In a follow-up on our earlier discussion regarding the Supreme Court’s broad scope of the research exemption to the Integra case, the question came up asking if a patented delivery formulation — say, a sustained release formulation as opposed to a therapeutic itself — would fall within the exemption from infringement under the Food and Drug Administration (”FDA”) Exemption.

This “safe harbor” under 35 U.S.C. ‘271(e)(1) states:

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 (emphasis added).

It’s very clear that the Supreme Court recently gave pharmaceutical companies broad latitude to study and experiment with compounds covered by other companies’ patents in its recent decision, Merck KGaA v. Integra Lifesciences I, Ltd., 125 S. Ct. 2372, No. 03-1237. The operative effect of the decision is that, in certain circumstances, drug companies can now conduct preclinical research (laboratory and animal testing) using patented compounds without risk of infringement.

The Supreme Court decided, unanimously, that such use in preclinical studies is protected as long as there is a reasonable basis to believe that the experiments will produce types of information relevant to an Investigational New Drug Application (”IND”) or New Drug Application (”NDA”) filed with the FDA.

But what if it is not the active agent that is subject to patent protection but a specific formulation or controlled release invention for use with the active agent?

Writing for a unanimous Court, Justice Scalia found that:

“As an initial matter, we think it apparent from the statutory text that §271(e)(1)’s exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA.” (emphasis added).

The use of the term “patented inventions” seems to indicate that the Court very much intended for the §271(e)(1) exemption to apply to any patented technologies that are used in drug development as long as they are reasonably related to the development and submission of information under the FDCA. The Supreme Court therefore ruled that the exemption applies broadly to all the aspects of when researchers seek out new compounds having pharmaceutical safety and efficacy, and is not limited to situations in which a pharmaceutical candidate has already been identified and is being tested in order to obtain FDA approval.

That would seem to include patented methods of making compounds, patented formulations and any other patented technologies related to the drug including tableting systems, coating and encapsulation technologies and even the machinery for manufacturing the drug.

Relying heavily on the language of the statute, Justice Scalia states that “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.”

Critical to triggering the exemption is that experiments be “reasonably related” to FDA submissions; the parameters of this standard are set forth by the Supreme Court:

At least where a drug maker 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, that use is ‘reasonably related’ to the ‘development and submission of information under…Federal law.’ 125 S. Ct. at 2382, No. 03-1237, slip op. at 13.

In view of the Merck decision, it appears that many preclinical studies using patented inventions will be exempt from infringement under § 271(e)(1). They may include:

Clinical and Preclinical studies of patented compounds that are appropriate for submission to the FDA;

Studies intended to generate pharmacological, toxicological, pharmacokinetic, and biological qualities of the drug in animals;

Studies intended to generate information regarding a risk-benefit assessment of the appropriateness of [a proposed clinical] trial; and

Safety related tests even if not compliant with FDA regulations.

Unfortunately, the Supreme Court explicitly declined to express a view about whether § 271(e)(1) exempts from infringement the use of research tool patents in furtherance of research for regulatory approval.

Posted August 3rd, 2007 by Stephen Albainy-Jenei in Supreme Court, FDA, IP Laws
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On Remand from the Supreme Court, the U.S. Court of Appeals for the Federal Circuit applied the broad scope of the research exemption to the Integra case and reversed the district court’s judgment of infringement. Integra Lifesciences v. Merck KGaA (02-1052-1065).

Integra Life Sciences has five patents relating to peptides that contain the RGD sequence of amino acids — the contiguous sequence of arginine (R), glycine (G), and aspartic acid (D) within a peptide chain. The inventions are described as demonstrating various cell interactions with the extracellular peptide matrix, including ways of promoting cell attachment, blocking cell attachment, and disrupting cell attachment.

Merck KGaA and Scripps Research Institute were collaborating in research on the inhibition of angiogenesis since the development and growth of undesired blood vessels is a factor in several diseases, including solid tumor cancers, diabetic retinopathy, and rheumatoid arthritis. Integra then sued for infringement.

In the district court, two defenses were presented: first, that the early scientific studies at Scripps on RGD peptides are not subject to patent infringement, based on the common law research exemption; and second, that the ensuing studies were conducted in furtherance of drug development and the projected clinical trials, and are exempt from infringement under the FDA Exemption (or “safe harbor”) established by 35 U.S.C. ‘271(e)(1):

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 (emphasis added).

