Amicus Curiae Brief — Duke University v. Madey

[Supreme Court, U.S

rFILED

| MAY 3.0 2003

No. 02-1007 OFFICE OF THE CLERK

Jn the Supreme Court of the Gnited States

DUKE UNIVERSITY, PETITIONER

Vv.

JOHN M. J. MADEY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE

THEODORE B. OLSON

Solicitor General

Counsel of Record

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

PAUL D. CLEMENT

Deputy Solicitor General

GREGORY G. GARRE

Assistant to the Solicitor

General

ANTHONY J. STEINMEYER

ScoTT R. MCINTOSH

JAMES A. TOUPIN

General Counsel

JOHN M. WHEALAN

Solicitor

WILLIAM LAMARCA

CYNTHIA C. LYNCH

Associate Solicitors

Patent and Trademark Attorneys

Office Department of Justice

Washington, D.C. 20231 Washington, D.C. 20530-0001

(202) 514-2217

QUESTION PRESENTED

Whether petitioner is entitled to summary judgment on

respondent’s claim of patent infringement under 35 U.S.C.

271(a), on the ground that petitioner’s unauthorized use of

respondent’s patented inventions is protected under the

common law defense of experimental use.

(I)

TABLE OF CONTENTS

Page

SETS BY SEAN CRC Ne 1

ERE RIE SEE tC Se ON eC TOT a 2

I eestsinns 5

A. The court of appeals’ decision is not directly con-

tray to prior case law applying the experimental

cate 6

B. Petitioner’s broad policy concerns are speculative

at this time and ultimately are better suited for

legislative rather than judicial consideration .......... 13

C. The interlocutory posture and unusual genesis

of this case also counsel against granting

| STII sicninihisscntiitinsansasevienvninhinesininesorvvintermnssveenntiorensennves 17

SII Shee edlciichnacabplaabiaiannneionne 19

TABLE OF AUTHORITIES

Cases:

Aro Mfg. Co. v. Convertible Top Replacement Co.,

I MIIIITED dcciunhiniiapunacinistsaesesclnesnioeesneitonsnnssiconmnants 8, 14

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

I I ibis icsisssinseligiethirmnessinhansadbiniincibvictwinezosies 8

Douglas v. United States, 181 U.S.P.Q. (BNA) 170,

aff’d on other grounds, 510 F.2d 364 (Ct. Cl. 1974),

cert. denied, 423 U.S. 825 (1975) .......scccesssssssssssssssssssssssseees 10

Embrezx, Inc. v. Service Eng’g Corp., 216 F.3d 1343

a I I ich iliibnliestiiindbatbendsvhinines 8

Hewlett-Packard Co. v. Repeat-O-Type Stencil Mfg.

Corp., 123 F.3d 1445 (Fed. Cir. 1997), cert. denied,

SE NC IIIT CIUIIIIIT -sinsinscshinsthinsicusisimsuntnsilheebastionnnimsanestonteavenes 14

Goodyear Atomic Corp. v. Miller, 486 U.S. 174

ST Aelirsshsttensiniecinieessaeieaacicshteableciisbesiaiesnanbareossninsanniseneutionne

Pfaff v. Wells Elecs., pay 525 U.S. 55 (1998) ........c.cccss00 7

Pitcairn v. United States, 547 F.2d 1106 (Ct. Cl.

1976), cert. denied, 434 U.S. 1051 (1978) .......sessecsessesesseees 4,10

(IIT)

IV

Cases—Continued: Page

Poppenhusen v. Falke, 19 F. Cas. 1048 (C.C.

es We HED cvinscncitisstniiihbaesaaieesiaseninspieaibaipbsnnabibinnataiiesicins 9

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

(Fed. Cir.), cert. denied, 469 U.S. 856 (1984) ..........cccsee 9

Root v. Third Ave. R.R., 146 U.S. 210 (1892) ........esesesees 7

Ruth v. Stearns-Roger Mfg. Co., 13 F. Supp. 697

(D. Colo. 1935), rev’d on other grounds, 87 F.2d

BB CGE Gr TED ce ecctvecenrancneneicenesinninioinnsiinnieantanennnssinninaniannee 11

Smith & Griggs Mfg. Co. v. Sprague, 123 U.S.

re citneninnisisssininesntiniunnitionsinniniinitinsiieniniinineninnieninene 7

United States v. Univis Lens Co., 316 U.S. 241

COED eicniarstnicinvnnisonnn ; laceitedapinatibinsaniesasiian 14

Virginia Military Inst. v. United States, 508 U.S.

I GOD sicnseiccstrssniiscinssiaicibiniirightatishlieshchiiinicintialinaneinmpnninonsiin 17

Whittemore v. Cutter, 29 F. Cas. 1120 (C.C. D.

