20

Trends in the U.S. Pro - Patent Policy in the
Pharmaceutical and Biotechnology Fields―Focusing on the Hatch-Waxman Act―
Short-term Overseas Research Fellow: Toshihiko Asano（*）

The United States is said to have achieved significant economic development, particularly in theinformation technology and biotechnology fields, through promotion of a “pro-patent” policy twenty years aheadof Japan. However, there is a concern that in the pharmaceutical and biotechnology fields, a pro-patent policy
might have raised problems in relation to research tool patents and genetic patents. This report analyzes thecurrent situation and trends in the United States from this viewpoint. The first part of this report gives an
overview of what pro-patent policy was implemented in the United States, focusing on court decision and policy
separately. The second part features the enactment of the Hatch-Waxman Act in 1984, which had a significant
impact on the pharmaceutical and biotechnology fields. This Act can be regarded as legislation that typicallyrealizes US balance-oriented policy. The second part reviews the background and legislative process of the Act,and studies future trends by examining the outcomes of various cases involving patent term extension,abbreviated new drug application (ANDA), and the Section 271(e)(1) exemption.

Ⅰ Introduction

patents. Analyzing the current situation and trends
in the United States will be a great help for Japan.

Three years have passed in Japan’s
implementation of its intellectual property policy,
and the country is also seeing signs of businesspickup after a long-term recession. The U.S.
pro-patent policy is thought to have begun in thetime of recession in the 1980s, and after going
through that time, the United States achieved
significant economic development in theinformation technology and biotechnology fields.
The first part of this report gives an overview ofwhat pro-patent policy was implemented in the
United States about twenty years ago, focusing on
court decision and policy separately. The second
part features the Hatch-Waxman Act, a patent
policy measure that had a significant impact on
the pharmaceutical and biotechnology fields,
reviews its background and legislation process,and studies future trends by examining theoutcomes of various cases involving patent term
extension, abbreviated new drug application(ANDA), and the Section 271(e)(1) exemption.
The Hatch-Waxman Act can be regarded as arepresentative of legislation that realizes balanceoriented policy. When pro-patent policy has
generated strains, this overall balancing
mechanism that also covers case law appears tohave played a coordinating role. There is a concernthat in the pharmaceutical and biotechnology fields,
a pro-patent policy might have raised problems in
relation to research tool patents and genetic(*)

Ⅱ History of U.S. Pro-Patent Policy
The term “pro-patent” refers to patentfocused policies and judgments emphasizing
protection of a patentee’s rights, but it is not sofrequently used in the United States. There isless point in categorization by pro-patent andanti-patent. Rather, it is more important tomaintain a balance between “protection policy
under the patent system” and “competition policy
under the antitrust system,” thereby keeping theoverall economy in the best condition fordevelopment.
The U.S. Constitution promulgated in 1788
after the independence guarantees citizens theright to register patents for promoting theadvance of science and technology. The period
from the foundation as a nation until around theFirst World War, centering on the time of
President Lincoln in the second half of the 19th
century, can be regarded as the first pro-patentera of the United States. In the anti-patent era
from the Great Depression (1929) through to the1970s, an antitrust policy was thoroughly pursued.
Having gone through the stalemate of theVietnam War and the two oil crises andexperienced the weakening of its international
competitiveness and the economic threat ofJapanese industry, the United States saw a trade

Currently Intellectual Property Department, Administration Division, Astellas Pharma Inc.

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deficit in 1979 for the first time in its history. In
the same year, the President’s Address on
Industrial Innovation Initiatives (Carter’s Address)
was presented, advocating many measures undera pro-patent policy (e.g. the establishment of the
Court of Appeals for the Federal Circuit (CAFC)
and the enactment of the Bayh-Dole Act). These
measures have been put into practice from the
1980s until today, and this period forms thesecond pro-patent era.
Meanwhile, in Japan, intellectual property
started to gain more attention in the second halfof the 1990s when Japan’s conventional method oftechnology development became no longer
applicable and the recession triggered by thecollapse of the bubble economy lingered.
Following Prime Minister Koizumi’s policy speech
in February 2002, the Japanese government
presented its basic scheme for making Japan an
intellectual property-based nation in theIntellectual Property Policy Outline. Furthermore,using the U.S. Bayh-Dole Act (1980) as a model,
the government promoted industry-academia
collaboration and commercialization of patented
inventions by applying Article 30 of the Law on
Special Measures for Industrial Revitalization,
which is called the Japanese Bayh-Dole system.
In line with the establishment of the CAFC in the
United States (1982), Japan also established theIntellectual Property High Court (2005). Thus,
although behind the United States by about
twenty years, Japan’s pro-patent policy has
already begun to bring about results.

