Scientific Research and the Experimental Use Privilege in Patent Law

Congressional research reportOct 28, 2004

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Scientific Research and the

Experimental Use Privilege

in Patent Law

October 28, 2004

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Congressional Research Service ˜ The Library of Congress

Scientific Research and the

Experimental Use Privilege in Patent Law

Summary

Congress has identified research and development (R&D) as important

contributors to technological progress. The performance of R&D may have

intellectual property ramifications, however. To the extent that researchers use

patented inventions without authorization, they may face infringement liability.

Although the courts recognize an exception to patent infringement known as the

“experimental use privilege,” this judicially created doctrine has been described as

very narrow and rarely applied. In particular, the experimental use privilege applies

only to uses done for amusement, to satisfy idle curiosity or for strictly philosophical

inquiry. This doctrine does not excuse uses that are in keeping with the accused

infringer’s business objectives.

In 2002, the U.S. Court of Appeals for the Federal Circuit applied these

principles in the case of Madey v. Duke University. The court held that the

experimental use privilege does not apply to activities that are “in keeping with the

alleged infringer’s legitimate business” — even though the business of the defendant,

Duke University, was nonprofit research. This ruling has raised concerns among

some representatives of universities and research institutions, who fear that their

basic R&D activities will subject them to patent infringement lawsuits.

Competing views have arisen over the significance of the Madey v. Duke

University case. Some commentators believe that a limited experimental use

privilege may best encourage technological advancement by rewarding successful

researchers with robust patent rights. Others argue that the restricted nature of the

experimental use privilege may in fact limit researcher access to state-of-the-art

technologies and thus discourage further technological development. Still others

assert that this issue is not of great practical importance, as few patent owners will

likely file costly and time-consuming lawsuits against researchers who are not

making commercially important uses of patented inventions.

The judicially created, “common law” experimental use privilege is

complemented by a limited statutory experimental use privilege for patents on

pharmaceuticals, medical devices, and certain other products regulated by the Food

and Drug Administration. This provision, enacted as part of the 1984 HatchWaxman Act, applies to firms seeking to market generic equivalents of brand-name

products. In addition, Congress has enacted other intellectual property legislation

that incorporates provisions shielding researchers from infringement liability.

Should congressional interest continue in this area, a variety of options are

available. If the current scope of the common law experimental use privilege is

deemed to be appropriate, then no action need be taken. Alternatively, Congress

could enact legislation confirming the limited experimental use privilege recognized

in Madey v. Duke University and predecessor cases. Introduction of a broader form

of the experimental use privilege into U.S. patent law is an additional possibility.

The report will be updated if events warrant such action.

Contents

Introduction to the Patent System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Patent Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Patent Acquisition and Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Common Law Experimental Use Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . 6

General Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Experimental Use and Innovation Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Statutory Experimental Use Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

The Hatch-Waxman Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Other Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Legislative Issues and Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Concluding Observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Scientific Research and the

Experimental Use Privilege in Patent Law

Congress has identified research and development (R&D) as important

contributors to technological advance.1 Technological improvements are in turn

acknowledged to be a driving force in the long-term economic expansion of the

United States. The federal government plays a role in funding R&D in the United

States, having appropriated an estimated $126 billion for federal R&D in 2004.2

Legislation has further encouraged technical cooperation among government,

academia, and the private sector during their R&D efforts.3

Although the issue has not commonly arisen, R&D activities may have

intellectual property implications. To the extent that researchers use another’s

patented invention without authorization, they may face liability for patent

infringement. While the courts recognize an exception to patent infringement known

as the “experimental use privilege,”4 this judicially created doctrine has been

described as “very narrow”5 and “only sparingly applied.”6 The experimental use

privilege allows a researcher to use a patented invention without permission from or

compensation to the patent owner. However, such a use must be “merely for

philosophical experiments, or for the purpose of ascertaining the sufficiency of the

[patented invention] to produce its described effects.”7 If the purpose of the research

falls outside these parameters, the “common law” experimental use privilege is

inapplicable, and the researcher may face liability for patent infringement.

See CRS Report 95-50, The Federal Role in Technology Development, by (name re

dacted).

See CRS Issue Brief IB10129, Federal Research and Development Funding: FY2005, by

(name redacted), coordinator.

See CRS Report RL32076, The Bayh-Dole Act: Selected Issues in Patent Policy and the

Commercialization of Technology, by (name redacted); and CRS Report RL32324,

Federal R&D, Drug Discovery, and Pricing: Insights from the NIH-University-Industry

Relationship, by (name redacted).

Janice M. Mueller, “No ‘Dilettante Affair’: Rethinking the Experimental Use Exception to

Patent Infringement for Biomedical Research Tools,” 76 Washington Law Review (2001),

Michelle Cai, “Madey v. Duke University: Shattering the Myth of Universities’

Experimental Use Defense,” 19 Berkeley Technology Law Journal (2004), 175.

Douglas v. United States, 181 U.S.P.Q. (BNA) 170, 176 (Ct. Cl. Tr. Div. 1974), aff’d on

other grounds, 184 U.S.P.Q. (BNA) 613 (Ct. Cl. 1975).

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

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Congress has supplemented this “common law” experimental use privilege with

a statutory research exemption to patent infringement. Introduced as part of the

Hatch-Waxman Act,8 this exemption is limited to patented pharmaceuticals, medical

devices and certain other products regulated by the Food and Drug Administration

(“FDA”). It exempts from patent infringement clinical studies and other activities

performed in order to obtain FDA marketing approval.

Despite relatively limited judicial application of patent law’s experimental use

privilege, vigorous debate on the topic has persisted for many years.9 The 2002

judicial opinion in Madey v. Duke University reinvigorated this discussion.10 Here,

the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) rejected an

experimental use defense to a patent infringement lawsuit against Duke University.

The Federal Circuit held that the experimental use privilege does not apply to

infringing activities that are “in keeping with the alleged infringer’s legitimate

business” — even though Duke University’s “business” consisted of serving as a

nonprofit research institution. Although the experimental use privilege was not

formally eliminated in Madey v. Duke University, some commentators believe that

this infringement exception is so limited that it is practically nonexistent.11 This

decision has in turn raised concerns among some representatives of universities and

research institutions, who fear that their basic research activities will subject them to

patent infringement lawsuits.12

Both supporters and detractors of an expansive experimental use privilege

believe that this doctrine bears upon the fundamental goal of the patent system, the

promotion of innovation. A more narrow exception will result in broader intellectual

property rights. Robust patent rights potentially provide innovators with strong

incentives to invest in research and development.13 On the other hand, an overly

restrictive experimental use exception might conceivably depress technological

advancement by decreasing the ability of researchers to experiment with state-of-theart technology.14 Debate over the appropriate scope of the experimental use

exception has been particularly vigorous with respect to patents on cell lines, assays,

See CRS Report RL30756, Patent Law and Its Application to the Pharmaceutical Industry:

An Examination of the Drug Price Competition and Patent Term Restoration Act of 1984

(“The Hatch-Waxman Act”), by (name redacted) and (name redacted).

