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

CS

No. 03-1237

IN THE

Supreme Court of the United States

Merck KGaA,

Petitioner,

Vv.

INTEGRA LireSciences I, Ltp. and THE BURNHAM INSTITUTE,

Respondents.

On Writ oF CERTIORARI TO THE

UNiTeD STaTES CourRT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF OF NEW YORK INTELLECTUAL PROPERTY

LAW ASSOCIATION AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

JoHN D. MurRNANE, PRESIDENT Davip F. RYAN

New York Intellectual Counsel of Record

Property Law Association BRENDAN MEE

FITZPATRICK, CELLA, RosBert S SCHWARTZ

HARPER & ScINTO FITZPATRICK, CELLA,

30 Rockefeller Plaza HARPER & ScINTO

New York, NY 10112-3801 30 Rockefeller Plaza

New York, NY 10112-3801

(212) 218 2100

Attorneys for Amicus Curiae

192781 g

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

i

TABLE OF CONTENTS

Page

TABLE OF CITED AUTHORITIES ............ ill

STATEMENT OF INTEREST OF AMICUS CURIAE

jecchedbhod suds bouedds eeaasbeed ebaceaes l

SUPPLEMENTAL FACT STATEMENT ......... 4

B. Respondents’ Patent Claims .............

~ C. The 1994-1998 Work At Scripps .........

D. The Facts Considered By The Jury .......

SUMMARY OF ARGUMENT .................

EE ohne cea eWeweeecctnuneensecsses

I. The Plain Language Of The Statutory FDA

Exemption Mandates Reversal Of The Court

Of Appeals Determination ..............

A. All Of The Developmental Research

Carried Out At Scripps On Behalf Of

Petitioner And Considered By The Jury

Fell Squarely Within The Plain Meaning

Of The Statutory FDA Exemption ....

13

13

ii

Contents

B. The Statutory FDA Exemption Arises,

Not From The De Minimis Maxim As The

Court Of Appeals Majority Ruled, But

Rather From Article 1, Section 8 of the

Constitution And From The Economic

Principles Echoed In This Court’s

Decisions Which Inherently Endorse

Competition In The Research And

Development Of Improvements And

Alternative Technologies And Proscribe

Unwarranted Extensions Of The Patent

Term Via Post-Expiration Royalties .. .

II. There Is No Need To Consider Application Or

Construction Of The Common Law Exemption

On The Record Presently Before This

oe Pere eee

Ill. On The Record Presently Before This Court,

There Also Is No Need To Resolve Any

Conflict Between The FDA Exemption And

The Presumed Right Of Patentees To Recover

Royalties For Commercial Laboratory Use Of

Hypothetical Claims Addressed To Research

Screening, Diagnostic Procedures Or

Fundamental Biotechnical Processes ......

CAIULRAFEEIES cc ccccsccsectecepneusauenenl

Page

21

25

ili

TABLE OF CITED AUTHORITIES

Cases:

Bonito Boats, Inc. v. Thunder Craft Boats, Inc.,

Ga Ge OSS EE cudcnceteccceddcudcions

Brulotte v. Thys Co., 379 U.S. 29 (1964) .........

Business Elecs. Corp. v. Sharp Elecs. Corp.,

GaP ae EF ED bedasdedsendcccndceénes

Eli Lilly & Co. v. Medtronic, Inc.,

Gap es Ge GEE ee cdedcncsecocoioséeéds

Embrex, Inc. v. Serv. Eng'g Corp.,

216 F.3d 1343 (Fed. Cir. 2000) ..............

In re McLamore, 379 F.2d 985 (C.C.P.A. 1967) ...

In re Ruschig, 343 F.2d 965 (C.C.P.A. 1965) .....

Kewanee Oil Co. v. Bicron Corp.,

Cap es ED Shs Gee anesnececccccones

Madey v. Duke Univ.,

307 F.3d 1351 (Fed. Cir. 2002) ..............

NCAA v. Board of Regents, 468 U.S. 85 (1984) ...

Northwest Wholesale Stationers v. Pacific Stationery

& Printing Co., 472 U.S. 284 (1985) .........

Pfaff v. Wells Elecs., Inc., 525 U.S. 52 (1998) ....

Page

21

iv

Cited Authorities

Page

Roche Prods., Inc. v. Bolar Pharm. Co.,

733 F.2d 858 (Fed. Cir. 1984) .......... 4, 18, 20, 21

Sawin v. Guild,

21 F. Cas. 554 (C.C.D. Mass. 1813) .......... 20

SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp.

225 F.3d 1349 (Fed. Cir. 2000) .............. 23

Standard Oil Co. v. United States,

SC «00 cs canugaceanhenwenett 20

Standard Oil Co. (Ind.) v. United States,

0 GS Eee 16

Universal Oil Prods. Co. v. Globe Oil & Ref. Co.,

SC EC scoisudedevesedteceéucse 16

Statutes, Legislative & Administrative Materials:

WD GP. AIRE OER GED ccccccceccosececes passim

FO OBE. | FR GRD cc ccccccccccccesenceses 24

5S UBL. © SES GRSGEP cccccccccccccccsccseces 23

35 UBL. OST GIREED cccccccccccccccccses 20, 24

35 U.S.C. § 271 (e)(1) (2005) .............. 2, 11, 19, 21

35 U.S.C. § 271 (e)(2) (2005) ..........----- eee 1,2

Cited Authorities

Page

Drug Price Competition and Patent Term Restoration

Act of 1984, Pub. L. No. 98-417, 98 Stat.1585

AR eae rns. 1-2

Department of Justice and Federal Trade Commission

Antitrust Guidelines for the Licensing of

Intellectual Property 1.0 (April 6, 1995). <http://

www.usdo}j.gov/atr/public/guidelines/ipguide.htm>

f + aaa penetra ae es 17

FTC/DOJ, Public Hearings, Competition and

Intellectual Property Law and Policy in the

Knowledge-Based Economy, (2002) <http://

www.ftc.gov/opp/intellect/index.htm> ........ 18

Patents:

Brooks ef ail.

