United States: Exemption from Patent Infringement is Expanded by the Supreme Court

In a rare Supreme Court patent infringement decision, the Court has made it clear that "uses reasonably related to the development and submission of information" to federal regulatory agencies by those developing medications that may be the subject of applications to the Food and Drug Administration ("FDA") are not acts of patent infringement. In reaching its decision, the Supreme Court vacated and remanded the Federal Circuit’s ruling on a patent dispute between Merck KGaA ("Merck") and Integra LifeSciences Holdings Corp. ("Integra").

The Supreme Court’s unanimous ruling exempts from patent infringement preclinical research undertaken to identify a new drug for submission of information to the FDA. However, basic scientific research which is not performed with the intent of identifying a new drug candidate for FDA submission is not covered by the exemption.

Integra had filed a patent infringement lawsuit against Merck, the Scripps Research Institute ("Scripps") and a scientist at Scripps, Dr. Cheresh. Integra claimed that Merck willfully infringed Integra’s patented tri-peptide sequence Arg-Gly-Asp (the "RGD peptide") by supplying Integra’s RGD peptide to Scripps for preclinical research of angiogenesis and Scripps infringed those patents by using the RGD peptide in these experiments.¹ Integra’s complaint sought damages from Merck and a declaratory judgment against Scripps and Dr. Cheresh. The action against Scripps and Dr. Cheresh was dismissed because no damages were sought from them. This left Merck to rebut the complaint allegations. Merck answered that it did not infringe the patents at issue and that, in any event, it was protected from infringement under 35 U.S.C. §271(e)(1).

Section 271(e)(1) states that it is not "an act of [patent] infringement to … use … or import into the United States a patented invention … solely for uses reasonable related to the development and submission of information under a Federal law which regulates the … use … of drugs."

Dr. Cheresh had previously discovered that blocking membrane receptors on certain cells inhibited angiogenesis. In 1995, Merck hired Scripps to test RGD peptides made by Merck as potential drug candidates that would inhibit angiogenesis. Scripps’ experiments focused on three potential drug candidates, EMD 66203 and two related derivatives, EMD 85189 and EMD 121974. The tests performed by Scripps apparently used the Integra RGD peptides as "positive controls" against which to measure the efficacy of the experimental drug candidates.² Ultimately, a primary drug candidate was identified, EMD 121974. Merck initiated the formal approval process with the FDA by filing an IND for EMD 121974 in 1998.

The District Court heard evidence at trial relating to whether the use of Integra’s RGD peptides fell within the scope of §271(e)(1). At the conclusion of the trial, the jury received the following instructions:

The jury returned a verdict for Integra on the basis that Merck failed to show that its activities were protected by §271(e)(1) and awarded Integra damages of $15 million. In response to post-trial motions, the District Court affirmed the jury’s damage award and denied Merck’s motion for judgment as a matter of law. With respect to the denial of Merck’s motion, the District Court explained that the evidence was sufficient to show that "any connection between infringing experiments and FDA review was insufficiently direct to qualify for the § 271(e)(1) exemption." Merck then appealed to the Federal Circuit challenging the sufficiency of the evidence supporting the jury’s finding. The Federal Circuit disagreed with Merck and affirmed the District Court’s ruling. The Federal Court found that § 271(e)(1)’s safe harbor did not apply because Merck’s use occurred before the stage when human trials are conducted. The Federal Circuit stated that the safe harbor of § 271(e)(1) did not apply because "Scripps work sponsored by [Merck] was not clinical testing to supply information to the FDA, but only general biomedical research to identify new pharmaceutical compounds." ⁴ The Federal Circuit’s ruling was based on two propositions: (1) the experiments conducted by Merck-Scripps did not supply information for submission to the FDA, but instead identified the best drug candidate; and (2) §271(e)(1) does not include all experimental activity that at some point may lead to an FDA approval process. This latter proposition suggested that a limited construction of §271(e)(1) was necessary to avoid depriving patents on "research tools" of their value.

The Supreme Court granted certiorari to review the legal conclusion – the proper interpretation of § 271(e)(1) - not the findings of fact. The issue that was decided by the Supreme Court was "whether uses of patented inventions in preclinical research, the results of which are not ultimately included in a submission to the FDA, are exempted from infringement under 35 U.S.C. §271(e)(1)". The Supreme Court ruled that such preclinical research was exempt, at least as long as there was a reasonable basis to believe that the compound tested would be the subject of an FDA submission and the experiments would produce the types of information relevant to an investigational new drug application ("IND") or a new drug application ("NDA"). Consequently, this Supreme Court’s opinion favors a broad view of patent-exempted research activities.

