Sunday, January 09, 2005

O'Connor, Breyer will not participate in Merck v. Integra?

Hope Yen of the AP discusses the grant of cert on January 7, 2005 in Merck v. Integra. Of a conflict of interest issue, Yen writes that Justices O'Connor and Breyer did not vote on the cert grant and observed:

O'Connor and Breyer own shares in the U.S.-based Merck & Co., which was affiliated with Merck KGaA [the named defendant] in the 1800s. The two companies are now separate.

Hope Yen's comments are correct. In 1827 Heinrich Emanuel Merck started with the large-scale production of alkaloids ("E. Merck").
In 1889 Georg Merck, a grandson of Heinrich Emanuel Merck, took over the office in New York and established Merck & Co. After World War I, Merck lost many of its foreign affiliates, among them Merck & Co. in the USA. Merck & Co. became an independent American company. Both Merck KGaA and Merck & Co. are engaged in pharmaceuticals, but it is only Merck KGaA which is involved in the litigation Merck v. Integra.

A report by Tony Mauro in Legal Times observes Justices O'Connor and Breyer likely will not participate in the case Merck v. Integra. and that financial disclosure records filed in 2003 indicated ownership of Merck stock.

The Supreme Court did not provide an explanation for the non-vote of O'Connor and Breyer. If (hypothetically) the non-vote were due to a misperception of "which" Merck were involved and the misperception is corrected, it is possible that Justices O'Connor and Breyer might participate in the case. It is a non-trivial matter, as this is a statutory construction case, in which (I suspect) Justices Scalia and Thomas would be more disposed to vote for the Integra position. In an array of seven justices, only two more would be needed for Integra to win. As is more fully developed below, the justices will be considering the meaning of "solely" and "reasonably related" in the text --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--

The case generally pertains to the Hatch-Waxman Act, and Integra sued Merck to keep Merck from infringing Integra patents in the development of new drugs to treat cancer. A jury found infringement and the CAFC upheld the verdict.

At issue is a safe harbor provision in the Hatch-Waxman Act [35 U.S.C. § 271(e)(1)]. The concept of safe harbors was central in the reasons for creating the act. For example, a generic company, preparing to market a proprietary drug going off-patent, needs to be able to use the compound in order to show that the generic's version is bio-equivalent. In a case in the 1980's [Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858, 221 USPQ 937 (Fed. Cir. 1984)], it was determined that testing a drug BEFORE it went off-patent was infringement. This had the effect of delaying the entry of generic drugs into the marketplace, and the Hatch-Waxman Act fashioned a compromise which allowed testing to occur while the drug was still on-patent. At issue in Merck v. Integra is the scope of the safe harbor. As the CAFC put the question: Thus, this court must determine whether the § 271(e)(1) safe harbor reaches back down the chain of experimentation to embrace development and identification of new drugs that will, in turn, be subject to FDA approval. The CAFC decision limited the safe harbor to the context of its creation: allowance of a safe harbor to perform testing on humans of already identified drugs. Merck wants to extend the safe harbor to allow use of patented materials to identify drug candidates.

The policy issues (although not the factual issues) are related to Madey v. Duke University, a CAFC ruling on which cert was not granted (and on which the solicitor general argued AGAINST cert, the opposite position to the SG's stand on Merck). In the Madey case, the CAFC denied an experimental use exception/exemption to Duke University, on the basis that its use of a patented method was involved in its "business," (teaching students, obtaining grants), and not purely to philosophical inquiry. The Madey case had complicated aspects (it amounted to a spat between a [now ex-] Duke professor and Duke over a patent obtained by the professor when he was at Stanford (a Bayh-Dole patent) doing Star Wars research; military/security issues were still involved in the case), and those complications may have guided the SG. In Merck v. Integra, a similar policy based consideration about the scope of research exception is cast against the legislative intent of the Hatch-Waxman Act and the politically-charged area of pharmaceuticals. In some alternative universe, Merck and Integra might have cut a deal to share benefits Merck obtains as a result of Merck's use of Integra's patent [Integra, of Plainsboro, NJ, did offer Merck a license, which Merck declined.] If one removed the Hatch-Waxman aspect of this case, and asked whether a [big] company had a right to use, without compensation, a patent of a [small] company to create and to sell a product, this is a no brainer. Even adding on the Hatch-Waxman dimension, the CAFC may have the better argument as to a "strict" construction of what was going on with the Hatch-Waxman Act. But this is a very sensitive area.