Integra argued that the FDA Exemption must be narrowly construed, explaining that the purpose of ‘271(e)(1) is to shield generic drug producers from patent infringement while they are preparing to enter the market on expiration of the patents on established products — a purpose quite removed from the activities for which Merck and Scripps were now seeking to invoke the Exemption

Merck and Scripps argued that ‘271(e)(1) is not limited to studies of safety for human subjects, and that information about efficacy, pharmacology, pharmacokinetics, and mechanism of action is properly included in the IND application and thus subject to the FDA Exemption.

The jury found infringement and the district court, sustaining the verdict, described the challenged experiments as “insufficiently direct to qualify” for the FDA Exemption.

A split panel of the Federal Circuit affirmed, holding that “the 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.” Integra, 331 F.3d at 866.

In the Supreme Court, the question was as follows:

Whether uses of patented inventions in preclinical research, the results of which are not ultimately included in a submission to the Food and Drug Administration (FDA), are exempted from infringement by 35 U.S.C. ‘271(e)(1).

The Supreme Court explained that ‘271(e)(1) “exempted from infringement all uses of patented compounds ‘reasonably related’ to the process of developing information for submission” to the FDA and that “reasonably related” includes uses in research that are conducted after the biological mechanism and physiological effect of a candidate drug have been recognized, such that if the research is successful it would appropriately be included in a submission to the FDA.

On remand, Integra repeated that ‘271(e)(1) was never intended as a broad authorization to investigators to infringe the patents of others, and that the statute should be strictly construed.

But, the Supreme Court rejected, as a matter of statutory interpretation, Integra’s position that the Scripps experiments that were not included in the IND application are excluded from the FDA Exemption:

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.

In applying the Supreme Courts directions, the Fed Circuit said:

All of the experiments charged with infringement were conducted for the purposes of determining the optimum candidate angiogenesis inhibitor and proceeding with commercial development of the selected candidate in compliance with regulatory procedures, initially using three structurally related RGD peptides.

Integra also argued that much of this work is properly viewed as “discovery-based research” and is not the “routine FDA-related work” that Integra states is the proper limit of ‘271(e)(1) even on the Court’s view of the statute.

Integra alternatively proposes that each of the Scripps experiments should be classified as either “discovery” or “routine,” and that only those experiments devoid of discovery, and entirely routine, can be subject to the FDA Exemption. But, the Fed Circuit noted that the safe harbor does not depend on a distinction between “discovery” and “routine,” but on whether the threshold biological property and physiological effect had already been recognized as to the candidate drug:

That the experiments contributed to scientific knowledge does not deprive them of the safe-harbor benefit of ‘271(e)(1) when the requirements therefore are met.

Unfortunately, the Federal Circuit did not discuss how a case should be decided based on research tool patents and instead relied on a post-hearing letter in which the parties stated that research tools were not at issue.

Judge Rader, dissenting-in-part and concurring-in-part.

This decision casts a large shadow over patent protection by its overly expansive interpretation of the 35 U.S.C. § 271(e)(1) exemption. In particular, this court today expands the exemption beyond the Supreme Court’s limits on the provision to eliminate protection for research tool inventions. The Supreme Court stated “that § 271(e)(1)’s exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the [Federal Food, Drug and Cosmetic Act (FDCA)].” Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005). Thus, the exemption covers activities that develop information that will ultimately be submitted to the FDA, not patented processes and tools beyond the scope of the “patented compounds” that the Supreme Court placed within the statutory exemption. In this case, two of the patents are research tools that deserve protection. This court should remand with instructions that the district court examine and protect these research tool patents.

A careful examination of the patents shows that two of them have no application at all outside of a laboratory. If the patents in this case are not research tools, then of course this court could quickly construe the claims and show that they claim drugs or other products likely to undergo FDA clearance, not simply laboratory methods. Unfortunately even a cursory analysis of the patents (undertaken in this dissent) shows that two of them have no application outside the laboratory.

