January 1, 1970 (Vol. , No. )

Brian D. Coggio, J.D. Senior Principal Fish & Richardson

Hatch-Waxman safe harbor exemption may apply even if patents are not extendable.

Biopharmaceutical executives and lawyers have often viewed the Hatch-Waxman safe harbor exemption and patent term extension provisions in tandem: Infringers obtain the protection of the safe harbor, while patentees take advantage of the patent term extension provisions. While this may be logical and understandable, it is incorrect. There is no legal nexus between these two portions of the Hatch-Waxman Act. Furthermore, several recent decisions make clear that in many more instances than previously thought, the safe harbor will apply to patents whose terms are not extendable.

Some would argue that these decisions violate the compromise between pioneering and follow-on drug makers by extending safe harbor protection to infringement of patents whose terms are not extendable. Moreover, these decisions may even go further in terms of the scope of the safe harbor.

The way the law in this area appears to be evolving, we may soon see Hatch-Waxman safe harbor granted to infringing use of research tools well in advance of any FDA submission. Short of Congressional action, developers of patented research tools may have limited recourse.

Several recent court decisions may have violated the compromise between pioneering and follow-on drug makers by extending safe harbor protection to infringement of patents whose terms are not extendable. [© Gor Grigoryan – Fotolia.com]

Relevant Sections of the Hatch-Waxman Act

The Hatch-Waxman law balances many competing interests, not just between branded and generic companies, but between existing FDA drug-approval applicants and future drug-approval applicants. Section 156(a) (patent term extension) and section 271(e)(1) (safe harbor exemption) were enacted as part of the compromise reflected in the Hatch-Waxman Act. But a language inconsistency between these two sections and the interpretation of that language by various courts—including perhaps most importantly the interpretation given by the Supreme Court in Eli Lilly and Co. v. Medtronic, Inc.—has had the effect of giving second-class-citizen status to research tool patents.

The Supreme Court in Eli Lilly ruled that medical devices were covered under § 271(e)(1), and the term “patented invention” in that section was defined to include all inventions, not just drug-related inventions. The Court implied that § 156(a) and § 271(e)(1) should be applied in tandem, when possible.

Thus, if a patent were not extendable under § 156(a)—that is, if the patented product were not subject to FDA approval—§ 271(e)(1) did not apply. Significantly, however, the Court explicitly recognized that this symmetry would not always exist:

[T]here may be some relatively rare situations in which a patentee will obtain the advantage of a [§ 156] extension but not suffer the disadvantage of the [§ 271(e)(1)] noninfringement provision, and others in which he will suffer the disadvantage without the benefit.

Although the Court could not “readily imagine such situations,” they clearly exist. And as time has passed we have seen an increasing number of precisely such situations. Two decades of jurisprudence in this area followed, alternatively confirming and denying that a nexus existed between these two sections of the Hatch-Waxman statute.

Issue of Statutory Symmetry Keeps Returning

The interpretation of the Hatch-Waxman statute was again at issue when the Federal Circuit took up Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc. In this case, the scales tipped decisively in favor of infringers of research tool patents.

In Momenta, the patent covered methods for analyzing heterogeneous populations of various compounds, including heparin. This patent—a research tool patent—was not extendable under § 156(a). The defendant used the patented method to determine the molecular weight of its generic heparin. Even though the Abbreviated New Drug Application (ANDA) had been approved, the molecular weight of each commercial batch had to be tested before the batch could be marketed. Thus, the alleged infringing conduct occurred post-FDA approval.

The Momenta majority held that such conduct—since it was regulated and required by the FDA—was protected by § 271(e)(1). As pertinent here, the majority dismissed the plaintiff’s argument (noted by Chief Judge Rader in dissent) that § 271(e)(1) is not available unless the patent is extendable under § 156(a).

