By Kevin E. Noonan --
The Federal Circuit decided the Integra Lifesciences I, Ltd. v. Merck KGaA case last week on remand from the Supreme Court, which had (in)famously overturned the CAFC last year. In its earlier decision, the Federal Circuit had affirmed the District Court's finding that Merck's activities did not fall within the ambit of 35 U.S.C. § 271(e)(1)'s infringement exemption for activities "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," relying in its decision on Congress' intentions to balance the interests of patent-holders and generic drug companies, as evidenced by the legislative history of the statute.
The Court set forth the procedural status of the case before it:
Thus the [Supreme] Court expressly rejected the three legal grounds mentioned by the district court as its reasons for sustaining the jury verdict: the ground that the purpose of an IND application is to establish safety for administration to humans, such that experiments not directed to human safety do not have the protection of §271(e)(1); the ground that only studies that meet the "good laboratory practices" protocol can be submitted to the FDA, thereby excluding the Scripps studies from §271(e)(1); and the ground that experiments not included in an IND are not subject to the safe harbor of §271(e)(1), whereby the Scripps experiments using other RGD peptides would be infringing. However, the [Supreme] Court did not undertake to review the accused experiments on the correct construction of §271(e)(1), the [Supreme] Court observing that this had not yet been done through the standard appellate process. We thus review the issues presented on appeal, with application of the correct law.
On remand, the Federal Circuit's decision was written by Judge Newman and joined by Judge Prost, and joined only in part by Judge Rader (who wrote the original Federal Circuit opinion reversed by the Supreme Court). The Federal Circuit first recited the sixteen experimental categories that were undisputedly performed by Merck (and co-defendants) Scripps Research Institute, along with co-defendant Dr. David Cheresh. These were (with Merck's statement of the purpose of the experiment in parentheses):
- αvβ3 receptor binding assay (efficacy);
- angiogenesis chick chorioallantoic membrane (CAM) assay (efficacy, mechanism of action, and pharmacokinetics);
- angio-matrigel tests (efficacy and mechanism of action);
- cell adhesion assay (efficacy);
- chemotaxis assay (efficacy and mechanism of action);
- chick embryo pharmacokinetics assay (pharmacokinetics);
- fluorescence-activated cell sorting (FACS) analysis (mechanism of action and efficacy);
- rabbit pharmacokinetics assay (pharmacokinetics);
- tumor growth in severe combined immunodeficiency (SCID) mouse (efficacy, mechanism of action, pharmacology);
- tumor growth nude mouse assay (efficacy, pharmacology, pharmacokinetics, and mechanism of action);
- mice retina vascuole assay (efficacy, mechanism, pharmacology, and pharmacokinetics);
- rabbit cornea assay (pharmacokinetics and efficacy);
- mouse retina IF vasculogenesis assays (pharmacokinetics);
- rabbit arthritis experiments (efficacy, pharmacology, pharmacokinetics, safety and mechanism of action);
- mice arthritis experiments (efficacy); and
- chick CAM tumor growth with melanoma cells (efficacy and mechanism of action).
Integra reiterated, as it had before the Supreme Court to no avail, that more than half of the experiments (specifically, the angiogenesis chick CAM assay and the tumor growth chick CAM assay) performed by Merck et al. had nothing to do with either human safety or efficacy, and thus were not properly within the scope of the § 271(e)(1) exemption. However, since the Supreme Court had interpreted the statute to encompass experiments directed towards "efficacy, mechanism of action, pharmacology, or pharmacokinetics," which Integra conceded were the types of experiments at issue, this argument was unavailing. Moreover, Integra was hampered by the lack of any evidence on the record that it had challenged the scientific veracity of these experiments, a failing that is understandable since it could not have anticipated the expansive reading of the § 271(e)(1) exemption set out by the Supreme Court and (arguably) not explicitly supported by the plain meaning of the statute or its legislative history (see Integra Lifesciences I, Ltd. v. Merck KGaA (Fed. Cir. 2003); "Merck v. Integra: The Supreme Court Misses a Golden Opportunity").
The key fact, according to the Federal Circuit, was that "all of the challenged experiments were performed after the discovery that a cyclic RGD peptide inhibited angiogenesis." This knowledge provides a bright line that distinguishes "research" or "discovery" (that may not fall within the exemption) from experiments directed towards "efficacy, mechanism of action, pharmacology, or pharmacokinetics" that do.
Finally, the parties and the majority agreed with the Supreme Court that this case did not involve "research tools" as defined by the National Institutes of Health as:
tools that scientists use in the laboratory including cell lines, monoclonal antibodies, reagents, animal models, growth factors, combinatorial chemistry and DNA libraries, clones and cloning tools (such as PCR), methods, laboratory equipment and machines.
64 Fed. Reg. 72090, 72092 n.1 (Dec. 23, 1999), and thus did not provide an opportunity for the Federal Circuit to decide whether research tools fall within the scope of the § 271(e)(1) exemption.
In dissent, Judge Rader agreed with the result for two of the patents-in-suit (U.S. Patent Nos. 4,792,525 and 5,695,997) and disagreed as to two other Integra patents (U.S. Patent Nos. 4,879,237 and 4,789,734), basing his distinction on whether the latter two patents claimed research tools that were explicitly not encompassed by the Supreme Court's opinion. Judge Rader based his more limited reading of the Supreme Court's Merck decision on the following passages from the Court's opinion:
At least where a drugmaker 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 [exemption criteria]."