I, FIO iccesincnsensaienicianiienninieiianon - ee 6, 7,9

Constitution and statutes:

Fs NONI MU, ha SP OIA UO sinchicaessesisioiinincucinceieeniieapegaiina ~

Bayh-Dole Act, 35 U.S. 200 ef 8€q. ...........scsssssssssssssesessssesseeers 12

Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301

IG, senncenesiionnpnenninnsiemnicenttininitininidanniinnnmimntnnaninmana 16

Patent Act, 35 U.S.C. 1 et seq.:

DD CA, BD tessstiileninnsentneseeniinieiiananittinitiindiaiasiihinniin 7

Ae Ee as ia siccneeesonsienitinnesiciaiiataiihitinianeaidaiishiainiaibiliisiniapinaiiaies 7

Se SEs PIAL? ceiniassantketiiientsigeiintntemniniiaiihaieninainciaanaine 15

Se OF ele At E senissesieeniaineiianiicinninhiianinintiieemennniinbtenanibin 3, 6,8

I re MID scsinsinscncivinedinteiersinatanbisenbaihanniadiabaniemmaninanintii .

Se AA, BI GIIEED secccssseinincsinnennscsnienenns 16

Miscellaneous: :

Derek Bok, Universities in the Marketplace: The

Commercialization of Higher Education (2003) ......... 12, 13

Jennifer Croissant & Sal Restivo, eds., Degrees

of Compromise: Industrial Interests and Acade-

__ i RENNIN OD FoR OORT ESRI SON OCC ab 12

Miscellaneous—Continued: Page

Rebecca S. Eisenberg, Patents and the Progress of

Science: Exclusive Rights and Experimental Use,

56 U. Chi. L. Rev. 1017 (1989) ........... sisiieieasiihlaeniadiili 15

H.R. 4970, 100th Cong., 2d Sess. (1988) ......ssccssssessssseseseesees 17

H.R. 1556, 101st Cong., Ist Sess. (1989) ........scssssssssssesseesees 17

H.R. 5598, 101st Cong., 2d Sess. (1990) ......sscssesssessssssesssees 17

Suzanne T. Michel, The Experimental Use Exception

to Infringement Applied to Federally Funded

Inventions, 7 High Tech. L.J. 367 (1992) .......cscsscsesseeeees 12, 15

Janice M. Mueller, No “Dilettante Affair”: Rethink-

ing the Experimental Use Exception to Patent

Infringement for Biomedical Research Tools,

76 Wash. L. Rev. (2001) io ~

National Academy of Engineering, Technology Transfer

Systems in the United States and Germany: Lessons

and Perspectives (H. Norman Abramson et al., eds.

BUT) . a:reesseveveninssunniisbinsisetiemveiataiabahtietnlinhianiiienasaniiiamnbinaimiabiatabins 12

Arti K. Rai & Rebecca S. Eisenberg, Bayh-Dole Reform

and the Progess of Biomedicine, 66 Law & Contem-

porary Prods. BED GIIGR) sciesccnscsseoneemeniinenmnesnctnens 13, 15

Louis G. Tornatzky, et al., Innovation U.: New Univer-

sity Roles in a Knowledge Economy (2002) ........ssssssse000 12

In the Supreme Court of the Gnited States

No. 02-1007

DUKE UNIVERSITY, PETITIONER

Vv.

JOHN M. J. MADEY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE

INTRODUCTION

This brief is submitted in response to the order of this

Court inviting the Solicitor General to express the views of

the United States. The position of the United States is that

the petition for certiorari should be denied. The court of

appeals’ decision does not directly conflict with prior prece-

dent discussing the boundaries of the common law experi-

mental use defense to patent infringement. To the extent

that petitioner reads the decision to break new ground, the

interlocutory posture of this case will afford the lower courts

with an opportunity on remand to clarify the scope of the

experimental use defense after further factual development

concerning the allegedly infringing uses of respondent’s pat-

ented inventions. The policy concerns raised by petitioner

and its amici may be alleviated by such further clarification

on remand and, in any event, may be better suited for legis-

lative rather than judicial consideration.

(1)

STATEMENT

1. Respondent, an acclaimed physicist, invented the free

electron laser (FEL) in the 1980s. During that time, respon-

dent was a tenured professor at Stanford University, where

he obtained patents for the two inventions that are at issue

in this case. The first patent (the ’103 patent) is for a micro-

wave electron gun that is used as an electron source for

FELs. The second patent (the ’994 patent) is for an FEL

oscillator. Pet. App. 2a-3a.

In 1988, respondent accepted an offer for a tenured posi-

tion in petitioner’s physics department. Shortly thereafter,

he moved his FEL research laboratory from Stanford to a

new laboratory facility on petitioner’s campus. The labora-

tory contains two FELs, known as the “Mark III FEL” and

the “Storage Ring FEL,” which incorporate the inventions

covered by the ’103 and ’994 patents. Pet. App. 2a, 4a. Re-

spondent served as the director of petitioner’s FEL labora-

tory until 1997, when a dispute led petitioner to remove

respondent from that post. Respondent resigned from peti-

tioner’s faculty and has continued his academic and research

activities at the University of Hawaii. Jd. at 3a.