The court held that the Supreme Court in Eli Lilly recognized that this symmetry was not always achievable. In this regard, the Federal Circuit stated:

We too have rejected this strict interpretation of the safe harbor, explaining that “statutory symmetry is preferable but not required.” Abtox, 122 F.3d at 1029 (holding that Class II medical devices, which are not subject to a “rigorous premarket approval process” and thus cannot receive patent term extensions, are nonetheless covered by the safe harbor).

Accordingly, under Momenta, research tool patents could be subject to § 271(e)(1). In dissent, Chief Judge Rader stated that the majority ignored the binding precedent on post-approval testing and, as relevant here, the result rendered manufacturing test method patents “worthless.” To explain his reasoning, Chief Judge Rader stated:

This Court … would apply the disadvantage of § [271(e)(1)] to a patentee who would not be able to obtain the benefits of § [156]. The patentee of a manufacturing patent does not obtain the patent extension created in § [156(a)], yet this court’s new expansion of § [271(e)(1)] would allow its competitors to infringe during the life of its patent.

As noted above, the Supreme Court in Eli Lilly did not require symmetry between § 156(a) and § 271(e)(1), and, indeed, specifically recognized that instances of nonsymmetry could occur.

Two recent cases highlight the conflicting views of § 271(e)(1) as it applies to research tools. In these cases, Teva sued Sandoz and Mylan alleging that their use of Teva’s patented polypeptides as “molecular weight markers” in the development of their own generic versions of Copaxone infringed.

Significantly, the patents-in-suit covered the use of the peptides as therapeutics and markers. Both Sandoz and Mylan moved to dismiss and argued that § 271(e)(1) applied because the results of the tests were included in their respective ANDAs.

In opposing the motions, Teva argued that the patented polypeptides were not “drug products” as they had not been approved by the FDA. Indeed, even though such products had potential therapeutic uses, neither Sandoz nor Mylan were using the peptides in that way, but only as analytical tools in characterizing the products they intended to sell as pharmaceuticals.

The judge in these Teva cases made clear that regardless of the implications of the Act’s legislative history, § 271(e)(1) should not be limited to those patents extendable by § 156(a). This result is confirmed by the Supreme Court’s decision in Eli Lilly and the Federal Circuit’s decision in Momenta. Rather, as the Eli Lilly Court stated, § 271(e)(1) covers “all inventions.”

Weighing Legislative Intent

Extrapolating from the legislative history to assess Congress’ view of research tool patents is difficult because Congress was certainly not concerned with the impact of § 271(e)(1) on such patents. Rather the legislative history was directed to the use (probably insubstantial) of a patented product to develop a generic equivalent.

Nevertheless, the legislative history suggests that under § 271(e)(1), the “nature of the interference” with a patentee’s rights was not intended to be “substantial” but only “de minimis.” Certainly the post-approval use of a patented invention sanctioned by the Federal Circuit in Momenta or the use sanctioned by the Southern District of New York in the Teva cases is not de minimis. Certainly the use of a research tool (for example, an assay) to discover or develop a commercial product would not seem to be de minimis, since the making, using, or selling of the resulting product—“the fruit of the poisonous tree”—would not infringe the research tool patent.

Thus, if § 271(e)(1) were applicable, the patent holder would never have a claim against the “infringer”, and the patent, as Chief Judge Rader has observed, would become essentially worthless. If one were to incorporate this concept into the statute, as Chief Judge Rader seemingly advocates, § 271(e)(1) would not cover research tools. The statute, however, is not written in that way, and the cases hold otherwise.

For now if a research tool is used to gather information to submit to the FDA seeking approval, § 271(e)(1) probably applies. Moreover, if the FDA requires certain information, gathering such information—pre- or post-approval—using a research tool should also be subject to § 271(e)(1). Alternative options to obtain the information do not alter this conclusion.

The big question remains: Is the use of a research tool to evaluate potential candidates or to select a candidate for further development covered by § 271(e)(1)? That would seem to present a different situation—one likely to be presented to the Court of Appeals for the Federal Circuit in the future.

Brian D. Coggio, J.D. ([email protected]), is senior principal in the New York office of Fish & Richardson.

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