See Katherine J. Strandburg, “What Does the Public Get? Experimental Use and the Patent

Bargain,” 2004 Wisconsin Law Review 81.

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

See Jennifer Miller, “Sealing the Coffin on Experimental Use,” 2003 Duke Law &

Technology Review (May 7, 2003), 12.

Lawrence M. Sung & Claire M. Maisano, “Piercing the Academic Veil: Disaffecting the

Common Law Exception to Patent Infringement Liability and the Future of a Bona Fide

Research Use Exemption After Madey v. Duke University,” 9 Journal of Health Care Law

and Policy (2003), 256.

Jordan P. Karp, “Experimental Use as Patent Infringement: The Impropriety of a Broad

Exception,” 100 Yale Law Journal 2169 (1991).

Rebecca S. Eisenberg, “Patents and the Progress of Science: Exclusive Rights and

Experimental Use,” 56 University of Chicago Law Review 1017 (1989).

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and other “research tools” used primarily for the purpose of conducting

biotechnology research.15

This report will explore the intellectual property laws and policies concerning

the patent law’s experimental use privilege. It begins with a review of patent policy

and procedures. The report then discusses current statutes and judicial precedent

governing the common law experimental use in patent law, as well as the potential

impact of this doctrine upon innovation policy. The report next reviews the statutory

experimental use privilege with respect to the Hatch-Waxman Act and other, more

specialized intellectual property statutes. This report closes with a summary of

congressional issues and alternatives.

Introduction to the Patent System

Patent Policy

The goal of the patent system is to promote the production and dissemination

of technological information. Some observers believe that absent a patent system,

individuals and firms would be less likely to engage in research and development.

Without the availability of patent protection, new inventions could be easily copied

by “free riders” who incurred no cost to develop and perfect the technology involved,

and who would therefore be able to undersell the original inventor. The resulting

inability of inventors to capitalize on their inventions would lead to an environment

where too few inventions are made. By providing individuals with exclusive rights

in their inventions for a limited time, the patent system allows inventors to realize the

profits from their inventions.16

Other commentators believe that if the patent system were unavailable,

individuals would maintain their inventions as trade secrets so that competitors could

not exploit them. Trade secrets do not enrich the collective knowledge of society,

however, nor do they discourage others from engaging in duplicative research. The

patent system avoids these inefficiencies by requiring inventors to consent to the

disclosure of their inventions in issued patent instruments.17

Additional explanations for the patent laws have been offered. The Patent Act

may stimulate technological advancement by inducing individuals to “invent around”

patented technology. Issued patent instruments may point the way for others to

develop improvements, exploit new markets or discover new applications for the

See, e.g., David C. Hoffman, “A Modest Proposal: Toward Improved Access to

Biotechnology Research Tools By Implementing a Broad Experimental Use Exception,” 89

Cornell Law Review (2004), 993.

Roger E. Schechter & (name redacted), Principles of Patent Law § 1.3.1 (Thomson West

2004).

See, e.g., Grant v. Raymond, 31 U.S. 218, 247 (1832).

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patented technology.18 Moreover, the patent system may encourage patentees to

commercialize their proprietary technologies during the term of the patent. The

protection provided by a patent’s proprietary rights increases the likelihood a firm

will continue to refine, produce and market the patented technology.19 Finally, the

patent law has been identified as a facilitator of markets. Absent patent rights, an

inventor may have scant tangible assets to sell or license, and even less ability to

police the conduct of a contracting party. By reducing a licensee’s opportunistic

possibilities, the patent system lowers transaction costs and makes technology-based

transactions more feasible.20

The patent system has inspired numerous critics, however. Some detractors

have asserted that the patent system is unnecessary due to market forces that already

suffice to create an optimal level of invention. The desire to gain a lead time

advantage over competitors, as well as the recognition that technologically backward

firms lose out to their rivals, may well provide sufficient inducement to invent

without the need for further incentives.21 Others observe that the inventions that

fueled many dynamic sectors of modern industry, such as biotechnologies and

computer software, arose at a time when patent rights were unavailable or uncertain.22

While these justifications and criticisms have varying degrees of intuitive

appeal, none of them has been empirically validated. No authoritative study

conclusively demonstrates that society obtains more rapid technological development

with patents than it would without them. As a result, the rationales for, and

criticisms of, the patent system remain open to challenge.23

Patent Acquisition and Enforcement

As mandated by the Patent Act of 1952,24 U.S. patent rights do not arise

automatically. Inventors must prepare and submit applications to the U.S. Patent and

Trademark Office (“USPTO”) if they wish to obtain patent protection.25 USPTO

R. Polk Wagner, “Information Wants to Be Free: Intellectual Property and the Mythology

of Control,” 103 Columbia Law Review (2003), 995.

F. Scott Kieff, “Property Rights and Property Rules for Commercializing Inventions,” 85

Minnesota Law Review (2000), 697.

See Robert P. Merges, “Intellectual Property and the Costs of Commercial Exchange: A

Review Essay,” 93 Michigan Law Review (1995), 1570.

See Frederic M. Scherer & David Ross, Industrial Market Structure and Economic

Performance (Rand McNally & Co., 3d ed. 1990).

See, e.g., Pamela Samuelson, Benson Revisited: The Case Against Patent Protection for

Algorithms and Other Computer Program — Related Inventions, 39 Emory Law Journal

(1990), 1025.

CRS Report RL31951, Innovation, Intellectual Property, and Industry Standards, by (nam

e redacted).

Pub. L. No. 82-593, 66 Stat. 792 (codified at Title 35 United States Code).

35 U.S.C. § 111 (2000).

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officials, known as examiners, then assess whether the application merits the award

of a patent.26 The patent acquisition process is commonly known as “prosecution.”27

In deciding whether to approve a patent application, a USPTO examiner will

consider whether the submitted application fully discloses and distinctly claims the

invention.28 In addition, the application must disclose the “best mode,” or preferred

way, that the applicant knows to practice the invention.29 The examiner will also

determine whether the invention itself fulfills certain substantive standards set by the

patent statute. To be patentable, an invention must be useful, novel and nonobvious.