The Supreme Court stated that the statutory language of §271(e)(1) makes clear that it provides a safe harbor for the use of patented drugs in activities reasonably relating to the development and submission of any information under the Federal Food, Drug, and Cosmetic Act ("FDCA"). Consequently, the use of patented compounds standing alone does not render the preclinical use of those compounds infringing even when the experiments themselves are not included in a "submission of information" to the FDA. "There is simply no room in the statute for excluding certain information from the exemption on the basis of the phase of research in which it is developed or the particular submission in which it could be included." Integra conceded this point.

Integra’s argument, in part, was that if preclinical studies relating to a drug’s efficacy, mechanism of action, pharmacokinetics, and pharmacology are not included in an IND or an NDA, then those studies are outside the scope of the §271(e)(1) exemption. However, as the Supreme Court noted, the FDA requires that applicants include in an IND summaries of the pharmacological, toxicological, pharmacokinetic, and biological qualities of the drug in animals. Moreover, the FDA’s primary interest may be to assure safety of the drugs in humans, but the FDA does not evaluate the safety of the experiments in a vacuum. The Government’s Amicus Curiae brief explains that the "FDA might allow clinical testing of a drug that posed significant safety concerns if the drug had sufficiently positive potential to address a serious disease." Accordingly, information from preclinical studies of a drug’s efficacy in achieving particular results may be necessary for an IND.

Integra also argued that even if the FDA’s interest in preclinical studies is accepted, the experiments conducted by Merck would be disqualified because they were not conducted in conformity with the FDA’s good laboratory practices. However, as the Supreme Court noted, the FDA’s requirement for "good laboratory practices" only applies to experiments on drugs to determine their safety, not to studies of a drug’s efficacy, mechanism of action, pharmacology, or pharmacokinetics.

Considering these arguments, the Supreme Court explained that the statutory language of §271(e)(1) does not require that one know at the outset that a particular compound will be the subject of an IND. "[T]o construe §271(e)(1), as the Federal Circuit did, not to protect research conducted on patented compounds for which an IND is not ultimately filed is effectively to limit the assurance of exemption to the activities necessary to seek approval of a generic drug." The Supreme Court stated, "Congress did not limit §271(e)(1)’s safe harbor to the development of information for inclusion in a submission to the FDA; nor did it create an exemption applicable only to the research relevant to filing an [Abbreviated New Drug Application] for approval of a generic drug." The proper construction of §271(e)(1)’s safe harbor leaves adequate space for experimentation and failure on the road to FDA approval.

The Supreme Court opinion can be read as creating a test for activities covered by the §271(e)(1) exemption, i.e., those "reasonably related to the development and submission of information". On page 13 of the Slip Opinion, the Court states that for the safe harbor exemption to be available a drugmaker must at least (1) have a reasonable basis for believing that a patented compound may work, (2) through a particular biological process, (3) to produce a particular physiological effect, and (4) use the compound in research that would be appropriate to include in a submission to the FDA. Furthermore, scientific research may not be infringement even when: (1) the experimental drug is not the subject of an FDA submission or (2) a patented compound is used in experiments that are not ultimately submitted to the FDA.

The Court specifically stated that the exemption did not apply to 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.

The Supreme Court declined to make a final decision on the evidence presented in the case. The Court stated that its construction of § 271(e)(1) was consistent with the instructions previously given to the jury, however, the evidence presented at trial was not reviewed under the standard set forth in the jury instructions. Thus, the case was remanded.

The Supreme Court did not restrict the § 271(e)(1) exemption to only human studies or to studies where the data was later submitted to the FDA. This may provide some comfort to a drug company that uses another company’s patented compound in its research at early stages of new drug development.

The Supreme Court, however, left open several issues. The Court specifically declined to opine on whether, or to what extent, § 271(e)(1) exempts from infringement the use of "research tools" in the development of information for the FDA. Noteworthy is the fact that the Court expressed a belief that the RGD peptides were not used at Scripps as research tools. Also, still unanswered is the freedom a drug company will have in conducting preclinical studies that involve experiments that infringe a claim of another’s "research tool" patent.

Because of the significance of this decision and the continuing legal evolution in this case, the Life Science Practice Group at Pillsbury Winthrop Shaw Pittman is closely monitoring future activities and will provide up-to-date analyses as they occur.

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