United States Patent No. 5,753,230-........... 4

Harpold et ai.

United States Patent No. 5,401,629 .......... . 23-24

Mullis ef ai.

United States Patent No. 4,683,195 ........... 22

Pierschbacher

United States Patent No. 4,789,734 ........... 7

Ruoslahti ef ai.

United States Patent No. 4,792,525 ........... 7

vi

Cited Authorities

Ruoslahti ef ai.

United States Patent No. 4,879,237 ...........

Ruoslahti ef al.

United States Patent No. 5,695,997 ...........

Wang ef ai.

United States Patent No. 5,476,774 ...........

Young ef ai.

United States Patent No. 5,837,479 ...........

Law Reviews, Journals & Magazines:

Gregory J. Glover, Competition in the Pharmaceutical

Marketplace, at | and 3-4, Testimony before the

FTC and the DOJ (March 19, 2002) <http://

www.ftc.gov/opp/intellect/020319gregory

DERE ccccccccccceecccesconseceseses

Janice M. Mueller, 7he Evanescent Experimental Use

Exception from United States Patent Infringement

Liability: Implications for University/Nonprofit

Research and Development, 56 Bay.or L. Rev. 917

SD &6adncecedccesdeaneandaceseveneeeue

Bernard Wysocki, Jr., Wall St. J., (December

in SEED cicddedoeneneeeseeeeeeseseeess

Page

23

23

15

2 ney

~ + =

l

STATEMENT OF INTEREST OF AMICUS CURIAE

This brief amicus curiae is submitted in support of

Petitioner by the New York Intellectual Property Law

Association (the “NYIPLA” or the “Association”), a

professional association of more than 1,300 attorneys whose

interests and practices lie in the area of patent, copyright,

trademark, trade secret and other intellectual property law. '

NYIPLA members include in-house attorneys working

for businesses that own, enforce and challenge patents as

well as attorneys in private practice who represent both patent

both plaintiffs and defendants in infringement litigation and

also regularly participate in proceedings before the United

States Patent and Trademark Office (PTO”), including

representation of applicants for patents and parties to

interferences.

A substantial percentage of NYIPLA members participate

actively in patent litigation. Due in part to the concentration

of a number of large pharmaceutical and biotech firms in the

New York metropolitan area, significant numbers of NYIPLA

members participate regularly, as representatives of both the

traditional research-based “branded” firms and their newer

“generic” competitors, in litigation involving claims of

infringement under 35 U.S.C. § 271(e)(2).?

Section 271(e)(2) was enacted as part of the Drug Price

Competition and Patent Term Restoration Act of 1984,

' Pursuant to Sur. Cr. R 37.6, the NYIPLA and its counsel

represent that they have authored this brief in whole, and that no

person or entity other than the amicus curiae and its counsel have

made a monetary contribution to the preparation or submission of

this brief. Pursuant to Sur. Cr. R. 37.3, both petitioner and

respondents have consented to the filing of this brief and documents

reflecting such consent have been filed with the Clerk of this Court.

735 U.S.C. § 271(e)(2) (2005).

2

popularly known as the Hatch-Waxman Act (“Hatch-Waxman

Act” or “1984 Act”).’ Under certain defined circumstances,

Section 271(e)(2) makes the filing of an Abbreviated New

Drug Application (‘ANDA”) with the Food and Drug

Administration (“FDA”) an “artificial” act of patent

infringement. By insuring that the jurisdiction of the federal

courts can be invoked at an early stage, the 1984 Act promotes

prompt resolution of patent disputes between the branded

innovator and the generic potential entrant.

This action involves interpretation of a related section

of the 1984 Act, now codified as 35 U.S.C. § 271(e)(1),*

which exempts from potential infringement liability all

activities, whether or not associated with a “commercial

project”, whether or not such activities might interfere with

any income the patentee might expe-t to receive during the

period of exclusivity, and whether or not already exempt

under the so-called “common law exemption” or “research

exemption” — so long as such activities were carried out

“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” (the “FDA

exemption”).

All sectors of the biomedical industry initially

understood that the application of the FDA exemption of

Section 271(e)(1) was not limited to information contained

in ANDA submissions made by generic firms under the 1984

Act, but rather extended to all data from experiments that

were “reasonably related” to submissions to the FDA which

are made by a far broader segment of the industry. That initial

understanding was confirmed by this Court’s Lilly decision

in 1990,° and the decision of the court below represents the

> Pub. L. No. 98-417, 98 Stat. 1585 (1984).

*35 U.S.C. § 271(e)(1) (2005).

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

3

first suggestion that the plain meaning of the FDA exemption

can be narrowed by resort to legislative history.

The Association’s membership includes attorneys

representing at least four different types of firms who conduct

pharmaceutical and related biological, biotech, biomedical

and medical device research and thus have an interest in the

proper construction of the FDA exemption.°

Since its founding in 1922, the NYIPLA has committed

itself to maintaining the integrity of United States patent law,

and to the proper application of that law. Nowhere is the

rational and considered application of patent law principles

more important to the economy of the United States than in

enacting and construing research exemptions in a fashion

that will achieve the proper balance between the right of

patentees to exclusivity for “limited times” and the “progress

of science” which the Constitutionally mandated Patent Law

attempts to secure for the public by making those grants of

exclusivity. ’

In no other industry are the economic stakes surrounding

patent protection higher than in the pharmaceutical industry

where one study estimates the average cost to develop a

new drug at $802 million, where the members of the

Pharmaceutical Research and Manufacturers of America

invested over $30 billion in 2001 alone in discovering and

developing new medicines, and where “Average total drug

development time has gone from 8.1 years in 1960, to 11.6

years in the 1970s, to 14.2 years in the 1980s and 1990s”.

* These four categories of firms are discussed in more detail,

infra, at 5-7. ‘

"U.S. Const. art. 1, § 8,1. 8.

