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Washington-Last week’s big victory in the U.S. Supreme Court for drug manufacturers and researchers seeking protection from patent infringement liability left unresolved two huge issues in the patent arena, say patent scholars and litigators-issues unlikely to get back to the high court anytime soon. In Merck KGaA v. Integra LifeSciences, No. 03-1237, the high court was asked to determine the scope of a federal safe harbor statute-35 U.S.C. 271(e)(1)-that protects drug manufacturers from patent infringement liability as they conduct research into new drugs. The justices unanimously rejected the narrow interpretation of that safe harbor by the U.S. Court of Appeals for the Federal Circuit. Led by Justice Antonin Scalia, the high court held that the safe harbor “extends to all uses of patented inventions that are reasonably related to the development and submission of any information” to the Food and Drug Administration. But in a footnote, the court expressly declined to answer what that means for patented research tools-those incredible gizmos, machines, software, reagents, antibodies, etc., that are used to study other substances in order to gain information about them. For the research-tool industry-by some estimates a $26 billion industry-the uncertainty surrounding its patents is more than unsettling and most likely will have to be resolved through additional litigation or patent-reform legislation now under way in Congress, said patent lawyers. “Congress could see what might be down the road in terms of litigation and it may itself try to address research tools by making the safe harbor exemption more clear if it believes that’s necessary,” said Sandip Patel of Chicago’s Marshall, Gerstein & Borun. And although the justices explicitly declined to address the research-tool issue, they offered only silence in response to a number of friends of the court briefs in Merck asking what remains of the common law exemption from infringement liability for experimental uses in drug and other types of research. That exemption, which dates to 1813, also has been severely narrowed by the Federal Circuit in recent years in ways that sent shock waves through the academic research community in particular. “I, for one, am a big supporter of the common law research exemption,” said patent scholar Janice Mueller of the University of Pittsburgh School of Law. “I think we really need it in the United States. All of the other major patent systems in the world have it. But the Federal Circuit, since it was created in the 1980s, has significantly narrowed the scope, so much so that I think it’s pretty much a nullity at this point.” Tool time After the Merck ruling, drug companies now know that the safe harbor exemption provides, in the words of Scalia, “a wide berth for the use of patented drugs in activities related to the federal regulatory process.” But what if the patented invention you are using is not the drug being developed but a tool whose only value is to study the drug, such as a microscope or centrifuge?, asked Merck’s winning counsel, E. Joshua Rosenkranz of Heller Ehrman’s New York office. “The biotech industry or a sector of it revolves around the ability to make inventions whose sole value is to scientists in laboratories studying drugs,” he said. “The question they’re asking is, what is the FDA exemption now that it is so much broader than what the Federal Circuit said it was. What does that mean for research tools? Are drug companies entitled to use research tools freely, without paying for them during that phase of drug development that is FDA-directed?” The Federal Circuit in the Merck case actually adopted a narrower view of the safe harbor exemption partly because, it said, a broad interpretation would destroy the exclusivity of patents for research tools. If research tools used only in drug experimentation are included within the scope of the safe harbor exemption, noted many patent experts, that harms the only exclusive right attached to those tools-to use them in research. “I find that a very knotty legal issue,” said Rosenkranz. “I could argue either side. If you look back at the 19 amicus briefs filed in Merck, virtually all of them urged the court to take some position or no position. The court declined quite correctly to reach the question here; it was just not presented by our case. And, its decision in this case doesn’t necessarily expose research tools to danger.” While Merck does not speak to research tools, it may well present some danger to them, said patent litigator Dominick Conde of New York’s Fitzpatrick, Cella, Harper & Scinto. “Some people will argue a research tool is really part of drug development,” he explained, which would bring the tool within the safe harbor exemption. “For companies built around research tools, it could be a substantial issue. “My sense is [the safe harbor exemption] will eventually apply just because the Supreme Court was willing to give such a wide berth to it,” he said. “I’m sure companies in the research tool area will try to change the statute, and if they want certainty, that’s the most definitive avenue. Whether they will get it is a different issue.” The Federal Circuit’s narrowing of the safe harbor exemption for drug research in Merck came just a year after it had narrowed significantly the scope of the common law experimental-use exemption. The common law exemption traces its roots to an 1813 opinion by Justice Joseph Story in Whittemore v. Cutter, 1 Gall. 429, 29 F. Cas. 1120, 1121 (CCD Mass. 1813) (No. 17,600). Story supported a trial judge’s instructions to a jury that an infringer must have an intent to use a patented invention for profit. The doctrine, as it evolved over the years, led many institutions, particularly academic ones, to believe that they could engage in infringing activities without liability as long as their use was for a purely scientific, and not a commercial, purpose. But that understanding was turned on its head by the Federal Circuit in Madey v. Duke University, 307 F.3d 1351 (2002). John M.J. Madey was a physicist at Duke who developed and patented a free-electron laser. He left after a disagreement and Duke continued to use the laser. Madey sued for patent infringement. Duke argued that its use of the laser was protected under the common law experimental-use exemption because it was for a noncommercial purpose. But the Federal Circuit held that the exemption does not apply if the use is “in furtherance of the infringer’s legitimate business.” Duke, the court said, used the laser to further legitimate business objectives, such as educating students and faculty and obtaining research grants. The Federal Circuit limited the exemption to experiments “solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry.” Mueller of the University of Pittsburgh believes that the Federal Circuit’s interpretation is wrong and harms U.S. competitiveness. “As long as we don’t have a full exemption, we’re at a disadvantage and research work may be shipped offshore,” she said. “Even if it isn’t, there’s still the risk that people doing research have to fear patent infringement liability,” she said. “I don’t think the patent system is supposed to be impeding early-stage, basic research. It should be allowed to proceed without the threat of patent infringement liability, and that’s the way it is in rest of the world.” In Merck, one group of law professors urged the justices not to examine the scope of the common law exception in that case and to state explicitly that it was not doing so. They hoped such a statement would encourage some litigants to bring a case to the high court. But a group of nonprofit organizations urged the justices to correct the Federal Circuit and “confirm that Congress intended a broad experimental use exception to promote the progress of science and technology.” Their amicus brief was written by Professor Joshua Sarnoff of American University Washington College of Law, who called the Supreme Court’s subsequent silence on the issue a “a lost opportunity to reverse what most people believe is bad law.” Sarnoff and Mueller noted that the National Academy of Sciences had identified the common law exception as a major provision to include in recent patent reform legislation. But it was not. They believe it was dropped because of serious opposition from the research-tool industry, which fears a general research exemption applicable to research tools. They also blame a lack of vigorous advocacy by the parties with the greatest interest-academic and scientific institutions. “I think legislation could be drafted that would protect those research tool folks,” said Mueller. “But it hasn’t happened.” And litigation to get the issue to the high court is very risky given the Federal Circuit’s hostility to the common law exemption, Mueller and others agreed. “What happens when an entire arena of law is monopolized by a single court?” said Heller Ehrman’s Rosenkranz. “When that court issues a ruling that purports to shut down protection, it affects activity and pending litigation. Who is going to continue to fight for an exemption that the Federal Circuit says doesn’t exist? Who is going to engage in [potentially infringing] activities if you know [you will] get sued and spend the rest of your career in litigation?”

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