Need to know
- The Hatch-Waxman safe harbor creates an exception to patent infringement liability for uses of patented inventions reasonably related to the development and submission of information to the Food and Drug Administration (FDA).
- The use of patented research tools in drug development generally falls outside the safe harbor’s protections; however, there is limited authority on the measure of damages for infringing uses of said tools.
Research tools — such as assays, testing platforms, and other technologies used to generate data during drug development — sit at an uneasy intersection of patent and regulatory law. Although the Hatch-Waxman Act’s safe harbor shields certain activities undertaken to develop and submit information to FDA, courts generally have been reluctant to extend that protection to activities alleged to infringe research tool patents. However, only a few decisions address damages for infringement of research tool patents where the accused conduct was allegedly protected by the Hatch-Waxman safe harbor. Here, we highlight the limited authority on this topic.
Statutory background
The safe harbor provision, 35 U.S.C. § 271(e)(1), was enacted as part of the Hatch-Waxman Act. In relevant part, it provides:
It shall not be 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 which regulates the manufacture, use, or sale of drugs or veterinary biological products.1
Safe harbor and research tool patents background
The leading decision addressing the applicability of the safe harbor to research tools is Proveris Sci. Corp. v. Innovasystems, Inc.2 There, the Federal Circuit held that the accused product, an Optical Spray Analyzer (“OSA”), used to conduct tests required for FDA approval of the final product, a nasal spray drug device, was not subject to the safe harbor3 for two reasons: (1) because the OSA itself was not subject to FDA premarket approval,4 and (2) because the patent-in-suit was not extendable under §156(a).5 Courts have used this two-prong test to evaluate whether, as relevant here, research tools patents are subject to the safe harbor.
Significantly, the Supreme Court sidestepped the applicability of the safe harbor to research tools in Merck KGaA v. Integra Life Sciences: “We 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.”6
Several courts have addressed the applicability of the safe harbor to assays. For example, in PSN Ill. LLC v. Abbot Laby’s, the patents-in-suit covered a specific type of receptor that Abbot used to develop three drug candidates that required FDA approval.7 The three candidates did not contain the patented receptor.8 Relying on Proveris, the court held that the receptors were research tools and, therefore, the safe harbor did not apply because they did not require regulatory approval.9
In ISIS Pharms. Inc. v. Santaris Pharma A/S Corp.,10 the patents-in-suit generally covered methods of modifying biologic molecules.11 Relying on both Proveris and PSN Illinois, the court held that the safe harbor did not apply because the patented inventions were not themselves subject to FDA review and approval.12
In Infigen, Inc. v. Advanced Cell Tech., Inc., the patents-in-suit covered processes for activating bovine oocytes for use in cloning.13 The court rejected the defendant’s safe harbor defense because the defendant was using the patented inventions to conduct preliminary steps to identify a product that would eventually need FDA approval.14 The court’s general discussion of damages differentiated between pre - and post - notice of infringement.15
Most recently, and quite possibly most clearly related to patented assays is Momenta Pharms., Inc. v. Teva Pharms. USA, Inc.16 There, the Federal Circuit held the safe harbor did not apply where the patent-in-suit covered an assay used to measure the molecular weight of each batch of an FDA-approved product before it could be released for sale (i.e. the conduct occurred post-FDA approval17). Particularly pertinent is the court’s analysis of safe harbor protection and research tools:
Despite the broad contours of the exemption, some activities are outside its protection. For example, § 271(e)(1) ‘does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained.’ In addition, research tools or devices that are not themselves subject to FDA approval may not be covered.18
In sum, unless the accused conduct is itself subject to FDA approval, the safe harbor does not apply.19 Interestingly, companion diagnostics, which are research tools, are subject to FDA approval and therefore covered under the safe harbor.
Damages and research tool patents
There is very little case law on the measure of damages for the use of research tools. In Ajinomoto Co. v. Archer-Daniels-Midland Co., the court awarded reach–through royalties on sales of a product that resulted from the use of an infringing process.20 But of particular interest are Judge Rader’s comments in Integra Life Sciences I, Ltd. v. Merck KGaA, where the jury awarded $15,000,000 for Merck’s use of the patents-in-suit, which included research tool patents:21
[P]atented tools often facilitate general research to identify candidate drugs, as well as downstream safety-related experiments on those new drugs. Because the downstream clinical testing for FDA approval falls within the safe harbor, these patented tools would only supply some commercial benefit to the inventor when applied to general research.22
In evaluating damages, Judge Rader noted that the date of the hypothetical negotiations was critical, and the lower court’s date was unclear.23 The Federal Circuit noted that the jury decision was based, in part, on Merck’s expectation of FDA approval.24 But if the negotiations were earlier in time, the risks and expectations of the parties would change. Accordingly, the court reviewed the risk/reward aspects of damages depending on the stage of the research at the time of first infringement. Thus, “[t]he value to a licensee of research tools lies, in part, in the point at which those [seven] initial infringement tools are employed in the drug development continuum.”25 Under that reasoning, a tool used to identify candidates may be more valuable than one used merely to confirm safety or efficacy. The Supreme Court reversed the decision, however, holding that the Federal Circuit had conducted an improper analysis of the safe harbor protections.2627
In SIBIA Neurosciences, Inc. v. Cadus Pharmaceutical Corp.,28 the jury awarded $18,000,000, where the patents covered assays.29 No discussion of methodology was provided. Since the Federal Circuit found the patent obvious on appeal, the court did not discuss damages.30
It should be noted that the Federal Circuit affirmed an award of $70 million in Amgen, Inc. v. Hospira, Inc.,31 where Hospira stockpiled products manufactured by infringing Amgen’s process patents, but had not sold any.32 The Federal Circuit favorably discussed the testimony on what Hospira would have expected to gain from a license to manufacture the volume of batches needed to meet its expected product launch.33 Although not a decision involving research tools, it does show that significant damages can be awarded even though there were no infringing sales based on what the infringer would have paid for a license.34 In Amgen, the court allowed in evidence that occurred after the hypothetical negotiation took place.35 This included the gain to Hospira from obtaining a license to manufacture the commercial batches.36 That Hospira had not received FDA approval did not affect the damage award.37
The court’s reasoning in Amgen generally is consistent with Judge Rader’s views regarding the risk/reward analysis. The potential reward to Hospira from the sale of the extensive inventory manufactured by infringing Amgen’s process patents was significant. Accordingly, Hospira would have paid a significant amount ($70 million) to obtain licenses even before FDA approval. Moreover, according to Judge Rader, the value of a research tool is dependent on the stage of the research that uses it. One could argue that the use of research tool to identify a future commercial product despite lack of FDA approval is highly valuable.
Takeaways: Await future guidance
Research tools are used extensively in pharmaceutical research, but they often fall outside the scope of the safe harbor, resulting in findings of patent infringement and resulting damages awards. Yet predicting damages for infringing research tool use is difficult, as there is little case law providing consistent methods for their calculation. One can only hope that judicial guidance is forthcoming to assist practitioners in assessing potential damages for infringing research tool patents.
