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By Mark D. Uehling

August 15, 2003 | David Cheresh of The Scripps Research Institute got busted by the feds. For a protein. Duke University -- same thing. For a laser.

In each case, they used someone else's patented scientific tool under a longstanding misconception that anyone engaged in basic research is exempt from patent-infringement lawsuits. With two federal rulings in June, that immunity looks riskier and less like business as usual. “They have essentially eliminated the research exemption,” says David Korn, senior vice president for research at the American Association of Medical Colleges. He says major research universities are already reeling at the prospect of “major behavioral change” enforced by far larger legal departments on major campuses. “If the universities were to behave like industry, where every scientific venture is first screened by a patent office to clear patents and licenses and challenge any claims that seem to be in the way, this could get very, very expensive.” In the first case, the U.S. Court of Appeals for the Federal Circuit said that the sponsor of Cheresh's preclinical cancer research, Merck KGaA of Germany, infringed four patents around a key peptide sequence owned by Integra LifeSciences. Cheresh's lab used that protein in the mid-1990s.

In the second case, Duke v. Madey, the university got its knuckles rapped by the U.S. Supreme Court, which declined to hear its appeal of an earlier ruling. So a powerful laser developed at Duke by John Madey, who has since left the campus, may have to be unplugged. Duke had 23 major research organizations and universities (including MIT and Yale University) on its side in one brief to the Supreme Court

Likely outcomes of its defeat: more cross-licensing of research tools between universities and industry, and less frequent appropriation of materials or processes that have not been licensed. The Integra decision could also bolster any company with patents on tools used in drug discovery. "We're happy," says Diana Hamlet-Cox, vice president of intellectual property at Incyte. "A patent covering a research tool can be infringed when used for preclinical drug discovery."

Scientific Precedent
For Hamlet-Cox, lower court rulings have misunderstood an exemption from patent lawsuits granted by Congress in the mid-1980s. Lawmakers, she says, only intended to give "safe harbor" protection to generic drugmakers, letting them get started on research before the expiration of patents.

But in the Integra decision, the Court of Appeals decided that the "safe harbor" exemption does not apply to the entire research and development process, just to activities directly supporting information destined for the FDA.

"The Scripps work sponsored by Merck was not clinical testing to supply information to the FDA," the court wrote, "but only general biomedical research to identify new pharmaceutical compounds." The court added that the "safe harbor" exemption "simply does not globally embrace all experimental activity that at some point, however attenuated, may lead to an FDA approval process."

The Price of Cooperation
Integra, for its part, had tried to get Merck to license the peptide sequence. But negotiations faltered and the German company played hardball, declining to license the protein and disputing the legitimacy of Integra's patents.

Steve Maebius of Foley & Lardner, a law firm specializing in intellectual property, says the biotechnology industry will be relieved by the Integra decision. "There was a lot of fear that all those patents might not be enforceable and that drug companies might be able to use those patents without paying," he says.

What do non-lawyers need to know? "It is worthwhile to patent your own research tools," Maebius says. "If you're doing drug discovery with someone else's research tool, you had better think about negotiating with them."

Naturally, there is some cheating. But most companies already make a self-interested effort to license the intellectual property that they need to protect their own inventions. Says Maebius: "I don't think there is going to be a massive restructuring of pharma-biotech alliances because of this case."

So You Don't Want to Pay?
In some instances, working around tools patents will be easy. Much drug research can be moved overseas, Maebius notes. "One issue is going to be how much it costs to do the testing offshore and circumvent the U.S. patent," he says. Once in another country, where a technique or reagent has not been patented, a large company can legally infringe a research-tool patent as it pleases.

But it also seems inevitable that scientists will have to worry about licensing processes and molecules to a much greater degree. “At the extreme, you could spend your day and your entire budget complying with paperwork,” says David Jarmul, associate vice president of communications at Duke. “The impact could be substantial.”

Many tools may not get used at all. Back in the lab at Scripps, Cheresh says the peptide sequence is no longer part of his research. He's since found other ways to inhibit the growth of blood vessels. Now he has several promising compounds in clinical testing that will require no licenses from Integra. He never dreamed that using Integra’s protein would require him and his staff to spend years explaining themselves to lawyers on both sides of the dispute.

"We have certainly been hurt by this," Cheresh says. "If I told you how much time I've spent with lawyers, you'd be amazed and appalled." Because of the legal entanglements, he says sadly, other scientists are wary of working with him: "People who I had collaborated with shy away from me."

Despite being inserted into the sharp, slow-turning gears of the U.S. legal system, Cheresh has a disarmingly philosophical attitude. He understands and endorses the notion that biotech companies need to protect their intellectual property to attract investment.

But he sounds mystified that Integra targeted him and Scripps so early in the drug discovery process, suing him long before any drugs had even reached early testing in humans. The fact that the Integra decision supports an earlier court's vindication of him and Scripps is only a partial consolation for the slower progress he made in the lab during years of legal machinations.

As news of the decision percolates beyond the legal community into the world of the bench scientist, Cheresh suspects it will tip some researchers against partnerships with industry -- especially in situations where the intellectual-property risks are unknown. The Integra decision, he believes, "will prevent many colleagues from interacting with biotech companies." For now, all of his research funding is from the National Institutes of Health.

For more coverage of intellectual property issues, see Malcolm in the Middle, page 8, and Playing by Aussie Rules, page. 24

For reprints and/or copyright permission, please contact Angela Parsons, 781.972.5467.