Monday, June 13, 2005

Supreme Court reverses CAFC in Merck v. Integra on June 13

In a unanimous decision authored by Justice Scalia, the Supreme Court reversed the decision by Judge Rader of the Federal Circuit in Merck v. Integra [03-1237]. Justice Scalia also authored the opinion in the earlier case on 271(e)(1), Eli Lilly v. Medtronic.

The use of patented compounds in preclinical studies is protected under 271(e)(1) at least as long as there is a reasonable basis to believe that the compound(s) could be the subject of an FDA submission and the experiments will produce the types of information relevant to an IND or NDA. In reaching this test, the Supreme Court relied on the words "reasonably related" within 271(e)(1) but placed no emphasis on the word "solely."

An interesting part of the Supreme Court opinion begins after the sentence: "We do not quibble with the latter statement." An especially interesting part follows: "As to the first proposition,..."

Additionally, this portion of the opinion contains footnote 7, wherein the Supreme Court expresses no opinion on whether or not 271(e)(1) exempts from infringement the use of patents on research tools. The bigger potential issue in the case was the research tool issue, which remains undecided. Similarly, applicability of the common law research exemption was not reached.

Because almost any research done will provide a reasonable basis to believe that the compound could be the subject of an FDA submission AND involves experiments that will produce the type of information relevant to an IND or NDA, the Merck v. Integra decision means that one drug company can do research on any drug patented by another drug company. The exemption does not give the drug company the right to make, use, or sell the drug commercially while the patent is in force. However, in a sense, the decision opens up the patent portfolio of every drug company to every other drug company for research purposes with no fear of infringement. Same result as to medical devices.

One consequence of the case is a disincentive to "little guys" such as Integra (or Telios) to play in the drug ball game if they don't have a reasonable expectation of bringing a product to market. Someone else can utilize their discovery, shadow it, and bring it to market on patent expiry. Similarly, bigger drug companies might become wary of patenting "marginal" compounds, for which they do not have a clear vision of exploitation. Someone else can utilize the results of the research. It's definitely a different ballgame.

[Parenthetically, it is not clear that the Court addressed the arguments of Integra which were independent of the clinical/preclinical distinction made by the CAFC.]


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