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COPYRIGHT 2005 University of Santa Clara, School of Law
I. INTRODUCTION
In January 2005, the Supreme Court agreed to review the Federal Circuit's holding in Integra LifeSciences I, Ltd. v. Merck KGaA. (1) The decision, largely seen as a victory for research tool patentees in the biotechnology sector, would if affirmed, promote cross-licensing between universities and industry, as well as discourage misappropriation of unlicensed patented tools. (2) Pharmaceutical manufacturers argue that the decision
is a limitation on drug development activities that could potentially benefit human health, and that restricting the use of tool patents in biomedical research could mean years of delay in the availability of new, life-saving drugs. (3)
The underpinnings of the Integra ruling involve federally enacted, 35 U.S.C. [section] 271(e)(1). (4) To encourage development and expedite the introduction of pharmaceuticals into the marketplace, Congress amended the patent laws in 1984 to insulate drug research from charges of infringement so long as such research is "solely for uses reasonably related to the development and submission of information" to the Food and Drug Administration ("FDA"). (5) The statute renders activities that would otherwise constitute patent infringement noninfringing if they are undertaken for the purpose of developing and submitting to the FDA information necessary to obtain marketing approval for a new chemical entity, a medical device, or a food additive. (6) Hence, the statute benefits competitors of a patentee by freeing them of liability for development work reasonably related to securing regulatory approval.
In interpreting the meaning of the phrase, "solely for uses reasonably related to," the Integra court clarified that the FDA research exemption applies only to those activities that directly support information submitted for regulatory approval, such as bioequivalency data for generic drug analogs. (7) Specifically, the court stated that the safe harbor did not "reach any exploratory research that may rationally form only a predicate for future FDA clinical tests." (8) The court held that Merck's unlicensed use of Integra's patented research tool could not fall within the safe harbor provisions of [section] 271(e)(1) because Merck was not involved in clinical testing to supply information to the FDA, but rather, had performed exploratory, pre-clinical biomedical research aimed at identifying a new drug candidate. (9) Hence, according to the Federal Circuit, preclinical testing (that which occurs before human testing) falls outside the safe harbor.
Accordingly, the Integra decision affirms that "upstream" research activities do not enjoy the benefits of the safe harbor, i.e., there is no defense to infringement for the use of patented materials during the development of new drugs, or for general biomedical experimentation, or for so-called "drug hunting." (10) At the outset, this seems reasonable when read in the context of the policy objective of [section] 271(e)(1), which was to facilitate the immediate entry of safe, effective generic drugs into the marketplace upon expiration of a pioneer drug patent. (11) Less than a year earlier, however, in Madey v. Duke University, (12) the Federal Circuit confirmed that the U.S. has a very narrow common law experimental use exemption, which excludes from immunity any use of unlicensed patented tools that is "in furtherance of the alleged infringer's legitimate business." (13) Read together, the Integra and Madey decisions could limit what many academics have long seen as their right to use intellectual property under statutory and common law research exemptions. In Madey, when the court characterized the running of a university as a business aimed at attracting students, Duke University's use of a patented laser was seen as an effort directed toward garnering tuition-paying students, and not as promoting learning for learning's sake. (14) Various commentators have expressed disagreement with these rulings as encroaching on the progress of biomedical research at universities. (15)
As the use of research tools in pre-clinical studies and basic science is widespread among research universities and not-for profit organizations, spectators are left wondering whether the Supreme Court will affirm the Federal Circuit's ruling. Will biotechnology and/or other research productivity companies be able to successfully assert infringement of tool-type patents against university and not-for profit researchers? (16) Where such research has potentially significant implications for public health, many have voiced an urgent need for a system that protects a patentee's rights while simultaneously promoting basic research. (17) At the same time, would an expansion of the Federal Circuit's interpretation of the "safe harbor" exaggerate [section] 271(e)(1) out of context and remove the benefits of the Patent Act for biotechnological inventions?
The Supreme Court will consider whether the Federal Circuit erred in holding that the research exemption does not encompass drug development activities beyond those necessary to acquire information for FDA approval of a patented pioneer drug already on the market. (18) In particular, the Court will address whether the safe harbor protects research studies back down the chain in the drug development process, studies the pharmaceutical industry contends are distantly, but still "reasonably related" to securing FDA approval.
