Amicus Curiae Brief — Merck KGaA v. Integra Lifesciences I, Ltd.

No. 03-1237

In The

Supreme Court of the United States

¢

MERCK KGAA,

Petitioner.

Vv.

INTEGRA LIFESCIENCES I, LTD. and

THE BURNHAM INSTITUTE and

TELIOS PHARMACEUTICALS, INC.

¢

On Writ Of Certiorari To The

United States Court Of Appeals

For The Federal Circuit

°

BRIEF OF AMICI CURIAE APPLERA

CORPORATION AND ISIS PHARMACEUTICALS,

INC. IN SUPPORT OF RESPONDENTS

¢

EDWARD R. REINES

Counsel of Record

PAUL T. EHRLICH

WEIL, GOTSHAL & MANGES LLP

201 Redwood Shores Parkway

Fifth Floor

Redwood Shores, CA 94065

(650) 802-3000

Counsel for Amici Curiae

Applera Corporation

Isis Pharmaceuticals, Inc.

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

ORK CALL COLLECT (402) 342 2831

III.

VI.

TABLE OF CONTENTS

Page

STATEMENT OF INTEREST ........................00 1

EE cnisecetatiihieniniinininipsbiiinenesianmeioninds 3

PETITIONER'S REQUEST FOR A BROAD

“DRUG RESEARCH AND DEVELOPMENT”

EXEMPTION IGNORES THE PLAIN MEAN-

ee tccsencnsctiniincsnntninnsenecee: 7

A. The Statutory Term “Solely” Must Be

Given Real Meaning ......................cccceeeeeeees 7

B. The Attempts By Petitioner And Its Allies

To Address The Meaning Of “Solely” Treat

That Term As Surplusage......................0006 11

C. Petitioner And Its Allies Misinterpret The

Word “Uses,” As Used In Section 271(e)(1),

By Conflating It Improperly With “Act Of

BINNIE scisrnsinnnnnsesinnsnesenntnanesemaisemecnee 13

RESPECTING THE WORDS OF SECTION

271(e1) RIGHT-SIZES THE EXEMPTION

AND ALIGNS IT WITH ITS ORIGINAL PUR-

ie vcesccecssscedeqessecsssenasosmasenimqmesetessesnenssessenenee 16

THE EXEMPTION SOUGHT BY PETI-

TIONER WILL SET BACK, NOT ADVANCE,

PUREED GRMEOUIISEID cnceveecccccceecccseseecsssenvensecssonesceee 19

EINES ccsncccnecceccenssencnsessunenansessecnsousente 23

TABLE OF AUTHORITIES

Page

CASES

Duncan v. Walker, 533 U.S. 167 (2001)................ccseecseeeeeees 7

Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661

(2 GBB) ....cccccceccccccescoccoccescoosonsesennennennnnenennnnnnnnnnnnnnnnnEEEEE 18

Integra Life Sciences 1, Ltd. v. Merck KG, 331 F.2d

960 (Ped. Cle. SERB) ....cccccsvccsecsscecescessuestnnsunnannan 18

Neumann v. AT&T Communications, Inc., 376 F.3d

778 (Bide Cle. SBBE) .occccccoccccccccecssestcnnssnsusniananeaeee 9

Nixon v. United States, 506 U.S. 224 (1998).........sssse00 7, 8

Scripps Clinic & Research Foundation v. Genen-

tech, Inc., 666 F. Supp. 1379 (N.D. Cal. 1987)........ 10, 16

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) .............. 7

United States v. Clingan, 254 F.3d 624 (6th Cir.

BODA) ...000ccccceccecccccsscocccssccescnsnssonnensunuuannnnnnnnnnnannE 8

United States v. Minnesota, 97 F. Supp. 2d 973 (D.

Diem. BOGO). ....0cccccccccecccessccncsnsseunsssennnsunnnnnenninanannnnnnnnE 8

White v. Kentuckiana Livestock Market, Inc., 397

F.9d 430 (Gthe Cle, SBGG) .ncccocccccocccccnsssscssncnsiasanaaan 9

FEDERAL STATUTES

BB UBC. © BBG occcccccccccccccseccccscscsensssuensnenmauanann 2

fs Coe), | ee oonntsatuboniaaiaaa 13, 14

96 U.B.C. § STR) ..coccoccccccecccscccssesecesnnseusaananaaee 3

96 U B.C. § ST7RGONE). nncceccccseccccencsscontesssannsneeeaaae passim

TABLE OF AUTHORITIES - Continued

OTHER AUTHORITIES

H.R. Rep. No. 857, reprinted in 1984 U.S.C.A.N.N.

IIIc eer crccccntnessnccsocncosezocsecoccoes

Kevin E. Noonan, Paradise Lost: The Uncertain

Future Of Research Tool Patents, 15 No.3 J. Pro-

Tufts Center for the Study of Drug Development,

Backgrounder: How New Drugs Move Through

The Development and Approval Process (Novem-

ber 1, 2001) at http://csdd.tufts.edu/NewsEvents/

RecentNews.asp?newsid=4 .................cccccceseessceceeeeseeeees

1

I.

STATEMENT OF INTEREST’

This brief is submitted by Applera Corporation (in-

cluding Applied Biosystems and Celera Genomics), and

Isis Pharmaceuticals (referred to collectively as “Amici”).