* Gregory J. Glover, Competition in the Pharmaceutical

Marketplace, at | and 3-4, Testimony before the FTC and the DOJ

(March 19, 2002) <http://www.ftc.gov/opp/intellect/0203 | 9gregoryj

glover.pdf>.

4

In enacting the statutory FDA exemption, Congress gave

explicit recognition to the importance of achieving the correct

balance between the rights of the patentee and the “progress

of science” in this very important industry. Because of its

dissatisfaction with the application of the common law

exemption to the pharmaceutical industry by the court of

appeals in Roche Prods., Inc. v. Bolar Pharm. Co.,’ Congress

provided a clear legislative statement that all work done to

generate data “reasonably related” to submissions to the FDA

could be carried out free from the prospect of infringement

liability.

SUPPLEMENTAL FACT STATEMENT

Fair and accurate presentations of the operative facts are

set forth in the “Brief For Petitioner’ of February 15, 2005

(“Merck Brief”’),'° the “Brief For The United States As_

Amicus Curiae” of December 2004” (U.S. Brief’), and in

the “Petition for Writ of Certiorari” of March 3, 2004

(‘Petition’). The Association can perceive no justification

for repetition of those recitals.

It is believed, however, that the Court might benefit from

some convenient catalogue of the different types of firms

that make submissions to the FDA and the different types of

research and development in which those firms are engaged.

Such a catalogue may assist the Court in understanding the

“interest that such firms maintain in proper interpretation of

the FDA exemption, and also might assist in understanding

* Roche Prods., Inc. v. Bolar Pharm. Co., 733 F.2d 858 (Fed.

Cir. 1984).

' The Association has adopted and will attempt to employ

throughout this brief for the convenience of the Court, the same

shorthand terms employed by petitioner, including use of the term

“Merck” to refer to the petitioner Merck KGaA. The Appendix to

the Petition for Writ of Certiorari is cited as “P.A.” The Joint Appendix

and the Supplemental Joint Appendix are cited as “J.A.” and “S.A.”,

respectively.

5

the different categories of patent claims that such firms

prosecute to secure protection of their own discoveries —

whether of (a) pioneering innovations or of (b) improvements

and alternatives to such pioneering discoveries.

Additionally, the Association believes that some

explanation of the nature of the patent claims at issue below

would assist the Court in assessing the relationship between

those claims and the research and development work actually

carried out at Scripps between August of 1994 and 1998.

Finally, it may be useful to provide a capsule restatement

to differentiate between that research and development work

done by Scripps which was presented to the jury and that

which was not — and, consequently, which of the research

and development work done at Scripps was properly

considered by the court of appeals.

A. The Firms Affected By the FDA Exemption

The Association’s membership includes attorneys who

represent at least four different types of firms that conduct

pharmaceutical and related research and development at

different levels of the industry,'' including:

1. The major developers of branded pharmaceuticals,

which must expend great sums of money to bring a single

new drug to market, through both (a) the initial

Investigational New Drug (‘IND”) Application which

contains preclinical in vitro and in vivo animal studies; and

'' As the industry has evolved since 1984, these lines of

demarcation have sometimes become blurred. Some generic

manufacturers have begun to patent their own innovative products

and processes, and some traditionally branded manufacturers now

market generic drugs as well, including generic versions of their own

pioneering drugs. Both branded and generic manufacturers sometimes

become involved in biotechnical research and development activities,

and universities now sometimes engage in activities traditionally

associated with each of the other three types of firms.

6

(b) the New Drug Application ((NDA”) which requires

several “phases” of human clinical studies designed to

establish the safety and effectiveness of the drug and secure

ithe approval by the FDA which is necessary before any new

pharmaceutical product can be marketed;'’

2. The biotech firms which concentrate their efforts upon

research, identification and development of (A) both naturally

occurring and genetically modified biological materials or

products with therapeutic or diagnostic potential;

(B) methods for the manufacture of such materials for use

both in the laboratory and in commercial production;

(C) methods for the use of such materials to obtain

desirable therapeuti' or diagnostic results; (D) fundamental

biotechnology methods or “tools” for use in both research

and commercial laboratories; (E) specialized assays for

diagnostic use by consumers and both reseai.h and

commercial laboratories; and (F) specialized assays for

efficient laboratory “screening” of potential materials for

specific therapeutic or diagnostic applications;'’

3. The generic companies which, by virtue of the 1984

Act, can now bring cheaper versions of pioneering drugs to

market upon expiration of the innovator’s patent coverage

under an ANDA which merely sets forth a showing of

bioequivalence and bioavailability — thereby avoiding the

need to expend many millions of dollars for all of the clinical

' The regulations governing the respective submissions to the

FDA for IND Application, NDA and ANDA purposes are identified

and discussed in the Merck Brief (at 7-8) and the U.S. Brief (at 2

and 9-11). Again, no purpose would be served by duplicative

discussion of those regulations here.

'S In subsequent portions of this brief, these activities of the

biotech and biomedical firms are sometimes referred to for

convenience as “Category A” through “Category F” activities. As

will be discussed, infra, each such category typically is associated

with a particular format of patent claim.

7

testing (and almost all of the preclinical testing) that would

have been required before 1984 to obtain approval of an IND

Application and NDA for the generic product; and

4. The public and private universities which, in their

medical and other graduate school departments, conduct

research and generate both preclinical and clinical

development data regarding inventions for potential

submission to the FDA.'‘

B. Respondents’ Patent Claims

Claim 8 of United States Patent No. 4,792,525 (“the ‘525

patent”), represents the broadest “Category A” product claim

asserted against Merck and is the only such claim discussed

by the court below. P.A. 14a-15a.'° Claim 8 is directed to a

broad genus of non-naturally occurring peptides that contain

the cell-attachment-promoting RGD tripeptide segment

of an adhesive glycoprotein known as fibronectin.'* The

“ The Wall Street Journal reported on December 21, 2004 that

Columbia University’s licensing revenues for the fiscal year ended

June 30, 2003 totaled $178.4 million. Bernard Wysocki, Jr., Wall St.