This Comment explores the effect the decision will have on research that is too remote from the FDA approval process to fall within the statutory safe harbor, as well as research that is commercial in nature, such that it does not qualify for the common law research exemption articulated in Madey. Research associated with the California Institute for Regenerative Medicine ("CIRM") is likely to number among these kinds of research endeavors. Proposition 71, the California Stem Cell Research and Cures Initiative, (19) was approved by voters on November 2, 2004. (20) This legislation provides roughly $3 billion in state bond money over ten years for human embryonic stem cell research and facilities, specifically focused on embryonic stem cell and progenitor cell research, (21) which would be unlikely to receive timely or sufficient federal funding due to current federal limitations on such research.
The Supreme Court's ruling will likely govern the use of research tools in state-funded stem cell research activities at universities and not-for profit organizations, as well as the use of such tools (including stem cell lines) generated by this research. As a result, the apparent commercial intent of stem cell research funded under Proposition 71 will be a critical factor in applying the Supreme Court's ruling. In addition, because stem cell research is in its early stages (arguably years away from the point of regulatory submissions) the Court's interpretation of "reasonably related to the development and submission of information under a Federal law," (22) will most certainly impact whether the unlicensed use of patented research tools by groups associated with CIRM falls within the statutory safe harbor. At the same time, because the state seeks to benefit from patents ultimately granted under CIRM, giving such intellectual property the broadest possible scope of protection is arguably in the state's best interest.
This Comment explores the three most likely outcomes of the pending Supreme Court decision and considers the implications in the area of licensing research tools, and in particular, the regulation of research using human embryonic stem cells in California with respect to Proposition 71. Would affirmation of the Integra ruling, when read in light of Madey, cause stem cell research to fall outside both the statutory and common law research exemptions due to its early stage of development and commercial purpose? Will this encumber academic research scientists by requiring them to license patented research tools that have until now appeared available to them under the statutory and common law research exemptions? Or, would affirmation of the Federal Circuit's ruling be in the state's best interest due to its intention of profiting from patents and royalties generated under CIRM?
In considering the various potential courses of action that the Supreme Court may take, Part IV weighs competing policies including: (1) the cost of drug research, (2) the incentive to develop new chemical entities and research tools, (3) the need for access to research tools, (4) the inability of academic institutions and nonprofit organizations to afford costly licenses, and (5) the legislative history. Part II presents (1) a background of policy concerns in patent doctrine and the emergence of the experimental use exemption, (2) the development of the statutory FDA research exemption, (3) the facts of the cases at issue, (4) a study of activities that have thus far been held exempt from patent infringement, (5) a discussion of the definition of "research tools," and (6) a description of stem cells as research tools. Finally, Part IV argues that affirmation of the ruling is the best way to preserve the incentives of the Patent Act, and that the legislature is the best equipped branch of the government to specify the parameters of the research exemption.
II. BACKGROUND
A. Competing Policy Concerns in Patent Doctrine and the Experimental Use Exception
Article I of the United States Constitution states:
The Congress shall have the Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. (23)
Patent protection laws were later enacted to embody these Constitutional provisions. For example, the 1984 Patent Act characterizes patent infringement in its preliminary paragraphs, providing, in part:
[w]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. (24)
Yet, two divergent policy concerns--a patentee's interest in protecting his invention (and the commercial value thereof), and the public's interest in benefiting from the technology (25)--continue to compete for lawmakers' recognition.
The rights inherent in a patent term of twenty years are set forth in federally enacted 35 U.S.C. [section] 154(a)(1):
Every patent shall contain a short title of the invention and a grant to the patentee, his heirs or assigns, of the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States, and, if the invention is a process, of the right to exclude others from using, offering for sale or selling throughout the United States, or importing into the United States, products made by that process, referring to the specification for the particulars thereof. (26)
It follows that a patentee has a statutory right to exclude others from acts that infringe his patent. Yet this right may be limited by a defense of "experimental use," a doctrine whose origins are often linked to an opinion written by Circuit Justice Joseph Story in a case before the Massachusetts Circuit Court in 1813.