Posted August 2nd, 2007 by Stephen Albainy-Jenei in Supreme Court, IP Litigation
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The U.S. Supreme Court will vote today whether to accept for review Zoltek Corporation v. United States, No. 06-1155. Pharmaceuticals, defense and manufacturing companies are closely watching the case, which centers on the types of protections, if any, that are available to a patent-holder whose inventions have been infringed by the Federal Government or its contractors.

Patent infringement under 35 U.S.C. § 271(a) includes “us[ing] * * * any patented invention, within the United States.” Patent infringement under 35 U.S.C. § 271(g) includes “import[ing] into the United States or … us[ing] within the United States a product which is made by a process patented in the United States.” Where a patented invention is “used or manufactured by or for the United States” 28 U.S.C. § 1498(a) provides that the “owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use or manufacture.” Under 28 U.S.C § 1498(c), § 1498 does “not apply to any claim arising in a foreign country.”

Where a government-authorized contractor performed some or all of the steps of a patented process outside the United States, but the products of that process were imported into and used in the United States by and for the United States, the questions presented by this Petition are:

1. Whether conduct by the government through its authorized contractors that would otherwise constitute patent infringement under § 271(g) or § 271(a) is a taking of property subject to the Fifth Amendment?

2. Whether a patent-holder can seek compensation in the Court of Federal Claims for such otherwise infringing conduct either: (A) under § 1498, notwithstanding that some or all steps of the process were performed outside the United States; or, if not, (B) as a claim for just compensation under the Fifth Amendment cognizable pursuant to the Tucker Act, 28 U.S.C. § 1491(a)?

Zoltek manufactures materials produced from carbon fiber and has patent protection under U.S. Patent No. RE 34,162, which claims a method for producing carbon-fiber sheets having properties useful in military applications, such as providing stealth qualities to aircraft.

Lockheed Martin and its subcontractors used Zoltek’s patented process to produce carbon-fiber sheets and imported such materials into the United States for use in making the F-22 Fighter Plane pursuant to a contract with the government.

Under 28 U.S.C. § 1498(a), Lockheed’s “use or manufacture of [a patented] invention” is “construed as use or manufacture for the United States.” Section 1498(a) further provides that whenever a patented invention “is used or manufactured by or for the United States without license of the owner thereof … the owner’s remedy shall be by action against the United States in the Court of Federal Claims for the recovery of his reasonable and entire compensation for such use or manufacture.”

Zoltek sued for infringement infringement of Zoltek’s patent and the government sought partial summary judgment arguing that the accused processes were used, in whole or in part, outside the United States and thus the claims were excluded from § 1498 by § 1498(c) as “claim[s] arising in a foreign country.”

The Court of Federal Claims ruled that, per § 1498(c), § 1498(a) does not apply to “claims arising in a foreign country,” and that a claim for the “use” of a patented process arises in a foreign country where any step in the process is performed in a foreign country.

The CFC ruled that the government’s actions, if proven, would constitute a taking under the Fifth Amendment and that it had jurisdiction under the Tucker Act, 28 U.S.C. § 1491, to hear a claim for just compensation not covered by §1498. It thus denied the government’s motion for partial summary judgment.

The CFC held that although Zoltek has an exclusive property right in its patented process and in the importation and use of the products thereof, § 1498 immunizes Lockheed against such claims and yet simultaneously the same provision and language does not cover those claims for purposes of providing compensation.

The CFC concluded that “Congress and the Supreme Court now see acts of the U.S. government that between private parties would be patent infringement as eminent domain takings.”

The Federal Circuit, per curiam, affirmed in part and reversed in part, in favor of the government on both issues on appeal holding that a patent-holder’s only “judicial recourse against the federal government, or its contractors, for patent infringement, is set forth and limited by” § 1498 and that a “‘process cannot be used within the United States as required by § 271(a) unless each of the steps is performed within this country.’”

The per curiam opinion also reversed the CFC’s holding that Zoltek could assert a Fifth Amendment takings claim under the Tucker Act.

Judge Plager observed that the decision below “is an invitation to strategic conduct if ever there was one.” Meanwhile, the government suggests that it should be left to Congress to correct any problems from the decision below.

See the lenghty Zoltek Petition for Certiorari here.

Posted June 7th, 2007 by Stephen Albainy-Jenei in Supreme Court, IP Laws, Current Affairs
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