Amici are companies whose technological contribu-

tions epitomize the innovation that the Constitutional

mandate for a patent system is intended to promote.

Amici’s array of inventions are primarily “platform tech-

nologies” in the biotech and pharmaceutical area, the

proverbial “shoulders of giants” on which other innovators

stand. Indeed, Amici’s efforts have led to fundamental

enabling technologies such as the polymerase chain

reaction (“PCR”), and groundbreaking drug discovery tools

such as antisense technology. Amici depend on a vibrant

patent system that allows them to fund future innovation

by licensing these enabling technologies to others.

Applera Corporation is a world-renowned innovator

whose inventions routinely establish benchmarks in the

globa: economy and provide springboards for innovation.

Through its Applied Biosystems division, Applera has

developed and commercialized fundamental instruments

and tools that form the foundation for the modern biotech

and pharmaceutical industries. These include instruments

and basic techniques for automatically synthesizing DNA

with any genetic code desired, finding and replicating

* Pursuant to Rule 37.6, none of the parties or their counsel has

contributed substantively or monetarily to the preparation of this brief.

Specifically, only Amici and their counsel have contributed to the

preparation or submission of this brief. The consents of the parties are

being lodged herewith.

2

DNA, and sequencing DNA and proteins. Through its

Celera Genomics division, Applera has created tools for

gene discovery and sequencing that have accelerated the

comprehension of the human genome by decades. Ap-

plera’s technologies are core to the biotech and pharma-

ceutical industries and are disseminated through a robust

program of licensing that allows all researchers to be lifted

by this rising tide of innovation.

Isis Pharmaceuticals is a leading drug discovery and

development company focused exclusively on the thera-

peutic target, RNA. Isis is a pioneer in the field of an-

tisense technology, which aims to control protein

expression by intervening at the RNA level. Antisense

technology is one component in a suite of valuable tools

that Isis has created to facilitate drug discovery at every

stage of the process. Other Isis inventions include tech-

nologies for rapid validation of targets, medicinal chemis-

tries and formulations useful in basic research and for

optimizing delivery of drug candidates, and improved

manufacturing and analytical tests and standards for

evaluating therapeutic agents. Isis holds more than 1400

patents worldwide and depends on its ability to license its

patent portfolio for its continued success.

Amici generate the tools that constitute the lifeblood

of the pharmaceutical industry. Amici’s tools are diverse

and run the gamut from bench instruments to medicinal

chemistries. All of these inventions enable the drug dis-

covery process to proceed while remaining ancillary to the

ultimate drug products. Thus, unlike many of the other

amici from the pharmaceutical industry, Applera and Isis

do not often reap the benefit of the patent term extension

granted to certain therapeutics by 35 U.S.C. § 156. How-

ever, Amici’s businesses are threatened by overaggressive

3

attempts to expand the exemption of 35 U.S.C. § 271(e) in

ways that would destroy the value in foundational tool

patents. While others espouse unduly one-sided views of

the cost of patent law, Amici have witnessed first hand the

profound growth that can be achieved when the intellec-

tual property of the entire industry is protected, consistent

with the patent laws and the will of Congress.

In sum, Amici are well-positioned to address the

balanced trade-off inherent in the patent system that

tolerates short term costs of patent licenses to achieve the

long term benefits that accrue in a system that rewards all

innovation. Amici eschew the short-sighted attempts to

shift the costs of invention almost entirely from one set of

innovators to another.

Il.

INTRODUCTION

Petitioner and its allies ignore the critical word

“solely,” which sits squarely in the middle of Section

271(eX(1). Indeed, the United States does not address this

statutory language until page 20 of its brief —- and then the

subject is reduced to a footnote. As one would expect, the

statutory term “solely” should be given meaning because it

is not mere hollow text needlessly cluttering the statute.

The plain text of the statute should not be ignored.

Specifically, Section 271(e1) provides that the FDA

exemption applies “solely for uses reasonably related to the

development and submission of information under a

Federal Law.” Whether viewed from the perspective of a

lay person, or a legal scholar trained in statutory construc-

tion, these words unmistakably mean that the exemption

4

applies to infringing activities undertaken solely for

purposes of regulatory approvals. This is particularly true

because the structure of the statute shows that the word

“uses” in the phrase “solely for uses” refers to the purposes

of the infringing act (e.g., clinical testing, marketing), not

to the infringing act itself. Thus, “solely for uses” necessar-

ily means “solely for purposes” reasonably related to the

development and submission of information under a

federal drug law.

As the statute states in straightforward terms, to

qualify for the exemption, the purpose of any infringement

must be solely for regulatory reasons — a subjective in-

quiry. That an infringement could theoretically result in

information of a kind that someone might submit to the

FDA is insufficient to gain immunity if the information

was never even supposed to be used for regulatory pur-

poses at all. Even if it were intended solely to obtain

regulatory approvals, such an intent must also be reason-

able because the statute provides that the purpose must

be “reasonably related” to the regulatory approval process

— an objective inquiry. That an infringer commits acts of

infringement for the purpose of FDA approval is insuffi-

cient to gain immunity if the information generated is not

reasonably related to the approval process. Thus, the

language and logic of the statute dictate that the exemp-

tion has both a subjective and objective requirement. The

fatal error in Petitioner’s position is that it ignores the

statutory term “solely for uses” and :onsequently ignores

the subjective requirement of the statute. Indeed, neither

Petitioners, nor its allies, explain what real meaning

“solely” would have under their reading of the statute.

