Research Tools: No 271(e)(1) Safe Harbor for Non-Regulated Equipment

Proveris Scientific Corp v. InnovaSystems, Inc. (Fed. Cir. 2008)

Innova’s optical spray analyzer is used in connection with FDA regulatory submissions. In particular, the device can be used to measure the quality of aerosol sprays used for drug delivery. In a pre-trial order, much experienced Judge Young of Massachusetts ruled that the safe harbor of 35 USC 271(e)(1) does not immunize Innova’s activities.

Section 271(e)(1) is designed to facilitate FDA regulatory approval process by immunizing submission related activity from charges of patent infringement. In particular, the safe harbor immunizes activities associated with a patented invention “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.”

On appeal, the CAFC affirmed Judge Young’s decision – holding that “the Section 271(e)(1) safe harbor does not immunize the OSA from infringement.”

“In short, Innova is not a party seeking FDA approval for a product in order to enter the market to compete with patentees. Because the OSA device is not subject to FDA premarket approval, and therefore faces no regulatory barriers to market entry upon patent expiration, Innova is not a party who, prior to enactment of the Hatch-Waxman Act, could be said to have been adversely affected by the second distortion. For this reason, we do not think Congress could have intended that the safe harbor of section 271(e)(1) apply to it. Put another way, insofar as its OSA device is concerned, Innova is not within the category of entities for whom the safe harbor provision was designed to provide relief. We thus agree with the district court that Innova is not entitled to the benefit of the section 271(e)(1) safe harbor.”

Note:

  1. Jeff Light of “Patients not Patents” filed an amicus brief in this case.

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

24 thoughts on “Research Tools: No 271(e)(1) Safe Harbor for Non-Regulated Equipment

  1. “It seems to me pretty clear that the patent for which exemption under the 271(e)(1) safe harbor is to be sought has to at least be ELIGIBLE for patent term extension.”

    The safe harbor is intended to protect entities seeking FDA approval from patent roadblocks. The case law is quite clear that the type of patent being asserted is not a controlling issue. The controlling issue is the intent of the alleged infringer (i.e. the entity seeking safe harbor) and the relatedness of the allegedly infringing technology to the FDA submission.

  2. “how do you reconcile this blanket statement with the following quote from the decision, citing the Supreme Court in Eli Lilly?”

    How do I reconcile it? Gosh, that’s easy: “the Court essentially interpreted section 271(e)(1) to include at least “all inventions” within the ambit of section 156.”

    Did you see the term “at least”? There’s no contradiction between my statement and the CAFC’s interpretation of the Supreme Court’s statement.

    “assuming the DNA and protein claims are granted on SOME utility, but FDA approval is never sought, would you think those claims fall under the safe harbor if used by another entity to make therapeutic antibodies?”

    Only if the “another entity” is seeking FDA approval on those therapeutic antibodies and only to the extent the use of the DNA and/or protein in the claims is reasonably related to the FDA submission.

  3. According to Innova, that it only sold to pharma companies and the FDA and that the units were used exclusively in applications for regulatory approval.

    In that case I think that only third parties are the ones that can, if desired or they considered it part of their FDA premarket requirement, can apply for 35 USC 271(e)(1).

  4. Two questions:

    “Let’s be clear: 271(e)(1) provides a safe harbor for the sole use of patented inventions that are reasonably part of an FDA submision. The inventions themselves need not ever be subject to FDA approval, or even appropriate for FDA approval. They just need to be used by the entity in the harbor for preparing an FDA submission.”

    First, how do you reconcile this blanket statement with the following quote from the decision, citing the Supreme Court in Eli Lilly?

    “The Court noted that interpreting the phrase “patented invention” in section 271(e)(1) to include all products listed in section 156(f)produced “perfect ‘product’ fit” between the two provisions. Id. at 672. The Court pointed out that all of the products eligible for patent term extension under section 156 – including drugs, medical devices, food additives, and color additives – were subject to FDA premarket approval. Id. Conversely, all products subject to premarket approval that were not eligible for patent term extension under section 156(f) – such as new animal drugs and veterinary biological products – were excluded from the section 271(e)(1) safe harbor provision as well.4 Id. at 674. Because of this nearly perfect product correlation between sections 156 and 271(e)(1), and the roughly offsetting patent term distortions those two provisions were designed to address, the Court essentially interpreted section 271(e)(1) to include at least “all inventions” within the ambit of section 156.”