The requirement of usefulness, or utility, is satisfied if the invention is operable and

provides a tangible benefit.30 To be judged novel, the invention must not be fully

anticipated by a prior patent, publication or other knowledge within the public

domain.31 A nonobvious invention must not have been readily within the ordinary

skills of a competent artisan at the time the invention was made.32

If the USPTO allows the patent to issue, the patent proprietor obtains the right

to exclude others from making, using, selling, offering to sell or importing into the

United States the patented invention.33 The term of the patent is ordinarily set at

twenty years from the date the patent application was filed.34 Patent title therefore

provides inventors with limited periods of exclusivity in which they may practice

their inventions, or license others to do so. The grant of a patent permits the inventor

to receive a return on the expenditure of resources leading to the discovery, often by

charging a higher price than would prevail in a competitive market.

Patent rights are not self-enforcing. A patentee bears responsibility for

monitoring its competitors to determine whether they are using the patented invention

or not. Patent proprietors who wish to compel others to observe their intellectual

property rights must usually commence litigation in the federal district courts.35 The

U.S. Court of Appeals for the Federal Circuit possesses exclusive national

jurisdiction over all patent appeals from the district courts,36 while the U.S. Supreme

35 U.S.C. § 131 (2000).

(name redacted), “On Preparatory Texts a nd Proprietary Technologies: The Place of

Prosecution Histories in Patent Claim Interpretation,” 47 UCLA Law Review (1999), 183.

35 U.S.C. § 112 (2000).

Ibid.

35 U.S.C. § 101 (2000).

35 U.S.C. § 102 (2000).

35 U.S.C. § 103 (2000).

35 U.S.C. § 271(a) (2000).

35 U.S.C. § 154(a)(2) (2000).

35 U.S.C. § 281 (2000).

28 U.S.C. § 1295(a)(1) (2000).

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Court possesses discretionary authority to review cases decided by the Federal

Circuit.37

The Common Law Experimental Use Privilege

General Principles

Under the Patent Act of 1952, any individual who makes, uses, sells, offers to

sell, or imports into the United States a patented invention without the authorization

of the patent owner faces liability for infringement.38 Although the Patent Act

authorizes a number of defenses to a charge of patent infringement — such as that

the patented invention does not meet the statutory standards for patentability and was

improvidently awarded a patent by the USPTO39 — the statute does not expressly

authorize a generally applicable experimental use privilege. The federal courts have

nonetheless developed a “common law” experimental use privilege using their

judicial powers.

Judicial decisions from the nineteenth century established the scope of the

experimental use privilege. In the first of these opinions, the 1813 case of

Whittemore v. Cutter,40 Justice Joseph Story explained that “it could never have been

the intention of the legislature to punish a man, who constructed such a machine

merely for philosophical experiments, or for the purpose of ascertaining the

sufficiency of the machine to produce its described effects.”41 Later, in Sawin v.

Guild,42 Justice Story explained that an unauthorized manufacture of a patented

invention was not an infringement unless it constituted “making with an intent to use

for profit, and not for the mere purpose of philosophical experiment, or to ascertain

the verity and exactness of the specification.” The 1861 decision in Peppenhausen

v. Falke further explained:

It has been held, and no doubt is now well settled, that an experiment with a

patented article for the sole purpose of gratifying a philosophical taste, or

curiosity, or for mere amusement, is not an infringement of the rights of the

patentee.43

28 U.S.C. §1254(1) (2000).

35 U.S.C. § 271(a) (2000).

35 U.S.C. § 282 (2000).

29 F.Cas. 1120 (C.C.D.Mass.1813) (No. 17,600).

29 F. Cas. at 1121.

21 F. Cas. 554 (C.C.D. Mass 1813) (No. 12, 391).

19 F. Cas. 1048, 1049 (C.C.S.D.N.Y. 1861).

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This judicial conception of the experimental use privilege has been described

as “crabbed,”44 “narrowly construed”45 and “rarely sustained.”46 As explained in

numerous judicial opinions, the experimental use exception applies only to uses done

for amusement, to satisfy idle curiosity or for strictly philosophical inquiry.47 Any

use that is commercial in nature is not subject to the doctrine.48

The opinion of the Court of Claims in Pitcairn v. United States provides one

example of judicial views concerning the experimental use privilege.49 In that case,

the U.S. government was accused of infringing 59 patents relating to helicopters.

The government contended that various aircraft used only for purposes of testing and

demonstration should be held not to infringe. The court disagreed, explaining:

Defendant urges the court to exclude from compensation any aircraft used by the

defendant for testing, evaluational, demonstrational or experimental purposes.

Use for such purposes is use by or for the Government and is compensable.

Obviously every new helicopter must be tested for lifting ability, for the effect

of vibration on installed equipment, flight speed and range, engine efficiency,

and numerous other factors. Tests, demonstrations, and experiments of such

nature are intended uses of the infringing aircraft manufactured for the defendant

and are in keeping with the legitimate business of the using agency. Experimental

use is not a defense in the present litigation.50

This language further suggests that if the use furthers the user’s “legitimate business”

objectives, even in a tangential way, then it is not experimental.51

A 2002 decision on the experimental use privilege, Madey v. Duke University,52

reflects this narrow sense of the experimental use privilege. Here, Duke University

recruited Dr. John M.J. Madey from Stanford University in order to serve as a

research professor and director of a laser laboratory. A dispute ultimately led to

Madey’s resignation from Duke. After he left the university, Madey brought suit for

James Boyle, “Foreward: The Opposite of Property,” Law & Contemporary Problems

(Winter/Spring 2003), 27.

Kevin Sandstrom, “How Much Do We Value Research and Development: Broadening the

Experimental Use Exemption to Patent Infringement in Light of Integra Lifesciences I Ltd.

v. Merck KGaA, 30 William Mitchell Law Review (2004), 1067.

Rebecca S. Eisenberg, “Proprietary Rights and the Norms of Science in Biotechnology

Research,” 97 Yale L. J. 177, 220 (1987).

See, e.g., Radio Corp. of America v. Andrea, 15 F.Supp. 685, 30 USPQ 194 (E.D. N.Y.

1936), modified, 90 F.2d 612, 34 USPQ 312 (2d Cir. 1937).

See, e.g., Cimotti Unharing Co. Derboklow, 87 F. 997, 999-1000 (C.C.E.D.N.Y. 1898).

547 F.2d 1106 (Ct. Cl. 1976).

547 F.2d at 1125-26.

See also, e.g., Embrex Inc. v. Service Engineering Corp., 216 F.3d 1343 (Fed. Cir. 2000).

