While the Patent Act generally protects a patent owner from outsiders'' acts that would infringe the claimed invention, it also exempts from infringement certain activities undertaken to gain federal regulatory approval of a medical device, drug or veterinary biological product. Section 271(e)(1) of the US Patent Act states that it is not "an act of infringement to make, use, or sell a patented invention ... solely for uses reasonably related to the development and submission of information under a Federal Law" to a federal regulatory body. 35 U.S.C. § 271(e)(1). The courts have generally interpreted this safe harbor statute as rendering "activities that would otherwise constitute patent infringement non-infringing if they are undertaken for the purpose of developing and submitting to the Food and Drug Administration ("FDA") information necessary to obtain marketing approval for a drug or medical device" under the Federal Food, Drug, and Cosmetic Act ("FDCA"). Eli Lilly and Co. v. Medtronic, Inc., 496 U.S. 661 (1990). The statute has benefited competing companies, permitting them to engage in otherwise infringing activities for the purposes of filing for and obtaining regulatory approval.

This safe harbor provision was codified as part of the Drug Price Competition and Patent Term Restoration Act of 1984, legislation designed to benefit the makers of generic drugs, research-based pharmaceuticals and the general public. See Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1568 (Fed. Cir. 1997)(citing H.R.Rep. No. 98-8557(I), at 14-15). Congress sought to balance the two directly competing interests with this statute: "continuing full protection of the rights of patent holders, on the one hand, and, on the other, assuring access by the public to medically beneficial new products at truly competitive market prices immediately after the expiration of the terms of relevant patents". Intermedics, Inc. v. Ventritex, Inc., 775 F. Supp. 1269, 1276 (N.D. Cal. 1991).

Application of the safe harbor provision

To determine whether the exemption from infringement under Section 271(e)(1) applies, the courts generally focus on whether the infringing activity at issue is "solely for uses reasonably related to" the submission of data to the FDA. See Intermedics, 775 F. Supp. at 1281; Telectronics Pacing Sys., Inc. v. Ventritex, Inc., 982 F.2d 1520, 1523 (Fed. Cir. 1992). Implicit in any Section 271(e)(1) analysis, the activity at issue, i.e., the making, use or sale of a patented invention, must constitute acts of infringement under the Patent Act but for this exemption". Intermedics, 775 F. Supp. at 1277; see also 35 U.S.C. § 271 (a) ("whoever without authority makes, uses, offers to sell, or sells any patented inventions, within the United States ... during the term of the patent thereof, infringes the patent"). Courts have rejected arguments advancing the proposition that non-infringing activity revealing a commercial purpose that is unrelated to obtaining FDA approval provides a basis for denying application of the Section 271(e)(1) exemption. See Telectronics, 982 F.2d 1524 ("The statute does not identify dissemination of [data] information as potentially infringing activity"); see also Intermedics, 775 F. Supp. at 1281 ("[U]se of clinical data, in a prospectus or otherwise, is not an infringing act under § 271(a).").

Scope of Section 271(E)(1)

The Federal Circuit has construed the Section 271(e)(1) exemption broadly. Pointing to the statute, the Federal Circuit has state that "as long as the use is reasonably related to FDA approval," the underlying intent or consequences of an infringer''s activity, including the promotion of product, does not disqualify the infringer from Section 271(e)(1) protection. Abtox, Inc. v. Exitron Corp., 122 F.3d 1019, 1030 (Fed. Cir. 1997).

In Teletronics, the defendant was conducting clinical trials of its implantable defibrillator pursuant to an Investigational Device Exemption ("IDE") from the FDA. The IDE permitted the defendant to sell its device at cost for implantation in patients in order to obtain data on the device''s clinical operation. 982 F.2d at 1521. Additionally, the defendant demonstrated its device at medical conferences to physicians and non-physicians. The Federal Circuit held that the Section 271(e)(1) safe harbor provision applied to the medical conference demonstration because they were for the purpose of obtaining clinical investigators for its clinical trials. Id. at 1523. Such activities constituted "an exempt use reasonably related to FDA approval, because device sponsors are responsible for selecting qualified investigators and providing them with the necessary information to conduct clinical testing." Id.

The Federal Circuit also determined that the infringers did not lose their exemption by using data gained from clinical tests for fund raising purposes. Id. at 1524-25. Congress must have been aware of "the need of competitors to raise funds for developing and testing competing products, and for preparing to enter the market once controlling patents had expired." Id. at 1525. The Federal Circuit concluded that "if Congress had intended to make that more difficult, if not impossible, by preventing competitors from using, in an admittedly non-infringing manner, the derived test data for fund-raising, and other business purposes, it would have made that intent clear." Id.

A later Federal Circuit decision expanded upon the reasoning of Telectronics, addressing the intent of the infringer seeking Section 271(e)(1) protection. In Abtox, the defendant conducted limited tests to collect data necessary for filing an application with the FDA for approval of its device. 122 F.3d at 1027. The plaintiff contended that "the actual purpose of these tests" was to promote the device at issue to potential customers. Id. The Federal Circuit responded to these allegations, holding that Section 271(e)(1) "does not look to the underlying purposed or attendant consequences of the activity ... As long as the activity is reasonably related to obtaining FDA approval, the defendant''s intent or alternative uses are irrelevant to its qualification to invoke the Section 271(e)(1) shield." Id. at 1030.

Notably, following the Federal Circuit''s lead, the District Court of Delaware noted that the "FDA establishes regulations to oversee the development and testing of drugs and devices". Nexell Therapeutics, Inc. v. Amcell Corp., 143 F.Supp.2d 407, 422 (D. Del. 2001). In this case, the plaintiffs claimed that the defendants were marketing the device by pursuing clinicians to participate in clinical investigations that were not necessary to obtaining regulatory approval. 143 F. Supp.2d at 421. The court stated that the "FDA is in a better5 position than the courts to determine what activities are reasonably related to obtaining regulatory approval". Id. at 422. Ultimately the court concluded that "by controlling a manufacturer''s commercial messages and disallowing application for IDEs where the FDA believed that the [clinical] trial would not yield useful data or where the manufacturer is promoting, test marketing, commercializing, or unduly prolonging the investigation of a device, the FDA is telling the courts what activities fall within the scope of the Section 271(e)(1) exemption". Id. at 422. Consequently, it held that the defendant was entitled to protection under Section 271(e)(1). Id. at 423.

Scope Of Provision - Medical Devices And Drugs

The explicit language of Section 271(e)(1) is for "a patented invention" and refers to "drugs and veterinary biological products". Judicial interpretation of the statue has revealed that devices are also included under the Section 271(e)(1) safe harbor provision. The United States Supreme Court in the Eli Lilly case held that the phrase "patented invention" is "defined to include all invention, not drug-related inventions alone". 496 U.S. at 665. As a result, the Court held that Section 271(e)(1) exempts form infringement the use of patented invention reasonably related to the development and submission of information needed to obtain marketing approval of medical devices under the Federal Food, Drug and Cosmetic Act. 496 U.S. at 661.

Since the United States Supreme Court decision, the Federal Circuit has determined that "Section 271(e)(1) makes no distinctions based upon the different FDA classes of medical devices or drugs". Abtox, 122 F.3d at 1029. Accordingly, the safe harbor applies to Class I, II and III medical devices.

About the author:

-- The authors are US-based patent attorneys.