CASRIP Newsletter - Spring/Summer 2005, Volume 12, Issue 1
Summary: Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. ___ (2005)
By Sean O’Connor†
On June 13, 2005, the U.S. Supreme Court decided a crucial case involving the scope of the research use exemption under 35 U.S.C. § 271(e)(1). This exemption entered U.S. patent law through the Drug Price Competition and Patent Term Restoration Act of 1984, sometimes referred to as the “Hatch-Waxman Act”. It is a different exemption from the “common law” or “judicial” research use exemption interpreted in 2002 by the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) in Madey v. Duke. The §271(e)(1) research exemption permits persons other than the patent holder 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) . . . 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 . . . .”
Integra Lifesciences I, Ltd. (“Integra”) co-owns five patents, in conjunction with the Burnham Institute, to variants of a tripeptide sequence that promotes cell adhesion by binding to receptors on the surface of certain endothelial cells (the “RGD Peptides”). Merck KGaA (“Merck”) funded angiogenesis research at the Scripps Research Institute (“Scripps”). The principal investigator for the Scripps research, Dr. David Cheresh, discovered that angiogenesis – the process by which new blood vessels grow from existing ones – could be inhibited by blocking surface receptors on endothelial cells. Because angiogenesis plays such an important role in solid tumor cancers, diabetic retinopathy, and rheumatoid arthritis, Dr. Cheresh surmised that a process that inhibited angiogenesis could likewise reverse some of the effects of these diseases.
In 1994, Merck supplied a version of the RGD Peptides to Cheresh after he had some earlier luck with a monoclonal antibody that he created himself. Based on the strength of his subsequent results with this version to shrink tumors, Cheresh secured substantial new funding from Merck to investigate other RGD Peptides as potential drug candidates. Under the parties’ 1995 agreement, Cheresh and the Scripps team were to perform research aimed at identifying the best candidates through screening for efficacy, specificity, and toxicity, while Merck would then perform the specific toxicology tests required to file an investigational new drug application (“IND”) to the U.S. Food and Drug Administration (“FDA”). Provided that the toxicology tests revealed nothing substantially problematic and the FDA approved Merck’s IND, then Merck would move forward to find a sponsor for human subject clinical trials under the IND. Successful conclusion of these clinical trials would then allow Merck to submit a new drug application (“NDA”) to the FDA to obtain approval by the FDA for Merck to market and sell the final therapeutic version of the RGD Peptides in the U.S.
Cheresh and the Scripps team performed their research and, after a drug candidate was selected, Merck performed its toxicology tests. By the end of 1998, Merck had submitted an IND to the FDA and obtained the agreement of the National Cancer Institute to sponsor clinical trials.
Integra sued Merck, Cheresh, and Scripps on July 18, 1996 in the District Court for the Southern District of California for patent infringement of its patents on the RGD Peptides. Integra claimed that Merck willfully infringed the patents and induced others to infringe them. It also claimed that Cheresh and Scripps infringed the patents as well. Integra sought damages from Merck, but only a declaratory judgment against Cheresh and Scripps. Merck responded that it had not infringed the patents and that, at any rate, its actions were covered by both the common law research exemption and the §271(e)(1) research exemption.
The District Court held that the pre-1995 research activities were covered by the common law research exemption, with one exception, but that there was a question of fact for the jury as to whether the use of the RGD Peptides after 1995 were covered by the §271(e)(1) research exemption. The jury found for Integra and awarded it $15 million in damages from Merck. The judge, responding to post-trial motions, dismissed the suit as against Cheresh and Scripps, but affirmed the damages against Merck. Specifically, “the District Court explained that the evidence was sufficient to show that ‘any connection between the infringing Scripps experiments and FDA review was insufficiently direct to qualify for the [§271(e)(1) exemption].’”
A divided panel of the Federal Circuit affirmed the District Court’s denial of Merck’s motion for judgment as a matter of law, but reversed its refusal to modify the jury’s damages award. On remand, the District Court reduced the damages to $6.375 million. The panel was unanimous, however, in affirming that Integra’s patents covered the RDG Peptides developed by Merck and used by Cheresh and Scripps. The Supreme Court then granted certiorari to review the Federal Circuit’s interpretation of the 271(e)(1) research exemption.