For ease, Amici have collected in one table the sum

total of the arguments to date submitted to this Court

5

from those who made any effort to take on the textual

significance of the word “solely.” The table is attached as

the appendix to this brief. The few attempts to explain

away the use of “solely” in the statute are unsatisfying, at

best.

Giving “solely” its natural meaning is supported by

the legislative history. The legislative history makes ciear

that the exemption was designed to address improper

patent term extensions, not to repeal the patent law

broadly in the area of drug and medical device research

and development. Section 271(e)(1) was merely intended to

avoid the situation where the regulatory approval process

resulted in an undeserved de facto extension of a patent’s

life. It thus makes sense that only activities used for

regulatory approvals are exempt under the statute. Al-

though the terms of the statute are not limited to immu-

nizing infringement in the generic drug approval process,

the exemption fits that circumstance like a glove. Because

a generic drug is a copy of an existing product, there is no

drug discovery necessary. What is necessary is to have a

generic drug approved by the FDA by the time the patent

on the proprietary version of the drug expires. This simply

requires immunity from infringement for the development

and submission of information to the FDA for regulatory

approval to establish the generic copy is what it is sup-

posed to be.

The presence of the phrase “solely for uses” is not a

mistake or surplusage because it ensures that the exemp-

tion remains balanced as Congress intended. This is not a

case where clear statutory language appears to be the

unfortunate result of a stumble by the drafter. If that were

so, a tough statutory construction question might exist.

But it is not so. Respecting the phrase “solely for uses”

6

right-sizes the exemption and honors the sensible policy

balance struck by Congress and blessed by the President.

A statute that authorizes the uncompensated infringement

of a whole class of patents was not undertaken lightly — or

without balance. Yet, petitioner and it: allies mistreat the

exemption as though it were a sweeping suspension of the

patent law for the drug discovery and development process

generally. To interpret the statute in this way would be

manifestly unfair to those who innovate and invest in the

technology protected by such patents.

The potential cost of ignoring the term “solely” is

staggering. The engine for modern drug discovery is the

biotech industry. The biotech industry has provided an

increasingly rich set of tools that are used for basic re-

search, drug discovery, and drug development. Yet, if

Section 271(e) is construed as the drug companies would

like, the patents on such tools could be infringed cost-free.

The patents protecting those innovations would lose their

value and the incentive to create new tools would diminish

dramatically. This is particularly true because the patent

rights preventing copying are frequently the main source

of value for the large investments made by tool creators.

In sum, limiting the exemption to immunity for

infringement “solely for” efforts to obtain regulatory

approval avoids major policy problems, properly gives

effect to all terms of the statute, and respects the balance

memorialized in the plain terms of the statute.

7

III.

PETITIONER’S REQUEST FOR A BROAD

“DRUG RESEARCH AND DEVELOPMENT”

EXEMPTION IGNORES THE PLAIN

MEANING OF THE STATUTE

A. The Statutory Term “Solely” Must Be Given Real

Meaning

As this Court has explained repeatedly, “it is a cardi-

‘nal principle of statutory construction” that the Court has

a “duty ‘to give effect, if possible, to every clause and word

of a statute.’” Duncan v. Walker, 533 U.S. 167, 174 (2001).

Further, the Court is “reluctant to treat statutory terms as

surplusage in any setting” Jd. (citations omitted). The

Court is “especially unwilling” to treat a term as surplu-

sage when it occupies a pivotal place in the statute. Id.

Here, the phrase “solely for uses” occupies a central

place in Section 271(e) and cannot be ignored. Not surpris-

ingly, this Court has recognized that “solely” has an

established meaning that should be given effect. In Shaw

v. Delta Air Lines, Inc., 463 U.S. 85, 106-07 (1983), this

Court gave meaning to the word “solely” to find that an

employee benefit plan is exempt from federal ERISA

preemption only insofar as its terms are “solely” for the

purpose of complying with state disability law and include

nothing more.

In Nixon v. United States, 506 U.S. 224, 230-31 (1993),

the issue was whether the Constitutional phrase “the

Senate shall have the sole Power to try all impeachments”

meant that the Senate was the only entity that had the

authority to determine the impeachment issue. The Court

criticized the petitioner for failing to meaningfully address

8

the word “sole,” which this Court termed of “considerable

significance.” Jd. The Court then set forth the standard

dictionary meaning of “sole” that it applied:

“Sole” is defined as “having no companion,” “soli-

tary,” “being the only one,” and “functioning .. .

independently and without assistance or inter-

ference.”

Id. (quoting Webster’s Third New International Dictionary

2168 (1971)). Based on this conclusion, this Court ruled

that the Senate had the sole (only) Power to resolve the

impeachment issues.” Jd.

Courts have frequently acknowledged that “solely” has

a clear meaning that must be applied — even where it

makes a legal test tough to meet. In United States v.