After respondent’s departure, petitioner has continued to

use the Mark III FEL and the Storage Ring FEL. Pet. App.

3a. Petitioner asserts that the equipment is being used for

academic purposes, including instruction and research, and

not commercial purposes. Pet. 3. The record does not indi-

cate the specific uses that petitioner has made of the FEL

equipment, but it is undisputed that petitioner has not

obtained a license from respondent to use the inventions

covered by the ’103 and ’994 patents.’

1 Research that led to respondent’s development of the FEL and the

patents at issue was funded in part by the federal government. Although

not reflected in the record of the instant dispute, the Department of

Energy has informed petitioner that the Mark III FEL and related

equipment that was part of respondent’s FEL laboratory and remains in

2. Respondent brought suit against petitioner for patent

infringement and various other federal and state law claims.

Respondent claimed, inter alia, that petitioner infringed the

103 and ’994 patents by using the inventions (as incorpo-

rated in the Mark III FEL and the Storage Ring FEL) with-

out his permission. Respondent’s infringement claim is pre-

dicated on Section 271(a) of the Patent Act, which provides

in relevant part that “whoever without authority makes,

uses, offers to sell, or sells any patented invention * * *

during the term of the patent therefor, infringes the patent.”

35 U.S.C. 271(a) (emphasis added).

3. The district court entered summary judgment for peti-

tioner on respondent’s patent infringement claim. Pet. App.

3la-56a. The court explained that, although unauthorized

use of a patented invention is proscribed by the Patent Act,

“for well over a century, United States ‘patent jurisprudence

has paid homage to . . . an exception from infringement

liability for . . . unauthorized uses of patented inventions[,]’

where the uses were solely for research, academic, or experi-

mental purposes.” Jd. at 40a. The court further stated that

the common law experimental use “defense remains viable

and may be asserted in those cases in which the allegedly

infringing use of the patent is made for expe,imental, non-

profit purposes only.” /bid.

The district court concluded that the experimental use de-

fense is a complete answer to respondent’s patent infringe-

ment claim. Pet. App. 39a-46a. The court explained that

respondent had the burden of proving that petitioner “has

not used the equipment at issue ‘solely for an experimental

or other non-profit purpose’” and that petitioner’s use of the

equipment “had definite, cognizable, and not insubstantial

petitioner’s custody is the property of the United States government. The

Department has requested petitioner to transfer the equipment to the

University of Hawaii, in order to carry out a federal grant project

supporting important domestic security related research.

commercial purposes.” Jd. at 41a (quotations omitted; em-

phasis added). The court found that respondent failed to

meet that burden, explaining that petitioner’s “primary pur-

pose is to teach, research, and expand knowledge” and that

respondent’s “mere speculation that [petitioner] intends, in

this case, to stray from [that] general policy * * * is insuf-

ficient to create a genuine issue of material fact.” Id. at 43a.

4. The Federal Circuit reversed in pertinent part and

remanded. Pet. App. la-30a. The Federal Circuit agreed

that the “judicially created experimental use defense” re-

mains available, id. at 21a, but it concluded that the district

court erred in applying that defense and, “consequently, in-

correctly found that there was no genuine issue of material

fact upon which [respondent] could prevail,” id. at 30a. Asa

threshold matter, the court found, the district court had

improperly shifted the burden to respondent “to show as a

part of his initial claim that [petitioner]’s use was not

experimental.” Jd. at 23a (emphasis added).. But more

fundamentally, the Federal Circuit held, the district court

had operated under “an overly broad conception of the

* * * experimental use defense.” Jd. at 24a.

The court of appeals explained that, under existing case

law, the experimental use defense is “very narrow” and is

confined to actions performed “for amusement, to satisfy idle

curiosity, or for strictly philosophical inquiry.” Pet. App.

24a. According to the court, the defense does not insulate

“conduct that is in keeping with the alleged infringer’s legiti-

mate business, regardless of commercial implications.” Jd. at

25a (citing Pitcairn v. United States, 547 F.2d 1106 (Ct. Cl.

1976), cert. denied, 434 U.S. 1051 (1978)). That general

analysis, the court added, applies both to for-profit and non-

profit entities, including “major research universities,”

which “often sanction and fund research projects with argua-

bly no commercial application whatsoever.” [bid.

The Federal Circuit emphasized that application of the

experimental use defense requires “a{] detailed analysis of

the character, nature and effect of the use.” Pet. App. 25a.

The district court in this case, the court found, “attached too

great a weight to the non-profit, educational status of [peti-

tioner].” Jd. at 26a. Indeed, the court of appeals noted, peti-

tioner, “like other major research institutions of higher

learning, is not shy in pursuing an aggressive patent licens-

ing program from which it derives a not insubstantial reve-

nue stream.” Jd. at 26a n.7. The Federal Circuit thus

remanded for reconsideration of petitioner’s experimental

use defense, stating that “(t]he correct focus should not be on

the non-profit status of [petitioner] but on the legitimate

business [petitioner] is involved in and whether or not the

use was solely for amusement, to satisfy idle curiosity, or for

strictly philosophical inquiry.” Id. at 26a.

