Orange Book Blog

Federal Circuit Addresses Effect of 271(e)(1) "Safe Harbor" in ITC Actions

Amgen v. Int'l Trade Comm'n and Roche, No. 2007-1014 (Fed. Cir. 2008)

Amgen holds at least six US patents that relate to erythropoeitin and its derivatives (EPO) and processes for making EPO, protecting the Amgen drugs Aranesp and Epogen.  Sales of Aranesp alone topped $3.6 million last year.  Roche produces EPO in Europe and has been seeking FDA approval for its own EPO drug, Mircera, in the US.

Roche began importing EPO as part of its effort to generate data for its regulatory submissions to the FDA.  Amgen did not object to these acts of importation.  However, Roche continued importing EPO even after its FDA application was complete (though Roche has not yet sold or contracted to sell any of its EPO in the US).  Amgen responded by filing a Section 337 action with the International Trace Commission (ITC), asking the ITC to enjoin Roches further importation and future sale in the US of its European-produced EPO.

The ITC denied Amgens injunction request because (1) the ITC determined that Roches importation of EPO was protected by the FDA safe harbor provision of Section 271(e)(1), which provides that conduct cannot infringe a patent when it is reasonably related to securing FDA approval; and (2) the ITC has no jurisdiction absent a sale or contract for sale of EPO in the US.  In a decision Wednesday, the Federal Circuit affirmed in part, reversed in part, and remanded the case to the ITC.

Amgen made three arguments on appeal: (1) Section 271(e)(1) provides no exemption for the importation of articles made overseas by patented processes in Section 337 actions before the ITC; (2) Section 271(e)(1) does not provide blanket protection for all pre-FDA-approval conduct; and (3) the ITC has jurisdiction whenever sale of the accused article is imminent.  All three Federal Circuit panelists sided with Amgen on the second and third points.  On the first point, however, Judges Newman and Lourie agreed with the ITC, while Judge Linn dissented to express his agreement with Amgen’s argument.

On Amgen’s first point, the majority accepted the ITC’s argument, i.e., that the Section 271(e)(1) safe harbor should operate identically in ITC litigation as in federal district court litigation.  The importation of an article made by an infringing process constitutes an act of infringement under Section 271(g).  But the safe harbor of Section 271(e)(1) holds that certain acts related to gaining regulatory approval are not acts of infringement.  Therefore, 271(e)(1) cuts back on 271(g) by declaring that certain types of conduct do not constitute infringement.  The ITC, however, does not look to Section 271(g) for its authority.  Instead the ITC looks to 19 USC § 337(a)(1)(B)(ii), which declares unlawful the importation of any article “made . . . by means of a process covered by the claims of a valid and enforceable United States patent.”  In contrast, Section 271(g) only forbids the importation of articles made by means of a process that infringes the claims of a valid and enforceable US patent.  Because the safe harbor of Section 271(e)(1) only addresses infringement, Judge Linn (in dissent) argues that the safe harbor applies to infringement liability under Section 271(g) but not to unlawful trade practices under Section 337(a)(1)(B)(ii).  The majority’s holding elects to gloss over these key differences between Section 271(g) and Section 337.

On the other hand, the majority’s holding probably does comport more closely with the policy rationales that support having the regulatory safe harbor.  As the majority notes, the legislative history supports this proposition that the 271(e)(1) safe harbor applies identically to importation under Section 271(g) and to importation under Section 337(a)(1)(B)(ii).  Moreover, the Supreme Court’s broad reading of the scope of the regulatory safe harbor in Integra v. Merck and Eli Lilly v. Medtronic lends further support for the majority’s policy judgment.  Judge Linn even agrees that the majority reaches the policy outcome that makes the most sense.  Nevertheless, the text of Section 337(a)(1)(B)(ii) is clearly at odds with such a policy outcome.

On Amgen’s second point, the Court agreed with Amgen.  The safe harbor of Section 271(e)(1) does not provide blanket protection for all pre-FDA-approval conduct.  For each separate act, the accused party must demonstrate that each act is reasonably related to gaining regulatory approval.  Amgen asserted that Roche continued importing EPO after its FDA application was complete and used the imported EPO to conduct marketing studies.  The Court remanded the case to the ITC for an act-by-act evaluation of whether Roche’s conduct was indeed within the ambit of Section 271(e)(1).

On Amgen’s third point, the Federal Circuit held that the ITC jurisdiction is invoked “[w]hen it has been shown that infringing acts are reasonably likely to occur . . . .”  The court went to great lengths to point out that this standard is not new, and is, in fact, consistent with nearly three decades of ITC precedent.  Because Section 337 provides for a prospective remedy, it makes no sense for the complainant to wait for an actual sale to occur, so long as an actual sale is imminent.