J., (December 21, 2004) at 1.

'S The Category A product claims of the patents asserted against

Merck and not held invalid include claim 8 of the ‘525 patent, which

is directed to potential therapeutic compounds, and claim | of United

States Patent No. 4,789,73* (“the ‘734 patent”), which is directed to

potential diagnostic compositions. The Category B manufacturing

method claims of the patents asserted against Merck include claims

4 and 8 of United States Patent No. 4,879,237 (“the ‘237 patent”).

The Category C use method claims of the patents asserted against

Merck include claims 15 through 18 of United States Patent No.

5,695,997 (“the ‘997 patent”). P.A. 46a. As is discussed, infra, none

of the patents asserted against Merck coniain claims directed to

inventions in Category D, Category E or Category F.

'* The term “fibronectin” is derived from the Latin words fibra

(“fiber”) and necto (“to attach”). The fibronectin glycoprotein is

known to bind to selected receptor sites on a broad family of

transmembrane proteins known as “integrins”.

8

assignors of respondents were awarded the ‘525 patent based

upon their recognition that the RGD tripeptide segment was

responsible for the ability of the fibronectin glycoprotein to

bind to certain integrin receptors and that this property could

be engineered into the claimed compounds.

Because the “525 patent teaches that the RGD segment

may be “incorporated as part of a larger molecule” (Col. 2,

Lines 42-44), and because such larger molecules can be

formulated using non-naturally occurring amino acids (such

as the D-forms of the naturally occurring amino acids), the

scope of the claimed genus is virtually unlimited.

‘ihe specification of the ‘525 patent also teaches that

some species of the claimed genus can be used to “inhibit

cell attachment” (Col. 5, Lines 46-58), and identifies two

such peptides (the tetrapeptide RGDS and the hexapeptide

PRGDSG).

None of the patents asserted against petitioner claim or

discuss inhibition of angiogenesis or compounds which

inhibit angiogenesis, sometimes referred to as angiogenesis

antagonists. Nor do they claim or discuss any methods that

could be used to screen the innumerable modified peptides

of the claimed genus to identify species which might

demonstrate potential utility for the inhibition of

angiogenesis.

C. The 1994-1998 Work At Scripps

Petitioner’s initial interest in collaboration with Scripps

was sparked by the research successes of Dr. Cheresh in

inhibiting the growth of tumors using the monoclonal

antibody LM609 to block the a, receptor, one of six integrin

receptors to which fibronectin is known to bind. P.A. 26a;

Merck Brief at 8-10.'’ Petitioner hoped that, in collaboration

'? Dr. Cheresh’s monoclonal antibody (LM609) is not a member

of the broad genus claimed by respondents.

9

with Scripps and Dr. Cheresh, it could develop non-toxic

compounds which would demonstrate superior inhibition of

angiogenesis and which could be delivered therapeutically

to tumor sites and function effectively as tumor-starving

drugs useful in the fight against cancer.'* J.A. 97a-107a.

By 1991 petitioner had prepared the cyclic EMD66203

lead compound (“EMD6”), which Judge Newman’s dissent

correctly characterized as having the sequence c(RGDfV).

P.A. 26a. Long prior to negotiation of the 1995 contract,

petitioner also had prepared two cyclic derivatives of EMD6,

EMD85189 (EMD8”) and EMD121974 (EMD12”). These

~ three related cyclic compounds represented a tiny subgroup

of the broad genus claimed in the ‘525 patent. Although

“blocked” by the broad Category A product claims prior to

expiration of the ‘525 patent, EMD6 had been shown to be a

potentially potent agent for that entirely new therapeutic

purpose several months before the first of the experiments

considered by the jury was carried out by Scripps in August

of 1994.'°

'* As the decision below and the briefs reflect, such agents would

have other potential therapeutic uses as well. For simplicity, and

because of the arrangements petitioner has concluded with the

National Cancer Institute (“NCI”) to fund the clinical tests of EMD12

(now known as cilengitide), the Association’s presentation will

discuss only the therapeutic end use involving the control and

reduction of cancerous tumors.

'? Although the issue was not discussed below, there is no reason

to believe that (a) EMD6, (b) EMD 12, and (c) the small subgroup of

cyclic peptides which Scripps was working to develop, are not

separately patentable as non-obvious improvements over claim 8 of

the ‘525 patent. See, e.g., In re McLamore, 379 F.2d 985, 990

(C.C.P.A. 1967); In re Ruschig, 343 F.2d 965, 978 (C.C.P.A. 1965).

A patent application was filed on the monoclonal antibody developed

by Dr. Cheresh and has been issued as Brooks ef a/. United States

Patent No. 5,753,230. S.A. 20.

10

Petitioner transmitted EMD6 to Scripps for testing as

an angiogenesis antagonist under the same protocols used to

establish the antagonist functionality of the LM609

monoclonal antibody that Dr. Cheresh had developed

previously. The results of that testing under the 1988

agreement led to negotiations in mid-1994 which resulted in

the 1995 agreement — which focused upon preclinical in

vitro and in vivo animal studies on EMD6 and its EMD8 and

EMD12 derivatives.

By 1997, the results of the in vitro and in vivo animal

studies at Scripps led to the selection of EMD12 (cilengitide),

the c(RGDf-NMeV) species of the claimed genus, as the best

candidate for the IND Application.’°

D. The Facts Considered By The Jury

None of the work which the jury considered involved

preparation of EMD6 or its derivatives by petitioner. Nor

did the trial court submit to the jury the initial Scripps

comparison of the angiogenesis inhibiting properties of

EMD6 and LM609. Indeed, the trial court held that, with the

exception of a single chicken CAM pharmacokinetics

experiment in August of 1994, all of the work done by Scripps

before 1995 under the 1988 contract was subject to the

common law exemption and could not be considered by the

jury. *!