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

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infringement of two patents relating to the operation of specialized equipment used

in the Duke laser laboratory.53

Responding to Madey’s charges of patent infringement, Duke sought to take

advantage of the experimental use privilege. Duke explained that it was a non-profit

educational institution dedicated to teaching, research and the advancement of

knowledge. Duke further argued that it does not undertake research or development

work principally for the purpose of obtaining patents or designing products for the

marketplace. The district court agreed that the experimental use privilege applied

and ruled in favor of Duke.54

On appeal, the Federal Circuit reversed the district court’s experimental use

determination. The Court of Appeals characterized the experimental use privilege

as “very narrow and strictly limited.”55 In particular, the Federal Circuit observed

that the experimental use privilege “does not immunize any conduct that is in

keeping with the alleged infringer’s legitimate business, regardless of commercial

implications.”56 It further explained that:

Major research universities, such as Duke, often sanction and fund research

projects with arguably no commercial application whatsoever. However, these

projects unmistakably further the institution’s legitimate business objectives,

including educating and enlightening students and faculty participating in these

projects. The projects also serve, for example, to increase the status of the

institution and lure lucrative research grants, students and faculty.57

As a result, the Federal Circuit held that the district court had resolved the case based

upon an inappropriately expansive view of the experimental use privilege. It

remanded the litigation back to the district court, with instructions to resolve the

issue in light of the Federal Circuit’s decision.58

Many patent law experts agree that following the Madey v. Duke

University case, colleges, universities and other academic institutions are unlikely to

be able to rely upon the common law experimental use privilege as a defense to a

charge of patent infringement.59 Co-authors Lawrence Sung, then a member of the

University of Maryland Law School faculty, and attorney Claire M. Maisano

explained that the “decision in Madey leaves grave doubt that the common law

exemption to patent infringement liability can act as a safe harbor for any academic

307 F.3d at 1352-53.

266 F. Supp. 2d 420 (M.D.N.C. 2001).

307 F.3d at 1361.

307 F.3d at 1362.

Ibid.

307 F.3d at 1362-63.

See Tom Saunders, “Renting Space on the Shoulders of Giants: Madey and the Future of

the Experimental Use Doctrine,” 113 Yale Law Journal (2003), 261 (concluding that Madey

“reformulated the experimental use doctrine and cast considerable doubt on its continued

viability as a defense in patent infringement cases involving universities”).

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research effort.”60 Commentator Michelle Cai further opined that “practically any

project conducted by a research university, even one without any commercial

implications, would be in keeping with the university’s legitimate business interests

and hence would not qualify for the experimental use defense.”61

Observers generally agree that Madey v. Duke University either retains, or

perhaps restricts to an even greater degree, the quite limited nature of the common

law experimental use privilege as it might be applied outside of academic settings.62

Attorneys Paul Devinksy and Mark G. Davis concluded that the opinion is consistent

with previous judicial interpretations of the common law experimental use privilege.

As a result the privilege “lives on as a narrow defense to a claim of infringement.”63

Other observers would go further. Ms. Cai states, for example, that the decision “has

essentially destroyed any practical meaning to the experimental use defense.”64

Attorneys Cathryn Campbell and R.V. Lupo are in accord, stating that after Madey

v. Duke University “the Experimental Use Exception would appear to provide little,

if any protection in today’s world.”65

Experimental Use and Innovation Policy

Although the experimental use privilege has been part of the patent law for

many years, the Madey v. Duke University opinion has renewed dialogue over the

propriety and scope of this infringement exemption. Proponents and detractors of a

broad experimental use privilege, as well as those who do not believe the doctrine is

important as a practical matter, have expressed diverse opinions. This report

summarizes these competing views.

Some commentators believe that a broad experimental use privilege is

inappropriate as a matter of technology policy. Under this view, a liberal

experimental allowance would greatly ease the ability of competitors to “design

around” the invention or develop competing technologies. Patent owners in turn

would be less able to appropriate the returns of their investments in research and

development, this account continues, and would therefore be discouraged from

Sung & Maisano, supra note 10.

Cai, supra note 5.

See Michael R. Taylor & Jerry Cayford, “American Patent Policy, Biotechnology, and

African Agriculture: The Case for Policy Change,” 17 Harvard Journal of Law &

Technology (2004), 321 (“In a recent decision, the U.S. Court of Appeals for the Federal

Circuit narrowed the [common law experimental use] exemption to the point of eliminating

it for practical purposes.”).

Paul Devinksy & Mark G. Davis, “2003 Patent Law Decisions of the Federal Circuit,” 53

American University Law Review (2004), 773, 883.

Cai, supra note 5.

Cathryn Campbell & R.V. Lupo, “Exemption to Patent Infringement Under 35 U.S.C.

Section 271(e)(1): Safe Harbor or Storm A-Brewing?,” 5 Sedona Conference Journal

(2004), 29.

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making future investments in research and development.66 As attorney Jordan Karp

concludes: “Rather than spurring increased innovative activity, a broad experimental

use exception would have just the opposite effect.”67

For some observers, a broad experimental use privilege is inappropriate even

when research takes place within an academic research setting. This is because

university research is often not isolated from the private sector, but instead may have

significant commercial implications.68 As stated by two senior officers of the

USPTO, the Madey v. Duke University decision “recognized a basic economic truth

underlying research performed by large universities — it is a business, and

universities derive substantial commercial value from that research.”69

Indeed, some commentators believe that university research is increasingly

likely to have commercial implications. This shift is believed to be due in part to

federal legislation commonly known as the Bayh-Dole Act.70 The Bayh-Dole Act

aims to encourage the commercialization of basic research by allowing universities

and small businesses to procure patents on inventions that result from federally

funded research. Since the passage of the Bayh-Dole Act, many research universities

have developed patent portfolios and garnered significant royalties from intellectual

property licensing.71 Because academic institutions are increasingly benefitted from

the patent system, some observers reason, they should also be held accountable when

they infringe the patents of others.72

In contrast, others believe that the common law experimental use privilege is

overly narrow. They assert that the current scope of this doctrine too greatly restricts

the ability of innovators to “tinker” with the developments of others.73 Under this

view, research may be chilled if scientists cannot experiment upon state-of-the-art

technology free from charges of patent infringement. By limiting the tools with

which researchers can work, these commentators say, the patent system could

ultimately depress, rather than promote innovation.74

Karp, supra note 13.

Ibid.

Cai, supra note 5.

Stephen G. Kunin & Linda S. Therkorn, “Workship on Future Public Policy and Ethical

Issues Facing the Biotechnology Industry,” 86 Journal of the Patent and Trademark Office

Society (2004), 503.

