In a decision that will have far reaching implications for drug and medical device development, the Court of Appeals for the Federal Circuit held yesterday that the Hatch-Waxman safe harbor of 35 U.S.C. § 271(e)(1) is inapplicable to patented research tools that are not themselves subject to the FDA review process. While the decision is good news for the providers of research tools such as drug screening assays, it will make drug and medical device development in the United States costlier and more risky.
The case is Proveris Scientific Corp. v. Innovasystems, Inc. (.pdf) (No. 2007-1428), decided August 5, 2008. In rejecting the § 271(e)(1) exemption, the court reasoned that Congress must have intended that the safe harbor protect only those entities adversely affected by the de facto extension of patent life at the end of the patent term while they await FDA approval for a product that is subject to regulatory review. Unless the defendant is within the category of entities for whom the safe harbor was intended to provide relief, the court ruled, the exemption does not apply. The defendant, Innovasystems, is now weighing its further appellate options.
The Proveris decision departs from a line of earlier cases holding that the safe harbor protects the infringing use of any patented invention as long as the use is "reasonably related to the development and submission of information" in support of FDA approval of a new product covered by the FDCA. The decision thus changes the focus of § 271(e)(1) from whether the defendant's infringing use of the patented invention is "reasonably related" to developing the types of information relevant to the FDA, to whether the patented invention itself is the product on which the defendant intends to seek FDA approval.
The court's decision appears to implicate the full panoply of research tools used in drug discovery and development, including monoclonal antibodies, cell lines, membrane preparations, cDNA's and drug screening assays. To the extent the safe harbor protection now turns on whether the defendant is seeking FDA approval to market the product that is the subject of the patent-in-suit, the decision could produce anomalous results. For example, the infringing use of a monoclonal antibody may be outside the scope of the safe harbor if it is used only as a research tool to isolate a subset of cells, but may fall within the safe harbor if the same antibody becomes a candidate for a therapeutic drug. Similarly, the infringing use of a small molecule agonist may be exempt under § 271(e)(1) because it is a potential drug candidate subject to FDA review, but the defendant may not have the protection of the safe harbor to generate safety and selectivity data needed for FDA approval because to do so, it must perform a binding assay using cloned receptors that are patented and unavailable for license.
The decision means that manufacturers will need to devote more attention to assessing their freedom to operate as to research tools used in their drug development programs. Those companies that decided not to seek FTO opinions on research tool patents after the Supreme Court's decision in Merck v. Integra extending the safe harbor protection to pre-clinical research and development will need to reconsider their practices. More licenses with the providers of research tools will need to be negotiated, increasing the value of research tool companies but correspondingly increasing the cost of drug and medical device development. Global manufacturers might decide to conduct more of their pre-clinical research outside the United States where they may have greater freedom to operate, or to subcontract more of the research to third party vendors overseas.
Inevitably, there will be more litigation brought for infringement of research tool patents. This will rekindle the debate over the measure of damages that can be recovered for the one-time use of a research tool somewhere along the research and development pathway. In particular, litigants will confront an issue never decided by the Federal Circuit: whether the patent statute authorizes the award of reach-through royalties on sales of an approved commercial product, based upon the prior infringing use of a patented research tool to assist in drug discovery or product development. For an extensive discussion of the damages issue, see Donald R. Ware, "Research Tool Patents: Judicial Remedies," in 30 AIPLA Q. J. 267 (2002).
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