    It seems to me pretty clear that the patent for which exemption under the 271(e)(1) safe harbor is to be sought has to at least be ELIGIBLE for patent term extension.

    To go a little further, however, the language of 156 appears to require a positive answer to the question of whether there has been regulatory review of a claimed product in order to trigger the inclusion of the claim in the safe harbor: “(4) the product HAS BEEN subject to a regulatory review period before its commercial marketing or use” … but do you think this would apply to products that COULD be subject to review, if they haven’t been?

    This second question applies to, inter alia, gene patents as research tools. While the DNA and protein may be covered by a gene patent, neither may be actually useful as therapeutics; however, they COULD be useful as or to make antigens to make an antibody. Nevertheless, gene patents often disclose therapeutic utilities for the DNA and protein — assuming the DNA and protein claims are granted on SOME utility, but FDA approval is never sought, would you think those claims fall under the safe harbor if used by another entity to make therapeutic antibodies?

  5. “The Federal Circuit discussed at length the rationale for including within the ambit of §§ 156 and 271(e)(1) only those patented inventions that are subject to a required FDCA approval process.”

    Let’s be clear: 271(e)(1) provides a safe harbor for the sole use of patented inventions that are reasonably part of an FDA submision. The inventions themselves need not ever be subject to FDA approval, or even appropriate for FDA approval. They just need to be used by the entity in the harbor for preparing an FDA submission.

    A patented pencil sharpener probably would not fit the “reasonably related” requirement. But just about anything necessary for testing or preparing the device/drug/whatever to be submitted for approval would fit in that requirement.

    Remember: the point of the harbor is to allow FDA filers to proceed unhindered by patentees who might otherwise try to roadblock the FDA filers efforts to bring the therapeutic device/drug/whatever to the public.

  6. MM:

    I agree that “the merchandising activities [surrounding the OSA] would be excluded.” But I doubt that sales to third parties are the only basis for excluding items like the OSA device.

    The Federal Circuit discussed at length the rationale for including within the ambit of §§ 156 and 271(e)(1) only those patented inventions that are subject to a required FDCA approval process.

    The court noted that Innova’s position was that Innova’s “offering for sale and its sale of the OSA device fit squarely within the statutory language because, like the product claimed in the ’400 patent, the OSA is used in a way which is “reasonably related” to the “development and submission of information” pertinent to the FDA premarket approval required for inhaler-based drug delivery devices.”

    The court then observed that Innova’s argument was premised upon a logical fallacy: “The problem with that argument is that it is premised on the proposition that the device claimed in the ’400 patent is, for purposes of section 271(e)(1), a “patented invention.” As we have just seen, it is not. We therefore reject the argument.”

    In other words, the court seems to be saying something like, “Innova, it’s not what you did or didn’t do with the OSA device; it’s that the OSA device isn’t covered under § 271(e)(1).” And if it isn’t covered, then even Innova’s own use of the OSA device in-house wouldn’t be immunized by § 271(e)(1).

  7. “That synthesis would seem to exclude from the § 271(e)(1) umbrella devices like the OSA (because it’s not intended for use in/on humans and so not subject to FDA regs),”

    No, that’s not why the OSA is excluded from the safe harbor. It’s excluded from the safe harbor because it’s only use by the alleged infringer (Innovis) is its sale to another entity. If Innovis was ALSO using the OSA in the process of developing a drug, THAT USE may well be entitled to the safe harbor. But the merchandising activities would still be excluded.

  8. So, under an Merck KGaA v. Integra Lifesciences I, Ltd. scenario, could Innova have received funding from a third party to make and use an OSA device entirely in-house and solely for activities related to FDA submissions?

    I don’t think so.

    In Merck, the Supreme Court found that peptides manufactured by a university professor (under a grant from Merck) and used in his preclinical studies were immunized under § 271 (e)(1) from infringement of Integra’s patents so long as there was a reasonable basis for believing that the studies could be the subject of an FDA submission. 545 U.S. 193 (2005).