RELATED READING:

• Patent Docs
• Patently-O
• Reuters

Patent Protection for Research Tools Remains Unclear After Federal Circuit Revisits Integra v. Merck

Integra Lifesciences v. Merck KGaA, No. 2002-1052 (Fed. Cir. 2007)

        Guest Post by Robert S. Dailey

Last Friday, the Court of Appeals for the Federal Circuit decided Integra v. Merck, on remand from the Supreme Court.  Click here for the opinion.  The case has important implications for owners of "research tools" patents.

In the mid-1990s, Integra sued Merck KGaA (the German company) and Scripps for infringing five patents relating to peptides that contain the RGD sequence of amino acids.  This suite of patents included both patents directed to RGD-containing peptide compounds and patents directed to laboratory methods (i.e., research tools) using the RGD-containing peptides.

Merck and Scripps defended their conduct by relying on the FDA safe harbor of 35 USC § 271(e)(1), which precludes liability for activities "reasonably related to the development and submission of information under [the Food, Drug and Cosmetic Act]."  The FDA safe-harbor was passed as part of the Hatch-Waxman Act to permit "a limited amount of testing so that generic manufacturers can establish the bioequivalency of a generic substitute."  In this sense, the safe harbor encompasses activities that develop information that will normally find its way into an FDA submission.

At the original trial in the district court, Integra argued for a narrow reading of the FDA safe harbor in three respects.  First, Integra argued that the safe harbor includes only studies on the safety of administration to humans, and does not include experiments on mode of action (i.e., ADME and PK studies).  Second, Integra argued that the safe harbor excludes studies on related compounds that were not the subject of any FDA submission.  Third, Integra argued that the safe harbor can only include experiments complying with the FDA’s Good Laboratory Practices (GLP), since only data from GLP-compliant studies qualify for submission to the FDA.

A jury verdict and bench opinion accepted Integra's narrow reading of the safe harbor statute, and found Merck and Scripps liable for infringement.  A divided panel of the Federal Circuit affirmed.  The Supreme Court granted certiorari on the limited question of "whether uses of patented inventions in preclinical research, the results of which are not ultimately included in a submission to the [FDA], are exempted by [the FDA safe harbor]."  The term "patented inventions" presumably included both patented compounds and patented research tools that use those compounds.

Pharma News Briefs

• The Antitrust & Competition Policy Blog reports on a new paper by Prof. Christopher Leslie of Chicago-Kent College of Law advocating the use of antitrust law to challenge the licensing of invalid patents.
• Richard Epstein, my law school Property professor, has a new book out entitled Overdose: How Excessive Government Regulation Stifles Pharmaceutical Innovation.  Judy Chevalier has this review at Slate.  Prof. Epstein wrote two related Op-Ed pieces for the Boston Globe and L.A. Times.
• Via Patent Circle, Abraxis, Orchid, and Sandoz have filed citizen petitions in support of their ANDAs for generic versions of Wyeth's Zosyn.  The Economic Times of India published this article about the petitions.
• On Patent Docs, Kevin Noonan continues his series of posts in defense of patents on biotechnology inventions.
• Ed Silverman, veteran reporter for The Star-Ledger of New Jersey, recently started Pharmalot, a new blog covering news and trends in the pharmaceutical industry.
• The Voluntary Trade Blog reports that FTC Commissioner William Kovacic, in a recent interview with Dow Jones, harshly critized the Department of Justice for advising the Supreme Court not to take the FTC v. Schering-Plough "reverse payments" case last year.
• Peter Zura's Two-Seventy-One Patent Blog reports on a recent district court decision applying the 271(e)(1) "safe harbor" to research tools.
• The Economist and The Scientist recently published articles on the current "dismal" state of the pharmaceutical industry.

Hoffman-LaRoche's Motion to Dismiss EPO Case On Basis of 271(e)(1) Research Exemption Is Denied

Amgen dodged a bullet last week when Judge William G. Young of the U.S. District Court for the District of Massachusetts denied Hoffman-LaRoche's motion to dismiss Amgen's complaint alleging infringement of its patents on erythropoeitin (EPO).  Hoffman-LaRoche based its motion to dismiss on the assertion that all of the allegedly infringing activities fell under 35 U.S.C. 271(e)(1), which exempts activities reasonably related to the development of information necessary for FDA approval.

Judge Young's opinion explains that the 271(e)(1) research exemption is an affirmative defense to patent infringement, and therefore Amgen was not required to plead that Hoffman-LaRoche's activities were not protected by the exemption.  Amgen's complaint survived the motion to dismiss simply because Amgen pled facts sufficient to establish importation of a patented drug in violation of section 271(a).