Ⅲ Changes in the Pro-Patent Trends
Seen in Court Decisions
Determining court decisions as being in the
pro-patent trends or anti-patent trends
Representative court decisions are analyzed
in chronological order from the following four
perspectives:(1) Should patentability be found in such typesof subject matter that have never been deemed tobe patentable before? (expansion of the scope of
patentable subject matter)(2) How should utility and non-obviousness be
determined?
(3) To what extent should the scope of patent be
expanded through claim interpretation? (criteria
for applying the doctrine of equivalents)(4) What is the basis for defining the extent of
exception to patent infringement?
In Brenner v Manson in the anti-patent era(1966), the Supreme Court determined utility, arequirement under Section 101 of the U.S. Patent
Act, pointing out that it was not sufficient inproving the compound’s utility to argue that it was
the “subject of serious scientific investigation”;
patentability would not be found unless thecompound had practical utility. In Benson (1972),
the Supreme Court addressed the issue ofpatentable subject matter also provided Section
101, and denied the patentability of a mathematicalformula or a conversion algorithm itself.
In Chakrabarty in the pro-patent era (1980),
the Supreme Court determined that geneticallyengineered micro organisms should be deemed to
be included in the scope of patentable subject
matter provided under Section 101, holding that
there was nothing in the language of the Patent
Act to exclude living things from the scope of
patentable subject matter. In Diehr (1981), theSupreme Court determined that the process thatused a mathematical formula and digital computer
was eligible for patentable protection under
Section 101 of the Patent Act. In WarnerJenkinson (1997), the Supreme Court upheld thecommon law doctrine of equivalents that had been
established by the CAFC, pointing out that “theCourt adheres to the doctrine of equivalents; thedetermination of equivalence should be applied as
an objective inquiry on an element-by-element
basis.” However, in Madey v. Duke University(2002), it was clearly declared that evenexperimental use at university does not qualify
for the experimental use defense, if the act is infurtherance of the alleged infringer's legitimate
business and is “not solely for amusement, tosatisfy idle curiosity, or for strictly philosophicalinquiry.” This suggests that the protectionoriented tendency along with the pro-patent
trends is likely to have an influence on freedom ofstudy or research.
Some court decisions recently made show
obvious changes in trends from the pro-patent era
so far. In Festo, the en banc court of the CAFC
ruled in 2000 that estoppel arises from any
amendment that narrows a claim to comply with
the Patent Act, and when estoppel applies, it bars
any claim of equivalence for the element that wasamended (strict approach; complete bar). Thisruling unilaterally overturned the precedents on
the doctrine of equivalents, and shocked
companies all around the world including U.S.
companies. In 2002, the Supreme Court rejected
the CAFC’s complete bar and adopted a flexible
bar for applying prosecution history estoppel,
ruling that prosecution history estoppel wasapplicable not only to amendments intended to● 167 ●IIP Bulletin 2006

narrow the patented invention’s subject matterbut also to any narrowing amendment, including
an amendment to correct defects in description.
In Housey (2004), Housey, the holder of U.S.
patents for an assay research tool using animalcells based on ambiguous and too broad claims,
coercively offered to license the patented method
to pharmaceutical companies across the world,and sued them if they did not accept the offer.
The patent application filed in Japan in respect of
this invention was rejected as lacking novelty or
inventive step, and the CAFC determined that thepatents should be invalid. In Fisher (2005),
following the Supreme Court decision on Brenner
v. Manson in 1966, the CAFC pointed out that
Fisher’s specification failed to provide specificgene expression data of the claimed ESTs but
only disclosed general uses of ESTs (molecularmarker, micro-array technology, primers), and an
application must contain the disclosure toestablish a “specific and substantial utility” forthe claimed invention. Consequently, the court
supported the decision by the Board of Appeals toreject the patent application.