[Merck] at 207 (emphases added). [T]he Court reiterates repeatedly that its decision affects "a patented compound in experiments that are not themselves included in a 'submission of information'" and "uncertainties" in "selection of a specific drug" and "the use of patented compounds in preclinical studies." [Merck] at 207-208 (emphases added). . . .
We therefore need not - and do not - express a view about whether, or to what extent, § 271(e)(1) exempts from infringement the use of "research tools" in the development of information for the regulatory process.
[Merck] at 205 n.7 (emphasis added).
Judge Rader's dissent construed claims from both the '237 and '734 patents, which in his view were clearly limited to laboratory methods and reagents and were in no way related to obtaining information to submit to the FDA for regulatory purposes.
The dissent sets forth a reasonable hypothetical that illustrates Judge Rader's concerns:
A hypothetical example will help illustrate the importance of protecting research tool patent rights. Suppose a university professor or small independent research company invents and obtains a patent for a novel and extremely useful research tool. This invention represents the work of a lifetime for its inventors and perhaps most of the research budget for the university department or the small company - perhaps millions of dollars in investment. The only use of the invention tests other pharmaceutical compounds for effectiveness in fighting cancer. The invention does not itself fight cancer, but instead simply identifies the cancer fighting characteristics in other compounds. This patented invention would, of course, be of great use to the pharmaceutical industry. It would also benefit the public by identifying cancer treatments. The patent system of course would wish to protect this invention and give incentives for more investment in developing this kind of valuable research tool.
. . . [The majority's] overbroad interpretation could obliterate all value for the hypothetical invention discussed above and with it the incentives for development of these inventions outside of the pharmaceutical industry itself. The pharmaceutical industry itself, of course, still needs these tools and will invest in their development, but outside that community, research tools will have no value. In other words, this opinion could shift all control of research and the patented tools that facilitate research to the insular pharmaceutical industry. Universities and independent researchers will have to understand that their work on research tools is likely to amount only to a charitable (but nondeductible) gift to the pharmaceutical industry.
The university professor or small company might expect a reward for the lifetime of labor and investment that produced the research tool. The inventor might also hope to use that reward to further his pioneer research. These benefits to the public and that inventor would flow from the patent's right to exclude that would produce reasonable royalties. However, under today's opinion, the exemption would swallow that lifetime of labor and investment because the nature of the use itself, without any concern for the object of the patented invention, would be the gauge upon which the exemption would be measured. . . . In effect, any use of the hypothetical invention would automatically translate to non-infringement based on this court's expansive application of 35 U.S.C. § 271(e)(1).
The Supreme Court explicitly avoided rendering a decision about the extent to which the exemption extends to research tools. The Federal Circuit's decision, merely to apply the Supreme Court's Merck decision without explicating its application to the claims of each patent-in-suit or (as Judge Rader would prefer) remanding for the District Court to make fact-finding determinations in view of the Supreme Court's interpretation of § 271(e)(1), makes this hypothetical and undesirable outcome more likely in Judge Rader's view.
Judge Rader's dissent suggests that there are proper roles for each institution - the Federal Circuit and the Supreme Court - to play in making determinations regarding the scope and meaning of patent law. Judge Rader's dissent can be seen as delegating to the High Court statutory interpretation, as it has recently done in KSR INt'l Co. v. Teleflex Inc. and in the Merck case. The Federal Circuit would then implement these interpretations; the Supreme Court has explicitly endorsed this role for the Federal Circuit with regard to how prosecution history estoppel acts to limit the extent to which a patentee is entitled to rely on the doctrine of equivalents in Warner-Jenkinson Co. v. Hilton-Davis Chem. Co. and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. (see Patent Docs report). Instead, Judge Rader's dissent accuses the majority of abdicating this role in this case, perhaps in response to the unprecedented string of reversals and criticisms the Federal Circuit has endured in recent years from the Supreme Court (see "Is It Time for the Supreme Court to Stop Flogging the Federal Circuit?"). It would be unfortunate indeed if 25 years of the Federal Circuit's work in improving the consistency of U.S. patent law (which was the asserted Congressional purpose of establishing the CAFC) were to be diminished by efforts of the current members of the Court to avoid additional criticism. The Federal Circuit's strength is its focus on patent law that stems from its exclusive jurisdiction and the experience and expertise that is its result. A measured appreciation of the Federal Circuit's expertise, and frank deference to that expertise even by the Supreme Court in appropriate circumstances, would ensure that each court - the Federal Circuit and the Supreme Court - play its proper role. A return to this arrangement might preserve the improvements in U.S. patent jurisprudence that underlie, in significant part, the important place that intellectual property protection now occupies in the U.S. economy.
Although this case was not heard en banc, amicus curiae briefs were filed by: the Association of the Bar of the City of New York, Bavarian Nordic A/S, Consumer Project on Technology, Electronic Frontier Foundation, and Public Knowledge, Eli Lilly & Company, Bar Association of the District of Columbia, and Wyeth.
Integra Lifesciences I, Ltd. v. Merck KGaA (Fed. Cir. 2007)
Panel: Circuit Judges Newman, Rader, and Prost
Opinion by Circuit Judge Newman; dissenting-in-part and concurring-in-part opinion by Circuit Judge Rader