DISCUSSION

The petition in this case should be denied. To date, the

common law experimental use defense has been applied in-

frequently by the lower courts and only as a narrow excep-

tion to the general statutory prohibition on patent infringe-

ment. The Federal Circuit’s treatment of that defense in

this case is generally in line with the lower court case law

that has developed in this area. While petitioner asserts that

a more robust exception for experimental use is needed to

accommodate university research in particular, the existing

case law does not establish such an exception and any

substantial altering of the balance between the goals of the

patent laws and the demands of academic research calls for

judgments that are legislative, not judicial, in nature.

Petitioner argues that the Federal Circuit’s decision will

render the experimental use defense unavailable to research

institutions simply because their “legitimate business” is re-

search. Pet. App. 25a. Although some language in the

opinion, in isolation, could support such an argument, that

approach is not compelled by the decision when read as a

whole. Under the Federal Circuit’s decision, research insti-

tutions are neither automatically entitled to nor automati-

cally ineligible for the experimental use defense. Thus, to

determine whether the experimental use exception applies,

the Federal Circuit instructed the district court on remand

to consider not simply the legitimate business of petitioner,

but the specific uses to which the patented inventions at

issue were put. /d. at 26a. The record currently does not

detail such uses, and that provides another reason to deny

certiorari at this interlocutory stage of the case.

A. The Court Of Appeals’ Decision Is Not Directly Con-

trary To Prior Case Law Applying The Experimental

Use Defense

1. The Patent Act states that “whoever without author-

ity * * * uses * * * any patented invention * * * during

the term of the patent therefor, infringes the patent.” 35

U.S.C. 271(a). The text of the Act does not expressly

establish an experimental use exception. For some time,

however, courts have recognized a limited experimental use

exception to the statutory prohibition on the unauthorized

use of a patented invention. The court of appeals’ applica-

tion of that judge-made defense in this case is generally in

step with prior lower court precedent.

a. The common law experimental use defense traces its

origins to an opinion by Justice Story in Whittemore v.

Cutter, 29 F. Cas. 1120 (C.C. D. Mass. 1813). Whittemore

was a patent case in which the defendant challenged the

validity of a jury instruction. In the course of discussing that

instruction, Justice Story observed that “it could never have

been the intention of the legislature to punish a man, who

constructed * * * a [patented] machine merely for phi-

losophical experiments, or for the purpose of ascertaining

|

the sufficiency of the machine to produce its described ef-

fects.” Id. at 1121. That statement was dictum; the infring-

ing activities at issue in Whittemore were not claimed to be

experimental in nature and the defendant did not seek to

avoid liability on that ground. But Justice Story’s observa-

tion nonetheless provided the impetus for judicial recogni-

tion of an experimental use defense.

Since Whittemore, the experimental use defense has had a

modest existence. The number of cases in which defendants

have invoked the defense is relatively small; the number of

times that courts have actually relied on it to excuse other-

wise infringing conduct is smaller still; and this Court itself

has not addressed the application of the defense. See Janice

M. Mueller, No “Dilettante Affair”: Rethinking the Experi-

mental Use Exception to Patent Infringement for Bio-

medical Research Tools, 76 Wash. L. Rev. 1, 17-18 (2001)

(“In practice, * * * the experimental use doctrine has

rarely been applied in favor of an accused infringer.”).”

b. The relatively minor role played by the experimental

use defense is consistent with the limits placed on that

defense by the text of the Patent Act and policies underlying

that Act. The 1952 Patent Act by its terms prohibits any

unauthorized “use” of a patented invention, 35 U.S.C. 154

2 Although this Court has not addressed the availability or scope of

the experimental use defense to a claim of patent infringement, the Court

has recognized a “distinction between inventions put to experimental use

and products sold commercially,” Pfaff v. Wells Elecs., Inc., 525 U.S. 55,

64 (1998), in the context of determining whether an invention was “in

public use or on sale” more than one year before a patent application and

thus ineligible for patent protection under 35 U.S.C. 102(b). See, e.g.,

Smith & Griggs Mfg. Co. v. Sprague, 123 U.S. 249, 256 (1887). Although

the Court’s patentability cases do not discuss the exception at issue here,

they nonetheless underscore that the determination whether an inventor

has engaged in an experimental use may be highly fact specific. See Root

v. Third Ave. R.R., 146 U.S. 210, 221-226 (1892) (discussing experimental-

use determinations in this context).

and 271(a), and does not contain any explicit exception for

experimental uses. Cf. 35 U.S.C. 271(e) (exception for uses

of certain patented inventions manufactured with DNA), dis-

cussed at pp. 16-17, infra. This Court has stated that

“§ 271(a) of the [1952] Patent Code which defines ‘infringe-

ment,’ left intact the entire body of case law on direct

infringement,” Aro Mfg. Co. v. Convertible Top Replacement

Co., 365 U.S. 336, 342 (1961), which would presumably in-

clude the judge-made experimental use defense. But even

assuming that Congress intended to incorporate existing

case law on that defense, Section 271(a)’s express prohibition

of any unauthorized “use” of a patented invention precludes

any role for an experimental use defense that goes beyond

the traditionally narrow confines of the defense.