By mid-1994, petitioner had been fully informed of the

outstanding angiogenesis-inhibiting properties of EMD6 —

and clearly anticipated that similar properties would be

confirmed in the related cyclic derivatives of that lead

” As the Merck Brief points out (at 15), EMD12 differs from

EMD6 only in the addition of a single methyl group (CH).

2! See U.S. Brief at 4. Since no appeal of that ruling was perfected

by either petitioner or respondents, the court of appeals was without

jurisdiction to review it.

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11

compound. In short, whatever the court of appeals majority may

have believed, any “screening” of the broad claimed genus to

identify compounds of interest for the specific therapeutic

tention off | had been leted well before initiati

of the 1994-1998 work which was presented to the jury.

SUMMARY OF ARGUMENT

The NYIPLA is mindful of this Court’s directive that a brief

for amicus curiae should be limited to “relevant matter not

already brought to its attention by the parties” Gur. Cr. R

37.1).

In Point L.A of the Argument, the Association supplements

its endorsement of the statutory construction arguments already

submitted by Merck and the United States with a short discussion

of an industry practice which usually requires conducting parallel

preclinical development work on a small series of compounds.

In Point I.B, the Association demonstrates that enactment

of Section 271(e)(1) by Congress finds its justification, not in

the concept of de minimis as the court of appeals majority

believed, but in Article I, Section 8 of the Constitution and in

* In addition to the Merck Brief, the U.S. Brief and the Petition,

the Association has reviewed drafts of two additional briefs amicus

curiae, the Brief of Intellectual Property Professors As Amici Curiae

In Support Of Neither Party (the “Professors’ Brief”) and the Brief

Amici Curiae on behalf of the Consumer Project on Technology

(“CPT”), Electronic Frontier Foundation (“EFF”) and Public

Knowledge (“PK”) (the “Consumers’ Brief”). Arrangements also

have been made to permit counsel for the Association to review a

final draft of the Brief Amicus Curiae for the American Intellectual

Property Law Association (the “AIPLA Brief”) prior to the

Association’s deadline with the printer. Every effort has been made

to comply with the spirit of Rule 36.1 by minimizing to the extent

possible any overlap in factual subject matter and argumentation

between this brief and those additional submissions.

12

In Point Il, the Association endorses the conclusion of

the Professors’ Brief that there is no need to consider

application or construction of the common law exemption

on the record presently before this Court. The Association

respectfully disagrees with the suggestion in the Professors’

Brief that the FDA exemption arises from considerations

different from those upon which the common law research

exemption necessarily is based. However, the Association

does agree that there can be no justification on this record

for asking the Court to determine hypothetically whether an

overlap or an hiatus exists as between the respective scopes

of the two exemptions.

In Point Ill of the Argument, the Association submits

that there also is no need to address on this record the

ostensible concern of the court of appeals majority with either

“screening” or biotechnology “tool” inventions. P.A. 13a-

14a, 21a. In the first place, none of the upstream screening

work that took place before August of 1994 is before this

Court for review. Secondly, none of the claims asserted

against Merck are directed to any Category D “tool”, Category

F “screening” or Category E diagnostic subject matter.

13

ARGUMENT

I. THE PLAIN LANGUAGE OF THE STATUTORY

FDA EXEMPTION MANDATES REVERSAL OF

THE COURT OF APPEALS DETERMINATION

A. All Of The Developmental Research Carried Out

At Scripps On Behalf Of Petitioner And

Considered By The Jury Fell Squarely Within

The Plain Meaning Of The Statutory FDA

Exemption

The Association endorses the cogent statutory

construction analyses set forth in the Merck Brief, the U.S.

Brief and the Petition, all of which mandate reversal and

none of which will be repeated in this brief. As those

submissions forcefully point out, the panel majority‘s belief

that the alleged Congressional focus on the ANDA

mechanism and generic drugs “informs the breadth of the

statutory test” cannot be reconciled with this Court’s Lilly

ruling.??

The types of preclinical work carried out by Scripps

beginning in August of 1994, as catalogued in Judge

Newman's dissent, were all “reasonably related” to the IND

Applkzation. Indeed, if cilengitide (EMD12) should be carried

through to an approved NDA, a great deal of the data

generated for that compound in the Scripps work would be

set forth in the package insert required by FDA regulations.

Finally, the Association submits that the Merck Brief did

not go far enough by saying at page 45 that:

[T}here is nothing in the FDA exemption to

suggest that the protection evaporates if the drug

* In their discussion of the preclinical studies required for

submission of an IND Application, moreover, those submissions point

out the blatant inconsistency between the explicit terms of the statute

and the panel majority's belief that the FDA exemption must be

limited to clinical submissions.

14

sponsor pursues the risky prospect of FDA

approval of a drug while continuing to explore

back up drug candidates in parallel.

The practice in the industry is that basic in vitro and in vivo

preclinical studies almost always will be carried out, not on

a single candidate compound, but on a limited number of

such compounds, whether or not those candidates are close

chemical analogues. Every prudent pharmaceutical executive

knows the importance of maintaining the availability of a

fallback compound for use in the event the first IND

compound encounters problems in the clinics. Additionally,

the first candidate compound may prove unsuitable for

commercial development for other non-clinical reasons. For

example, formulations of the candidate compound may not

demonstrate sufficient long term stability for an acceptable

shelf life. Generation of comparable preclinical data for a

limited number of backup compounds in parallel thus

represents a recognized sound business practice in the

industry.

B. The Statutory FDA Exemption Arises, Not From

The De Minimis Maxim As The Court Of Appeals

Majority Ruled, But Rather From Article I, Section

8 of the Constitution And From The Economic

Principles Echoed In This Court’s Decisions Which

Inherently Endorse Competition In The Research

And Development Of Improvements And

Alternative Technologies And _ Proscribe

Unwarranted Extensions Of The Patent Term Via

Post-Expiration Royalties

The panel majority’s resort to the principles of the

de minimis maxim to justify its interpretation of

the FDA exemption reflects a basic misconception.