In dicta, Judge Young stated that even if Amgen were required to plead acts that fall outside the 271(e)(1) research exemption, the court would conclude that Amgen's complaint supported a claim of infringement.  The court recognized that although many of Hoffman-LaRoche's activities fall within the research exemption, Amgen alleged that Hoffman-LaRoche is importing a drug "which is materially indistinguishable from Amgen's patented invention."  According to Judge Young, "This Court cannot conclude, as a matter of law, that because Roche/Hoffman is in the process of submitting information to the FDA, that this importation of the alleged infringing drug must be solely for uses that reasonably relate to the submission of that information."

This case suggests that because the 271(e)(1) research exemption is an affirmative defense, 271(e)(1) can never be the basis for a motion to dismiss.  Instead, a defendant relying on 271(e)(1) must wait at least until the summary judgment stage to dispose of the case, when it can move for summary judgment of noninfringement based on the research exemption.

RELATED READING:

• Amgen press release
• More on 271(e)(1) at Patent Docs

Merck and Integra Submit Post-Hearing Letters to Federal Circuit, Urging the Court Not to Address Research Tools Issue

As reported in a post last week, the Federal Circuit recently heard oral arguments in Merck KGaA v. Integra LifeSciences following remand from the Supreme Court.  Since the hearing, both Merck and Integra have submitted letters to the Federal Circuit, urging the court not to decide the issue of whether Merck's use of Integra's patented compounds fell outside the 271(e)(1) FDA exemption as "research tools," in which case Merck would be liable for patent infringement.

Merck asserted in its letter that a Federal Circuit decision based on the research tool issue would be improper because Integra never argued--in the district court, Federal Circuit, or Supreme Court--that the jury verdict for Integra should be sustained on the basis that Merck used Integra's patented compounds as research tools.  Integra, in its own letter, agreed with Merck, stating that while the research tool question is extremely important, it should be answered in a case in which the issue has been "squarely raised and thoroughly vetted" in the trial court.

At oral argument, Judge Rader, in particular, seemed gung ho to remand the case to the district court to determine whether Merck used Integra's compounds as research tools and therefore was not entitled to the 271(e)(1) FDA exemption.  If the other two members of the panel, Judges Newman and Prost, follow the parties' advice and ignore that issue, then the Federal Circuit will limit its opinion to the narrower technical question of whether Merck's JMOL motion was properly denied by the district court.

NOTE:  Thanks to Dennis Crouch for providing the parties' letters!

Federal Circuit Hears Oral Arguments in Integra v. Merck, After Remand from Supreme Court

A Federal Circuit panel of Judges Newman, Rader, and Prost heard oral arguments Monday in Integra LifeSciences v. Merck KGaA, No. 02-1052.  An mp3 audio file of the 45-minute session is available here (be patient when downloading this; it's a 40 mB file).

The case involves the scope of the "FDA exemption" under 35 U.S.C. 271(e)(1), which exempts activities "reasonably related to the development and submission of information" to the FDA from charges of patent infringement.  Last year, the Supreme Court reversed the Federal Circuit's earlier decision in the case, and remanded it to the Federal Circuit for further proceedings.  The Supreme Court held that the FDA exemption "extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA," including all clinical and preclinical studies of patented compounds appropriate for submission to the FDA.

At this stage of the proceedings, Merck stated the issue as follows:

The Supreme Court has now clarified that the FDA exemption immunizes an experiment from patent infringement claims where (1) it is reasonable for a scientist to believe that a drug candidate "may work through a particular biological process, to produce a particular physiological effect"; and (2) the experiment "uses the compound in research that, if successful, would be appropriate to include in a submission to the FDA."  There is no dispute that, by the time Scripps scientists conducted the accused experiments at issue here, Merck and Scripps had discovered that the accused compounds shrank tumors in animals, and that every accused experiment was reasonably designed to yield data on topics that the Supreme Court has confirmed are relevant to the FDA.  Should judgment be entered as a matter of law?

The oral arguments grew heated early, with intense questioning by Judge Rader focusing on whether "research tools" are protected by the FDA exemption under the Supreme Court's decision.  Judge Rader called this the "central issue we're going to be dealing with here."  Merck's attorney tried to refocus the court on whether Merck's specific experiments with Integra's patented compounds are entitled to the FDA exemption (arguing they are), saying, "I've only got 10 more minutes."  But Judge Rader would have none of it, replying, "You're going to spend them on this issue, so you might as well get used to it."

The question whether research tools fall under the FDA exemption is especially important to small biotechnology companies.  The Supreme Court decision left this question unanswered.

RELATED READING:

• Dennis Crouch's Patently-O post on the Supreme Court decision
• Brief of Merck KGaA
• Brief of Integra LifeSciences
• Reply brief of Merck KGaA
• Amicus brief of Bavarian Nordic A/S
• Amicus brief of Consumer Project on Technology, Electronic Frontier Foundation, and Public Knowledge
• Amicus brief of D.C. Bar Association