Tuesday, June 14, 2005 8:35 PM
Supreme Court: Drug Patents No Bar to Rivals' Research
Tony Mauro
Legal Times
06-14-2005
In a closely watched patent case, the Supreme Court on Monday gave drug companies broad leeway to use other companies' patented compounds in their own research, even at the earliest stages of new drug development.
The unanimous ruling in Merck KGaA v. Integra Life Sciences overturned a decision by the U.S. Court of Appeals for the Federal Circuit that had jolted the drug industry with a narrow interpretation of when companies can use rival patents in drug research. Monday's high court ruling means companies can begin developing competing drugs and generics earlier in the life of a competitor's patent, enabling them to jump into the market as soon as a rival patent expires.
"For drug innovators and patients, this is enormous good news," said E. Joshua Rosenkranz, a partner at New York's Heller Ehrman who argued the case for Merck. "It means that researchers will not have to sit on their hands for a decade when they have discovered a promising drug, but rather, without skipping a beat, can conduct the experiments they need to conduct to make sure the drug gets to sick patients as soon after patent expiration as possible."
The Bush administration and the AARP were among those supporting Merck in its view that the Congress intended to allow broad use of patented drugs in research when it enacted a so-called safe harbor exemption from patent law in 1984. That provision, aimed in part at speeding the development of generics that could be marketed after patents expire, allows the research use of other drugs when it is "reasonably related" to the development of new drugs for presentation to the Food and Drug Administration.
Merck invoked the safe harbor provision after Integra complained about Merck's use of its patented peptides in preclinical cancer-drug research. A jury in the Southern District of California agreed with Integra that its patents had been violated, awarding the company $15 million in damages.
The Federal Circuit agreed that Merck's use of Integra's patents was not covered by the safe harbor provision because the use occurred before the stage when human trials are conducted.
The drug industry objected that if its use of patented drugs was limited only to the final stages of research, development of generics and new drugs would be stalled, in effect giving the patent holders an extension to the life of their patents.
Justice Antonin Scalia, joined by a unanimous court, agreed with the industry Monday. Describing drug development as "a process of trial and error," even in its later stages, Scalia said drug companies need "adequate space for experimentation and failure on the road to regulatory approval." He suggested that Congress intended to allow use of patented compounds even if the research never ends up as a drug submitted to the FDA for approval. As long as there is a "reasonable basis" to believe that the experiments will produce information relevant to a filing with the FDA, the safe harbor applies, in Scalia's view.
"This is really far more sweeping than we were expecting," said Rosenkranz. "If the court had restricted the exemption only to human studies, it would have been devastating to research."
For their part, lawyers for Integra refused to view the decision as a loss. Noting that the case now returns to the Federal Circuit for review under the new "reasonable basis" standard, Mauricio Flores of McDermott Will & Emery, who represented Integra, said, "That's where we believe we are going to win." He said he can still prove that Merck's activities are not protected by the safe harbor provision.
As for the overall ruling and its impact on the drug industry, Flores said, "That's all fine as far as Integra is concerned."
All nine justices participated in the decision. At an earlier stage of the case, Justices Sandra Day O'Connor and Stephen Breyer, who own stock in Merck & Co., recused. But when Rosenkranz informed the Court that Merck KGaA, a German company, has had no connections with the American Merck company since 1917, they rejoined the case.
Also Monday, the Court:
• Ruled in Wilkinson v. Austin that prison inmates are entitled to at least some due process before they can be assigned to "supermax" prisons, which in some instances are more onerous than solitary confinement in a regular prison. Justice Anthony Kennedy, writing for a unanimous court, said inmates have a "constitutionally protected liberty interest" in avoiding assignment to such prisons.
• Declined to consider several appeals in which broadcasters and newspaper organizations asked the Court to restore government rules easing restrictions on media ownership. A lower court had struck down the regulations.
• Rejected the request by accused "dirty bomber" Jose Padilla to have the Court take up his case in advance of a ruling by the 4th U.S. Circuit Court of Appeals.