That misconception has been criticized by a number of

nag

15

commentators,‘ and the Consumers’ Brief contains a useful

discussion of the precedents which need not be repeated here.

The FDA exemption must be broadly construed both

because it is firmly rooted in the explicit language of the

Constitution and because this Court (a) has recognized that

competitors of the innovator should not be prevented from

researching and developing improvements and alternatives

to patented technology, whether or not the commercial

practice of the fruits of that research and development may

be “blocked” during the limited period of exclusivity; and

(b) has proscribed unwarranted extensions of the “limited

times” fixed by Congress for the exclusive rights of the

patentee.

Despite the fact that the “common law exemption” was

created in 1813 by Justice Story and has been universally

recognized by the lower federal courts ever since, this Court

has never had occasion to consider the doctrine directly. **

This Court has several times explained the nature and

significance of the patentee’s bargain with the public. That

bargain derives from Article I, Section 8 of the Constitution

which reads:

To promote the progress of science and useful

arts, by securing for limited times to authors and

inventors the exclusive right to their respective

writings and- discoveries

—

* See, e.g., Janice M. Mueller, The Evanescent Experimental

Use Exception from United States Patent Infringement Liability:

Implications for University/Nonprofit Research and Development,

56 Bay.or L. Rev. 917, 935(2004).

** Both the Professors’ Brief and the Consumers’ Brief set forth

learned discussions of the common law research exemption which

need not be repeated he-e.

16

(Emphasis supplied). For example, in Universal Oil Prods.

Co. v. Globe Oil & Ref. Co., 322 U.S. 471, 484 (1944) Justice

Reed explained the Constitutionally-based bargain as

follows;

As a reward for inventions and to encourage their

disclosure, the United States offers a seventeen-

year monopoly to an inventor who refrains from

keeping his invention a trade secret.

(Emphasis supplied). See also Kewanee Oil Co. v. Bicron

Corp., 416 U.S. 470, 484 (1974) (Disclosure is “the quid

pro quo of the right to exclude”); Bonito Boats, Inc. v.

Thunder Craft Boats, Inc., 489 U.S. 141, 146 (1989) (‘The

Patent Clause itself reflects a balance between the need to

encourage innovation and the avoidance of monopolies which

stifle competition without any concomitant advance in the

‘Progress of Science and useful Arts’”); Pfaff v. Wells Elecs.,

Inc., 525 U.S. 52, 63-64 (1998).

As Judge Newman’s dissent pointed out, however,

disclosure of an invention will not stimulate “the progress

of science” as the framers intended in any significant way

unless research and development experimentation directed

to improvements and alternatives to the patented innovation

can be carried out during the period of exclusivity (29a, 30a).

This principle was inherently accepted in a number of this

Court’s previous examinations of the antitrust legality of

arrangements designed to facilitate the availability of

“blocking” improvements through cross-licensing and

pooling arrangements.

For example, in the Gasoline Cracking case, Standard

Oil Co. (Ind.) v. United States, 283 U.S. 163, 171 (1931),

the Court said:

An interchange of patent rights and a division of

royalties according to the value attributed by the

parties to their respective patent claims is

17

frequently necessary if technical advancement is

not to be blocked by threatened litigation. If the

available advantages are open on reasonable terms

to all manufacturers desiring to participate, such

interchange may promote rather than restrain

competition.

(Emphasis supplied). To sanction unblocking arrangements

governing rights under a pioneer invention and its

improvements, of course, necessarily implies an endorsement

of the underlying right of the innovator’s competitor to

develop patentable improvements during the life of the

pioneer patent.

In addition to consideration of the Constitutional roots

of the patent law, therefore, selection of the appropriate

balance point — whether fixed by Congress or by the courts

— should include consideration of the principles of economic

freedom embodied in the antitrust laws and the misuse

doctrine which mandate the encouragement of research

competition.

Indeed, fostering and increasing research competition has

been an important enforcement concern at least since the

promulgation of the 1995 Licensing Guidelines:*°

An innovation market consists of the research and

development directed to particular new or

improved goods or processes, and the close

substitutes for that research and development. The

close substitutes are research and development

efforts, technologies, and goods that significantly

Department of Justice and Federal Trade Commission Antitrust

Guidelines for the Licensing of Intellectual Property 1.0 (April 6,

1995) <http://www.usdoj.gov/atr/public/guidelines/ipguide.htm> (last

visited 2/20/05). For convenience the Department of Justice and the

Federal Trade Commission are referred to herein as “DOJ” and

“FTC”, respectively.

18

constrain the exercise of market power with

respect to the relevant research and development,

for example by limiting the ability and incentive

of a hypothetical monopolist to retard the pace of

research and development.

As a number of witnesses at the FTC/DOJ interface

hearings stressed,’ research competition is important in

developing countervailing power by compecitors of an

innovator through development of improvements and

alternatives to the claims of the innovator — thus facilitating

cross-licensing and pooling arrangements which can make a

new technology broadly available even before expiration of

the pioneering patents.

The alternative to permitting such research competition

would be to reserve to the first patentee not only the right to

exclude from the practice of his innovative claims during

the “limited times” fixed by Congress, but also the sole right

to develop improvements during that same term. Such a rule

clearly would contravene the fundamental principles reflected

in numerous antitrust and misuse decisions of this Court.

Finally, even the court of appeals majority recognized

that the FDA exemption represented a remedial response to

Roche v. Bolar, in the sense that it “sought to insure that a

patentee’s rights did not de facto extend past the expiration

of the patent term’. This Court, of course, resolved a similar

concern under Article I, Section 8 when it proscribed post-

expiration royalties under the misuse doctrine in Bru/lotte v.

Thys Co., 379 U.S. 29 (1964).

The power of Congress to legislate a specific statutory

infringement exemption for a particular industry has never

been questioned. The roots of that power derive directly from

*” FTC/DOJ, Public Hearings, Competition and Intellectual

Property Law and Policy in the Knowledge-Based Economy (2002)

<http://www.ftc.gov/opp/ intellect/index.htm>.

