STRATEGIC INSIGHTS Think the safe harbor provision in patent law lets you use patented compounds in all preclinical-phase research? Think again.
By Hope Melville
June 17, 2004 | Suppose you're conducting research to identify potential new drug candidates, and you have found a promising class of compounds. Years of further research and testing of those compounds will be required before you can even hope to know if early promising results will be confirmed, and to satisfy the biological and regulatory requirements to enter clinical trials with a specific drug candidate for FDA marketing approval.
Suppose, too, that you learn that other researchers own patents covering the class of compounds you're studying, and that these patents won't expire for many years. Sure, the "safe harbor" provision of the patent laws will exempt you from infringing on the patented invention during clinical trials. But what about your current developmental research activities that are needed to determine if you'll ever enter such exempted clinical trials?
Time was, owners of patented drugs could prevent others from using the patented compound in any way until the patents expired — even for purposes of generating data to obtain FDA approval on generic versions for sale after the patent expired. The result was a de facto extension of the patent term for several years after the patent expired during the time needed to get FDA approval for generic equivalents.
To correct this situation, in 1984 Congress enacted a safe harbor provision to the patent laws that exempts from patent infringement the use of patented compounds and medical devices "solely for uses reasonably related to development and submission of information" for FDA approval.
Shouldn't your current preclinical research activities also be exempt from patent infringement under the safe harbor exemption? Or can the patent owner use its patent to preclude you from using the patented compounds to continue the developmental research needed to enter exempt clinical trials? Or to at least extract license fees for permission to use said compounds in that research?
Those who own patents for new classes of compounds or research tools would likely take the view that if they can't enforce their patent rights and receive compensation for use of their inventions, they would have no incentive to develop new compounds and research tools and make them available to other researchers.
These competing interests were the subjects of a recent ruling by the Federal Circuit Court of Appeals in the case of Integra LifeSciences v. Merck. Based on the facts in that case, the court came down on the side of enforcing the patent owner's rights for patented compounds and other research tools.
Integra Sues Merck
In the early 1980s, scientists at a research foundation began studying RGD peptides, a tripeptide segment of fibronectin having the sequence Arg-Gly-Asp. The RGD peptide sequence promotes cell adhesion to substrates by interacting with avB3 receptors on cell-surface proteins called integrins. In theory, better cell adhesion should promote wound healing and biocompatibility of prosthetic devices. In addition, blood vessels grow new branches due to controlled interactions with integrins.
| Despite the finding of patent infringement, the ruling in the Integra case wasn't all bad news for Merck. |
The researchers filed a series of patent applications on the results of their research on RGD peptides, from which a number of patents issued were owned by Telios Pharmaceuticals. These included a patent that was issued in 1988 for synthetic peptides having the RGD sequence and having cell-attachment promoting activity. Subsequent patents claimed various methods of using RGD peptides to control cell-attachment activity.
Telios supplied these synthetic RGD peptide compounds to other researchers, including David Cheresh, professor of immunology at The Scripps Research Institute, who used the compounds in his research on integrins. Cheresh studied various compounds containing the RGD sequence and discovered that by binding various molecules to receptors on the surface of certain cells, the growth of new blood vessels (angiogenesis) could be inhibited. Cheresh found that blocking avB3 receptors inhibits angiogenesis, which showed promise as a means to halt tumor growth and to treat other diseases. Beginning in 1987, Cheresh published more than 50 articles and research summaries on his research with integrins and angiogenesis.
To further fund Cheresh's research and identify potential drug candidates that might inhibit angiogenesis, in 1988 Scripps entered into a research support agreement with Merck. In his further research, Cheresh identified a particular cyclic RGD peptide that displayed good inhibition of avB3 receptors. In 1995, Merck renewed its agreement with Scripps and significantly increased its funding of Cheresh's research, including the experiments necessary to satisfy the requirements to enter clinical trials with a drug candidate based on RGD peptides.
This research led to the discovery of several derivatives, and Scripps scientists conducted in vitro and in vivo experiments to evaluate the specificity, efficacy, and toxicity of the compounds for various diseases, to explain the mechanism by which these compounds work, and to determine which compounds were effective and safe enough to warrant testing in humans. In 1997, the Scripps-Merck collaboration chose a particular cyclic RGD peptide, EMD 121974, as the most promising compound for clinical development, and in 1998 filed an investigatory new drug application with the FDA.
In contrast, the Telios scientists were unable to develop a viable commercial RGD peptide product. Instead, Telios notified Cheresh in 1994 of Telios' patents and began licensing negotiations with Merck for a license to cover Merck's involvement with Scripps and Cheresh's work with RGD peptides. These negotiations continued for two years, during which time the parties carried out scientific collaborations using RGD peptides. But the negotiations were ultimately unsuccessful, and in mid-1996 Telios and Integra (which eventually purchased Telios and its patents) sued Merck, Scripps, and Cheresh for patent infringement.
| It remains to be seen whether a patent enforcement action to recover infringement damages would ever be cost-effective for preclinical research activities. |
The suit sought to enjoin any further work on Cheresh's discoveries, and to collect damages for the underlying research during the period from 1994 until 1998, when Merck commenced exempt clinical trials of its RGD peptide compound. All parties agreed that Merck's use of the RGD compounds during clinical trials was exempt from infringement under the safe harbor provision of the patent laws.