Similarly, the underlying premise of federal patent law,

which is embodied in the Constitution itself, is that “the

Progress of Science” is best promoted by giving inventors

“the exclusive Right to their * * * Discoveries” during the

limited term of a patent. U.S. Const. Art. I, § 8, Cl. 8. By

vesting the patent holder with the right to exclude others

from making, using, or selling the subject matter of his

patent for a limited time, the patent laws provide a powerful

incentive for scientific innovation and development. When

the public is permitted to engage in the unlicenced use of

patented inventions without incurring liability for infringe-

ment, even with respect to “experimental” uses that may

offer other scientific benefits, the incentives provided by the

patent laws are diminished and the nature of the patent

“bargain” altered. Bonito Boats, Inc. v. Thunder Craft

Boats, Inc., 489 U.S. 141, 150 (1989). The more broadly that

the experimental use defense is construed, the greater is the

potential adverse impact on the patent bargain.

ec. Courts have repeatedly emphasized that the experi-

mental use defense is “narrow.” See, e.g., Embrex, Inc. v.

Service E'ng’g Corp., 216 F.3d 1343, 1349 (Fed. Cir. 2000)

(per curiam) (experimental use defense has been construed

“very narrowly”); Roche Prods., Inc. v. Bolar Pharm. Co.,

733 F.2d 858, 863 (Fed. Cir.) (“truly narrow”), cert. denied,

469 U.S. 856 (1984); see also Mueller, supra, 76 Wash. L.

Rev. at 17-18 (same). Typically, the defense is available only

when an experiment is undertaken “for the sole purpose of

gratifying a philosophical taste, or curiosity, or for mere

amusement.” Poppenhusen v. Falke, 19 F. Cas. 1048, 1049

(C.C. S.D.N.Y. 1861). The defense ensures that individuals

who experiment on a patented device simply to understand

how it works wili not face liability for patent infringement.

Cf. Whittemore, 29 F. Cas. at 1121 (defense allows one to

“ascertain[] the sufficiency of the machine to produce its de-

scribed effects”). And thus in effect, the defense has excused

only “de minimis” acts of technical infringement. Embrez,

216 F.3d at 1349; see Roche, 733 F.2d at 863 (“It is obvious

here that it is a misnomer to call the [alleged experimental]

use de minimis. It is no trifle in its economic effect on the

parties even if the quantity used is small. It is no dilettante

affair such as Justice Story envisioned.”).

2. a. Petitioner argues that the Federal Circuit’s appli-

cation of the experimental use defense in this case repre-

sents a significant break with prior case law applying the

defense. Pet. 13-15. But the standards employed by the

Federal Circuit below are drawn directly from prior deci-

sions of the Federal Circuit and its predecessors. As noted,

the court’s observation that the experimental use defense is

“very narrow and strictly limited” (Pet. App. 24a) has been

repeatedly recognized by the case law. The principle that

the defense is “limited to actions performed for amusement,

to satisfy idle curiosity, or for strictly philosophical inquiry”

(Pet. App. 24a (internal quotation marks omitted)) was first

announced as early as the 1860s and has been reiterated on

several occasions since then. See Poppenhusen, 19 F. Cas. at

1049; Roche, 733 F.2d at 863; Embrex, 216 F.3d at 1349. And

10

the Federal Circuit’s refusal to extend the defense to experi-

mental uses that further a defendant’s “legitimate business,”

even when that business is not commercial in nature (Pet.

App. 26a), is drawn from Pitcairn v. United States, 547 F.2d

1106, 1125-1126 (Ct. Cl. 1976). See also Douglas v. United

States, 181 U.S.P.Q. (BNA) 170, 177, aff’d on other grounds,

510 F.2d 364 (Ct. Cl. 1974), cert. denied, 423 U.S. 825 (1975).

b. Petitioner argues (Pet. 13) that the Federal Circuit’s

recitation of Pitcairn’s “legitimate business” language will

strip academic institutions of the experimental use defense

altogether, explaining that “([nJo research institution will be

able to demonstrate that its experimental use of any patent

fails to further the institution’s ‘legitimate business,’”

“{bJecause such entities are ‘in the business’ of research and

education.” Pet. 14. Although some language in the court of

appeals’ decision (see Pet. App. 25a) could support such an

interpretation, that interpretation of the decision would pro-

duce the anomalous and untenable result of subjecting re-

search institutions to a disfavored status under the experi-

mental use defense. Moreover, read as whole, the court’s

decision is fairly susceptible of a much more routine and

evenhanded application of the defense.