Ⅳ Hatch-Waxman Act
1

Legislative History of the Hatch-Waxman
Act

Background of the enactment of the HatchWaxman Act
In 1938, the Federal Food, Drug, andCosmetic Act (FDCA) was established for the
purpose of ensuring safety of drug products
before placed in the market. Triggered by thethalidomide
scandal,theKefauver-Harris
Amendment was established in 1962, requiring
more data to be submitted in the process ofobtaining approval of new drugs at the Food andDrug Administration (FDA) and also requiring
notification to be given of investigational new
drugs (IND) to the FDA prior to conducting
clinical tests. As a result, the period from filing a
new drug application (NDA) until obtaining
approval was prolonged; it took more than ten
years to complete R&D, from conducting
pre-clinical tests and clinical tests until filing an
NDA, and then following the new drug approval
procedure before the FDA, which would eat up
most of the term of a patent provided under the
U.S. Patent Act of that time, 17 years. There werestrong calls for legislation to restore the term ofpatent after approval to make up for the time
consumed for examination proceedings at the

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FDA. In 1980, legislation for patent term
restoration was brought to deliberation for the
first time at the 96th Congress. At the 97th
Congress from 1981, Senator Charles McCurdy Jr.
Mathias submitted a bill for patent term
restoration, which was finally rejected by theHouse of Representatives due to vigorous protest
lobbies by generic drug manufacturers and also byconsumer groups opposing the bill.
On the other hand, the enormous wall that
confronted generic drug manufacturers at thattime was the tightened examination proceduresfor FDA approval. After the amendment, NDA
was also required for approval of generic drugs
that arose from original drugs approved in 1962
and thereafter, and approval was not granted
unless clinical tests that had already been
conducted by the original drug manufacturer wereconducted anew. Generic drug manufacturers faceddifficulties filing NDAs, which would eliminate
market mechanism principles. Therefore, it wasnecessary to make the abbreviated new drug
application system (ANDA: only required materials
relating to bioavailability and bioequivalence andallowed omission of pre-clinical and clinicalreports) also applicable to generic drugs arisingfrom new drugs approved since 1962.
98th Congress and Roche v. Bolar
At the 98th Congress, Senator Mathias andRepresentative Mike Synar submitted bills forpatent term restoration in June 1983. Meanwhile,in July 1983, Representative Henry A. Waxman,
supporting generic drug manufacturers andaiming to promote the sale of generic drugs,
submitted a bill for drug price competition.
The CAFC decision on Roche v. Bolar was
rendered in April 1984 under such circumstances.
The defendant Bolar, during the term of thepatent for the sleeping pill marketed by Roche,
attempted to begin necessary testing for filing an
NDA (it would take about two years to collect thenecessary data for FDA approval). Roche charged
Bolar with patent infringement. The district court
denied infringement, holding that Roche did not
suffer any substantial loss from Bolar’s filing of an
NDA, and therefore Bolar’s act was de minimis.
Against this decision, the CAFC determined theuse of the patented invention in the testing for
FDA approval of a generic drug as patent
infringement, stating that the experimental use
rule cannot be construed so broadly when thatinquiry has definite, cognizable, and notinsubstantial commercial purposes. In response
to Bolar’s argument that “if testing prior to the● 168 ●

expiration of the patent term were prohibited, itwould in effect extend the term of Roche’s patent
for two years,” the CAFC concluded that thepatentee’s interests and the generic drug
manufacturer’s interests should be adjusted
through legislation, not through experimental use
exception.
Driven by the Roche v. Bolar decision, rapid
progress was made toward the enactment of the
Hatch-Waxman Act at the 98th Congress.
Representative Waxman worked hard for a big
negotiation between the most importantorganizations concerned, the Pharmaceutical
Manufacturers Association (PMA), the party thatwished for the introduction of the patent term
restoration
system,andthe
Generic
Pharmaceutical Industry Association (GPIA), theother party that wished for the introduction of the
ANDA system. Under the initiative ofRepresentative Waxman (Democrat) and Senator
Orrin G. Hatch (Republican), a compromise bill
was born as a package bill that integrated the billfor patent term restoration and the bill for drug
price competition. This package bill was finallyintegrated into the bill to amend the patent lawsof the United States submitted by Senator
Mathias. On September 24, the Drug Price
Competition and Patent Term Restoration Act of
1984, which is generally called the HatchWaxman Act, was enacted.
2

