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On June 13, the Supreme Court addressed the extent to which biomedical research is exempt from claims of patent infringement under a federal law that exempts activities undertaken “solely for purposes reasonably related to the development and submission of information” to the Food and Drug Administration. The specific question in Merck KGaA v. Integra LifeSciences was whether the exemption applies to preclinical research, the results of which are not ultimately included in a submission to the FDA. The Court ruled that such activities can potentially fall within the scope of the exemption, but only if they satisfy the “reasonably related” requirement established by Congress. The Court rejected the interpretation of the law by the U.S. Court of Appeals for the Federal Circuit, which would have categorically excluded preclinical experiments from the exemption and would otherwise have limited the exemption to the type of activities undertaken by companies seeking FDA permission to market a generic drug. We represent Integra LifeSciences in this case. Although we wish the Court had reviewed the evidence and ruled for our client last Monday, Integra has a good chance of prevailing when the Federal Circuit addresses the case on remand. AT TRIAL The case began in 1996 when a predecessor of Integra LifeSciences sued Merck KGaA for experiments funded by Merck and carried out by the Scripps Research Institute in San Diego, Calif. That research, which was carried out with drug compounds furnished by Merck to Scripps, was part of Merck’s effort to develop an anti-angiogenesis drug that would inhibit the growth of solid tumors by preventing the growth of blood vessels that feed the tumor. As part of this research, Merck used Integra’s pioneering technology relating to peptides that contain a binding site formed by a sequence of three amino acids — arginine, glycine, and aspartic acid. Integra holds patents that generally cover these peptide compositions and their use to attach and detach cells from their substrates. Integra learned that Merck had been sponsoring the research from scientific papers written by Scripps scientists. Although Integra did not object to the use of its patented technology for research purposes only (and indeed had previously provided these peptides to Scripps scientists), Integra took the position that sponsored research that was part of Merck’s commercial drug development program required a license. But Merck refused to obtain a license. Integra then filed suit while the research was ongoing and before any submission to the FDA had been filed. The case was tried for 28 days before the U.S. District Court in San Diego. One of Merck’s principal defenses was that even if the research at issue fell within the scope of Integra’s patents — which Merck vigorously disputed — it was exempt from patent infringement claims under 35 U.S.C. §271(e)(1). A provision of the 1984 Hatch-Waxman Act, this exemption protects activities reasonably related to the development and submission of information to the FDA. Merck relied on testimony by its scientists and by Scripps scientists to argue that even if they otherwise infringed Integra’s patents, the experiments conducted by Scripps related to the safety and efficacy of these peptide compounds as a potential anti-cancer drug. The evidence, however, was conflicting. The jury learned that Merck itself intended to perform all of the preclinical experiments necessary to support its investigational new drug application to the FDA, with an experienced regulatory team in Germany that did not include the Scripps scientists. Merck and Scripps witnesses also admitted that there were reasons for the Scripps research that did not pertain to FDA review, such as strengthening Merck’s patent position and validating the general scientific premise that the inhibition of a key receptor could inhibit the growth of blood vessels necessary to sustain tumors. Merck and Scripps witnesses also noted that the majority of the experiments were performed on chicken embryos. There is no established connection between the effect of a compound on chicken embryos and the effect of a compound on humans. Faced with this conflicting record, the jury concluded that Merck had not met its burden of establishing that the infringing research qualified for the FDA exemption. ON APPEAL On appeal to the Federal Circuit, which has exclusive appellate jurisdiction over patent disputes, Merck argued that it was entitled to judgment under the FDA exemption because the Scripps experiments formed a “rational predicate” to the experiments that would ultimately be submitted to the FDA. In other words, they were a necessary step in the chain of research leading up to an FDA filing. The majority opinion of the Federal Circuit rejected Merck’s rational predicate theory, reasoning that the exemption does not cover all experiments, however attenuated, in the chain of research leading to an FDA filing. The panel majority found that the jury’s verdict was sustained by substantial evidence because “the Scripps work sponsored by [Merck] was not clinical testing to supply information to the FDA but only general biomedical