The Mauro article noted that both the Solicitor General and the AARP had written briefs in favor of the Merck position. AARP lawyer Sarah Locke was quoted: "It is vitally important that drug companies are able to test and experiment with patented material in order to advance pharmaceutical research and bring useful drugs to market as soon as possible."

What's really going on is whether a pharmaceutical company has the right to test and experiment with a patented material, WITHOUT COMPENSATING THE PATENT OWNER, in order to advance pharmaceutical research. Integra offerred Merck a license. Merck declined. This is a money issue. One recalls the Wright Brothers. They allowed people to experiment with and use their invention for non-commercial purposes. They told people that that was their view. They wanted a lot of money to license their invention for commercial purposes. Lots of people declined. The Wrights sued and won. World War I arrived and some people thought US aviation was being held back by the issues over the Wrights patent. Compulsory licensing and a patent pool were created.

The Yen article goes into the issues a bit more deeply.

Merck contends it was entitled to the "head-start" research under a Food and Drug Administration exemption for studies "reasonably related" to a future drug application, saying it would promote the innovation of cutting-edge treatments while respecting the rights of patent holders.

[The CAFC] ruled that the FDA exemption did not extend to exploratory research - only later-phase, human trials typically involving generic drugs. It reasoned that Congress intended only to promote the growth of generics when it passed the exemption in 1984.
The CAFC stated: "The FDA has no interest in the hunt for drugs that may or may not later undergo clinical testing for FDA approval."


Yen quotes the AARP: "If this decision stands, the inevitable effect will be that the costs of drug development will be driven up even further and it will serve to delay the development of new medicines."

To comment on this quote, if the Integras of the world are not going to be compensated for the money they spend in research, they won't do it. Then, those results won't be available for the Mercks of the world to do their work. Judge Newman, in her separate opinion in the CAFC decision, pointed out that Integra didn't produce a product like Merck did, and thus not allowing Merck access to the Integra work would have denied the public the ultimate useful product. HOWEVER, the deal that Integra made with the US public was full disclosure in return for a limited period of exclusivity. If the Integras don't get the exclusivity they won't have an incentive to give full disclosure. Apply the test of the Wright Brothers. Merck was going to make money using information gained from the work of Integra. This is patent infringement. All that Hatch-Waxman was designed to do was give competing companies (typically generics) time to comply with FDA requirements while the drug was on-patent.

The text of the CAFC's June 6, 2003 decision is available at The decision was written by Judge Rader, and there was a concurring-in-part, dissenting-in-part, opinion by Judge Newman. Donald Dunner of Finnegan argued for Merck KGaA.
The earlier history of the case: the United States District Court for the Southern District of California ruled that Merck KgaA (Merck) infringed U.S. Patent Nos. 4,988,621 (’621 patent), 4,792,525 (’525 patent) 5,965,997 (’997 patent), 4,879,237 (’237 patent), and 4,789,734 (’734 patent), belonging to Integra Lifesciences I, Ltd., the Burnham Institute and Telios Pharmaceuticals, Inc.

In terms of technical background:

Integra owns the ’621, ’525, ’997, ’237, and ’734 patents, all of which are related to a short tri-peptide segment of fibronectin having the sequence Arg-Gly-Asp (in single- letter notation, referred to as the “RGD peptide”). The RGD peptide sequence promotes cell adhesion to substrates in culture and in vivo. The RGD sequence promotes this beneficial cell adhesion by interacting with αvβ3 receptors on cell surface proteins called integrins. In sum, the RGD sequence attaches to the αvβ3 receptors on the surface of cells. This bond adheres the cells to the substrate containing RGD. In theory, inducing better cell adhesion and growth should promote wound healing and biocompatibility of prosthetic devices. In addition, blood vessels grow new branches due to controlled interactions with integrins.

Dr. David Cheresh, a scientist at Scripps, discovered that blocking αvβ3 receptors inhibits angiogenesis, the process for generating new blood vessels. Inhibiting angiogenesis showed promise as a means to halt tumor growth by starving rapidly dividing tumor cells. Similarly, anti-angiogenic therapies might also treat diabetic retinopathy, rheumatoid arthritis, psoriasis, and inflammatory bowel disease.

Merck recognized the importance of Dr. Cheresh’s discovery, and hired Scripps and Dr. Cheresh to identify potential drug candidates that might inhibit angiogenesis. Dr. Cheresh’s research showed that cyclic peptide EMD 66203 displayed good inhibition of αvβ3 receptors. Merck then entered into an agreement with Scripps to fund the “necessary experiments to satisfy the biological bases and regulatory (FDA) requirements for the implementation of clinical trials” with EMD 66203 or a derivative thereof. The agreement contemplated commencing clinical trials with a drug candidate within three years.