In its opinion issued on June 13, 2005, the Supreme Court vacated the Federal Circuit’s judgment and remanded the case for further proceedings in the courts below. First, the Court found that the §271(e)(1) research exemption “extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the [Food, Drug and Cosmetics Act (“FDCA”)].” Further, “[t]his necessarily includes preclinical studies of patented compounds that are appropriate for submission to the FDA in the regulatory process.” But, of course, the Court really cannot mean what it says in the first statement above, because that would seem to cover all patented lab equipment, software, etc. Did the Court actually mean to authorize researchers to build their own unauthorized versions of patented lab equipment and engage in unauthorized use of patented methods regardless of whether those patented things are the subject of planned FDA submission or instead tools that the researchers will use to perform the research on the intended subject of a planned FDA submission? Unfortunately, the Court claimed that it intended not to speak to the issue of research tools, even as it made the broad assertion above.
Outside of this particular issue, the Court focused on constructing the §271(e)(1) research exemption in both chronological and subject matter breadth dimensions. Thus, the Court found that the exemption explicitly includes uses of patented inventions to perform the early stage research required to file an IND, as well as the later stage research involved in clinical trials leading to submission of an NDA. At the same time, the Court rejected the Federal Circuit’s apparent construction that only research that produces safety data in the preclinical phase warrants the protection of the §271(e)(1) research exemption. Rather, the Court states that research leading to data on the pharmacological, toxicological, pharmokinetic, and biological qualities of a drug can be required by the FDA to be included in the IND, and thus also properly fall under the §271(e)(1) research exemption. Further, the Court allows that, in certain circumstances, the §271(e)(1) research exemption can cover “(1) experimentation on drugs that are not ultimately the subject of an FDA submission or (2) use of patented compounds in experiments that are not ultimately submitted to the FDA.”
Essentially, the Court takes the “reasonably related” phrase in the statute at face value and states 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 . . . .
Based on this, the Court holds 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.’”
Accordingly, the Court vacated the Federal Circuit’s opinion that was based on a narrower reading of §271(e)(1), and remanded the case for further review of the evidence presented at trial under the trial court’s jury instructions that should have been – but were not – followed.
The question remaining, however, is how the Court’s opinion will affect the use of patented research tools, even though the Court expressly claimed not to have been commenting either for or against the applicability of the §271(e)(1) research exemption to such tools. On the one hand, the Court used strong, broad language in setting out what the exemption covers: “. . . all uses of patented inventions that are reasonably related to the development and submission of any information under the [FDCA].” But on the other, it disclaimed any intent to speak to research tools and cabined most of its later discussion of the coverage to the use of “patented compounds.” Thus, the Court really seems to have been attempting to give leeway to researchers’ use of target or subject patented items, even where such use does not ultimately lead to an IND or NDA, or where the research itself does not wind up being contained in an IND or NDA.
In the end, then, the Court has likely left the unauthorized use of patented research tools outside of the reach of the §271(e)(1) exemption – at least for now – unless the tools are themselves the target of research inquiry for a possible IND or NDA submission to the FDA. But at the same time, it significantly broadened the sort of uses of target or subject compounds that can be made by researchers as they search for the next blockbuster drug or therapy.
†Sean O'Connor is an Assistant Professor of Law at the University of Washington School of Law, and Associate Director of CASRIP.
 Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. ___ (2005).
 307 F.3d 1351 (Fed. Cir. 2002).
 35 U.S.C. § 271(e)(1).
 U.S. Patent Nos. 4,988,621, 4,792,525, 5,696,997, 4,879,237, and 4,789,734.
 Merck KGaA (www.merck.de) is not related to the large pharmaceutical company, Merck & Co., Inc. (www.merck.com ).
 Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. ___ (2005), No. 03-1237 at 7.
 Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. ___ (2005), No. 03-1237 at 8.
 In a footnote, the Court asserts that “[w]e therefore need not – and do not – express a view about whether, or to what extent, §271(e)(1) exempts from infringement the use of ‘research tools’ in the development of information for the regulatory process.” Id. at fn. 7.
 The Court also dismisses Integra’s contention that the Merck funded experiments should not qualify for the §271(e)(1) research exemption because they apparently were not performed in compliance with FDA good laboratory practices guidelines.
 The jury instructions as quoted by the Court read:
To prevail on this defense, [petitioner] must prove by a preponderance of the evidence that it would be objectively reasonable for a party in [petitioner’s] and Scripp’s situation to believe that there was 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.
Each of the accused activities must be evaluated separately to determine whether the exemption applies.
[Petitioner] does not need to show that the information gathered from a particular activity was actually submitted to the FDA.
Id. at 7.
 And, of course, fall within the scope of subject matter qualifying as a drug for these purposes.