Merck Socked with Infringement
At trial, Merck argued that because its preclinical research activities to identify the best RGD peptide drug candidate eventually led to generation of data for submission to the FDA, those activities should be within the safe harbor provision as "reasonably related" to the development and submission of information to the FDA. Merck argued that it defied logic to limit the exemption only to the experiments that are the culmination of years of such research, and that Congress could not have intended to allow patent holders such as Integra to block others from conducting general biomedical research on patented compounds.
Integra, on the other hand, argued that Merck was seeking to unfairly broaden the safe harbor provision far beyond its intended scope to a general exemption for all infringing biomedical research that merely could lead, however far in the future, to the development of a drug subject to FDA review.
The trial judge agreed with Integra and held that the safe harbor exemption did not exempt Merck from liability for use of Integra's patented RGD peptides during all preclinical research. The jury awarded Integra $15 million in compensation for Merck's infringement.
On appeal, the Federal Circuit Court also agreed that the safe harbor exemption for FDA trials does not reach back down the chain of experimentation to include the development and identification of new drugs that will, in turn, then be subject to FDA approval. The appellate court reasoned that this result was consistent with the language of the safe harbor statute that expressly limited the reach of the exemption to activities "solely for uses reasonably related" to development of information for submission to the FDA.
This limited provision did not globally embrace all experimental activity that at some point might lead to an FDA approval process, such as general biomedical research to identify new pharmaceutical compounds. The court considered this result consistent with the legislative intent that the safe harbor exemption be a narrow provision designed to have only insubstantial impact on a patent owner's rights.
JUDGE: Merck Was Innocent!
In Integra LifeSciences v. Merck, the Federal Circuit Court of Appeals ruled in favor of enforcing a patent owner's rights for patented compounds — even when those compounds are used only for preclinical research. But one of the three appellate judges strongly dissented from this ruling.
Judge Newman agreed that the safe harbor provision did not reach back down the chain of experimentation to embrace the identification of new drugs. But she stated that, in her opinion, there should be a common-law research exemption for such early research activities to permit patented inventions to be studied and improved.
Newman rejected the notion that such an exemption would affect the value of research tool patents, describing Integra's patented RGD peptides as simply new compounds rather than research tools, and characterizing Merck's preclinical research to be study of the new RGD peptides compounds, rather than use of the peptides as research tools.
She observed that investigations to understand or improve on patented things have always been permitted, and are different in kind from development and commercialization activities using patented things. On that basis, Judge Newman would have found Merck's preclinical-phase, discovery-based research exempt from patent infringement. |
The appellate court was particularly concerned that expanding the safe harbor exemption to embrace new drug development activities such as the Scripps-Merck preclinical research would render ineffective the exclusive rights of those owning biotechnology "research tool patents." The court stated that "exaggerating" the safe harbor provision out of context would deprive the entire category of biotechnology research tool patents of any real patent protection, and would therefore be inconsistent with the express intent of the safe harbor statute to have only insignificant impact on patent rights.
Nevertheless, despite affirming the finding of infringement, the ruling in the Integra case was not all bad news for Merck because the appellate court reversed the jury's award of $15 million in damages, finding that amount not supported by the evidence. The court held that the damages for infringement during preclinical research activities could not assume knowledge that a promising drug candidate would eventually result from the research. Instead, the proper calculation of damages must take into account the numerous factors and uncertainties that would reduce the value of a license in the early stages of research, and the case was remanded back to the trial court for this calculation.
Will Research Be Stifled?
There is a very narrow "experimental use" exemption from liability for patent infringement that applies only when the activity is performed strictly for personal or philosophical inquiry, and does not apply when the use has even the slightest commercial implication. Although a dissenting judge in the Integra case felt that some sort of expanded "experimental use" exemption should have been recognized for Merck's preclinical-phase research using patented compounds, the majority of judges did not adopt that view.
In December 2003, the Federal Circuit declined to re-hear or reconsider its decision in the Integra case, and the Integra case is controlling law.
Therefore, appropriate licensing arrangements should be considered for patented compounds and research tools used in preclinical phase research, consistent with the value of those compounds and tools and available alternatives, and the uncertainties of early research. In addition, consideration should be given to whether all appropriate research activities have been included within the bounds of the exempt activities for clinical trials.
But will preclinical-stage research be seriously affected by the Integra ruling? Given the Integra court's stated view on the appropriate measure of damages for infringement during early research, it remains to be seen whether a patent enforcement action to recover infringement damages would ever be cost-effective for merely preclinical research activities.
The Integra/Merck case would also theoretically permit an owner of patented compounds to bring suit to prevent a competitor from using those compounds to conduct the research needed to enter exempt clinical trials. But it remains to be seen, too, whether in such situations the courts might not be motivated to move closer to Judge Newman's dissenting view (see "Judge: Merck Was Innocent!") and find such research activities within the traditionally allowed uses of patented subject matter, such as for purposes of designing around patented inventions and to better understand how they work.
Hope Melville is a partner at Orrick, Herrington & Sutcliffe's Orange County office. E-mail: hmelville@orrick.com.
ILLUSTRATION BY LUC MELANSON