One notes that Integra did offer Merck a deal:

Integra learned of the Scripps-Merck agreement. Believing the angiogenesis research was a commercial project that infringed its RGD-related patents, Integra offered Merck licenses to the patents-in-suit. After lengthy negotiations, Merck declined. Integra then sued Merck, Scripps, and Dr. Cheresh. Merck answered that its work with Scripps falls under the safe harbor afforded by 35 U.S.C. § 271(e)(1). Merck also contended Integra’s patents were invalid. Before trial, Integra limited its request for monetary damages to Merck’s alleged infringement, and sought only a declaratory judgment against Scripps and Cheresh. After the close of all evidence, the district court granted Scripps’ and Dr. Cheresh’s motion to dismiss Integra’s claim for declaratory judgment.

The safe harbor in question-->

35 U.S.C. § 271(e)(1) defines a safe harbor against patent infringement:

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 (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) 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.

The CAFC applied a strict construction approach:

-->To qualify for exemption, Merck must show its activities were “solely for uses reasonably related to the development and submission of information” to the FDA. 35 U.S.C. § 271(e)(1).

At the outset, this statutory language strictly limits the exemption “solely” to uses with a reasonable relationship to FDA procedures. The term “solely” places a constraint on the inquiry into the limits of the exemption. The exemption cannot extend at all beyond uses with the reasonable relationship specified in § 271(e)(1).

the express objective of the 1984 Act was to facilitate the immediate entry of safe, effective generic drugs into the marketplace upon expiration of a pioneer drug patent. The 1984 Act thus permits filing of an ANDA (abbreviated new drug application) to expedite FDA approval of a generic version of a drug already on the market. Bayer AG v. Elan Pharm. Research Corp., 212 F.3d 1241, 54 USPQ2d 1711 (Fed. Cir. 2000).

Therefore, the 1984 Act enacted § 271(e)(1) to create a safe harbor for those pre-expiration tests necessary to satisfy FDA requirements. As also noted, the legislative record shows as well that the 1984 Act narrowly tailored the § 271(e)(1) exemption to have only a de minimis impact on the patentee’s right to exclude. Therefore, the § 271(e)(1) safe harbor covers those pre-expiration activities “reasonably related” to acquiring FDA approval of a drug already on the market. Within this framework and language of the 1984 Act, the district court correctly confined the § 271(e)(1) exemption to activity that “would contribute (relatively directly)” to information the FDA considers in approving a drug. Intermedics, 775 F. Supp. at 1280.<--

In her separate opinion, Judge Newman viewed the issues in broad context:

This case raises a question of the nature and application of the common law research exemption, an exemption from infringement that arose in judge-made law almost two centuries ago, and that recently has come into sharper focus. Its correct treatment can affect research institutions, research-dependent industry, and scientific progress.

The purpose of a patent system is not only to provide a financial incentive to create new knowledge and bring it to public benefit through new products; it also serves to add to the body of published scientific/technologic knowledge. The requirement of disclosure of the details of patented inventions facilitates further knowledge and understanding of what was done by the patentee, and may lead to further technologic advance. The right to conduct research to achieve such knowledge need not, and should not, await expiration of the patent. That is not the law, and it would be a practice impossible to administer. Yet today the court disapproves and essentially eliminates the common law research exemption. This change of law is ill-suited to today's research-founded, technology-based economy. I must, respectfully, dissent.

Judge Newman further wrote:

Were all research using RGD peptides prohibited until the Integra/Telios patents expired, not even the patent owner would benefit, for the patented products had failed in Telios' hands, leaving the patents valueless until Scripps and Merck made their discoveries as to the cyclic peptides and their anti-angiogenic properties. The panel majority states that because the Scripps/Merck research had the goal of curing cancer and commercializing the cure, this purpose moved the research outside of any common law exemption. However, an ultimate goal or hope of profit from successful research should not eliminate the exemption. The better rule is to recognize the exemption for research conducted in order to understand or improve upon or modify the patented subject matter, whatever the ultimate goal. That is how the patent system has always worked: the patent is infringed by and bars activity associated with development and commercialization of infringing subject matter, but the research itself is not prohibited, nor is comparison of the patented subject matter with improved technology or with designs whose purpose is to avoid the patent.


Post a Comment

<< Home