19

Article 1, Section 8 of the Constitution as well as from the

patent, antitrust and misuse decisions of this Court which

bear upon research competition.?*

ll. THERE IS NO NEED TO CONSIDER APPLICATION

OR CONSTRUCTION OF THE COMMON LAW

EXEMPTION ON THE RECORD PRESENTLY

BEFORE THIS COURT

The Association does not believe that reversal need or

should require consideration of the common law exemption.

Accordingly, the NYIPLA also endorses the argument set

forth in the Professors’ Brief to the effect that the Court

should decline to construe the common law exemption on

the present record — particularly in view of the fact that the

trial court’s ruling on the common law exemption is not

before this Court. P.A. 6a, n-Z.

The Association also agrees with the Professors’ Brief

that “Section 271(e)(1) and the traditional experimental use

exemption are of independent scope” and that:

The scope of the traditional experimental use

exemption is also not fairly included within the

question presented to the Court and is of such

importance that it should be considered [in some

other case in which it is fairly presented] on its

own merits.

Id. (Bracketed material and emphasis supplied).

As the foregoing discussion in Point I.B should make

clear, however, the Association does not agree that Section

271(e)(1) and the common law research exemption “stem

from independent policy concerns” (id.), or that either is the

product of a “different provenance” (id. at 4). The genius of

** As will be discussed briefly, infra, the legitimacy of the

common law or research exemption derives from the same theoretical

underpinnings.

20

Justice Story’s initial perception lay in (a) his implicit

recognition both of the inherent tension between the twin

directives of Article I, Section 8 that are reflected in the

patentee’s right to exclude based upon her bargain and the

public’s right to the “progress of science”; and (b) his explicit

recognition that the solution lay in reading the word

“commercial” into the infringement provision of the 1793

Patent Act — which, like Section 271(a) today, did not

actually contain that language.” For Justice Story, the

touchstone for the determination of what uses were

commercial was whether such use was made “with an intent

to use for profit” and thus “deprive the owner of the lawful

rewards of his discovery” during the period of exclusivity.

Sawin v. Guild, 21 F. Cas. 554, 555 (C.C.D. Mass. 1813).

In response to Roche v. Bolar, Congress felt it necessary

to define the appropriate scope of the exemption in this

industry as experimentation “reasonably related” to

submissions to the FDA. That does not mean, however, that

the Constitutional and policy roots of the common law

** The court of appeals majority noted that the term “experimental”

does no* appear in the Patent Act, and suggested that nothing in Section

271(a) supported an interpretation of that statute to exempt a non-

commercial use or manufacture from infringement liability. P.A. 6a.

Justice Story’s determination that such language must be inferred,

however, represents an almost exact parallel with Chief Justice White’s

holding that the word “unreasonable” must be read into the Section | of

the Sherman Act. Standard Oil Co. v. United States, 221 U.S. 1, 60-70

(1911). See, also, Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S.

717, 723 (1988); Northwest Wholesale Stationers v. Pacific Stationery

& Printing Co., 472 U.S. 284, 289 (1985) (“[E]very commercial

agreement restrains trade. Whether this action violates § | of the Sherman

Act depends on whether it is adjudged an unreasonable restraint.”);

NCAA v. Board of Regents, 468 U.S. 85, 98 (1984). Coincidentally, both

Justice Story and Chief Justice White perceived the need for such judicial

inferences approximately twenty years after Congress enacted the

respective statutes at issue — the Patent Act of 1793 and the Sherman

Act of 1890.

21

research exemption were any different from those under which

Section 271(e)(1) was enacted by Congress.

This case involves the fourth decision within the last twenty

years in which the court below has significantly narrowed the

scope of a research exemption.*® Unquestionably, those decisions

have created significant problems for other industries as well

as for the upstream operations of biomedical research.

On this record, however, where the upstream research

activities of Merck and Scripps were not before the jury, the

common law research exemption need not and should not be

addressed.

Ill. ON THE RECORD PRESENTLY BEFORE THIS

COURT, THERE ALSO IS NO NEED TO RESOLVE

ANY CONFLICT BETWEEN THE FDA EXEMP-

TION AND THE PRESUMED RIGHT OF PATEN-

TEES TO RECOVER ROYALTIES FOR COMMER-

CIAL LABORATORY USE OF HYPOTHETICAL

CLAIMS ADDRESSED TO RESEARCH SCREEN-

ING, DIAGNOSTIC PROCEDURES OR FUNDA-

MENTAL BIOTECHNICAL PROCESSES

This is not a case in which the court of appeals majority’s

putative concern with patents containing claims addressed to

“screening” inventions or biotechnology “tool” patents need be

addressed.

First, each of the three cyclical candidate compounds from

the narrow subgenus of the EMD6 lead compound and its

derivatives had been identified prior to the 1994-1998 preclinical

research which the jury considered.

* In addition to Roche v. Bolar, the other cases preceding the

decision below are Madey v. Duke Univ., 307 F.3d 1351 (Fed. Cir.

2062), and Embrex, Inc. v. Serv. Eng'g Corp., 216 F.3d 1343 (Fed.

Cir. 2000). Those cases are adequately discussed in the Professors’

Brief and will not be treated here.

22

Second, none of the claims asserted against Merck are

Category D biotechnology “tool” claims, Category E

diagnostic claims, or Category F therapeutic “screening”

claims. Indeed, none of the patents contain any such claim.