Act of Dec. 12, 1980, Pub. L. No. 96-517, 94 Stat. 3015.

See Schacht, supra note 3.

See Traci Dreher Quigley, “Commercialization of the State University: Why the

Intellectual Property Restoration Act of 2003 Is Necessary,” 152 University of Pennsylvania

Law Review (2004), 2001.

See Eisenberg, supra note 14.

See Maureen A. O’Rourke, “Toward a Doctrine of Fair Use in Patent Law,” 100 Columbia

Law Review (2000), 1177.

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Other observers believe that limiting the experimental use privilege with respect

to universities and nonprofit institutes could impede academic research. Some

university-based scientists believe that, unlike some of their counterparts in the

private sector, academic researchers have all but ignored the patent system.75 In order

to avoid patent infringement, universities may have to devote scarce resources to

perform costly patent searches and engage in licensing negotiations with patent

holders. To a greater extent than profit-seeking firms, educational institutions may

find that these obligations weigh heavily on their frequently tight budgets.76

Several legal scholars have suggested that the holding of Madey v. Duke

University raises particular concerns with regard to patented research tools. A

“research tool” is an invention, such as a particular cell line, reagent, or antibody, that

is used exclusively or primarily for the purpose of conducting scientific research.77

Some observers believe that patents are too frequently granted on research tools,

particularly in biotechnology, and that such patents may impede future advancement.

For example, two members of the University of Michigan Law School faculty,

Michael A. Heller and Rebecca S. Eisenberg, have concluded that researchers might

someday need to obtain numerous patent licenses in order to conduct basic research.78

The costs and complications of engaging in numerous patent transactions may

potentially create an “anti-commons”: an environment where resources that could be

committed towards further research and development are inefficiently underutilized.79 Under this view, the narrowly cabined experimental use privilege

contemplated in Madey v. Duke University strengthens patents on research tools and

might make research and development more difficult to accomplish.80

Notably, other scholars contest these theories. For example, F. Scott Kieff, a

member of the law faculty of Washington University in St. Louis, asserts that this

scenario is incorrect as a matter of individual incentives.81 Rational patent holders

should always encourage others to research with their technologies, Kieff explains,

so as to increase the number of applications for their inventions and hence their own

profits. Wesley M. Cohen, an academic at the Fuqua School of Business at Duke

University, has also conducted empirical research suggesting that although the “anti-

John P. Walsh et al., “Working Through the Patent Problem,” 299 Science 1021, 1021

(2003) (“[Research universities] have largely ignored the growing number of patents

covering technology that their scientists use without license and without apology.”).

Miller, supra note 11.

Natalie M. Derzko, “In Search of a Compromised Solution to the Problem Arising From

Patenting Biomedical Research Tools,” 20 Santa Clara Computer & High Technology Law

Journal (2004), 347.

Michael A. Heller & Rebecca S. Eisenberg, Can Patents Deter Innovation? The

Anticommons in Biomedical Research, 280 Science 698 (1998).

Ibid.

Strandburg, supra note 9.

F. Scott Kieff, “Facilitating Scientific Research: Intellectual Property Rights and the

Norms of Science — A Response to Rai and Eisenberg,” 95 Northwestern Law Review

(2001), 691.

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commons” environment posited by Heller and Eisenberg may be theoretically

possible, to date it has not actually occurred.82

Other commentators believe that “scientists recognize the benefits of sharing

materials freely whenever possible and have developed informal norms to achieve

broad dissemination of research tools.”83 For example, the National Institutes of

Health (“NIH”) has issued “Principles and Guidelines” in order to promote the broad

use of patented research tools in biotechnology. 84 In particular, the NIH encourages

patent proprietors to license their proprietary research tools in such a way as to

minimize restrictions upon their use. Although the Principles and Guidelines

formally apply only to recipients of federal funding, the NIH has urged the entire

biotechnology community to adopt similar policies “so that all biomedical research

and development can be synergistic and accelerated.”85

Finally, a third set of commentators remain agnostic about the propriety of an

experimental use privilege, but believe that this issue is not of great importance for

practical reasons. Patent infringement litigation is widely regarded as costly, timeconsuming and complex.86 There may be insufficient economic justification to

commence litigation against individuals who are not making commercially important

uses of patented inventions. As a result, patent infringement suits may only rarely

be brought against hobbyists, philosophers and noncommercial defendants, regardless

of how narrowly or broadly the experimental use privilege is defined. 87

It is also important to remember that the patent law may, in certain

circumstances, provide researchers with the ability to use products even though they

have been patented by others. One of these principles is known as the “exhaustion”

doctrine. Under this legal rule, once a patent owner has sold a patented product, he

cannot control the use of that particular product. Any patent rights in that specific

physical item are said to have been “exhausted” by this initial sale. Sometimes the

exhaustion principle is termed the “first sale” doctrine.88

J. Walsh, A. Arora and W.M. Cohen, “The Patenting and Licensing of Research Tools and

Biomedical Innovation,” Mimeo, National Academy of Sciences, October, 2001.

Heather Hamme Ramirez, “Defending the Privatization of Research Tools: An

Examination of the “Tragedy of the Anticommons” in Biotechnology Research and

Development,” 53 Emory Law Journal (2004), 362.

Department of Health and Human Services, National Institutes of Health, “Principles and

Guidelines for Recipients of NIH Research Grants and Contracts on Obtaining and

Disseminating Biomedical Research Resources,” 64 Fed. Reg. 72,090 (Dec. 23, 1999).

Id. at 72,090.

See, e.g., Kimberly A. Moore, “Are District Court Judges Equipped to Resolve Patent

Cases?,” 15 Harvard Journal of Law and Technology (2001), 1.

Andrew J. Caruso, “The Experimental Use Exception: An Experimentalist’s View,” 14

Albany Journal of Law, Science & Technology (2003), 217.

CRS Report RL32400, Patents and Drug Importation, by (name redacted).

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For example, suppose that a pharmaceutical firm wished to analyze a drug

that had been patented by another. That firm might wish to confirm the drug’s

biological activity, identify new medical indications, or compare its pharmacological

profile to those of other compounds. If the firm is able simply to purchase the

patented drug on the open market, then no issues of patent infringement will

ordinarily arise. Any patent on the drug is exhausted once the drug has been sold,

allowing the purchasing firm to use the patented drug as it wishes. The scope of the

experimental use privilege is irrelevant in this scenario.89

On the other hand, suppose that a patented drug is not available for purchase

within the market. In order to experiment with that compound, a pharmaceutical firm

must synthesize it within its own laboratories. This step would be an act of patent

infringement, however, because the right to make a patented invention is exclusive

to the patent owner.90 In this case the experimental use privilege would, at least

theoretically, come into play as a possible defense to patent infringement.