Clingan, 254 F.3d 624, 626 (6th Cir. 2001), the court gave

meaning to the word “solely” in the criminal context

finding that the criminal’s use of firearms for self-defense

purposes meant that those firearms were not used “solely

for lawful sporting or collection purposes” and thus greater

punishment was appropriate. The court explained that the

plain meaning of “solely” mandated that outcome: “‘Solely’

means SINGLY, ALONE ... to the exclusion of alternative

or competing things.” (ellipses in original) (citations

* In a particularly clear statement, one judge explained that

“solely” is a legally significant word with an established meaning that

should not be ignored when present in a statute:

The presence of the word “solely” was not an idle choice; it

has a distinct legal meaning. “Solely” means “exclusively,”

and directs the Court to look to only the single factor identi-

fied.

United States v. Minnesota, 97 F. Supp. 2d 973, 984 (D. Minn. 2000)

(citations omitted).

9

omitted) (quoting Webster’s Third New International

Dictionary 2168 (1986)); see also Neumann v. AT&T

Communications, Inc., 376 F.3d 773, 783 (8th Cir. 2004)

(“‘Solely’ means ‘to the exclusion of alternate or competing

things.’”).

In White v. Kentuckiana Livestock Market, Inc., 397

F.3d 420, 425-26 (6th Cir. 2005), the Court ruled that

“solely because” in the context of bankruptcy discrimina-

tion means that the challenged employment decision must

have been based only on the employee’s bankruptcy for a

claim to exist. In giving the word “solely” its standard

meaning, the court acknowledged that “the decision of

Congress to include the phrase ‘solely because’ in § 525(b)

makes it harder for a plaintiff to prove bankruptcy dis-

crimination than to prove discrimination on the basis of

race, or sex, or age” but concluded that the use of the word

“solely” reflected Congress’s intent to do exactly that.

In the context of Section 271(e)(1), “solely” must mean

that, to fall within the exemption, the only purpose that

can be made of an otherwise infringing act is “solely for

uses reasonably related to the development and submis-

sion of information under a Federal Law.” If the exemption

were to be construed to apply to so-called “dual uses,” the

word “solely” would be erased improperly from the statute.

“Dual uses” occur, for example, when an infringing act is

used not only for FDA regulatory approval, but also for

commercial purposes such as identifying the best drug

candidates from a large family of potential drugs or selling

a product to thousands of customers who might use them

in clinical trials. Stated most simply, the concept of “sole”

does not encompass the concept of “dual.”

10

The clearest way of demonstrating that “solely” is not

surplusage is to consider the statute with that limitation

removed. The modified Section 271(e)(1) would read in

relevant part: “[acts of infringement are exempt] for uses

reasonably related to [FDA regulatory approval].” Saying

that acts are exempt if used for purposes reasonably

related to FDA regulatory approval necessarily insulates

“dual uses” from infringement — if at least one use is

reasonably related, the act is not an infringement. For

“solely” to have meaning, it must mean that the exemption

is forfeited where an act of infringement is not used “solely

for uses reasonably related” but is used for non-regulatory

uses as well.

In Scripps Clinic & Research Foundation v. Genen-

tech, Inc., 666 F. Supp. 1379, 1396 (N.D. Cal. 1987), Judge

Schwarzer got it ght when he concluded that the term

“solely” in Section 271(e)(1) precludes “dual use” infringe-

ments from the exemption:

The construction of § 271(e)(1) that Genentech

urges the Court to adopt would, in effect, elimi-

nate the express statutory limitation “solely

for” and thereby immunize any use of a patented

invention so long as some aspect of that use is

reasonably related to FDA testing. This broad

construction defies the plain mandate of the

statute and the intent of Congress. The statute’s

taeaning is clear: the use of a patented invention

is protected so long as that use is solely for pur-

poses reasonably related to meeting the report-

- ing requirements of federal drug laws.

(emphasis supplied).

—

11

B. The Attempts By Petitioner And Its Allies To

Address The Meaning Of “Solely” Treat That

Term As Surplusage

Petitioner and some of its allies have attempted to

respond to the Federal Circuit’s reliance on the word

“solely” in the statute. However, these attempts are

unsatisfying, at best. Petitioner expends only three con-

clusory sentences on this subject. Petitioner’s Brief at 29.

The gist of Petitioner’s argument is that solely “means

only that a drug innovator’s freedom to use a patented

invention under the FDA exemption is not a license to

infringe in other ways, such as commercial exploitation.”

Id. If this were correct, “solely” would merely represent

the truism that infringement outside of the exemption is

not protected by the exemption. This treatment of “solely”

would necessarily render it surplusage in violation of this

Court’s precedents identified above.

In a different part of its brief, Petitioner makes

perfectly clear that it is giving no meaning to the word

“solely.” Petitioner broadly argues that any experiment

that could yield information theoretically relevant to the

FDA is protected without regard to whether the purpose of

the infringement is for the regulatory approval process at all:

Congress insulated any experiment that would

yield the ‘information’ from any experiment, so

long as it would be reasonable for the researcher

to believe the experiment could generate infor-

mation of a sort the FDA considers at some point

in its role as a regulator of drugs.

Id. at 28-29 (emphasis in original). Petitioner’s argument

expressly would include as exempt an experiment merely

if it “could generate information of a sort the FDA consid-

ers at some point” even if that is not the purpose of the

12

infringement at all. Petitioner’s argument would also

include as exempt the identification of drug candidates in

the first instance from among thousands of compounds.

