21 September 2005
Key Points:
Under US patent law, it is not an infringement to use a patented invention for the development and submission of information under a US Federal law regulating the manufacture, use or sale of drugs. In Merck, the question was how far back in the research chain that exception extends. In a victory for the US generic pharmaceutical industry, the US Supreme Court held that the exception was not limited to experiments that yielded information that was submitted to gain regulatory approval, but extends to all uses of a patented invention reasonably related to the development and submission of such information.
On 13 June 2005, the United States Supreme Court handed down its unanimous decision in Merck KGaA v Integra Lifesciences I, Ltd. In a decision that represents a major victory for the US generic pharmaceutical industry, the US Supreme Court vacated the appeals court's narrow interpretation of the statutory pharmaceutical experimental use exception and held that that exception exempts from patent infringement "uses [of a patented invention] reasonably related to the development and submission of information" to federal regulatory agencies by those developing medications that may be the subject of applications to the US Food and Drug Administration (FDA). The Supreme Court's decision thus places preclinical research performed to identify a new drug candidate for FDA submission within the exception, but places basic research which is not performed for the purpose of identifying a new drug candidate for FDA submission outside that exception.
The legislation
As under the Patents Act 1990 (Cth), under US Patent Laws, it is ordinarily an act of infringement to make, use, sell, offer for sale or import any invention covered by the claims of a valid and enforceable US patent during its term.
However, section 271(e)(1) of the US Patent Laws provides:
"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 (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) 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."
In Merck, the Supreme Court was called upon to determine how far back in the research chain this exception extends.
Before examining section 271(e)(1), it is important to understand what the Federal Food, Drug, and Cosmetic Act ("FCDA") referred to in the section is. The FCDA regulates the manufacture, use or sale of drugs, somewhat like Australia's Therapeutic Goods Act 1989 (Cth) The FDCA requires that a drugmaker submit research data to the FDA in two stages. The first is the investigational new drug application (IND) stage where permission is sought to run clinical trials involving the testing of the drug on humans. This application is supported by a submission including a description of preclinical tests, including tests on animals. The second is the new drug application (NDA) stage where full reports of all investigations, including clinical trials and preclinical tests must be made.
Background
Integra commenced legal action against Merck, along with some related parties, accusing them of infringing five patents relating to RGD peptides by having conducted tests to measure the efficacy, specificity and toxicity of certain RGD peptides as angiogenesis inhibitors. Among its defences, Merck relied on section 271(e)(1). Merck lost on this point at both the District Court and Federal Circuit levels before taking its case to the Supreme Court. The Federal Circuit applied a very narrow interpretation of the legislative section, holding that only clinical testing with an immediate connection to an FDA submission was protected by the statute.
The Supreme Court's decision
In a unanimous judgment, the Supreme Court identified two propositions on which the Federal Circuit based its decision, namely:
The Supreme Court rejected the first proposition on the basis that even the later stages of clinical testing, scientific testing, is a process of trial and error. The reason the tests are conducted is because the scientists do not know that the drugs will work.
The Supreme Court agreed with the second proposition, at least to an extent. The court held that the exemption would not cover basic scientific research on a compound performed without an intent to develop a particular drug or a reasonable belief that the compound will cause the sort of effects intended by the researcher. However, the Supreme Court did note that it does not follow that the mere fact that an experiment is not part of a final FDA submission necessarily excludes that experiment from section 271(e)(1).
The Supreme Court therefore rejected the narrow interpretation of section 271(e)(1) proposed by the Federal Circuit. Instead, it adopted a much broader view, namely that:
"Properly construed, §271(e)(1) leaves adequate space for experimentation and failure on the road to regulatory approval: 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 "development and submission of information under … Federal law. "
For similar reasons, the use of a patented compound in experiments that are not themselves included in a "submission of information" to the FDA does not, standing alone, render the use infringing.…We thus agree with the Government that the use of patented compounds in preclinical studies is protected under §271(e)(1) as long as there is a reasonable basis for believing that the experiments will produce "the types of information that are relevant to an IND or NDA.""
