Saturday, July 29, 2006

More on the WARF / CIRM conflict in research in embryonic stem cells

In the current patent discussion/controversy between a holder of patents on embryonic stem cells (Wisconsin's WARF) and a potential user/"infringer" of said patents (California's CIRM), we are seeing that patent conflicts can reach entities that are nominally research institutions, but which nevertheless are planning commercializations.

Although the Supreme Court case of "Merck v. Integra" appeared to be one between two commercial entities, the underlying conflict came through one research entity (Scripps) wanting to use a patent created by another research entity (Burnham), after one research entity (Scripps) had made a deal with a commercial entity (Merck KGaA).

In the Merck v. Integra case, the Supreme Court stated that it had not understood the CAFC to have made a clinical/preclinical distinction as to the scope of the research exemption of 35 USC 271(e)(1) [meaning that "preclinical" activities could be insulated from infringement]. The common law research exemption was not reached and the "research tool" issue was not reached, one way or another.

Jeanne Loring and Cathryn Campbell wrote an article entitled "Intellectual Property and Human Embryonic Stem Cell Research," which appeared in 311 Science 1716 on March 24, 2006, which article did not mention either 35 USC 271(e)(1) or Merck v. Integra. The research exemption of 35 USC 271(e)(1) is of relevance to protecting researchers in the stem cell area from patent infringement actions. Cathyrn Campbell was familiar with the Merck v. Integra case in 2006, having been aligned with the position of patentee. Nevertheless, the March 2006 article suggests that patentee WARF presents a greater danger to stem cell research than does the research funding limitations of George Bush of August 2001.

from "Voices of San Diego":

Ms. Campbell and Ms. Eastham Go to Washington

Contributing Voices
Published April 22, 2005

A number of San Diegans, including the authors, converged on the U.S. Capitol to attend the Supreme Court hearings yesterday in a case that has deep San Diego roots-- and potentially broad implications for many local sectors of the life science industry. How did we find ourselves there, Karin in a reserved front-row seat, Cathryn at counsel table?

For both, it was an awe-inspiring, not-to-be forgotten opportunity to witness first hand that august body, which for everyone but the two of us will doubtless remain better known for Roe v. Wade than it will be for Merck KGaA v. Integra Lifesciences I, Ltd. Cathryn has a long history with this case and the patents at issue here, having prosecuted them on behalf of the Burnham Institute since the 1980s. Karin was an invited guest as a representative of the Burnham Institute and stood in for Erkki Ruoslahti, who was in Japan to formally accept the prestigious Japan prize for his seminal work in cell adhesion, the very technology that is the subject of this case.

Stemming from a patent infringement suit filed in San Diego in 1994, the dispute involves pioneering cell biology discoveries in the early 1980s at the Burnham Institute by Drs. Erkki Ruoslahti and Michael D. Pierschbacher. Merck KGaA (the German drug-maker, not to be confused with the U.S. company of the same name) sponsored research at the Scripps Research Insitute to support research on a potential anti-cancer compound which infringed The Burnham's patents.

When Merck declined to take a license from the Burnham Institute, a suit for infringement was filed naming Merck KGaA, Scripps and its researcher, Dr. David Cheresh, as defendants. Scripps and Dr. Cheresh were later dismissed as parties. After a 25-day trial in the local District Court, the jury found that Merck had willfully infringed. Yesterday-nine years after its filing-the case was before the U.S. Supreme Court, the only patent matter to be heard this year by our nation's highest court. And the issues at stake go far beyond the issue of patent infringement.

Mauricio Flores, a partner at McDermott Will & Emery LLP (and Cathryn's law partner), presented arguments to the court on behalf of Integra in a case that has broad implications to various constituencies in the life sciences sector: research institutions, biotechnology companies, research tool companies, and pharmaceutical companies. The fundamental question is whether Merck, through research performed at the Scripps Research Institute, infringed Burnham patents held by Integra. Merck claims that the work performed at Scripps qualified for a Food and Drug Administration exemption.

Lawyers for each side are allotted 30 minutes including questions from the justices. What surprised us was the large number of questions and interruptions. The justices seemed intent and anxious on getting answers to their specific issues. At times, the proceedings seemed more like a conversation than a Perry Mason trial. The time restriction is strictly adhered to, and when the red light comes on, the lawyer says, "Thank you" and immediately stops.

The Congressional exemption provides that a drug manufacturer can use an invention without obtaining a license when the manufacturer can prove that its otherwise infringing uses were "solely for uses reasonably related to the development and submission of information" for FDA submissions. Integra believes the Scripps work infringed of these patents because it was basic biomedical research to identify drug candidates; the work related to FDA requirements was performed at Merck in Germany, using the Good Laboratory Practices required by the FDA.

However, the industry wide implications are of broader importance than the outcome between the two parties in this case. The fundamental questions that could be addressed by the Supreme Court are the following:

Q1. Is any preclinical research potentially eligible for the FDA exemption or will a line be drawn between preclinical and clinical testing for purposes of the exemption?

Q2. Will the Supreme Court use this case to reconsider the common law research exemption to protect basic biomedical research?

Q3. Will the FDA Exemption be held to be broad in scope that "research tool" companies are at risk of losing patent protection when their technologies are used for generation of FDA data?

Q4. Is the FDA exemption only applicable to generics? What about medical device companies?

Based upon our observations of the probing and intense questions asked by the justices during the arguments by the lawyers on both sides, we have made some predictions regarding the decision, which is expected this summer:

Prediction 1. Clearly, work on human clinical subjects is exempt from patent infringement. However, scientists and drug innovators need some clearer guidelines as to whether basic biomedical research infringes patents, but no bright lines are expected to be drawn by the court between preclinical and clinical testing. Instead, it is expected that the Court will indicate that some preclinical work on animals or in test tubes is eligible for the FDA exemption, but decisions will be based upon the unique facts in each case.

Prediction 2. The common law research exemption was not at issue in this case and it is unlikely that the Court will address this.

Prediction 3. The Court is likely to consider that this case does not raise the issue of tool patents, and thus companies like San Diego's Invitrogen will still be able to go after infringers using their patented technology in basic research.

Prediction 4. The Court has previously held that the FDA exemption is not limited to protecting generics companies and applies to drug and device manufacturers.

While the Justices provided us with multiple clues about the potential industry-wide conclusions in this case, no case-specific leanings could be inferred from the intense line of questioning. We will have to wait patiently as this case approaches its 10th birthday. We will also wait patiently to learn whether our predictions accurately capture the outcomes that have landmark implications for our San Diego life sciences industry.

Cathryn Campbell, an attorney specializing in intellectual property, has focused her practice on the biotechnology industry since its infancy in the early '80s. She is a partner in the law firm of McDermott Will & Emery LLP.

Karin Eastham, executive vice president and chief operating officer of the Burnham Institute, has over 25 years experience in financial and operations management, primarily in life sciences companies. Karin also serves as a director on several biotechnology companies, public and private, and is on the board of UCSD Athena.


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