Indeed, in remanding the case, the Federal Circuit in-

structed the district court to focus on not only “the legiti-

mate business [petitioner] is involved in,” but also “whether

or not the use was solely for amusement, to satisfy idle curi-

osity, or for strictly philosophical inquiry.” Pet. App. 26a;

see ibid. (“The correct focus should be * * * on the

legitimate business [petitioner] is involved in and whether

or not the use was solely for amusement, to satisfy idle

curiosity, or for strictly philosophical inquiry.”) (emphasis

added). If engaging in the “legitimate business” of research

itself were enough to divest an institution of any experi-

mental use defense, then there would have been no reason

11

for the court of appeals to have instructed the district court

to undertake the second half of the inquiry set forth above.

The fact that the Federal Circuit remanded the cage for

further consideration of the availability of the experimental

use defense and, in particular, the instructions that it gave

concerning the “correct focus” (Pet. App. 26a) of the remand

indicates that the decision is premised on a much more

accommodating view of the application of the experimental

use exception in the context of research institutions than the

one feared by petitioner. The decision appears to premise

the applicability of the experimental use exception on the

specific actions of a research university, and not any whole-

sale determination that such institutions are categorically

entitled to or ineligible for the defense. Moreover, at this

interlocutory stage of the case, there is no reason to assume

that the decision below will establish the sort of categorical

and discriminatory rule against the application of the experi-

mental use exception in the research-institution setting criti-

cized by petitioner and its amici.

c. Petitioner asserts that, prior to the decision below,

“case law [had] established that a research institution did not

infringe a patent if it used a patented invention for experi-

mental purposes only.” Pet. 12. But the only case cited by

petitioner for this “established” rule is a district court deci-

sion from 1935 that was reversed on appeal. See Ruth v.

Stearns-Roger Mfg. Co., 13 F. Supp. 697, 703 (D. Colo. 1935),

rev'd on other grounds, 87 F.2d 35 (10th Cir. 1936). The

United States is not aware of any other reported decision

applying the experimental use defense to excuse otherwise

infringing activities by a research institution. The present

decision is the only one that has ever given extended con-

sideration to how the defense should be applied in that

context and the Federal Circuit’s remand order leaves that

issue open in this case. Accordingly, there is no direct con-

flict that warrants review by this Court concerning whether,

12

or when, research institutions in particular are entitled to

the benefit of the experimental use exception.

d. At a more general level, petitioner asserts that the

Federal Circuit’s decision disregards the settled “dichotomy

between commercial and non-commercial uses of a patent.”

Pet. 11. But that dichotomy is hardly clear-cut. During the

past 20 years, there has been a growing trend toward the

commercialization of academic research.” That trend has

been accelerated by the enactment of federal laws, such as

the Bayh-Dole Act, 35 U.S.C. 200 et seq., that give universi-

ties broad latitude to take title to discoveries resulting from

federally funded research and to grant exclusive licenses to

private companies to commercialize those discoveries. It

also reflects the growth of new industries with technological

roots, such as biotechnology, software, and microelectronics;

the increasing cost of conducting academic research; and fed-

eral policies that encourage collaborative university-corpo-

rate research activities. See Bok, supra, at 11-12; National

Academy of Engineering, supra, at 98-99; Mueller, supra, 76

Wash. L. Rev. at 33-35; Michel, supra, 7 High Tech L.J. at

377-378. Thus, universities today are devoting increasing

efforts toward the commercial exploitation of scientific

research and the record suggests that petitioner itself has

joined in that trend. See Pet. App. 26a n.7. There is nothing

in the current patent laws to suggest that modern universi-

ties—many of which have themselves taken advantage of

3 See, e.g., Derek Bok, Universities in the Marketplace: The Com-

mercialization of Higher Education 57-78 (2003); Louis G. Tornatzky, et

al., Innovation U.: New University Roles in a Knowledge Economy (2002)

(case studies); Jennifer Croissant & Sal Restivo eds., Degrees of Compro-

mise: Industrial Interests and Academic Values 55-100 (2001); National

Academy of Engineering, Technology Transfer Systems in the United

States and Germany: “ Lessons and Perspectives 91-123 (H. Norman

Abramson, et al., eds. 1997); Suzanne T. Michel, The Experimental Use

Exception to Infringement Applied to Federally Funded Inventions, 71

High Tech. L.J. 367, 377-378 (1992).

13

patent protection and entered into licensing arrangements

—are somehow outside the class of potential infringers be-

cause of an asserted non-commercial status.‘

In any event, as noted above, in applying the experi-

mental use defense, the Federal Circuit’s decision in this

case specifically calls for “a[] detailed analysis of the charac-

ter, nature and effect of the [challenged] use.” Pet. App. 25a.

That kind of “detailed analysis,” and not generalized asser-

tions about the non-commercial or commercial character of

academic research or major research universities, should

guide the lower courts in this case in determining whether

—in the light of a more fully developed factual record—

petitioner’s uses of respondent’s patented inventions are a

protected experimental use.