    Unlike the OSA device in Proveris, though, the peptides in the Merck case could have been “eligible for the benefit of the patent term extension” of § 156.

    So, in trying to make sense of Proveris in view of Merck, I think that the § 271(e)(1) safe harbor is available so long as: (1) the alleged infringer has a reasonable basis for believing that the allegedly infringing activities could provide information that would be appropriate to include in a submission to FDA; and (2) the allegedly infringing product could itself be subject to a required FDCA approval process.

    That synthesis would seem to exclude from the § 271(e)(1) umbrella devices like the OSA (because it’s not intended for use in/on humans and so not subject to FDA regs), and compounds like, say, Taq polymerase (unless you’re planning to administer Taq to a human).

  9. “‘So the solution for those companies would be to make all reagents and devices in-house. No problem–how many reagents and devices could there be? Piece of cake.'”

    “Or, in the alternative, obtain all infringing reagents and devices from a state research university which can hide behind the Eleventh Amendment.”

    I like this idea very much–I guess we’ll have to see how the present case on this issue comes out.

    (and yes, sorry, that was sarcasm about making all reagents and devices in-house being a piece of cake)

    This case seems to create a huge hole in the safe harbor of 271(e)1, because it seems to say that some of what would otherwise fall under the safe harbor of 271(e)1 becomes infringement if it is performed by a third party. Particularly vulnerable would seem to be small companies who use reagents prepared or devices made by outside vendors where the reagent or device becomes part of a process submitted to the FDA for approval in treating human patients. It would seem to be possible, following this case, for a patent holder to effectively force such a company to license a patent that would otherwise have fallen under the safe harbor if they sue the outside vendor–thus thwarting the whole purpose of the safe harbor, I think.

  10. “If memory serves, the actual use of the patented compounds in Merck v. Integra was done not in-house, but in a sponsored study at a university lab. So, the distinction being made in this forum between in-house house use and a “profiting” use (device seller or contract researcher) doesn’t have any DIRECT support in the case law.”

    AD,

    Not exactly. In the Merck case, Merck was still directly involved by supporting the pre-clinical research and was using, or going to use, the results of that research to potentially support a submission to the FDA. By contrast, Innovasystems only sold the analyzer and was not using the analyzer in anyway to support a submission to the FDA.

  11. Innova’s position was ridiculous. The safe harbor provision on its face clearly does not and was not intended to cover the use of Innova’s analyzer by the FDA as described here.

  12. If memory serves, the actual use of the patented compounds in Merck v. Integra was done not in-house, but in a sponsored study at a university lab. So, the distinction being made in this forum between in-house house use and a “profiting” use (device seller or contract researcher) doesn’t have any DIRECT support in the case law.

  13. “No problem–how many reagents and devices could there be? Piece of cake.”

    I assume this is sarcasm.

  14. “So the solution for those companies would be to make all reagents and devices in-house. No problem–how many reagents and devices could there be? Piece of cake.”

    Or, in the alternative, obtain all infringing reagents and devices from a state research university which can hide behind the Eleventh Amendment.

  15. Aaron: “According to the decision, Innova’s assertion, that it only sold to pharma companies and the FDA and that the units were used exclusively in applications for regulatory approval, was undisputed.”

    Not true. According to the decision, Innovas units were used to generate profit for Innova via their sale to other companies. That is key.

  16. “You further suggest that the status of the infinger matters; that Innova didn’t fit into the safe harbor because it was selling laboratory equipment but would have if it were a pharma company building the same equipment for its own use.”

    Yes, I think that is true, if the use was reasonably related to an FDA submission. That would jive with the point of 271(e): to permit companies to seek and obtain FDA approval for drugs without being roadblocked by patents.

  17. AL,

    You raise the same question I raise about what happens with “internal use” of the patented analytical equipment to support an FDA submission. It might take some time for the right case to come along to resolve this question as the facts might be somewhat unusual and would require the patentee to have something monetarily important at stake to sue a “user” of the patented invention, not a “seller” or “distributor”. Off the top of my head, one possibility might be biologic screening agents (for drugs, for example) which could be quite expensive and could provide the appropriate “monetary stakes” to make a patent infringement suit worthwhile.