Patent term extension and ANDA

Patent term extension is provided in Section
156 of the Patent Act. The term for a patent for ahuman drug product shall be extended by thetime consisting of half of the period from the dateof notification of IND until the date of filing of
NDA, plus the period from the date of NDA until
the date of approval, not exceeding five years.
The ANDA system is provided in Section 505 of
the Federal Food, Drug, and Cosmetic Act(FDCA) (21 U.S.C.A. §355) (j). Under this system,
original drug manufacturers are required todisclose information on patents and data
exclusivity in the Orange Book, whereas genericdrug manufacturers are required, upon filing an
ANDA, to attach a patent certification to theapplication form so as to make a statement on therelevant patent owned by the original drug
manufacturer and listed in the Orange Book.
There are four types of patent certification as
follows:
Paragraph I: The patent information has notbeen filed.

Paragraph II: The patent has expired.
Paragraph III: Indicate the date of expiration
for the patent currently in force, and declarethat the generic drug will be released after
the expiration of the patent.
Paragraph IV: Indicate that the patentcurrently in force is invalid or will not be
infringed by the new drug subject to the
ANDA.
Section 505(j) of the FDCA also includes thefollowing provisions on ANDA.
- The FDA grants 180-day exclusivity period tothe first generic drug manufacturer that has
filed a Paragraph IV ANDA for a particular
drug.
- Generic drug manufacturers are also required
to notify the original drug manufacturer thatowns the patent for the original drug of thefiling of an ANDA during the life of the patent.
If the original drug manufacturer brings anaction for infringement against the ANDA
applicant within 45 days from the date of
notification, approval may be stayed for 30
months from the date of notification. Approvalshall be granted immediately if the applicant
wins the case.
- Generic products shall be excluded from themarket for a fixed period from the date of
approval, i.e. five years if the new drug
contains a new compound or three years if the
new drug relates to a new use.
- An ANDA may be accepted after the
expiration of four years even within thefive-year protection period if the applicant
proves that the patent for the original drug is
not infringed.
The provision on ANDA can also be found in
Section 271(e)(2) of the Patent Act. According tothis provision, it shall be deemed to be an act of
infringement to submit, during the life of thepatent, an ANDA or NDA with a Paragraph IV
Certification for a generic drug.
3

Cases arising from patent term extension
and ANDA

Cases over patent term extension
Both in Merck v. Tava (2003) and Pfizer v. Dr.
Reddy’s (2004), the point of issue was how to treat“salt as an active ingredient,” but they are
different from each other in that the former
focused on the construction of the claims whereas
the latter focused on the construction of the
product subject to term extension. In Merck v.
Teva, Merck omitted inclusion of the salt in the● 169 ●IIP Bulletin 2006

