by Kevin Ferguson [*]

Congress passed the Drug Price Competition and Patent Term Restoration Act (DPC-PTR Act) in 1984.[1] The Act was an attempt to fix a dual distortion in patent protection for drugs and medical devices. Congress intended to strike a balance between allowing generic drug manufactures to compete with pioneer drugs as soon as the relevant patent protection expired and compensating patent owners for the extended periods of time their products spent tied up in the Food and Drug Administration's (FDA) approval process. The Act gives the patent owner an extension to the statutory monopoly of patent protection, yet takes away from the monopoly by allowing future competitors to begin some activities related to gaining federal approval before the expiration of patent protection.
The infringement exemption is codified in § 271(e)(1) of the Patent Act, which provides:

"It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States 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."[2]

Litigation and conflicting judicial opinions have arisen around two areas of the awkwardly worded statute. First, the statute and its legislative history do not explicitly state the range of medical products (just drugs or drugs and medical devices) that are eligible for the exemption. Additionally, the statute can be, and was, given two different interpretations based on whether the phrase "solely" or "reasonably related" is deemed to control "the development and submission of information" to the FDA. The courts' most recent interpretations of § 271(e)(1) have managed to create doctrine governing eligibility for the exemption that can be applied in a fairly coherent manner, even if a wholly coherent rationale explaining the decisions has been elusive.

A. Range of Products
The range of products enveloped by the exemption quickly was addressed by the Supreme Court in Eli Lilly & Co. v. Medtronic, Inc.[3] Eli Lilly sued Medtronic for infringing use of cardiac defibrillators in clinical trials for FDA approval. The Court affirmed the Federal Circuit's expansive reading of § 271(e)(1) and interpreted the phrases "patented invention" and "under a Federal Law" broadly to extend protection beyond drugs or veterinary biological products. First, the Court found inherent ambiguity in the language of § 271(e)(1). The majority did not feel bound by the narrow, literal recitation of only "drugs or veterinary biological products" in § 271(e)(1). The Court included within the infringement exemption a range of products delineated in other federal statutes concerning pre-market approval, particularly medical devices.
Secondly, the Court relied upon the broader legislative intent - remedying the dual distortion to a drugs patent term - to read in the same intent for a similar dual distortion on the term of patented medical devices. Medical devices are subject to the same process of clinical trials prior to FDA approval and suffer the same atrophy of a commercially protected monopoly. The Court held that § 271(e)(1)'s exemption was to be read consistently with 35 U.S.C. § 156's patent term extension for human drug products, medical devices, and food and color additives that were seriously delayed by procedures for FDA approval; therefore, medical devices were also eligible for protection from suit for infringement under § 271(e)(1). "It seems most implausible to us that Congress, being demonstrably aware of the dual distorting effects of regulatory approval requirements in this entire area... should choose to address both those distortions only for drug products [and not for medical devices]."[4]
The true scope of the Court's holding was recently settled in Abtox, Inc., v. Exitron Corp.[5] The device examined by the Supreme Court in Eli Lilly was a Class III medical device, which is defined as "present[ing] a potential unreasonable risk of illness or injury" or is "purported or represented to be for a use in supporting or sustaining human life or for a use which is of substantial importance in preventing impairment of human health" under 21 U.S.C. § 360c(a)(1)(C). Unlike Class III devices, lesser Class I and Class II devices are subject to only "general controls" and "specific controls" respectively and may be marketed without prior FDA approval.[6] Although Eli Lilly had established that Class III medical devices were eligible for the exemption, it was unclear whether the exemption extended to Class I and Class II devices. Abtox sued MDT, among others, for infringement of Abtox's patent on a Class II device for dry-sterilizing medical devices with plasma. Abtox's claim sought a reading of the holding in Eli Lilly that would narrowly limit availability to the medical device exemption to Class III devices, consistent with the rationale that the exemption was a necessary balance for the extensive procedures required for FDA approval.
Judge Rader of the Federal Circuit noted that the "Supreme Court['s] reasoning [in Eli Lilly] creates the rub for this case."[7] On one hand, the Court noted that the infringement shield of §271(e) and the patent term extension of §156 were the result of debate and compromise, and were not necessarily drafted as one coherent piece of legislation. Yet in Eli Lilly, the Supreme Court followed the Federal Circuit in reading the statutes to be "generally complimentary."

"Interpreting § 271(e)(1) as the [Federal Circuit] did here appears to create a perfect 'product' fit between the two sections. All of the products eligible for a patent term extension under [§ 156] are subject to [§ 272(e)(1)], since all of them... are subject to premarket approval under various provisions of the FDCA....[8]"

Additionally, Abtox received some support from the Supreme Court in Medtronic, Inc. v. Lohr,[9] where the Court noted that the approval process for Class II medical devices "is by no means comparable" to the approval process for Class III medical devices.
Judge Rader summed up the conflict: "Under the broad holding of Eli Lilly, all classes of medical devices fall within the plain meaning of section 271(e)(1). Nevertheless, under the Court's narrower justification of statutory symmetry, only Class III devices fall within the section.[10]" The Federal Circuit followed Eli Lilly's broader holding, finding that § 271(e)(1) makes no distinction based on the FDA's different classes of drugs and devices. The court noted that the Supreme Court had envisioned certain rare circumstances in which inventions not faced with extensive delay while seeking FDA approval could qualify for the benefits of the patent term extension. While statutory symmetry was preferable, it was not necessary given § 271(e)(1)'s failure to include such a limitation. Following what has become a common theme of interpreting § 271(e)(1)'s scope, the court refused to look at the purpose or intent of MDT's use of the medical device as long as it was reasonably related to testing for the FDA.