Statutory Experimental Use Privileges

The existence, possible scope and importance of the common law

experimental use privilege in patent law remains the subject of considerable debate.

However, it should be noted that the Patent Act of 1952 includes a limited statutory

experimental use privilege for patents on pharmaceuticals, medical devices, and

certain other products regulated by the Food and Drug Administration (FDA). This

provision, enacted as part of 1984 legislation known as the Hatch-Waxman Act,91

applies to firms seeking to market generic equivalents of brand-name products. In

addition, Congress has enacted other intellectual property legislation that

incorporates provisions shielding researchers from infringement liability. This report

considers these topics in turn.

The Hatch-Waxman Act

The Hatch-Waxman Act for the first time introduced a statutory experimental

use privilege into the patent laws. This privilege applies only to certain products —

notably specific kinds of pharmaceuticals and medical devices — that are regulated

by the FDA. Firms must obtain FDA approval in order to market these products.

Ordinarily the FDA will approve only of those products that have been proven to be

safe and effective through laboratory, animal and clinical investigations.92 Such

Edward T. Lentz, “Pharmaceutical and Biotechnology Research After Integra and Madey,”

23 Biotechnology Law Report (2004), 265.

35 U.S.C. § 271(a) (2000).

Pub. L. No. 98 — 417, Title II, 98 Stat. 1585 (Sept. 28, 1984).

CRS Report RL30989, The U.S. Drug Approval Process: A Primer, by Blanchard Randall

IV.

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studies can be costly and time-consuming. In some cases, the effort to obtain FDA

marketing approval requires many years to complete.93

Many firms wish to sell drugs or medical devices that are “generic” — that

is to say, equivalent to a product that was first developed and sold under a brand

name by a different company. Prior to Hatch-Waxman Act, generic firms faced two

notable difficulties in getting their products to market. First, generic firms ordinarily

had to conduct the same sort of expensive and lengthy clinical investigations as their

brand-name counterparts in order to obtain FDA marketing approval. This

requirement existed even in circumstances where the generic drug was chemically

identical to a brand-name drug of widely acknowledged safety and effectiveness.94

Second, generic firms had to account for the patents owned by their brandname competitors. As of the early 1980’s, legal uncertainty existed as to whether a

generic firm could conduct clinical trials at all if a brand-name firm held patents on

the drug or medical device. As part of the FDA marketing approval process, the

generic firm would need to both make and use the patented drug or device —

activities that under the intellectual property laws are exclusive to the patent

proprietor.95 The result was that a generic firm could be sued for patent infringement

and, at least until the relevant patents expired, enjoined from engaging in the

activities it needed to perform in order to satisfy FDA marketing approval

requirements.

Some generic drug and medical device firms sought to rely upon the common

law experimental use privilege in this situation. Their position was that activities

performed in order to fulfill FDA marketing approval standards were merely

experimental in nature, and as a result should be exempted from patent

infringement.96 Whether the courts would uphold this argument remained an open

legal question for many years.

Eventually this issue came before the Federal Circuit, which in 1984 issued

its decision in Roche Products, Inc. v. Bolar Pharmaceutical Co.97 Here the Federal

Circuit conclusively held that the common law experimental use privilege did not

shield generic firms engaged in FDA marketing approval activities from charges of

patent infringement. In this case, Roche Products, Inc. (“Roche”) marketed a

prescription sleeping pill under the trademark “Dalmane.” Roche also was the

proprietor of a patent claiming a chemical compound, flurazepam hcl, that was the

See Shashank Upadhye, “Understanding Patent Infringement Under 35 U.S.C. § 271(e)(1):

The Collisions Between Patent, Medical Device, and Drug Laws,” 17 Santa Clara Computer

& High Technology Law Journal (2000), 1.

See Janet A. Gongola, “Prescriptions for Change: The Hatch-Waxman Act and New

Legislation to Increase the Availability of Generic Drugs to Consumers,” 36 Indiana Law

Review (2003), 787.

35 U.S.C. § 271(a) (2000).

Alfred B. Engelberg, “Special Patent Provisions for Pharmaceuticals: Have They Outlived

Their Usefulness?,” 39 IDEA: Journal of Law and Technology (1999), 389.

733 F.2d 858 (Fed. Cir. 1984).

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active ingredient in Dalmane. Bolar Pharmaceutical Co. (“Bolar”), a manufacturer

of generic drugs, grew interested in marketing a generic equivalent of Dalmane.

Prior to the expiration of Roche’s patent, Bolar obtained a supply of flurazepam hcl

from a foreign manufacturer. It began to form the flurazepam hcl into dosage form

capsules to obtain stability data, dissolution rates, bioequivalency studies and blood

serum studies necessary to obtain marketing approval from the FDA.98

The Federal Circuit concluded Bolar’s activities infringed the Roche patents,

and that the experimental use defense did not apply. The Court of Appeals reasoned:

Bolar’s intended “experimental” use is solely for business reasons and not

for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry.

Bolar’s intended use of flurazepam hcl to derive FDA required test data is

thus an infringement of the [Roche] patent. Bolar may intend to perform

“experiments,” but unlicensed experiments conducted with a view to the

adaptation of the patented invention to the experimentor’s business is a

violation of the rights of the patentee to exclude others from using his

patented invention. It is obvious here that it is a misnomer to call the

intended use de minimus. It is no trifle in its economic effect on the parties

even if the quantity used is small. It is not a dilettante affair such as Justice

Story envisioned. We cannot construe the experimental use rule so broadly

as to allow a violation of the patent laws in the guise of “scientific inquiry,”

when that inquiry has definite, cognizable, and not insubstantial

commercial purposes.99

Congress responded to Roche v. Bolar by enacting the statute commonly

known as the Hatch — Waxman Act. The statute introduced a number of changes

to both the patent law and the food and drug law.100 Among them was an accelerated

marketing approval process for generic products.101 In addition, the Hatch-Waxman

Act created a statutory exemption from patent infringement for activities associated

with regulatory marketing approval. As originally enacted and codified in 35 U.S.C.

§ 271(e)(1), the Hatch-Waxman Act exempted from patent infringement “uses

reasonably related to the development and submission of information under a Federal

law which regulates the manufacture, use, or sale of drugs.” Through the Generic

Animal Drug and Patent Term Restoration Act, which became effective on

November 16, 1988, Congress extended this provision to cover regulated veterinary

drugs and biological products as well.102

A number of significant judicial opinions have interpreted the Hatch-Waxman

Act’s experimental use privilege. The U.S. Supreme Court opinion in Eli Lilly and

733 F.2d at 860.

733 F.2d at 863.

100

See CRS Report RL30756, Patent Law and Its Application to the Pharmaceutical

Industry: An Examination of the Drug Price Competition and Patent Term Restoration Act

of 1984 (“Hatch-Waxman Act”), by (name redacted) and (name redacted).

