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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0744%3A26

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2005
- **Citation:** 545 U.S. 193

## Text

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).
f + aaa penetra ae es 17

FTC/DOJ, Public Hearings, Competition and
Intellectual Property Law and Policy in the
Knowledge-Based Economy, (2002) ........ 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) 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) .

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) (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)
.

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0744%3A26. Public record. Not legal advice.