process claims for a use invention. Teva filed an
ANDA for the same salt as Merck’s patented
product and argued that Merck’s patent wasinvalid or not infringed. On the other hand, in
Pfizer v. Dr. Reddy’s, Dr. Reddy’s filed a paper
NDA for the salt in a different form from that of
Pfizer’s product, based on the clinical data that
Pfizer had provided to the FDA. In both cases, thegeneric drug manufacturers’ filing of applications
for FDA approval was determined as patent
infringement. In light of the legislative purpose of
the Hatch-Waxman Act, the decisions in thesecases can be deemed to be appropriate, because
the patent term extension system would havebecome meaningless if during the period of a
restoration extension, approval had beenobtainable for generic drugs that consisted of thesame active ingredient as the patented product,with the only difference being the salt.
Cases over ANDA
In 2003, two noteworthy decisions wererendered by the CAFC on how to deal with a use
patent in the following hypothetical case: a new
drug manufacturer, in the process of filing an
NDA for a drug to treat a disease X, has obtained
FDA approval by listing a substance patent and ause patent regarding the treatment of Disease X
in the Orange Book and sold the drug, and thendiscovered that the drug is also effective intreating another disease Y, and obtained thesecond use patent regarding the treatment ofDisease Y. According to the conclusion drawn
from the CAFC decisions, if a generic drug
manufacturer files an ANDA for a drug to treat
Disease X upon the expiration of the substancepatent and the first use patent, the new drug
manufacturer shall not be required to list thesecond patent in the Orange Book, and the
manufacture and sale of the drug by the genericdrug manufacturer shall not be regarded as
infringement
unlessthegeneric
drug
manufacturer recommended the use of thegeneric drug for the purpose of treating Disease Y,
which would constitute an act of inducing
infringement.
In Mylan Pharmaceuticals, Inc. v. Thompson(2001), in which the listing of false information in
the Orange Book was disputed, Bristol-Myers
Squibb (BMS) listed its patent in the Orange
Book as a use patent for the major component,
despite the fact that the patent related to ametabolic product that should not have been
listed in the book. BMS charged Mylan withinfringement for having filed an ANDA, and was

IIP Bulletin 2006

granted a 30-month stay of approval. Mylan filed acounterclaim against the FDA and BMS for
violation of the Antitrust Act. The district court
upheld Mylan’s claim and ordered the FDA todelete the patent from the Orange Book andapprove the ANDA immediately.
Acts charged by the FTC
Before the revision of the ANDA system in
2003, the FTC charged brand-name drug
manufacturers for concluding a settlementagreement with generic drug manufacturers that
had filed the first Paragraph IV ANDA, thereby
preventing other generic drugs from entering themarket.
Amendment of the FDA regulations on ANDA
and the Hatch-Waxman Act in 2003
From the perspective of protecting genericdrug
manufacturers
againstunjustifiableinterference, the FTC developed a recommendation
report in July 2002. In light of the FTC report, on
October 21, 2002, President Bush proposed a billto amend the FDA regulations with the aim of
permitting only one 30-month stay of approval
per drug product and ensuring appropriate listingof patents in the Orange Book. The amended
regulations were put into force on August 18,
2003.
Furthermore, the “Medicare Prescription
Drug, Improvement, and Modernization Act of2003” was enacted on December 8, 2003,
resulting in amending some provisions in relation
to the Hatch-Waxman Act.
- The first ANDA applicant shall be required toforfeit the 180-day exclusivity period undercircumstances including the failure to market
within a specified time frame.
- Any agreements made between new drug
manufacturers and generic drug manufacturers
regarding the manufacture or sale of a genericdrug must be filed with the AssistantAttorney General and the FTC for review
within 10 days after the agreements are
executed.
4

Section 271(e)(1) of the Patent Act andMerck v. Integra

Section 271(e)(1) exemption (generally called
Bolar exemption or safe harbor exemption)
In light of its legislative purpose—to reverse
the Roche v. Bolar decision that had determinedthat testing for FDA approval during the life of apatent should constitute patent infringement, it● 170 ●

may be reasonable to construe this provision to
be only applicable to ANDAs for generic drugs,
but such limitation cannot be found in the text.
The text of this provision merely stipulates thatthe patent shall not be infringed by the
exploitation of the patented invention “solely foruses reasonably related to the development andsubmission of information under a Federal law.”
The interpretation of this part has caused many
lawsuits.

Eli Lilly and Co. v. Medtronic, Inc. (1990;
Supreme Court)
The point at issue in this case was how todefine the scope of patented inventions to which
the Section 271(e)(1) exemption was applicable.
Eli Lilly argued that the exemption was applicable
only to drugs and not applicable to medical
devices. The Supreme Court, in light of thelegislative purport of the Hatch-Waxman Act,
recognized the applicability of the Section
271(e)(1) exemption to any products for whichpatent term restoration may be sought under theAct. Consequently, it was clearly established that
the Section 271(e)(1) exemption was applicable topatented inventions relating to drug products (forhumans or animals), medical devices, or foodadditives or color additives.

