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The Pre-Clinical Research Statutory Infringement Exemption
How Far Back is
Published By Patent Strategy & Management October 2005

On June 13, 2005, the United States Supreme Court expanded the safe harbor provision of 35 U.S.C. §271(e)(1) to the “use of patented compounds in preclinical studies … as long as there is a reasonable basis for believing that the experiments will produce ‘the types of information that are relevant to an [Investigational New Drug application ('IND')] or [New Drug Application ('NDA')].’” (Merck KGaA v. Integra Lifesciences I, Ltd., No. 03-1237, slip op. at 14 (U.S. June 13, 2005) (quoting, Brief of U.S. as Amicus Curiae 23) (Integra II).

Integra Lifesciences I, Ltd. (“Integra”) sued Merck KGaA and Scripps Research Institute (collectively, “Merck”) for infringement of five patents related to methods for contacting cells with tripeptides of the sequence Arg-Gly-Asp (“RGD peptides”). See, e.g., 4,988,621. The patented methods promote cell adhesion, inhibit cell proliferation, and selectively detach malignant cells, amongst other claimed results.

As a defense to infringement, Merck raised the research exemption under 35 U.S.C. §271(e)(1) (the “§271(e)(1) exemption”) for its developmental work from 1995 to 1996. The district court ruled, and the Federal Circuit affirmed, however, that Merck’s RGD peptides infringed four of the five asserted Integra patents and that the §271(e)(1) exemption did not apply. According to the Federal Circuit: 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 Lifesciences I, Ltd. V. Merck KGaA, 331 F.3d 860, 866 (Fed. Cir. 2003) ('Integra I').

The Supreme Court granted certiorari. After interpreting the §271(e)(1) exemption, the Court remanded to the Federal Circuit, noting that “the evidence presented at trial has yet to be reviewed under the standards set forth in the jury instructions, which we believe to be consistent with, if less detailed than, the construction of §271(e)(1) that we adopt today.” Integra II, 125 S.Ct. at 2384.

Reasonably Related Information
Section 271(e)(1) exempts from infringement any act that is “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.” 35 U.S.C. §271(e)(1) (emphasis added).

Information that is purposefully generated for the FDA (such as the safety of the drug candidate) clearly qualifies under the exemption. However, it is not so clear how far back in the research chain the exemption reaches. The Supreme Court notes that “[t]here 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.” Id. at 9. However, the Court agreed with the Federal Circuit that the exemption “does not globally embrace all experimental activities that at some point, however attenuated, may lead to an FDA approval process.” Id. at 12, quoting Integra I at 867. The Court also noted that the exemption applies “[a]t 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 used the compound in research that, if successful, would be appropriate to include in a submission to the FDA [because] that use is ‘reasonable related’ to the ‘development and submission of information under … Federal law.’” Integra II, 125 S.Ct. at 2383.

The Court, however, left other practical questions unanswered, such as whether the exemption applies when a researcher used the patented compound without having a reasonable basis for believing that it would produce an intended physiological effect. In addition, this question and others are unlikely to be resolved on remand. Instead, based on the Court’s approval of a consented-to jury instruction, the Federal Circuit likely will limit its review to whether substantial evidence existed for the jury to hold that the evidence of record failed to establish that Merck’s activities fell within the §271(e)(1) exemption.

Evidence at Trial
In 1995, Merck contracted with Scripps to develop “integrin antagonists as angiogenesis inhibitors,” beginning with in vitro and in vivo testing of RGD peptides in year one and culminating with the submission of an IND to the FDA in year three. Id. at 4. Merck’s key witness, Dr. Cheresh of Scripps, was hired by Merck to conduct research. In interrogatory responses, Dr. Cheresh identified that all his work done from 1995 to Oct. 15, 1996 was basic laboratory research undertaken solely for philosophical or scholarly gratification. (Brief for Plaintiffs-Cross Appellants Integra Lifesciences I, Ltd. and the Burnham Institute at Integra)(“Integra Brief”). At trial, however, he changed his theme and testified that all of his work from 1995 through 1998 was done for FDA approval. Id. Merck’s Director of Biomedical Research, Claus Schmitges, also testified that in 1996, Merck was still in the research phase, versus the development phase focused on regulatory requirements. Id. at 26.

At trial, the parties consented to the following jury instruction on the §271(e)(1) exemption which how has become the basis for the Federal Circuit’s analysis on remand: To prevail on this defense, Merck must prove by a preponderance of the evidence that it would be objectively reasonable for a party in Merck’s and Scripp’s situation to believe that there was a decent prospective that the accused activities would contribute, relatively directly, to the generation of the kinds of information that are likely to be relevant in the processes by which the FDA would decide whether to approve the product in question. (emphasis added).

What’s Next at the Federal Circuit
The Supreme Court remanded the case to the Federal Circuit with instructions to analyze the facts under the Court’s interpretation of §271(e)(1); however, it is not clear that the Court’s decision will affect the case’s ultimate outcome under §271(e)(1) for at least three reasons.