Claims of appropriate specificity can easily be drafted

whenever the teaching of a specification is sufficient to

support such a claim. Indeed, many well-known patents can

be cited as containing examples of Category D claims directed

to fundamental biotechnology methods or “tools”,’' Category

*! See, e.g., Mullis et al. United States Patent No. 4,683,195,

directed to the use of the polymerase chain reaction (PCR) to detect

specific DNA sequences. Claim | reads: A process for detecting the

presence or absence of at least one specific nucleic acid sequence in

a sample containing a nucleic acid or mixture of nucleic acids, or

distinguishing between two different sequences in said sample,

wherein the sample is suspected of containing said sequence or

sequences, which process comprises: (a) treating the sample with

one oligonucleotide primer for each strand of each different specific

sequence, under hybridizing conditions such that for each strand of

each different sequence to which an oligonucleotide primer is

hybridized an extension product of each primer is synthesized which

is complementary to each nucleic acid strand, wherein said primer

or primers are selected so as to be sufficiently complementary to

each strand of each specific sequence to hybridize therewith such

that the extension product synthesized from one primer, when it is

separated from its complement, can serve as a template for synthesis

of the extension product of the other primer; (b) treating the sample

under denaturing conditions to separate the primer extension products

from their templates if the sequence or sequences to be detected are

present; (c) treating the sample with olignonucleotide primers such

that a primer *xtension product is synthesized using each of the single

strands produced in step (b) as a template, resulting in amplification

of the specific nucleic acid sequence or sequences if present;

(d) adding to the product of step (c) a labeled oligonucleotide probe

for each sequence being detected capable of hybridizing to said

sequence or a mutation thereof; and (e) determining whether said

hybridization has occurred.

23

E claims directed to specialized assays for diagnostic use,’? and

Category F claims directed to specialized assays for the

“screening” of potential materials for specific therapeutic or

diagnostic applications.’*

Absent such specific claims, a reviewing court will not be

able to address such issues as whether the disclosures of the

supporting specification are sufficiently detailed to support such

claims under Section 112 of the Patent Statute** or whether, as

in the S/BIJA case referred to by the court below,** they are

* See, e.g., Wang et al. United States Patent No. 5,476,774, directed

to a method for determining the amount of a target DNA sequence in a

sample of DNA sequences. Claim 5 reads: A kit for the quantitation of a

target nucleic acid segment in a biological sample comprising individual

containers which provide: a predetermined initial amount of an internal

standard nucleic acid segment for quantitation of a target nucleic acid

wherein said internal standard binds the same primers as are bound by

said target nucleic acid segment; and an oligonucleotide primer pair

wherein said primer pair can serve to amplify said internal standard and

said target nucleic acid.

*® See, e.g., Younget al. United States Patent No. 5,837,479, directed

to screening assays for inhibitors of mammalian cyclooxygenase-2. Claim

1 reads: A method for identifying a compound that inhibits prostaglandin

synthesis catalyzed by mammalian prostaglandin H synthase-2 (PGHS-

2) comprising: (a) contacting a genetically engineered host cell that

contains a sequence encoding mammalian PGHS-2 operatively

associated with a regulatory sequence that controls gene expression, so

that a PGHS-2 gene product is stably expressed by the host cell, with

the compound in the presence of a pre-determined amount of arachidonic

acid; (b) measuring the conversion of the arachidonic acid to its

prostaglandin metabolite; and (c) comparing the amount of arachidonic

acid converted by the cells exposed to the test compound to the amount

of arachidonic acid converted by control cells that were not exposed to

the test compound.

* 35 U.S.C. § 112 (2005).

*® SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp., 225 F.3d 1349

(Fed. Cir. 2000). The patent at issue in S/BJA, Harpold et al. United

(Cont’d)

24

obvious under Section 103.°° Moreover, in the absence of

such claims, in order to find infringement of a broad product

claim such as claim 8 of the ‘525 patent on a “screening”

theory, the Court would have to invoke the generalized “uses”

language of Section 271(a).

Since none of the patents asserted against Merck

contained any Category F “screening” claims and since none

of the “screening” experiments carried out by Merck or

(Cont'd)

States Patent No. 5,401,629, is another example of a patent containing

Category F “screening” claims. This patent is directed to cell-based

screening methods useful for the identification of compounds that

exhibit agonist and antagonist activity with respect to particular cell

surface proteins. Claim | reads: A method for identifying compounds

that modulate cell surface protein-mediated activity by detecting

intracellular transduction of a signal generated upon interaction of

the compound with the cell surface protein, comprising: comparing

the amount of transcription of a reporter gene or the amount of

reporter gene product expressed in a first recombinant cell in the

presence of the compound with the amount of transcription or product

in the absence of the compound, or with the amount of transcription

or product in a second recombinant cell; and selecting compounds

that change the amount of transcription of a reporter gene or the

amount of reporter gene product expressed in the first recombinant

cell in the presence of the compound compared to the amount of

transcription or product in the absence of the compound, or compared

to the amount of transcription or product in the second recombinant

cell, wherein: the cell surface protein is a surface receptor or ion

channel; the first recombinant cell contains a reporter gene construct

and expresses the cell surface protein; the second recombinant cell

is identical to the first recombinant cell, except that it does not express

the cell surface protein; and the reporter gene constructs contains:

(a) a transcriptional control element that is responsive to the

intracellular signal that is generated by the interaction of an agonist

with the cell surface protein; and (b) a reporter gene that encodes a

detectable transcriptional or translational product and that is in

operative association with the transcriptional control element.

*©35 U.S.C. § 103 (2005).

25

Scripps were ever presented to the jury, it would be difficult

to hypothesize a less appropriate setting for determination

of such an important issue of first impression.

CONCLUSION

For all the foregoing reasons, the ruling of the court of

appeals should be reversed with directions to enter judgment

for Merck on the ground that the FDA exemption insulates

the accused experiments from patent infringement liability.

Respectfully submitted,

Davip F. Ryan

Counsel of Record

BRENDAN MEE

Roperr S. SCHWARTZ

FivzPaTRIck, CELLA,

Harper & Scinto

30 Rockefeller Plaza

New York, NY 10112-3801

(212) 218 2100

Joun D. MuRNANE, PRESIDENT

New York Intellectual

Property Law Association

Fitzpatrick, CELLA,

Harper & Scinto

30 Rockefeller Plaza

New York, NY 10112-3801

Attorneys for Amicus Curiae