B. Scope of Activities
An understanding of the scope of activities that a competitor may permissibly engage in under § 271(e)(1) has also evolved. Confusion was inherent in the wording of the statute, which permitted acts "solely for uses reasonably related" to obtaining FDA approval. The courts quickly split on which term was to guide the judgment of infringement. The Northern District of California focused on "solely" to find Genentech guilty of infringement for reusing data gathered for the FDA to apply for a European patent and continuing research to develop a commercial-scale production process.[11] One year later, on almost the same facts, the District Court of Delaware declined to follow Scripps v. Genentech, holding instead that the actual acts of infringement used to gather data for the submission to the FDA were covered by the medical device exemption regardless of that data's later use or reuse.[12]
Consensus began to emerge in Intermedics Inc. v. Ventritex Inc. (1991),[13] in which the Northern District of California turned the focus of its inquiry away from the purpose of the infringing use and towards whether the act of infringement itself was covered by § 271(e)(1). "When trying to determine whether a party is protected by this exemption, the target of a court's inquiry is on those acts of manufacture, use, or sale of a patented invention that would constitute acts of infringement but for this exemption."[14]
The court noted that Congress was surely aware of the commercial nature and intent of the parties that would invoke § 271(e)(1) and intended for them to be able to use § 271(e)(1)'s shield while making preparations to be commercially competitive upon expiration of the patent.[15] A defendant does not lose protection under § 271(e)(1) "simply as a result of a showing that [it has] engaged in non-infringing acts whose 'uses' fall outside those permitted by the statute."[16] Among the non-infringing acts the court sanctioned were Ventritex's stated intent to commercialize the product upon gaining FDA approval, use of clinical data in investment prospectus, and demonstrations of the device at medical conferences and trade shows without related sales activities.
The Federal Circuit approved the Intermedics court's analysis of § 271(e)(1) in Telectronics Pacing Systems, Inc. v. Ventritex, Inc. (1992).[17] The court held that Ventritex's display of the medical device at medical conferences, even by non-medical personnel, was reasonably related to obtaining sponsors and physicians for clinical testing. The fact that non-physicians saw the device was not important considering that there were no related sales activities. The court reaffirmed that reuse of clinical data for fund raising and marketing purposes does not forfeit a party's exemption for the initial infringing use, so long as that initial use was reasonably related to gathering relevant data for the FDA.
In NeoRX Corp. v. Immunomedics, Inc.[18], the District Court of New Jersey summed up § 271(e)(1)'s safe-harbor provision and identified one of the main areas of possible contention left. "Application of Section 271(e)(1) requires a two-step inquiry: (1) whether the activity at issue is a potentially infringing one; and (2) whether the exemption applies to that activity.[19]" This test allows courts to focus only on those acts that might themselves constitute infringement, and not on collateral uses of the product or data that otherwise could not be the focus of infringement litigation. The court upheld Immunomedics' production of "commercial-scale batches of the product" as a necessary step in acquiring FDA approval. Similarly, shipments of the product to foreign physicians for gathering clinical data did not forfeit protection under § 271(e)(1).
However, Immunomedics' shipment of the product to foreign regulatory agencies for approval failed the second step of the court's inquiry on infringement: it was not found to be within the ambit of activities "reasonably related" to submission of data "under a federal law." The court revived part of the holding from Scripps v. Genentech, reasoning that while reuse of data on foreign applications was permissible because the initial act was covered by the exemption, tests by foreign agencies to gather data neither required by nor relevant to the FDA are not covered by the exemption and are acts of infringement.[20]
Given the limited case law interpreting § 271(e)(1), the courts have begun to develop a fairly uniform, broad view of the range and scope of protection provided. The recent Abtox decision seems firmly grounded in the Supreme Court's statement that the range of products protected may extend beyond those strictly needing the patent-term extension to remedy extensive administrative delays. Meanwhile the decisions of the Federal Circuit are beginning to be synthesized into a two-step analysis that only focuses on the acts that would constitute infringement but for the exemption. These two factors have given broad protection to competitors who wish to compete for a share of the patent holder's market upon expiration of the patent term.
Two unresolved areas of contention still exist. The scope of permissible foreign activities remains ill-defined, although the courts have shown signs in Scripps and more recently NeoRX that the protection of § 271(e)(1) may actually be limited to acts taken "under a federal law" and not read more broadly as an experimental/developmental exemption. The second possible area of litigation derives from the most recent amendments to the Patent Act which include "offer to sell" within the § 271 definition of infringement. This may expand the scope of activities considered infringement, which competitors will have to justify as "reasonably relating" to the FDA approval process. While a court is unlikely to analyze closely the intent or purpose behind a competitor's activities, an expansive reading of "offer to sell" might cause many commercial activities that were previously non-infringing (e.g., display at trade shows and some forms of soliciting venture capital) to be found not to have a sufficient nexus to FDA clinical trials to be shielded by § 271(e)(1). With continuing advances in medicine and the potentially large profits from medical devices, litigants will force the courts to decide these issues in years to come.