  18. So…if you have a patent on a research tool or reagent and are annoyed by the safe harbor because you can’t recover any damages from companies using it for FDA-related activities, all you need to do is find a third-party manufacturer or supplier and sue them! Awesome. So the solution for those companies would be to make all reagents and devices in-house. No problem–how many reagents and devices could there be? Piece of cake.

    When might we be able to conclude that the Federal Circuit has failed in its original objective of bringing clarity and predictability to the patent law?

  19. Well, there’s a twist to the emphasis on “solely for uses reasonably related.” It’s not that the apparatus could be used for activity not related to FDA submissions. It’s that “Innova’s infringement is not for purposes of its own FDA-related research, but rather for commercial sale to third parties engaged in such research.”

    I think the court’s language leaves open the question of whether a third party who makes its own device (which infringes the Proveris claims) and uses it entirely in-house “solely for uses reasonably related,” can claim safe harbor under 271(e)(1). Would the Federal Circuit have found differently if Innova were using the device entirely in-house to prepare FDA submissions?

    On the other hand, the Federal Circuit’s “statutory symmetry” analysis (156(f) vs. 271(e)(1)) might be the best way to determine whether your client’s use is infringing or not:

    “Because [Innova’s] OSA device is not subject to FDA premarket approval, and therefore faces no regulatory barriers to market entry upon patent expiration, Innova is not a party who, prior to enactment of the Hatch-Waxman Act, could be said to have been adversely affected by the second distortion” (the barrier to generics entering the marketplace after patent expiry). “[S]o too Proveris is not a party who, prior to enactment of the Act, could be said to have been adversely affected by the first distortion … because [it] is not a patentee who would have been faced with a reduction of effective patent life caused by the FDA approval process.”

  20. Mr. Mooney –

    According to the decision, Innova’s assertion, that it only sold to pharma companies and the FDA and that the units were used exclusively in applications for regulatory approval, was undisputed. Also, the court’s reasoning does not rely on (or mention) other possible uses of the device to keep the device from falling under the safe harbor. So that doesn’t appear to distinguish this case from Merck v. Integra.

    You further suggest that the status of the infinger matters; that Innova didn’t fit into the safe harbor because it was selling laboratory equipment but would have if it were a pharma company building the same equipment for its own use. Again, the decision fails to support your position; the court found that the laboratory equipment itself cannot fall under the safe harbor, since it is not subject to regulatory approval. This would, presumably, remain true, regardless of whether the equipment was made in-house or by an outside supplier.

    To all –

    How do we distinguish between the allowable use, under the safe harbor, of patented compounds as tools (positive controls and molecular scaffolds to build on) in research (see Merck v. Integra) and the infringing use of a patented device as a tool to make FDA-required measurements of a spray-formulation (see the above case, Proveris v. Innovasystems)? I don’t think the reasoning of Proveris settles this. Why does the safe harbor protect the use of a reagent, which does not require any regulatory approval to be sold on the open market for research use, but does not protect the use of a device which can be sold on the open market for research use without regulatory approval?

  21. I noticed that Proveris was awarded no damages, but did get a permanent injunction at the district court. This makes me wonder how successful Proveris feels about this result. They’ve probably spent a small fortune on the case, but was it worth it? I have no idea, but I wonder if shutting down a competitor was worth the high expense of protracted patent litigation.

  22. It took me a while to understand what it was that Innova was attempting to do here. It was very bold for Innova to assert the safe harbor. Ridiculously bold. Thankfully the CAFC didn’t blink.

    One could draw an analogy to a patentee with a patent on a centrifuge suing Becton-Dickinson and Becton-Dickinson responding that they are entitled to the safe harbor because a lot of companies doing FDA work use their centrifuges. That’s crazy.

    The key word in the Supreme’s test is that only activities that are *solely* for uses reasonably related to FDA submissions are immunized. Selling an apparatus that can be used for all kinds of different non-FDA submission uses isn’t such an activity.

    On the other hand, if a company was preparing a submission to the FDA and manufactured their own apparatus to do some of the tests that formed part of the submission, and that apparatus infringed one or more patents, then I expect that the company would (and should) be immunized against charges of infringing those patents.

  23. It is somewhat troubling that the decision is premised on the position that the term “patented invention” has a different meaning in 271(e)(1) then it does in 271(a).

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