B. Petitioner’s Broad Policy Concerns Are Speculative At

This Time And Ultimately Are Better Suited For Leg-

islative Rather Than Judicial Consideration

Petitioner argues that if research institutions are com-

pelled by the Federal Circuit’s decision to obtain licenses in

order to use patented inventions for academic research, criti-

cal forms of scientific inquiry will be stunted. Pet. 16-25.

But there is no reason to presume that the impact of the

Federal Circuit’s decision will be as severe as petitioner

hypothesizes and, if problems materialize, Congress may be

the proper forum to evaluate the problems and devise a

comprehensive solution.

4 From 1979 to 1997, the number of patents awarded annually to

universities increased nearly ten-fold, from 264 to 2,486. Arti K. Rai &

Rebecca S. Eisenberg, Bayh-Dole Reform and the Progress of Biomedi-

cine, 66 Law & Contemp. Probs. 289, 292 (2003). Today, universities earn

more than one billion dollars per year in patent royalties and licensing

fees. Bok, supra, at 12. Petitioner, “like other major research institutions

of higher learning, is not shy in pursuing an aggressive patent licensing

program from which it derives a not insubstantial revenue stream.” Pet.

App. 26a n.7.

14

1. Even assuming the Federal Circuit’s decision substan-

tially limits the availability of the experimental use defense,

there are several reasons why the practical impact of that

decision may not be as great as petitioner fears and why

review is not warranted at this time to preempt any such

potential impact. First, when academic scientists use pat-

ented inventions that are available for purchase, such as

commercially available laboratory equipment or biological

and chemical agents, they may be protected by the “first

sale” doctrine. Under that doctrine, the sale of a patented

invention by the patent holder carries with it an implied

license for the purchaser to engage in the unrestricted use of

the invention. See, eg., Aro Mfg. Co., 377 U.S. at 484;

United States v. Univis Lens Co., 316 U.S. 241, 249-250

(1942); Hewlett-Packard Co. v. Repeat-O-Type Stencil Mfg.

Corp., 123 F.3d 1445, 1451-1452 (Fed. Cir. 1997), cert. denied,

523 U.S. 1022 (1998). As a result, when an academic re-

searcher purchases a patented research tool, he is generally

free to use it for experimental (or other) purposes.

Second, even in situations where the first-sale doctrine is

not applicable, such as with respect to the use of patented

processes or methods that are not subject to sale, it is un-

clear that the unavailability of the experimental use defense

will be as disruptive to research efforts as petitioner asserts.

Scientific research by America’s pharmaceutical, chemical,

and electronics industries has proceeded at a rapid and

increasing pace even in the absence of the sort of

experimental use defense that petitioner claims should be

established for academic research institutions.

Third, petitioner’s objections ultimately have less to do

with the contours of the experimental use defense than with

the underlying operation of the patent laws. The concerns

identified by petitioner, such as the risk of exorbitant

demands by patent holders, the transaction costs associated

with obtaining licenses for “stacked” patents, and the un-

15

availability of inventions that are the subject of exclusive li-

censes, are not peculiar to the academic research environ-

ment; they are present whenever someone wishes to make

use of a patented invention, regardless of the use to which

the invention will be put. Those concerns inhere in Con-

gress’s underlying decision to grant patent holders an un-

qualified right “to exclude others from making, using, offer-

ing for sale, or selling the invention.” 35 U.S.C. 1£4(a)(1).

Fourth, petitioner’s arguments ignore the practical conse-

quences that could follow from giving academic research the

kind of broad exemption from patent liability sought by peti-

tioner. Recognition of a broad exemption from the patent

laws for university research could have significant adverse

effects on the incentive structure for inventions that have

scientific and research applications. See, e.g., Rai & Eisen-

berg, supra, 66 Law & Contemp. Probs. at 299; Michel,

supra, 7 High Tech L.J. at 391-897. The problem may be

particularly acute with respect to research tools, as to which

researchers are “ordinary consumers.” If academic re-

searchers are categorically exempt from having to obtain

licenses to use such tools, the financial impact on the patent

holder may be severe and patent law incentives to innovate

may be significantly diminished. See Rai & Eisenberg,

supra, 66 Law & Contemp. Probs. at 299; Rebecca S. Eisen-

berg, Patents and the Progress of Science: Exclusive Rights

and Experimental Use, 56 U. Chi. L. Rev. 1017, 1035 (1989).

2. This is not to suggest that the academic and scientific

community has not raised weighty concerns about the poten-

tial effect of the patent laws on academic research. How-

ever, any effort to develop a special rule to accommodate

academic research within the framework of existing patent

law would entail several different layers of policy judgments.

For example, choosing the appropriate line between patent

protection and the promotion of university research requires

a series of judgments, including judgments concerning the

16

feasibility and cost of licensing arrangements among dif-

ferent types of research and different kinds of patents, the

significance of differences in funding sources and commercial

outcomes, the make-up of research institutions that might

qualify for such assistance, and the respective incentives and

disincentives of alternative liability rules.