Intermedics, Inc. v. Ventritex, Inc. (1993;
CAFC)
In this case, the district court presented astandard for applying the Section 271(e)(1)
exemption shown below.
Whether or not it would have been reasonable,
objectively, for a party in the defendant’s
situation to believe that there was a decent
prospect that the ‘use’ in question would
contribute (relatively directly) to the generationof kinds of information that were likely to be
relevant in the processes by which the FDA
would decide whether to approve the product.
This standard was confirmed by the CAFC
and has been adopted as the “Intermedics test” inlater cases.
AbTox, Inc. v. Exitron Corporation (1997;CAFC)
The CAFC stated that it must follow theSupreme Court's broader holding in Eli Lilly v.
Medtronic, and applied Section 271(e)(1) to theuse of the Class II device in the testing for FDA
approval. Thus, the CAFC has determined that
Section 271(e)(1) was also applicable to a subject
that is not eligible for patent term extension (theClass II device).

Infigen, Inc. v. Advanced Cell Technology, Inc.
(1999; District Court)
Advanced Cell Tech. was charged by Infigen
with patent infringement for having launched thedevelopment of a transgenic cow that would
produce milk containing recombinant humanserum albumin by using Infigen’s patent for thetechnology to produce recombinant human
product from a transgenic cow. The defendantargued that its use of the patented products andmethod came within the Section 271(e)(1)
exemption because it was working on the
preliminary steps of a product from a transgenic
cow that would need FDA approval. However,the district court denied the applicability of the
exemption, holding that Section 271(e)(1)applied only to those patents covering products
defined under Section 156(f), which were eligible
for patent term extension, and the patent usedby the defendant did not fall within the scope ofdrugs or medical devices specified under Section
156.

Bristol-Myers Squibb Co. v. Rhone-Poulenc
Rorer (2001; District Court)
In the screening phase of the taxane R&D
program, BMS developed a structure-activity
relationship database using more than 1,000
taxane derivatives, including RPR’s patented
intermediates. BMS finally developed taxane
analogs and obtained FDA approval for them. RPRargued that its intermediates should be excluded
from the scope of Section 271(e)(1) because they
were not end products eligible for patent term
extension. The district court determined thatpatented inventions provided in Section 271(e)(1)were not limited to such products that were
eligible for patent term extension.
RPR also claimed that BMS’s use of thepatented intermediates was not “solely for uses
reasonably related to” the submission of
information to the FDA. BMS argued that the dataof the initial screening tests were included in theinformation to be submitted to the FDA with an
IND application and NDA. The district court, byapplying the Intermedics test, upheld BMS’s
argument.
As shown in the trends of the court decisions
before Merck v. Integra, with the exception of thenarrow holding in Infigen v. Advanced Cell Tech.,Section 271(e)(1) was determined to be applicable
to a wider range of experiments and research
activities for the development of new drugs.

● 171 ●IIP Bulletin 2006

Integra LifeSciences I, Ltd. v. Merck KgaA:
Outline of the case and district court decision
Integra owned patents for RGD peptide,which plays a critical role in creating new bloodvessels (angiogenesis). Merck requested the
Scripps Research Institute to specify compounds
that could serve as angiogenesis inhibitors fromamong candidate compounds including Integra’s
patented compounds, and successfully discovereda cyclic peptide EMD121974. Having been awareof this, Integra charged Merck with patent
infringement. The district court, denying theapplicability of the Section 271(e)(1) exemption to
Merck’s
experimental
activities,
found
infringement of Integra’s four patents, and upheld
the claim for damages of 15 million dollars as areasonable royalty.
CAFC decision (2003)
The CAFC held that the Scripps-Merck
activities were not clinical testing to supply
information to the FDA, but only generalbiomedical research to identify new pharmaceuticalcompounds, and therefore Merck’s activity was
not “solely for uses reasonably related” to clinicaltesting for FDA. Consequently, denying a broadinterpretation of Section 271(e)(1), the CAFC
affirmed the district court decision, and remanded
the case for further examination on the amount ofdamages. The main points of the CAFC’s decision
are as follows: “extending Section 271(e)(1) toembrace all aspects of new drug development
activities would ignore its language and context
with respect to the Hatch-Waxman Act”; “the
FDA has no interest in the hunt for drugs that
may or may not later undergo clinical testing for
FDA approval.”
Dissenting opinion by Judge Newman
Judge Rader wrote the majority opinion on
this case on behalf of the three-judge panel of the
CAFC. Judge Newman dissented in part in a
separate opinion.
- The subject matter of patents may be studied
in order to understand it, or to improve uponit, or to find a new use for it, or to modify or“design around” it. Were such researchsubject to prohibition by the patentee theadvancement of technology would stop, andtherefore prohibition of research cannot besquared with the framework of the patent law.
- The common law exemption is not unlimited.
Indeed, it is a narrow exemption, for it must
preserve the patentee’s incentive to innovate,
an incentive secured only by the right to