101

21 U.S.C. § 355(j) (2000).

102

Pub. L. No. 100-670, 102 Stat. 3971.

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Co. v. Medtronic clarified the sorts of products that are covered by this statute.103 In

that case, Eli Lilly, which owned a patent claiming a cardiac defibrillator, filed an

infringement action against Medtronic for its use of a similar device. Medtronic in

turn pointed to 35 U.S.C. § 271(e)(1), arguing that Medtronic’s use of the

defibrillator was reasonably related to obtaining data for FDA approval. Eli Lilly in

turn argued that the wording of 35 U.S.C. § 271(e)(1) — as it was at the time — only

expressly referred to “drugs,” not “medical devices.”104

The Supreme Court sided with Medtronic, concluding that all of the products

eligible for patent term extension under the Hatch-Waxman Act fall within the scope

of the 35 U.S.C. § 271(e)(1) experimental use privilege. Justice Scalia concluded

that the statutory phrase “a Federal law which regulates the manufacture, use, or sale

of drugs” meant the entirety of the Food, Drug and Cosmetic Act, which regulates

drugs but also covers medical devices and other products. As a result of the Eli Lilly

and Co. v. Medtronic holding, 35 U.S.C. § 271(e)(1) extends to a range of subject

matter, including pharmaceuticals, medical devices, food additives, color additives,

and biological products. A generic firm may therefore use these products during the

term of another’s patent without fear of infringement liability, as long as the use is

reasonably related to obtaining data for FDA approval.105

Other noteworthy judicial opinions have considered the nature of the

activities that are exempted by the Hatch-Waxman Act privilege. The leading

decision in Intermedics, Inc. v. Ventritex, Inc. interpreted the statutory exemption

generously.106 According to the Intermedics decision, “[w]here it would have been

reasonable, objectively, for an accused infringer to believe that there was a decent

prospect that the use in question would contribute (relatively directly) to the

generation of information that was likely to be relevant in the processes by which the

FDA would decide to approve the product,”107 then the court should apply the 35

U.S.C. § 271(e)(1) infringement exemption. Following Intermedics, a number of

other decisions have found that the accused infringer’s activities fall within the

statutory experimental use exemption.108

The Hatch-Waxman experimental use privilege is not without limit, however.

A 2003 Federal Circuit decision, Integra Lifesciences, I, Ltd. v. Merck,109 held that

the 35 U.S.C. § 271(e)(1) experimental use exemption did not apply under the facts

before the court. Here, Integra sued Merck for infringement of several patents

103

496 U.S. 661 (1990).

104

496 U.S. at 665-66.

105

See Patricia Nussle, “Eli Lilly & Co. v. Medtronic Inc.: A Case of Statutory

Interpretation,” 54 Ohio State Law Journal (1992), 645.

106

775 F.Supp. 1269 (N.D. Cal. 1991), aff’d, 991 F.2d 808 (Fed.Cir.1993).

107

775 F. Supp. at 1280.

108

See, e.g., Abtox, Inc. v. Exitron Corp., 122 F.3d 1019 (Fed. Cir. 1997); Glaxo, Inc. v.

Novopharm, Ltd.,110 F.3d 1562 (Fed. Cir.1997); Amgen, Inc. v. Hoechst Marion Roussel,

Inc., 3 F.Supp.2d 104 (D. Mass.1998).

109

331 F.3d 860 (Fed. Cir. 2003).

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relating to compounds thought to eliminate tumor growth and for treating a variety

of other diseases. In turn, Merck asserted 35 U.S.C. § 271(e)(1) as a defense. The

district court held that the Scripps-Merck activity did not fall under the 35 U.S.C. §

271(e)(1) exemption.110

The Federal Circuit affirmed the district court on appeal. The Federal Circuit

observed that Merck’s experiments did not supply information for submission to the

FDA. Rather, Merck conducted these experiments in order to determine which of

several compounds was the best drug candidate to subject to future testing.111 The

court then reasoned that such activities were not conducted “solely for purposes

reasonably related to the development and submission of information under federal

law,” as the statutory exemption required. Rather, they were early-stage, exploratory

experiments performed merely to identify promising pharmaceutical compounds.112

The Integra Lifesciences decision makes clear that the 35 U.S.C. § 271(e)(1)

exemption does not apply to all exploratory research, but is instead a “narrowly

tailored” exemption intended to have a “de minimis impact on the patentee’s right to

exclude.”113

Other Statutes

Although the Hatch-Waxman Act awards limited experimental use privileges

with respect to patents on certain drugs, medical devices, and other products

regulated by the FDA, the Patent Act of 1952 does not provide for a more broadly

oriented experimental use privilege. However, Congress has enacted a number of

specialized intellectual property statutes that expressly incorporate a more

comprehensive experimental use doctrine. For example, the Plant Variety Protection

Act allows the Department of Agriculture to issue plant variety certificates on

sexually reproducible plants.114 These certificates provide their owner with the

exclusive right to “exclude others from selling the variety, or offering it for sale, or

reproducing it, importing, or exporting it, or using it in producing (as distinguished

from developing) a hybrid or different variety therefrom.”115 The statute does include

a research exemption, however, stipulating that “[t]he use and reproduction of a

protected variety for plant breeding or other bona fide research shall not constitute

an infringement of the protection provided under this chapter.”116

110

Integra Lifesciences I Ltd. v. Merck KGaA, 50 USPQ2d 1846 (S.D. Cal. 1999).

111

331 F.3d at 863.

112

331 F.3d at 866.

113

331 F.3d at 867.

114

Pub. L. No. 91-577, 84 Stat. 1542 (1970) (codified at 7 U.S.C. §§ 2321-2583). See CRS

Report RL31568, Plants, Patents and Seed Innovation in the Agricultural Industry, by (nam

e redacted).