Congress certainly has the capacity to balance those con-

cerns and, if it perceives a sufficient problem with existing

law, to fashion a comprehensive solution. But that would be

a much more difficult and ungainly undertaking for the

courts in devising or applying an experimental use defense.

Indeed, it seems improbable that a 190-year-old, judge-made

defense with little rooting in any statutory text could antici-

pate the challenges of the modern academic and research

environment and adequately accommodate the competing

policy concerns raised by the parties in this case.

Furthermore, Congress has demonstrated its sensitivity

to the sort of policy concerns asserted by petitioner and its

ability to address such concerns when it wants to. In Roche,

the Federal Circuit held that the experimental use defense

did not entitle a generic drug manufacturer to conduct

experiments with a patented drug in order to prepare a new

drug application under the Federal Food, Drug, and

Cosmetic Act, 21 U.S.C. 301 et seg. In response, Congress

specifically amended the Patent Act to provide a narrowly

tailored exception for the use of inventions “primarily

manufactured using * * * site specific genetic manipulation

techniques” when used “solely for uses reasonably related to

the development and submission of information under a

Federal law which regulates the manufacture, use, or sale of

drugs or veterinary biological products.” 35 U.S.C. 271(e)(1).

Congress has subsequently entertained several proposals

to enact additional exemptions for experimental uses, includ-

ing one bill that would have established a general exemption

for the use of patented inventions “for research or experi-

17

mentation purposes.” See H.R. 5598, § 402, 101st Cong., 2d

Sess. (1990) (“It shall not be an act of infringement to make

or use a patented invention solely for research or experi-

mentation purposes unless the patented invention has a pri-

mary purpose of research or experimentation”); H.R. 1556,

§ 2, 101st Cong., 1st Sess. (1989) (exemption for reproduction

of transgenic farm animals); H.R. 4970, § 2, 100th Cong., 2d

Sess. (1988) (exemption for making or use of genetically al-

tered animals “solely for research or experimentation with-

out any commercial intent or purpose”). To date, however,

Congress has not enacted any of those proposed bills.

C. The Interlocutory Posture And Unusual Genesis Of

This Case Also Counsel Against Granting Review

1. Even when an important threshold question has been

decided by a court of appeals, this Court will “generally

await final judgment in the lower courts before exercising

[its] certiorari jurisdiction.” Virginia Military Inst. v.

United States, 508 U.S. 946 (1993) (Scalia, J., respecting the

denial of certiorari). That customary practice is well-suited

for the interlocutory petition in this case.

If this Court wishes to address the appropriate contours

of the experimental use defense, it would benefit from doing

so in the context of a fully developed factual record that

clarifies precisely how the invention at issue was used by the

alieged infringer. The summary judgment record in this

case currently lacks such evidence, but the remand ordered

by the Federal Circuit will give the parties an opportunity to

present additional evidence on that critical factual issue.

Regardless of how that evidence is evaluated by the lower

courts of remand, its presence in the record would facilitate

any subsequent deliberations by this Court on the proper

scope of the experimental use exception.°

5 As discussed above, the Federal Circuit held that the district court

had erroneously placed on respondent the burden of proving that peti-

18

2. Moreover, even if the evidentiary record were com-

plete, this experimental use case arises in a somewhat un-

usual factual context. Infringement claims against univer-

sity research programs are more likely to be asserted by

commercial patent holders or competing research institu-

tions, and when such claims are made, the experimental use

defense is likely to have its greatest salience in connection

with process and method patents. See supra, p. 14. Here, by

contrast, the infringement claim against petitioner is being

brought by a former employee; the dispute grows out of an

employment dispute between respondent and petitioner; and

the allegedly infringing activities involve the use of patented

devices rather than patented processes or methods. The

atypical factual setting of this case provides an additional

reason for the Court to deny plenary review at this time and,

instead, wait and see if more conventional patent infringe-

ment litigation develops in the research-university context

in the wake of this case.

tioner’s use of his patented inventions was not solely experimental. See

Pet. App. 22a-23a. Petitioner has not challenged that aspect of the court

of appeals’ decision in this Court. The fact that the district court applied

an erroneous burden of proof itself may have affected the course of pro-

ceedings in the district court and contributed to the lack of factual devel-

opment concerning the uses to which petitioner has put respondent’s

inventions. That in itself provides a significant reason to deny the petition

and allow for the further proceedings called for by the Federal Circuit

before considering whether this Court’s review is warranted in this case.

19

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

JAMES A. TOUPIN PAUL D. CLEMENT

General Counsel

Deputy Solicitor General

—— GREGORY G. GARRE

Assistant to the Solicitor

WILLIAM LAMARCA General

CYNTHIA C. LYNCH ANTHONY J. STEINMEYER

Associate Solicitors Scott R. MCINTOSH

Patent and Trademark ’ pee . 7

Office ———

MAY 2003