In Whittemore v. Cutter, (27) Justice Story reasoned in dicta regarding the alleged infringement of a patent covering a machine that produced playing cards: "[I]t could never have been the intention of the legislature to punish a man, who constructed such a [patented] machine merely for philosophical experiments, or for the purpose of ascertaining the sufficiency of the machine to produce its described effects." (28) Subsequently, in Sawin v. Guild, (29) Justice Story fashioned an experimental use defense to exempt alleged patent infringers who did not intend to profit by way of the infringing activity. Use of a patented invention "for the mere purpose of philosophical experiment, or to ascertain the verity and exactness of the specification" describing the invention would not constitute patent infringement. (30) Hence, the test seemed to turn on the commercial intent of the patent user. Almost fifty years later, Judge Shipman wrote, "It has been held, and no doubt is now well settled, that an experiment with a patented article for the sole purpose of gratifying a philosophical taste, or curiosity, or for mere amusement, is not an infringement of the rights of the patentee," (31) thereby further developing the common law experimental use doctrine, so that it protected use of patented inventions for amusement or verification of the workings of the invention, but excluded activities motivated by financial gain. (32)
Thus, the common law experimental use doctrine in patent law makes an exception for infringers who use patented inventions for the sole purpose of experimentation, or purely philosophical inquiry. The "experimentation" described refers to a study of the patented inventions--clearly not the use of a patented invention to investigate an altogether different experiment, such as using patented microarray technology to study cancer cells. Therefore, the issue that remains is to define "philosophical inquiry" in today's society. (33) In our technology-driven economy, close ties between academic and commercial research are commonplace, making it difficult to draw a clear line between academic inquiry for the purposes of basic research, and research conducted with some expectation of future monetary gain. The same discrepancy may be found in the interpretation of the terms "science" and "technology." Some have opined that when the common law research exemption emerged almost 200 years ago, "science" must have been considered separate from "technology," as basic scientists had little to do with industry, and basic and applied research were thought to be distinct fields. (34)
While courts continue to acknowledge the existence of the common law experimental use doctrine, they frequently find a commercial motive behind the accused infringing activity. In the pharmaceutical industry, there is ongoing tension between the simultaneous need to establish incentives for pioneer-drug companies (typically large pharmaceutical companies) to invest in the research and development of new drugs, and the need to enable generic competitors to bring competitively priced analogs to the market. Discoveries made in biomedical research often have spectacular applications in the multi-billion dollar healthcare market. The combination of high-stakes economic value and contemporaneous improvements in the quality of healthcare has required balancing these two priorities. (35)
This conflict came to a head in Roche Products, Inc. v. Bolar Pharmaceutical, Co. when the Federal Circuit found that defendant generic drug manufacturer, Bolar, had infringed Roche's drug patent when it used samples for bioequivalency testing of their generic product submitted for FDA regulatory approval. (36) The seeming unfairness of the ruling sparked a heated Congressional debate: If the Roche ruling would not allow generic competitors to begin bioequivalency testing until after a patent expires--and bioequivalency testing can take years to complete--would the effect be an artificial extension of the length of the pioneer drug patent's term? The patentee's original drug would remain the only drug on the market while competitors completed testing. Indeed, if performing the necessary tests to produce generic copies of patented drugs constituted patent infringement, the Roche result appeared unfair. It has since been re-emphasized that innovation in certain scientific areas would be impossible, or, at least impractical, without some kind of experimental use exemption. (37)
B. The Statutory FDA Research Exemption-35 U.S.C. [section] 271(e)
After the Roche ruling, Congress enacted 35 U.S.C. [section] 271(e)(1), also known as the Hatch-Waxman Act (1984). (38) Its response to Roche was to "ensure that a patentee's rights did not de facto extend past the expiration of the patent term because a generic competitor ... could not enter the market without regulatory approval." (39)
There are three provisions of the 1984 Act, one of which is a research exemption that defines a "safe harbor" against patent infringement:
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.... (40)
As stated above, this arm of the statute permits competitors to conduct experiments in advance of patent expiration as long as the research activities are reasonably related to securing FDA regulatory approval. The purpose of enacting this provision was to encourage generic competitors to enter the drug market immediately...
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