First, the parties consented to the district court’s jury instruction, and the Supreme Court indicated that the jury instruction is “consistent with, if less detailed than” its own construction of §271(e)(1). Hence, on remand Merck cannot mount an attack based solely on the legal merit of the jury instruction in light of the Supreme Court’s new interpretation of §271(e)(1). However, Merck may be able to exploit the district court’s own interpretation of §271(e)(1).

In deciding Merck’s motion for JMOL, the district court explained that “any connection between the infringing Scripps experiments and FDA review was insufficiently direct to qualify for the [§271(e)(1) exemption].” Civ. No. 96-1307 JMF (S.D. Cal. Mar. 26, 2001), App to Pet. For Cert. 49a. (emphasis added). Under the Supreme Court’s interpretation, however, §271(e)(1) excludes “from infringement, all uses of patented compounds ‘reasonably related’ to the process of developing information for submission under any federal law regulating the manufacture, use, or distribution of drugs.” Integra II, 125 S.Ct. at 2383, (citing Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 674 (emphasis in original). On remand, therefore, the Federal Circuit likely will need to determine if the district court’s “insufficiently direct” connection satisfies the requirement that it be “reasonably related” to the FDA process. However, even if “insufficiently direct” in some cases could be found to be “reasonably related,” in this particular case, the testimony presented by Merck going towards “reasonably relatedness” of the preclinical research is slim and apparently contradicted by other evidence that the early research was “basic laboratory research undertaken solely for philosophical or scholarly gratification.” Integra Brief at 25.

Second, even though the Supreme Court rejected what it termed the Federal Circuit’s categorical exclusions from the §271(e)(1) exemption, the Court left room for specific fact scenarios within those categories where an activity still may be excluded from §271(e)(1). The Court held that “[I]t does not follow … that §271(e)(1)’s exemption from infringement categorically excludes either (1) experimentation on drugs that are not ultimately the subject of an FDA submission or (2) use of patented compounds in experiments that are not ultimately submitted to the FDA.” Integra II 125 S.Ct. at 2383 (emphasis added). However, the Court did not indicate how this case’s specific situation should be interpreted. In fact, based on the evidence, or lack of evidence presented by Merck, the Federal Circuit may be able affirm the district court’s denial of JMOL because Merck did not satisfy its burden to present substantial evidence that its infringing activity satisfied the Supreme Court’s interpretation of §271(e)(1). The Federal Circuit certainly did not have to create any categorical exemptions in order to exclude Merck’s specific activity from the §271(e)(1) exemption. Further, because the Court held that the jury instruction is “consistent with” the Court’s new interpretation of §271(e)(1), it is not likely that the Federal Circuit would remand to the district court for further fact finding. The parties had their opportunity to present facts, and the operable instruction has not changed.

Finally, the exempt activity use must be “solely for uses reasonably related to the development and submission of information. …” 35 U.S.C. §271(e)(1) (emphasis added). The Supreme Court did not comment on this language. In Amgen, Inc. v. Hoechst Marion Roussel, Inc. 3 F. Supp. 2d 104, 108 (D. Mass. 2002), a district court held that certain ulterior motives or alternative purposes do not preclude the exemption if a party reasonably believes that there was a decent prospect that “the use in question would contribute (relatively directly) to the generation of kinds of information that was likely to be relevant in the processes by which the FDA would decide whether to approve the product.” The Federal Circuit has not previously commented on whether the timing of these alternate purposes is relevant. If it is, then there is record evidence in Integra that the research at issue was not solely for such uses at the time the research was performed. Hence, on remand, the Court may be able to again affirm the district court’s denial of JMOL.

Prior statements by both lower tribunals imply that such evidence may exist. In denying Merck’s motion for JMOL, the district court held that “any connection between the infringing Scripps experiments and FDA review was insufficiently direct to qualify” for the §271(e)(1) exemption.” If the connection was so insufficiently direct, then it must have had a purpose other than solely reasonably related to FDA submission. In addition, the Federal Circuit commented, and the Supreme Court did not disturb, that the “Scripps work sponsored by Merck was … only general biomedical research to identify new pharmaceutical compounds.Integra I, 331 F.3d at 866. Therefore, record evidence may be available to allow the Federal Circuit to again affirm the district court based on the specific limiting language of §271(e)(1).

Given the factual scenario here, and even though the Supreme Court has reinterpreted §271(e)(1), it is not likely that the Federal Circuit will reverse the denial of JMOL and hence overturn the jury’s verdict that §271(e)(1) did not apply.

Questions Remain Unanswered
Based on the Court’s analysis, we now know that the §271(e)(1) exemption does not “categorically exclude” experimentation on drugs that are not ultimately the subject of an FDA submission, or use of patented compounds in experiments that are not ultimately submitted to the FDA. However, the Court did not provide any guidance on when such actions would be exempted from infringement. For example, would the exemption apply when a researcher used the patented compound without having a reasonable basis for believing that it would produce an intended physiological effect? The Court left this specific guidance to the percolation of case law through the district court and the Federal Circuit.


Reprinted with permission from the October 2005 edition of Patent Strategy & Management. ©2005 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

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