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exclude.
- Although the purport of Section 271(e)(1)originates in exempting experimental use for
FDA approval of generic drugs from liability,
the section should be interpreted more
broadly, as determined by the Supreme Court
in Eli Lilly v. Medtronic, to also apply to the
IND application in question.
- The panel majority appears to view the
Integra patents as for a “research tool.”
However, the RGD-containing peptides of theIntegra patents are not a “tool” used inresearch, but simply new compositions having
certain biological properties.
With respect to Judge Newman’s dissenting
opinion, Judge Rader made the following
comment: “The common law experimental use
exception is not before the court in the instantcase. The issue before the jury was whether the
infringing pre-clinical experiments are immunizedfrom liability via the “FDA exemption,” i.e.
Section 271(e)(1).”Merck KGaA v. Integra LifeSciences I, Ltd.
(2005; Supreme Court)
The Supreme Court, as of June 13, 2005,
reversed the CAFC’s majority opinion by aunanimous decision, recognizing the scope of theSection 271(e)(1) exemption more broadly toinclude the use of the patented compounds inpreclinical research at least as long as there was areasonable basis to believe that the experiments
would produce the types of information relevant
to an IND or NDA. The Supreme Court thus
quashed the CAFC decision and remanded thecase for further examination. The main points of
the Supreme Court’s holding can be summarized
as follows.
(i) Section 271(e)(1) exemption extends topreclinical tests.
The statutory text makes clear that Section
271(e)(1) provides a wide berth for any uses ofpatented inventions reasonably related to thedevelopment and submission of any information
under the FDCA. This necessarily includes
preclinical studies pertaining to the use ofpatented compounds that could be the subject ofan FDA submission.
(ii) Conformity with the FDA’s regulations on
good laboratory practices (GLP) is notnecessarily required for preclinical tests.
(iii) Section 271(e)(1) exemption is applicableeven when the drugs or experimentation thereon
are not ultimately submitted to the FDA.
The CAFC disregarded the reality that, even

