Scope Of Statutory Research Exemption Remains Unresolved

Law360, New York (July 02, 2013, 5:56 PM ET) - The statutory research exemption, 35 U.S.C. § 271(e)(1), affords immunization from patent infringement to developers of products subject to regulation by the U.S. Food and Drug Administration. Over the past several years, the Federal Circuit has embraced seemingly conflicting interpretations on the scope of the safe harbor.

On June 24, 2013, the U.S. Supreme Court declined an opportunity to resolve this tension when it denied a petition for a writ of certiorari by Momenta Pharmaceuticals Inc.1 This article summarizes the legal landscape for the exemption and offers strategic considerations for both patentees and companies developing therapeutics, diagnostics and medical devices.

Broad Reach of the Statutory Research Exemption

The safe harbor emerged in the wake of the Federal Circuit's ruling in Roche v. Bolar (1984), which held it an act of infringement to conduct FDA-required testing with a patented compound prior to expiration of the patent.2 After Roche v. Bolar, both pioneer and generic drug manufacturers were dissatisfied with "two unintended distortions" the FDA premarket approval process placed on patent terms.3

Pioneer drug developers desired extended patent terms to compensate for lost years of exclusivity prior to FDA approval. Generic drug manufacturers desired to eliminate the de facto patent term extension resulting from the fact that generic companies had to wait to begin the experimentation required for the lengthy FDA approval process until patent expiration or risk liability for infringement, as was the case in Roche v. Bolar. Congress addressed these competing economic interests in the Drug Price Competition and Patent Term Restoration Act, commonly known as the Hatch-Waxman Act.4

Title I of the Hatch-Waxman Act created an expedited route to FDA approval for generic drugs, the abbreviated new drug application (ANDA).5 Title II of the act amended United States patent law in two ways. The first provision of Title II, codified as 35 U.S.C. § 156, allowed innovators to recoup some of the useful life of the patent that now lay fallow during the FDA approval process through a patent term extension (PTE).6

The second provision of Title II, codified as 35 U.S.C. § 271(e)(1), provided a defense to infringement that allowed generic drug manufacturers to undertake commencing research, development and bioequivalency testing required for FDA approval before patent expiration.7

In the first Supreme Court case addressing § 271(e)(1), Eli Lilly & Co. v. Medtronic Inc. (1990), the court extended the exemption to the development of class III medical devices.8 Turning to the relevant regulatory framework for which use of a patented invention must be directed, the court broadly held that "a Federal law" in § 271(e)(1), when read in view of the amended Food, Drug and Cosmetic Act (FDCA) as a whole, extended to laws regulating the obtaining of marketing approval for all medical devices, not just drugs.9

The court observed that because patented products eligible for PTE also fell into the class of inventions whose use may be immunized by the research exemption, a "perfect 'product' fit" existed between §§ 271(e)(1) and 156(f).10 With respect to class I and II medical devices, which were not at issue in the case, the Eli Lilly opinion begged the question of whether those devices would fall within the exemption, given that neither qualify for PTE under § 156(f).

In AbTox Inc. v. Exitron...