research to identify new pharmaceutical compounds.” AT THE HIGH COURT A unanimous Supreme Court vacated the Federal Circuit judgment on the ground that it had erred in construing the FDA exemption too narrowly. As an initial matter, the Court made it clear that the scope of the exemption is not limited to clinical experimentation but also can include preclinical studies — a proposition to which Integra agreed from the outset of trial. The Court further held that the Federal Circuit erred by excluding experiments undertaken “in the hunt for drugs that may or may not later undergo clinical testing for FDA approval” from the scope of the exemption. The Court reasoned that the broad language of the “reasonably related” test under Hatch-Waxman does not “categorically” exclude either experimentation on drugs not ultimately the subject of an FDA submission or use of patented compounds in experiments not ultimately submitted to the FDA. “Under certain conditions,” the Court held, the exemption is sufficiently broad to protect the use of patented compounds in both situations. The Court stated: Properly construed, section 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.” The common element in the Court’s reasoning throughout its opinion was that the “reasonably related” language of §271(e)(1) is not consistent with bright-line exclusions of classes of activity. Hence, the fact that the activity claimed to be exempt is preclinical, or did not yield data actually submitted to the FDA, or did not relate to a compound for which FDA approval was ultimately sought cannot automatically exclude that activity from the ambit of the FDA exemption. Consistent with that approach, the Court held that the fact that the experiments at issue were not performed in conformity with the FDA’s “good laboratory practices” regulations does not necessarily disqualify them from the exemption. THE MESSAGE The message to the pharmaceutical community is that the scope of the FDA exemption is based on a reasonableness test that takes into account all circumstances relevant to the relationship of the allegedly exempt activities to the FDA review process. There are no bright lines excluding whole categories of activities. It is a broad standard in the sense that companies claiming the benefit of the exemption to carry out otherwise infringing activities have every opportunity to establish that the exemption applies. On the other hand, where there are contested issues of fact, the application of the exemption is likely to turn on the jury’s assessment of the weight and credibility of the evidence. In rejecting a bright-line approach, the Court noted with approval that the instruction to the jury (which was proposed by Integra) is not inconsistent with the Court’s opinion. That instruction, which the Court’s opinion quoted in relevant part, stated that for the exemption to apply there must be a “decent prospect that the accused activities would contribute, relatively directly, to the generation of the kinds of information that are likely to be relevant in the processes by which the FDA would decide whether to approve the product in question.” This standard, or something like it, is the basic requirement that must be satisfied to invoke the exemption. The Court’s opinion may be most significant for what it did not address. The Court expressly stated that its opinion leaves open what is perhaps the most important issue from the perspective of the biotechnological/pharmaceutical industry — whether the exemption can ever extend to protecting activities that infringe patents on biomedical research tools. The Court also remanded the case back to the Federal Circuit to review the evidence in light of the June 13 decision. It remains to be determined whether the evidence in the record, much of which is not discussed in the Supreme Court’s opinion, furnishes sufficient evidence to support the jury’s verdict. Although evidence as to what was (and was not) ultimately submitted to the FDA and as to whether the infringing research activities followed good laboratory practice guidelines is not dispositive, such evidence remains relevant to the application of the “reasonably related” test. On remand from the Supreme Court, the Federal Circuit must draw all reasonable inferences in favor of Integra’s verdict and defer to the jury’s assessment of the weight of the evidence and the credibility of the witnesses. These important rules may yet lead to a judgment in Integra’s favor. Accordingly, the issues that created this dispute are still very much with us. Last Monday’s ruling provides some guidance from the Supreme Court, but in the future, the lower courts will have to work out the detailed applications — both for Integra and for all other patent holders affected by this ruling. Mauricio A. Flores and Cathryn Campbell are partners at McDermott Will & Emery. Flores, resident in the firm’s Irvine, Calif., office, has represented Integra in the current case at trial and before the Federal Circuit and the Supreme Court. Campbell, resident in the D.C. office, is co-chair of the firm’s life sciences group and prosecuted the patents at issue in the case.

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