Petitioner’s Brief at 6 (“even tens of thousands”). Yet, this

too involves commercial purposes well beyond mere

regulatory approvals.

The United States’ brief also reads the term “solely”

right out of the statute. In its 30-page brief, the United

States’ argument on this key statutory language is re-

duced to a footnote. In that footnote, the brief struggles

unsuccessfully to justify how the exemption could immu-

nize infringements pursued for commercial purposes, such

as marketing and product development, notwithstanding

the presence of the word “solely”:

The statute authorizes making, using, selling, or

offering to sell a patented invention “solely for

uses reasonably related to the development and

submission of information” to FDA. 35 U.S.C.

271(eX1). Because “solely” modifies “uses,” it

makes clear that a researcher is not protected by

the exemption insofar as he or she engages in

uses that are not, in their entirety, reasonably re-

lated to the development and submission of in-

formation to FDA. “Solely” does not, however,

modify “reasonably related.” Thus, as long as the

full extent of a particular use is reasonably re-

lated to the development and submission of in-

formation, that use is protected even if it also

advances other objectives, such as product devel-

opment or marketing. See Amgen, Inc. v. Hoechst

Marion Roussel, Inc., 3 F. Supp. 2d 104, 107-108

(D. Mass. 1998). But the exemption is inapplica-

ble to the extent that a portion of the particular

use at issue does not satisfy the reasonable rela-

tionship test.

oe eee

13

United States’ Brief at 20 n. 5. Because “solely” modifies

“use,” if the infringing acts are used, for example, for

marketing (marketing obviously is not required for FDA

. approval), it is simply illogical for the United States to

argue that such a “use” is solely for regulatory approval

and thus within the statutory scope of the exemption. That

the United States could not identify in clear terms a

meaning for “solely” under its reading of the statute,

illustrates vividly that a broad exemption of the kind now

desired by the government is incompatible with the

statutory language selected by Congress.’

C. Petitioner And Its Allies Misinterpret The Word

“Uses,” As Used In Section 271(e)(1), By Con-

flating It Improperly With “Act Of Infringe-

ment”

It is important to appreciate that the second instance

of “uses” in the statute — which is in the phrase “solely for

uses” — is not referring to “use” as an act of infringement

under Section 271(a), but rather refers to the purpose of

the otherwise infringing acts.

There are three reasons why this must be true. First,

the statute would have used the phrase “acts of infringe-

ment” instead of “uses” if that had been the intent. After

all, the phrase “act «* infringement” was used earlier in

the statute when that was what was intended. Second,

“acts of infringement” and “uses” mean two very different

things and cannot be treated as interchangeable. Section

271(a), the basic direct infringement statute, defines an

* Attached as the Appendix is a table collecting the “solely”

arguments by all those who have already submitted a brief.

14

act of infringement as including the following types of acts:

making, using, offering to sell, selling or importing.

Indeed, this same list of acts of infringement is recited in

Section 271(eX1). “Use” is only one sub-class of acts of

infringement as defined in both Section 271(a) and Section

271(e). Thus, if solely for “uses” in Section 271(e) were to

refer to “use” as an act of inivin.gement, instead of “use” as

a purpose, it would exclude from the exemption whole

classes of acts (selling, making, importing, and offering to

sell) that are undisputedly within the exemption. That

makes no sense. Third, the phrase “solely for” immediately

before “uses” connotes purpose and thus confirms that the

overall phrase “solely for uses” refers to the intended

purpose of the act and is not merely a reference to an act

itself.

Petitioner’s and the United States’ arguments muddy

the waters around “solely” by conflating “act of infringe-

ment” and “use” to shift the inquiry to whether a particu-

lar infringing act can be reasonably related to the

regulatory approval process. This is not the proper ques-

tion. Because infringing acts have multiple potential

purposes, the question is whether the particular purpose of

the infringing act is reasonably related to the regulatory

approval process. If they are not, as in the dual use situa-

tion in which an act both generates regulatory information

but is also used for marketing, the act is not “solely for

uses reasonably related” to regulatory approval.

Petitioner and the United States short circuit the

analysis by asking whether an “experiment,” for example,

could generate regulatory information. Such a test focuses

only on the objective half of the inquiry and improperly

suggests that “reasonably related” should modify “act of

onfri “oe 1 of the p of the infringing act.

15

However, it is necessary, but not sufficient, that a particular

class of infringing acts, such as pre-clinical experiments,

can be put to regulatory uses. The presence of “solely” in

the statute demonstrates that Congress did not intend to

immunize all acts that might reasonably be related to FDA

approval. Only those acts that are solely used for regula-

tory approvals are exempt.’

Once “act” and “use” are properly distinguished from

each other in the context of Section 271(e\1), it also becomes

clear that the “solely for uses” requirement addresses the

problem of hindsight in applying the exemption. Indeed, the

temptation, to which others fall prey, is to view the drug

discovery process teleologically by looking back from the

perspective of successful drug screens and consummated

IND applications. Such a focus is understandable — the select

therapeutics that make it through are the valuable ones.