● 172 ●

at late stages in the development of a new drug,scientific testing was a process of trial and error,
because there was no way of knowing whether
an initially promising candidate would provesuccessful over a battery of experiments, and thiswas the reason to conduct the experiments.
The Supreme Court did not express a view
about whether, or to what extent, Section
271(e)(1) exempted from infringement the use of
research tool patents in the development of
information for the regulatory process.
Consideration
In Merck KGaA v. Integra LifeSciences I, Ltd.,the Supreme Court turned down the CAFC’s
narrow interpretation of the scope of the Section
271(e)(1) exemption. The Supreme Court’s
determination seems to be in line with Judge
Newman’s dissenting opinion at the CAFC. In her
dissenting opinion, Judge Newman also pointed
out that Integra’s peptide was not research tool.
In Japan, an activity to use a patented
invention for the purpose of improving or
circumventing it would be exempted from liability
for infringement as “experimental or research
exception” under Section 69(1) of the Japanese
Patent Law. The scope of exemption under
Section 69(1) of the Japanese Patent Law cannot
be said to be broad at all, and Someno’s theory iscommonly accepted that the scope of exemption
should be limited to such activities as aimed toachieve technological progress using patented
inventions per se as research subjects, whichcorresponds to Judge Newman’s view. If Merck v.
Integra took place in Japan, Section 69(1) would
be applied unless Integra’s patent was regarded
as a research tool. Judge Rader stressed
protection for research tool patent holders. His
dissenting opinion presented in the Fisher case in2005 also gave consideration to research tool
patents. The US Supreme Court refrained fromdetermining whether or not the use of researchtool patents was eligible for the Section 271(e)(1)
exemption. This resulted in the possibility thatthe use of research tool patents in R&D of new
drugs would be treated in different manners in
the United States and Japan in terms of
exemption from liability for infringement.
According to the language of Section 271(e)(1), “solely for uses reasonably related to thedevelopment and submission of information undera Federal law,” the exception would be applicable
only in cases where drug manufacturers, thosemanufacturing new drugs and generic drugs, fileapplications for FDA approval, and would notextend to basic research at universities andresearch institutes. With respect to the use of
research tool patents, which is obviously
irrelevant to the filing for FDA approval, theSupreme Court decision has not made any change
in the situation where the common law
experimental use exemption can hardly be
expected to be applied, as suggested by the CAFC
decision in Madey v. Duke University.
Comparing the US Supreme Court decisionin Merck v. Integra with the Japanese Supreme
Court judgment in 1999 (1998 (Ju) No. 153), they
have in common the broadly interpreted scope of
exemption under the existing provisions, butdiffer from each other in the theoretical concepts
supporting the interpretation. The JapaneseSupreme Court denied infringement by applying
Section 69(1) of the Japanese Patent Law to theclinical test conducted by the generic drug
manufacturer, before the expiration of the patent
held by the original drug manufacturer, to obtain
manufacturing approval. The Supreme Court gave
the following reason for the judgment: “if the test
did not fall within the scope of “experiment”
provided in Section 69(1), it would bring about
the same effect as the extension of the patentterm and prevent third parties from freely
exploiting the patented invention, which iscontrary to the foundation of the patent system.”This is exactly what the defendant argued in
Roche v. Bolar, which was rejected by the CAFC
as an “issue that should be solved throughlegislation” and subsequently reversed by theenactment of the Hatch-Waxman Act. In Merck v.
Integra, the US Supreme Court determined thescope of Section 271(e)(1) by focusing on theinterpretation of the phrase “solely for uses
reasonably related to,” while excluding fromconsideration the “balance with patent term
extension.”

Ⅴ Conclusion: Trends in US Patent
PolicyThe Hatch-Waxman Act was enacted as an
ideal balancing mechanism aimed at emphasizing
patent protection and also promoting competition.
However, around 2000, the Act came to be used
for anticompetitive purposes against its
legislative purport, revealing strains in themechanism. In 2003, amendment was made to the
Act immediately in order to seal up the loopholesthat caused such abuse, and the strains have been
removed quickly by administrative and legislativemeans. In October 2003, the Federal Trade● 173 ●IIP Bulletin 2006

Commission (FTC) published a report entitled“To Promote Innovation: The Proper Balance ofCompetition and Patent Law and Policy,” which
discussed solutions that are expected to properly
correct various anticompetitive problems that
may arise from the pro-patent policy.
In 2004, the National Academies of Science(NAS), in its report in 2004 entitled A Patent
System for the 21st Century, pointed out theoccurrence of new strains on the patent system.
Reform proposals presented in this report havebeen adopted for amendment bills and are
expected to contribute to developing a new patent
system free from strains in the near future.
Compared with some CAFC decisions made in the
1990s that placed excessive emphasis on
patentees’ rights, the Supreme Court decisions
recently made (Festo, Merck v. Integra) show
obvious changes in trends, as if attempting to
remove the strains. However, since the Supreme
Court refrained from making a determination on
the issue of research tool patents in Merck v.
Integra, the decision in Madey v. Duke University,
a representative pro-patent decision, still serves
as common law. Considering that this issue is also
discussed at the NAS, we can expect that strains
arising from pro-patent policy will be corrected
and a balanced system will be developed in thenear future.

IIP Bulletin 2006

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