to either the class of infringing product or the type of patent. Instead, the analysis will focus on the nature of the otherwise infringing acts, a question of fact. For this reason, cases are more likely to go to trial, with juries deciding whether the defendant’s activities satisfy the Intermedics standard and verdicts being reviewed only for substantial evidence. With biomedical technology becoming ever more complex and patent rights ever more important, doubtless many juries will grapple to determine — based on the facts of the case — when the causal chain of research events actually enters the safe harbor of the FDA Exemption.

1. 35 U.S.C. 271(a) provides "whoever without authority makes, uses, offers to sell or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefore, infringes the patent."

2. Codified at 35 U.S.C. 271(e)(1).

3. Wittamore v. Cutter, 29 F. Cas. 1120, 1121 (No 17,600) (C.C.D. Mass. 1813).

4. John M.J. Madey v. Duke University, 307 F.3d 1351 (Fed. Cir 2002).

5. Id.

6. Id.

7 35 U.S.C. §271(e)(1).

8. Id.

9. See, e.g., Amgen, Inc. v. Hoechst Marion Roussel, Inc., 3 F. Supp.2d 104 (D. Mass 1998); Intermedics, Inc. v. Ventirtex, Inc., 775 F. Supp. 1269 (N.D. Cal 1993), aff’d, 991 F.2d 808 (Fed. Cir. 1993); Abtox, Inc. v. Exitron Corp., 888 F. Supp. 6 (D. Mass. 1995), aff’d, 122 F.3d 1019 (Fed. Cir 1997); Elan Transdermal Ltd. v. Cygnus Therapeutic Sys., 24 U.S.P.Q 2d 1926 (N.D. Cal. 1992).

10. Integra LifeSciences I, Ltd. v. Merck KGaA, 331 F.3d 860 (Fed. Cir. 2003); Bayer AG v. Elan Phar. Research Corp., 212 F.3d 1241 (Fed. Cir. 2000).

11. Jury Instructions, Integra LifeSciences I, Ltd. v. Merck (S.D. Cal. 96-CV-1307) (based on Intermedics, Inc. v. Ventritex, Inc., 775 F. Supp 1269n (N.D. Cal. 1991) aff’d 991 F.2d 808 (Fed. Cir. 1993)).

12. 331 F.3d 860.

13. Id. at 866.

14. Id.

15. Id. at 867.

16. Pub.L. No. 84-417, 98 Stat. 1585 (1984)

17. Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir. 1984).

18. Id. at 863.

19. The author would like to acknowledge John B. Chasnow for the apt pun used in a different context

20. 331 F.3d 860 at 867.

21. 331 F.3d at 866.

Cathryn Campbell, Ph.D., a partner in the San Diego office, is co-chair of the Firm’s Life Sciences Group and Head of its Life Sciences Intellectual Property Practice. Mauricio A. Flores, a partner in Orange County, focuses his practice on intellectual property litigation. The authors were involved in the Integra case as counsel to Integra, but this article is based only on publicly available information.