However, by focusing only on the successes (and near misses)

the reality of the research process is warped. Every assay

and experiment appears directed toward (and reasonably

related to) the FDA approval process. The presence of the

subjective requirement that acts of infringement must be

“solely for” the regulatory approval process returns the focus

to the purpose of an “act” at its inception by evaluating what

the act is “for” before its fate appears preordained.

In reality, the drug development process is highly

uncertain. Some estimate that as many as one thousand

different medicines must be tested in order to yield one that

enters clinical trials. See Tufts Center for the Study of Drug

* Likewise, even though an act of infringement might reasonably

be used for a non-regulatory purpose, such as marketing, the act will

still be exempted if used solely for regulatory purposes.

16

Development, Backgrounder: How New Drugs Move Through

The Development and Approval Process (November 1, 2001)

at http//csdd_tufts.edu/NewsEvents/RecentNews.asp?newsid=4.

The pre-IND sieve that screens drug candi-dates is basic

research. Until an IND is filed for a particular therapeutic,

a significant if not predominant “use” of the acts of in-

fringement is research and optimization apart from the

generation of information that is required or desired by

the FDA. When the research landscape is viewed from the

perspective of the actor before an IND has been filed, it is

clear that acts of infringement cannot be “solely for” the

FDA approval process.

IV.

RESPECTING THE WORDS OF SECTION 271(e)(1)

RIGHT-SIZES THE EXEMPTION AND ALIGNS

IT WITH ITS ORIGINAL PURPOSE

As demonstrated above, for otherwise infringing

activity to qualify for the Section 271(e1) exemption, it

must be used “solely” for purposes of developing and

submitting information for regulatory approvals. As Judge

Schwarzer explained in Scripps, the legislative history

confirms that this interpretation of the statute aligns with

the purpose behind the exemption. Scripps at 1396 (“This

interpretation accords with the intent of Congress in

enacting § 271(e1).”).

When the rhetoric is stripped away, there is not

enactment of Section 271(eX1). As documented below, the

statute was a carefully circumscribed exemption. It au-

thorized only de minimis uncompensated patent infringe-

ment solely for the regulatory approval process. It was

17

intended to permit generic drug makers to perform FDA

required bioequivalency testing, which necessarily in-

volves the infringement of the proprietary drug maker’s

patent rights. The purpose of such testing is to allow the

generic drug maker to prove that the proposed generic

drug is effectively the same as the proprietary drug before

the patents on the proprietary drug expire. This enables

the fulfillment of the ultimate goal of having approved

generic drugs ready for the market promptly upon the

expiration of the patents covering the proprietary drug so

there is no de facto patent extension. Because the generic

drug makers are not defining a new drug, and a market

for the drug has already been established, the exemption

is needed for the basic bioequivalency testing. Of course,

the purpose of this limited testing ic for FDA approval.”

Petitioner concedes that Congress’ intent in enacting

Section 271(e1) was to authorize only “de minimis” and

“insubstantial” uncompensated infringement. Petitioner’s

Brief at 36 (“the nature of the interference with the rights

of the patent holder would not be substantial, but de

minimis”) (quoting H.R. Rep. No. 857, at 8, reprinted in

1984 U.S.C.A.N.N. 2684, 2692) (emphasis and citations

omitted); and at 37 (“infringement is de minimis just as

Congress intended”).

The Federal Circuit explained that a central purpose

of Section 271(e)(1) was to “ensure that a patentee’s rights

Section 271(e) such value cannot be more than incidental. If it were

more than incidental, it would constitute a purpose for the infringe-

ment that would render the infringement not “solely” for use in the

regulatory process.

18

did not de facto extend past the expiration of the patent

term because a generic competitor also could not enter the

market without regulatory approval.” Integra Life Sciences

1, Ltd. v. Merck KG, 331 F.2d 860, 865 (Fed. Cir. 2003).

Petitioner does not contest this analysis of the legislative

history. Likewise, Petitioner does not meaningfully deny

that the legislative history reflects that Congress foresaw

only “a limited amount of testing so that generic manufac-

turers can establish the bioequivalency of a generic substi-

“tute.” H.R. Rep. No. 857, at 8, reprinted in 1984

U.S.C.A.N.N. 2684, 2692.

On the other hand, Petitioner and its allies do not cite

any legislative history that suggests the purpose of the

legislation was to exempt broadly drug development from

the patent laws.

Where Amici and Petitioner really part company is on

the legal consequence of the legislative history. Petitioner

reasons that, because the above-quoted legislative history

did not trump the statutory language and structure in Eli

Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990), it

should not do so here. Indeed, Petitioner’s central argu-

ment is that the legislative history cannot narrow a broad

statute. Petitioner’s Brief at 35 (the legislative history

“cannot overcome unambiguous statutory language”).

The statutory interpretation issue here is far different

than that presented in Lilly, and Petitioner and its allies

uniformly ignore that important difference. Here, the

narrow scope of the exemption suggested by the legislative

history is mandated by the statutory language “solely for

uses,” as demonstrated above. It is not in conflict with the

statute’s structure as it was found to be in Lilly.

19

In sum, here, both the statutory language and the

legislative history support the conclusion that the Section

271(e(1) exemption is confined to infringing acts “solely”

used for the regulatory approvals such as bioequivalency

testing. If activities other than bioequivalency testing for

generic substitutes fall within some of the broader lan-

guage of the statute, they must be protected pursuant to

standard statutory interpretation principles. However, by

its plain terms, activities not used solely for regulatory

approvals fall outside the exemption because the statute

says so. The legislative history reinforces, rather than

undermines, this conclusion.

