Biotechnology Tool Patent Owners Breathe Sigh of Relief

Federal Circuit Clarifies Scope of § 271(e)(1) Research Use Exemption

On June 6, 2003 a Federal Circuit panel clarified the scope of the exemption afforded by 35 U.S.C. § 271(e)(1) with regard to infringing activities that occur early in drug development.  Integra Lifesciences I, Ltd. V. Merck KgaA, 2003 U.S. App. LEXIS 11335 (Fed. Cir. 2003) ("Integra Lifesciences"). This statute provides an exemption for otherwise infringing activities that are "solely for uses reasonably related to the development and submission of information" to the FDA. Much concern regarding the scope of this exemption arose following a district court opinion in Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 2001 U.S. Dist. LEXIS 19361 (S.D. N.Y. 2001) ("BMS"), which held exempt under § 271(e)(1) the use of patented intermediates to prepare libraries of taxol derivatives and identify novel anti-cancer taxol analogs for further development and submission to the FDA for approval. Thus, the allegedly infringing activity in the BMS case occurred far up-stream of the FDA approval process, even before identification of a compound for which FDA approval would be sought. Up until now the Federal Circuit has not had the opportunity to opine on how far upstream the scope of the § 271(e)(1) exemption reaches. In particular, the Court has not opined on whether research activity conducted to identify a drug compound falls with the § 271(e)(1) exemption.

Integra sued Merck for infringement of several patents relating to a tri-peptide segment of fibronectin having the sequence Arg-Gly-Asp ("the RGD peptide"), which promotes cell adhesion to substrates in culture and in vivo by interacting with the cell surface receptor αvβ3. Merck partnered with The Scripps Research Institute ("Scripps"), where a scientist had discovered that blocking the αvβ3 receptor inhibited angiogenesis (the process of generating new blood vessels), an effect thought to provide an effective means for eliminating tumor growth and for treating a variety of other diseases. The Merck-Scripps agreement contemplated a research and development program to bring a cyclic peptide αvβ3 receptor inhibitor discovered by Scripps or a derivative thereof to clinical trials and through FDA approval. Towards this end, additional Scripps research led to two derivatives of interest, and Scripps scientists conducted several in vivo and in vitro experiments "to evaluate the specificity, efficacy, and toxicity [of the compounds] for various diseases, to explain the mechanism by which these drug candidates work, and to determine which candidates were effective and safe enough to warrant testing in humans." These experiments included histopathology, toxicology, circulation, diffusion, and half-life of the peptides in the bloodstream and examined the proper mode of administration for optimum therapeutic effect.

Learning of the Scripps-Merck agreement, Integra contacted Merck and offered a license under its patents, which Merck ultimately declined. Integra sued for patent infringement, and Merck asserted § 271(e)(1) as a defense. The district court held that the Scripps-Merck activity did not fall under the § 271(e)(1) exemption.

In an opinion written by Judge Radar, the Federal Circuit affirmed the district court. The Court referred to the legislative history of the Drug Price Competition and Patent Term Restoration Act of 1984, Publ. L. No. 98-417, 98 Stat. 1585 (1984 ("the 1984 Act"), which implemented the § 271(e)(1) exemption, noting the two-fold legislative goals of (1) providing additional patent term to compensate patentee’s who must endure a protracted regulatory approval period during the term of their patent before they can enjoy market exclusivity, and (2) eliminating the de facto patent term extension arising because generic drug companies had to await patent expiry before they could conduct otherwise infringing activities necessary to generate data for regulatory approval, thereby delaying the generic drug’s entry into the market. To achieve these goals, the 1984 Act permitted generic competitors to conduct experiments on patented drugs during the lifetime of the patent so that the generic drug could be marketed as soon as the last of the relevant patents expired.

The Federal Circuit referred to the House Committee’s characterization of the activities permitted by the infringement exemption as "a limited amount of testing so that generic manufacturers can establish the bioequivalency of a generic substitute." The Court also considered important the Committee’s characterization of exempt activity as interfering with the patentee’s rights in a de minimis, rather than substantial, way. By the plain language of its terms the statute limits the exemption to activities conducted "solely for purposes reasonably related to the development and submission of information under Federal law." At issue in Integra Lifesciences was the meaning of the term "reasonably related."

The Court reasoned that the term "reasonably related" tied the exempt activities to the submission of information to the FDA. The Court opined that while infringing activities need not directly produce data that is submitted to the FDA to enjoy the safe harbor of § 271(e)(1), such activities "strain the relationship to the central purpose of the statute." Accordingly, the Court commended the district court for confining the exemption to activity that "would contribute (relatively directly)" to information the FDA considers for drug approval, citing Intermedics Inc. v. Ventritex Co., 775 F. Supp. 1269 (N.D. Cal. 1991), aff’d, 991 F.2d 808 (Fed. Cir. 1993). To further define the scope of "reasonably related," the court referred back to the purpose of the 1984 Act, which was, in part, to facilitate the immediate entry into the market upon patent expiration of generic versions of patented drugs already in the market.

Viewed in this context, the Court held that the term "reasonably related" does not embrace all activity in the research and development chain simply because they may lead to an FDA approval process. In particular, and de facto overruling the district court interpretation in BMS, the Court stated "[t]he FDA has no interest in the hunt for drugs that may or may not later undergo clinical testing for FDA approval." Integra Lifesciences, 2003 U.S. App. LEXIS 11335 at *15. "The safe harbor does not reach any exploratory research that may rationally form a predicate for future FDA clinical tests." Id. at *17. To view it otherwise, the court held, would ignore the language of § 271(e)(1) and its context in the 1984 Act. In addition, the court recognized that to hold otherwise would vitiate the exclusive rights of a whole class of patentees owning biotechnology tool patents, whose value had been put into question by the BMS decision. This outcome would be in direct conflict with the legislative intent that the exempt activity have only de minimis effect on patent owners’ rights: "[t]he 1984 Act was meant to reverse the effects of Roche under limited circumstances, not to deprive entire categories of inventions of patent protection." Id. at *18-*19.

Applying their reasoning to the facts of the case, the Court held that the Scripps-Merck activity, which the Court described as pre-clinical research that did not supply information for submission to the FDA but rather identified a drug candidate that would be subject to future clinical testing for FDA approval, was not exempt under § 271(e)(1).

Judge Newman, concurring in part and dissenting in part, agreed with the majority’s reasoning and holding with regard to § 271(e)(1) but opined that the common law research exemption (which neither party raised nor briefed) would apply.

Thus, the reasoning and holding in this case sets a clear limit on how far upstream in the research and development process the § 271(e)(1) exemption reaches. The Federal Circuit has set as a minimum that a clinical drug candidate must have been identified for the exemption to apply. The area of otherwise-infringing activities that lies between drug discovery and activities that directly generate data submitted to the FDA remains somewhat gray, however, particularly as the activities get closer in time and nature to the identification of the lead candidate.

For an expansive analysis of § 271(e)(1), the reader is referred to Noonan, Greenfield, and Zuhn, Paradise Lost: The Uncertain Future of Research Tool Patents, 15 INTELL. PROP. & TECH. L.J. 1 (2003).


For more information on this topic, please contact Michael S. Greenfield or Kevin E. Noonan . Both are partners at the law firm of McDonnell Boehnen Hulbert & Berghoff.The information contained in this email is provided for informational purposes only and does not represent legal advice. Neither the APLF nor the authors intend to create an attorney client relationship by providing this information to you through this message.