GPSolo Magazine - March 2005

Intellectual Property Law

The Hatch-Waxman Act: When Is Research Exempt From Patent Infringement?

The experimental use defense to patent infringement was formally recognized almost 200 years ago in Whittemore v. Cutter and Sawin v. Guild, which introduced two core concepts of the experimental use defense: “philosophical” endeavors and “intent.” While the common law theory has been refined in modern patent law, these core concepts remain essentially the same.

One of the most important decisions of the Court of Appeals for the Federal Circuit (CAFC) addressing the common law defense is Roche Products, Inc. v. Bolar Pharmaceutical Co., Inc., where the generic drug manufacturer intended to bring to market a generic version of a patented drug that was manufactured and sold by Roche. Bolar began conducting clinical tests required for Food and Drug Administration (FDA) approval before the expiration date of Roche’s patent. The CAFC relied primarily on 35 U.S.C. § 271(a), which stated that mere “use” of a patented invention, without either manufacture or sale, is actionable. It reasoned that experiments that are in keeping with the legitimate business of an alleged infringer are not exempt from infringement. The CAFC concluded that Bolar’s use was solely for business reasons and not strictly for philosophical inquiry. As such, the experimental use exception did not apply.

Section 271(e)(1) of the Hatch-Waxman Act provides that it is not 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 that regulates the manufacture, use, or sale of drugs or veterinary biological products.

The common law experimental use defense after the Hatch-Waxman Act. In Embrex v. Service Engineering, the CAFC rejected the defendant’s common law experimental use and de minimis use defenses to patent infringement. While such defenses were still available, the CAFC indicated that they were extremely narrow in scope and could not be used to escape liability for infringement simply by cloaking infringing activities in the “guise of scientific inquiry.”

In Madey v. Duke, a researcher at Duke University, who owned patents covering a new laser device, left Duke without licensing or assigning any rights to the inventions. After he left, Duke continued to use his inventions without permission. The CAFC found that the common law experimental use exemption did not apply. It reasoned that because academic institutions frequently conduct research without regard to commercial value, the focus should be on Duke’s legitimate business objectives, which increases the status of the institution and lures lucrative research grants. Madey appears to signal an end to the common law experimental use exception to patent infringement.

The courts’ interpretations of section 271(e)(1). Just as the courts have limited the scope of the common law exception, they also have restricted the scope of the statutory exemption. This was not always the case. Initially, the courts appeared to have interpreted section 271(e)(1) rather broadly, beginning with Eli Lilly and Co. v. Medtronic. In that case, Lilly sued Medtronic for infringement of its two patents covering
implantable cardiac defibrillators. Medtronic defended its activities based on the experimental use shield of section 271(e)(1). The court sided with Lilly, stating that section 271(e)(1) did not apply to medical devices. Relying on a combination of legislative intent and Roche, the CAFC reversed the court’s decision. They noted that Congress explicitly stated that section 271(e)(1) would “have the net effect of reversing the holding of Roche.” In reconciling Congress’s intent and the holding of Roche, the CAFC used Justice Scalia’s reasoning in United States v. Fasto to conclude that Roche’s interpretation of section 271(e)(1) was repealed by implication by the newly enacted statute. That is, Congress meant to allow testing and investigation of a patented invention if strictly related to obtaining approval for a substitute, regardless of the product involved. The high court recognized that medical devices fall within the purview of section 271(e)(1) and, thus, broadened the scope of the statutory research exemption.

In Telectronics v. Ventritex, the Federal Circuit catalogued the types of activities exempt under section 271(e)(1). In that case, Telectronics sued Ventritex for patent infringement based on its manufacture, sales, and marketing of an allegedly infringing device. The CAFC found that Ventritex’s activities were exempt, either because they were reasonably related to FDA approval or were simply “dissemination of the data developed for FDA approval.” The CAFC noted that Congress was aware that some fund raising and related marketing activities were necessary to enable competitors to enter the market after a controlling patent expired.

In Amgen, Inc. v. Hoechst Marion Roussel, Inc., the court found that certain ulterior motives or alternative purposes do not preclude the exemption if a party reasonably believes that there was a decent prospect that “the use in question would contribute (relatively directly) to the generation of kinds of information that was likely to be relevant in the processes by which the FDA would decide whether to approve the product.” In Amgen, the court found that such activities included exporting the patented product to evaluate manufacturing processes, testing to comply with European and Japanese standards, making an amount of the product in excess of that required for the FDA approval process, and characterizing the product.

The most recent decision addressing the statutory exemption to patent infringement, and the one that has been said to reverse the broadening trend, is Integra Lifesciences I, Ltd. v. Merck KgaA. Merck hired researchers at Scripps to perform the necessary experiments to satisfy the biological bases and regulatory requirements for the implementation of clinical trials on a series of peptidyl compounds. Scripps began experiments to evaluate several drug candidates. Scripps identified one of these peptidyl candidates for clinical development. Unfortunately for Merck and Scripps, Integra owned five patents that covered the peptidyl candidate. The court found Merck liable for infringing four of Integra’s patents, finding that the safe harbor of section 271(e)(1) was not available to Scripps and Merck. The CAFC affirmed with respect to the section 271(e)(1) exemption. The majority felt that the experiments were conducted to identify the candidates to subject to future clinical testing, not to supply information to the FDA. It determined that the section 271(e)(1) safe harbor did not reach back down the chain of experimentation to embrace development and identification of new drugs that will, in turn, be subject to FDA approval. Because the Scripps’ research was not clinical testing to supply information to the FDA, but only general biomedical research to identify new pharmaceutical compounds, it did not fall within the narrow scope of section 271(e)(1).

Conclusion. The range of activities that are considered reasonably related to FDA approval for generic substitutes of patented drugs or medical devices seems to remain rather broad. As a practical matter, it appears that the section 271(e)(1) defense will be available only to those planning to market a generic version of a medical device or drug upon the expiration of the corresponding patent. It remains to be seen if this exemption is still an available defense for nongeneric companies, as it was for all of the above defendants.

Pradip K. Sahu is a staff attorney with the 18th Judicial Circuit Court of Illinois in Wheaton, Illinois. He can be reached at K. Shannon Mrksich is a shareholder at Brinks Hofer and an adjunct professor at the John Marshall Law School. Dr. Mrksich can be reached at

For More Information about the Section of Intellectual Property Law

- This article is an abridged and edited version of one that originally appeared on page 23 of IPL Newsletter, Summer 2004 (22:4).

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