V.

THE EXEMPTION SOUGHT BY

PETITIONER WILL SET BACK,

NOT ADVANCE, PUBLIC HEALTH

The broad infringement exemption sought by Peti-

tioner and its allies will harm public health in the long

run, not help it. The far-reaching exemption they seek

essentially suspends the patent laws as it relates to the

drug research and development process. Indeed, Petitioner

goes so far as to suggest that if drug research and devel-

opment relates to the “safety, efficacy, mechanism of

action, pharmacology, or pharmacokinetics” any infringe-

ment is cost-free because the FDA is interested in those

broad topics. See Petitioner’s Brief at 276, United States’

Brief at 25-26. One of the more candid drug company

briefs expressly pleads that “the FDA exemption should be

generously interpreted” because to do otherwise would

“complicate” the drug development process. Brief of the

Amicus Curiae Genentech, Inc. and Biogen Idec., Inc. at 6-

7.

20

While there may be some superficial appeal to the

emotional argument that patent rights complicate product

development and increase prices, the Constitution and

experience teach otherwise. While those with a short-term

view see the cost of patent enforcement, those with a

longer perspective appreciate the incentives created by

patent rights in this field, at least as much as in other

fields.

These truths are especially relevant in the area of

drug discovery tools. Modern drug discovery is buoyed by

the rising and swelling tide of innovation in the area of

research tools. Some tools make the discovery of new

drugs and therapies possible. Examples of such tools are

technologies that replicate DNA, decode genes, screen

candidate drugs, validate targets and provide manufactur-

ing and analytical standards and tests. Other tools en-

hance the performance of candidate therapeutics or

diagnostic products. Examples of these tools include

medicinal chemistries and formulations that make whole

classes of drugs work better.

Tools are the common denominator across all possible

therapeutic agents — tools are necessary to isolate, ana-

lyze, qualify, and optimize every potential drug, and are

. employed at every stage of the development process. In

some cases, a tool is employed to work a permanent

improvement to a class of therapeutics. Concerns about

preserving the value of tool patents in the face of free-

riding by pharmaceutical companies during the term of

development are no less implicated where the “tool” is an

optimization that is incorporated into a final product that

is sold, potentially, years after patents on the tool have

expired.

21

If new drugs are the “fish,” the research tools are the

fishing poles. If the patent-free development of this year’s

drugs is perceived by some as in their short-term interest,

the patent-incentivized development of future research

tools is in the interest of our descendants for generations

to come.

One group of commentators explained in stark terms

the risk to tool patents posed by an overbroad reading of

Section 271(e)(1):

Since there is generally no use for research tools

other than in the research and development

process and a third party’s interest is to use the

technology rather than resell it, extension of the

§ 271(e)(1) exemption far upstream in the re-

search-and-development process renders re-

search tool patents essentially unenforceable.

Consequently, such staple technologies of bio-

technology industry patents as recombinant cells,

transgenic animals, or high-throughput screen-

ing methods and their uses will be essentially

unprotectable, thus erasing the value of much of

the biotechnology industry and undercutting in-

centive for further research in this essential

area. Because a biotech company would have no

proprietary rights to any FDA-approved commer-

cial product discovered or developed by a third

party using its patented research tool, the value

of these companies is severely and perhaps fa-

tally undercut.

Kevin E. Noonan, Paradise Lost: The Uncertain Future Of

Research Tool Patents, 15 No.3 J. Proprietary Rts. 1, 8.

Petitioner does not deny that research tools are vitally

important or even that patent protection is important for

such tools. Instead, it focuses its energy attempting to

22

persuade this Court that “research tools” are not (strictly

speaking) at issue in this case. Petitioner’s Brief at 41 (“it

bears emphasis that this case does not present the re-

search tool question.”). Petitioner’s fallback position is that

even if the rules created by this case impact tool patents,

the Court should not let that get in the way of creating the

broad exemption they seek. Jd. (“the possibility of a mar-

ginal encroachment on research tool patents has little

bearing on whether Congress, in 1984, intended to insu-

late preclinical experiments from patent infringement

claims.”); see also United States’ Brief at 28 (containing an

entire section entitled “The Uncertain Status of Patents

for Research Tools Under The Exemption Provides No

Basis For Artificially Narrowing The Exemption As Ap-

plied To Other Patents”). ‘

In fact, an overbroad interpretation of Section 271(e)(1)

unquestionably creates grave risk for the biotech industry

generally and tool patents specifically. Even the champi-

ons of a broad exemption raise the possibility of restric-

tions that this Court could invoke to protect tool patents.

For example, Petitioner explains that, under certain

circumstances, “a court might conclude that the use of a

patented research tool is not ‘reasonably related’ to the

development of information for the FDA.” Petitioner's

Brief at 43. Petitioner also notes that the “patented

invention” covered by Section 271(e) may not be inter-

preted to include tool patent inventions. Jd. Likewise, the

United States observes that “Congress may not have

intended to include research tools within the scope of the

affected inventions.” United States’ Brief at 29.