The case was then remanded for this test to be applied to the facts by the District Court.
According to the Supreme Court, section 271(e)(1) will now protect:
What the Supreme Court did not address
While the Supreme Court did recognise a wide interpretation of section 271(e)(1), the precise scope of this interpretation remains to be defined in subsequent cases. Patent owners can be expected to argue that the decision does not support a general fishing expedition involving experimenting with patented products to find unknown and unspecified uses. However, it should be noted that Merck does not prohibit the use of results from experiments intended for the development of a particular drug from being used in the development of other drugs. This may allow researchers to obtain the knowledge necessary to provide a reasonable basis that would allow further experimentation under the protection of section 271(e)(1).
There are two significant issues that the Supreme Court specifically did not address. The first is whether, or to what extent, section 271(e)(1) exempts the use of inventions that assist a scientist in conducting research, also known as research tools, from patent infringement.
An amicus curiae brief sought to have the court exclude research tools from section 271(e)(1) on the basis that if such tools were exempt from patent infringement, there would be no incentive for the creation of research tools in the future. The very reason such tools are patented is to prevent unauthorised use in research. However, the court declined to address this question as it was not an issue raised by the parties. However, the judgment certainly leaves scope for the view that a research tool should be treated differently under this section.
The research tools issue therefore remains open, to be decided by another case.
The second significant issue upon which the Supreme Court remained silent is the scope of the US common-law experimental use exception. In a line of decisions, the Federal Circuit has held that the exception, to the extent it exists, is limited to cases where the scientist is performing the experiment "for amusement to satisfy idle curiosity, or for strictly philosophical inquiry." One of the Federal Court judges, in a separate opinion, held in Merck's favour on this issue, while the court's other two justices held that the issue was not before the court. The Supreme Court chose not to address this issue.
What does this mean for Australia?
The Merck decision may well provide some guidance for Australian courts. Section 78(2) of the Patents Act (Cth) is fairly similar to that in section 271(e)(1), although the former only applies if an extension of a standard patent over a pharmaceutical has been granted, and only during the term of the extension. Section 78(2) of the Patents Act states in relevant part:
"If the Commissioner grants an extension of the term of a standard patent, the exclusive rights of the patentee after the grant of the extension are not infringed by a person exploiting:
(a) a pharmaceutical substance per se that is in substance disclosed in the complete specification of the patent and in substance falls within the scope of the claim or claims of that specification; or
(b) a pharmaceutical substance when produced by a process that involves the use of recombinant DNA technology, that is in substance disclosed in the complete specification of the patent and in substance falls within the scope of the claim or claims of that specification;
solely for purposes in connection with:
(c) having goods included in the Australian Register of Therapeutic Goods, where the goods are intended for therapeutic use; or
(d) obtaining similar regulatory approval under a law of a foreign country or of a part of a foreign country."
In recent times, Australian courts have become more accepting of US authority. The leading case on this is the High Court decision in Aktiebolaget Hassle v Alphapharm Pty Ltd,[1] in which the court rejected a line of the more traditionally favoured UK cases, instead placing greater weight on US authorities. Such an approach may be accentuated by the implementation of the US-Australia Free Trade Agreement.
However, whether the Merck decision has any impact in Australia will really remain a matter for speculation until the interpretation of s 78(2) comes before an Australian court. Ultimately, however, unless the Patents Act is amended, any potential impact that the decision may have is a limited one. Section 78(2), by being limited to the period of extension of patents that have had their patent term extended, simply does not have the far-reaching scope of the equivalent US legislation.
The notion of a broader experimental use exception, similar to the US common-law experimental use exception is currently being examined by the Advisory Council on Intellectual Property, which is expected to deliver its final report to the Government shortly, with a public release expected in the coming months. That report will foreshadow possible future revisions to Australian patent law with respect to experimental use at a broader level.
[1] (2002) 212 CLR 411.