Others explain persuasively why these protections

should in fact be invoked by this Court to minimize any

damage to the biotech community and tool makers; Amici

23

will not belabor those points. In any event, giving “solely”

its undeniable meaning goes a long way towards ensuring

that the balance struck by Congress is honored and that

the exemption does not threaten innovation broadly. As

explained above, respecting the word “solely” is also

mandated by the straightforward application of standard

statutory interpretation principles Acknowledging the

entirety of the text of the statute is net only common

sense, but it points to the right result.

IV.

CONCLUSION

For the reasons addressed above, the judgment of the

court of appeals should be affirmed.

Respectfully submitted,

Amici Curiae

Applera Corporation

Isis Pharmaceuticals, Inc.

EDWARD R. REINES

Counsel of Record

PAUL T. EHRLICH

WEIL, GOTSHAL & MANGES LLP

201 Redwood Shores Parkway

Fifth Floor

Redwood Shores, CA 94065

(650) 802-3000

APPENDIX

“solely”

App. 1

Merck

\Certainly, there is no categorical limitation

implicit in the exemption’s emphasis that in-

fringement is excused “solely for [the] uses”

described, and not for other “uses.” Contrary to

the Court of Appeals’ insinuation, see PA. 10a,

that adverb offers no assistance in discerning

which phases of drug development are covered by

the FDA exemption. It means only that a drug

innovator’s freedom to use a patented invention

under the FDA exemption is not a license to

infringe in other ways, such as commercial

exploitation. See, e.g., Intermedics, Inc. v. Ven-

tritex, Inc., 775 F. Supp. 1269, 1275 (N.D. Cal.

1991), aff'd, 991 F.2d 808 (Fed. Cir. 1993). (brief

p.29)

EON Labs

When words of elasticity are used, this Court

“construe[s] language in its context and in light

lof the terms surrounding it.” Leocal v. United

States, 125 S.Ct. 377, 382 (2004) (interpreting

the elastic word “use” in relation to deportation

of immigrant for drunk driving). It is also true

that the plain text uses the term “solely” that

imbues a limitation to the statute. It is also true

that statutes must be construed to give fidelity to

carne nnenenmnnnn an eppenee to intenyeet-

ing it to render any one particular term mean-

ingless. The Federal Circuit violated these rules

by focusing on the term “solely” as opposed to

interpreting this term in conjunction with the

term “reasonably” for when one does so, the

statutory construction results in a more liberal

interpretation than what the Federal Circuit

gave. If Congress had intended that the scope be

so narrow, then why did Congress insert the

“reasonably” into the statute?

ntegra, 331 F.3d at 866-67. (brief p.6)

App. 2

US Gov't

The court of appeals noted (Pet. App. 11a) that

“(t]he term ‘solely’ places a constraint on the

inquiry into the limits of the exemption.” That

constraint, however, is not relevant to the

interpretive question here. The statute au-

thorizes making, using, selling, or offering to

sell a patented invention “solely for uses

reasonably related to the development and

submission of information” to FDA. 35 U.S.C.

271(e)(1). Because “solely” modifies “uses,” it

makes clear that a researcher is not protected

by the exemption insofar as he or she engages

in uses that are not, in their entirety, rea-

sonably related to the development and

submission of information to FDA. “Solely”

does not, however, modify “reasonably re-

lated.” Thus, as long as the full extent of a

particular use is reasonably related to the

development and submission of information,

that use is protected even if it also advances

other objectives, such as product development

or marketing. See Amgen, Inc. v. Hoechst

Marion Roussel, Inc., 3 F. Supp. 2d 104, 107-

108 (D. Mass. 1998). But the exemption is

inapplicable to the extent that a portion of the

particular use at issue does not satisfy the

reasonable relationship test. (brief p.20)

App. 3

BIO

Section 271(e)(1)’s safe harbor is thus tied also

to “veterinary biological products” and, more

icritically, it exempts infringement of “a pat-

ented invention” when that infringement was

done “solely for uses reasonably related to the

development and submission of information”

under a Section 271(e)(1) Federal law. Id.

Similarly, “solely” in Section 271(e)(1) was not

intended by Congress to modify “a patented

invention.” If that were the case, the only

patented inventions falling within Section

271(e)(1)’s safe harbor are patented inventions

that have few other uses except those “rea-

sonably related to the development and

submission of information under a Federal

law which regulates the manufacture, use, or

sale of drugs or veterinary biological prod-

ucts.” Jd. Even pioneering drugs would not

fall within the ambit of such a limited descrip-

tion. (brief p.6)

Sepracor

The Federal Circuit thus rejected the view

that the word “solely” in § 271(e)(1) “requires

that the original exemption of the making,

using and selling activities be revoked when

the resulting data is later used for non-FDA

reporting purposes.” Jd. at 1524. (brief p.8-9)

App. 4

The statutory language that using a patented

invention “solely for uses reasonably related

to the development and submission of infor-

mation” under a federal law regulating drugs

is both plain and broad. The Federal Circuit

determined that the use of the words “solely”

and “reasonably related” meant there was

some limitation to the scope of the exemption,

a logical reading of these words of limitation.

But in its attempt to define the outer bounda-

ries of the exemption, it failed to appreciate

the breadth of the heart of the exemption.

(brief p.4)