115

7 U.S.C. § 2483(a).

116

7 U.S.C. § 2544 (2000).

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Another specialized intellectual property statute, the Semiconductor Chip

Protection Act of 1984,117 allows individuals to claim exclusive rights in “mask

works” — circuitry designs used on a computer or other semiconductor chip.118 It is

an act of infringement either to reproduce these mask works, or to sell or import a

semiconductor chip embodying a protected mask work.119 However, this legislation

expressly exempts those individuals who “reproduce the mask work solely for the

purpose of teaching, analyzing, or evaluating the concepts or techniques embodied

in the mask work or the circuitry, logic flow, or organization of components used in

the mask work.”120

A third example is provided by the Vessel Hull Design Protection Act.121

This legislation, which allows designers of an original boat hull to register their

designs with the federal government, incorporates an experimental use privilege

similar to that of the Semiconductor Chip Protection Act. Under the Vessel Hull

Design Protection Act, individuals who make, use, sell or import the protected design

without the authorization of the registered design owner may be subject to

infringement liability.122 Yet the statute expressly exempts from infringement those

uses “solely for the purpose of teaching, analyzing, or evaluating the appearance,

concepts, or techniques embodied in the design, or the function of the useful article

embodying the design.”123

Legislative Issues and Alternatives

Should congressional interest continue in this area, a variety of options are

available. If the current scope of the common law experimental use privilege is

deemed to be appropriate, then no action need be taken. Alternatively, Congress

could enact legislation confirming the narrowly cabined view of the experimental use

privilege as set forth in Madey v. Duke University and predecessor cases.

If reform of the experimental use privilege is deemed prudent, however,

another possibility is the introduction of some additional form of the experimental

use privilege into the Patent Act of 1952. This infringement exemption could

supplement or replace the narrow experimental use privilege introduced by the

Hatch-Waxman Act. One option is to incorporate a generally applicable privilege of

the sort contemplated by the proposed, but unenacted Patent Competitiveness and

117

Pub. L. No. 98-620, 98 Stat. 3347.

118

17 U.S.C. § 901 (2000).

119

17 U.S.C. § 905 (2000).

120

17 U.S.C. § 906(a)(1) (2000). See Lee Hsu, “Reverse Engineering Under the

Semiconductor Chip Protection Act: Complications for Standard of Infringement,” 5 Albany

Law Journal of Science and Technology (1996), 249.

121

Pub. L. No.105-304 , 112 Stat. 2905.

122

17 U.S.C. § 1308 (2000).

123

17 U.S.C. § 1309(g) (2000). The Digital Millennium Copyright Act provides another

example of a statutory experimental use privilege. See 17 U.S.C. § 1201 (2000).

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Technological Innovation Act of 1990. H.R. 5598 was introduced before the 101st

Congress on September 12, 1990. Section 402 of that bill provided:

It shall not be an act of infringement to make or use a patented invention

solely for research or experimentation purposes unless the patented

invention has a primary purpose of research or experimentation. If the

patented invention has a primary purpose of research or experimentation,

it shall not be an act of infringement to manufacture or use such invention

to study, evaluate, or characterize such invention or to create a product

outside the scope of the patent covering such invention.

H.R. 5598 was reported by the House Judiciary Committee on October 26, 1990.

Other intellectual property statutes, including the Plant Variety Protection Act,

Semiconductor Chip Protection Act, and the Vessel Hull Design Protection Act, also

provide examples of the manner in which a generally applicable statutory

experimental use privilege could be drafted.

A more limited statutory experimental use privilege presents another law

reform option. Such a privilege might be limited to patented inventions that arise in

particular technological fields, in the fashion of the proposed, but unenacted

Genomic Research and Diagnostic Accessibility Act of 2002. H.R. 3967 would have

exempted from patent infringement the use of genetic sequence information for

purposes of research. In addition, this bill would have limited the remedies that the

owner of a patent on genetic diagnostic testing could obtain during infringement

litigation. Following its introduction in the 107th Congress on March 14, 2002, H.R.

3967 was referred to the Subcommittee on Courts, the Internet and Intellectual

Property on May 6, 2002, but no further action was taken.

Another possibility would be to limit the experimental use privilege to

patented research tools, in whatever technological field they might arise. Yet another

option is to grant an experimental use privilege in favor of universities or non-profit

research institutions, but retain the current law of experimental use with respect to

for-profit enterprises.

Consideration of any sort of statutory reform with respect to experimental use

privilege should take into account the Agreement on Trade-Related Aspects of

Intellectual Property Rights.124 The United States is a signatory to the so-called

“TRIPS Agreement,” which is a component of the international agreements that form

the World Trade Organization (WTO). The TRIPS Agreement in part requires its

signatories to grant patent owners the right to exclude others from making, using,

offering for sale, selling, or importing a patented invention.125 Further, under Article

27 of the TRIPS Agreement, such rights must be “enjoyable without discrimination

as to the place of invention, the field of technology and whether products are

imported or locally produced.”

124

Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994,

Annex 1C, 33 I.L.M. 1197 (1994) (“TRIPS Agreement”).

125

TRIPS Agreement, Article 27(1).

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The TRIPS Agreement does allow member states to limit patent rights under

certain circumstances, however. As stated in Article 30 of the TRIPS Agreement:

Members may provide limited exceptions to the exclusive rights conferred

by a patent, provided that such exceptions do not unreasonably conflict

with a normal exploitation of the patent and do not unreasonably prejudice

the legitimate interests of the patent owner, taking account of the legitimate

interests of third parties.

Article 30 presumably allows its signatories to provide for a generally applicable

experimental use privilege. Many WTO members, including Germany,126 Japan127

and the United Kingdom,128 already incorporate such a privilege into their patent

statutes. However, a more limited form of the experimental use privilege may raise

concerns under the non-discrimination provision of Article 27. To the extent that the

experimental use privilege is available for some sorts of inventions and not others,

it may conflict with the Article 27 obligation not to discriminate as to the “field of

technology” in which a patentable invention arises.129

Finally, the experimental use privilege need not be an all-or-nothing

proposition. Another option is to grant researchers the ability to experiment with the

patented inventions of others — provided they compensate the patent holder at a

specified royalty rate. This regime would effectively amount to a “compulsory

license” available to researchers.130 Janice Mueller, a member of the faculty of the

University of Pittsburgh Law School, posits that this approach would ensure “a

royalty award of sufficient amount to maintain incentives for the development and

patenting of new research tools, yet [alleviate] the access restrictions and up-front

126

German Patent Act, Article 11, § 2. See Klinische Versuche (Clinical Trials) II (Case X

ZR 68/94), Federal Supreme Court of Germany, BGHZ 135, 217, [1998] R.P.C. 423.

127

Japanese Patent Act § 69(1), available at [http://www.jpo.go.jp/shoukaie/patent.htm].

128

United Kingdom Patent Act, 1977, ch. 37, § 60(5)(b) (Eng.), reprinted in U.K. Patent

Office, Manual of Patent Practice (1999), available at [http://www.patent.gov.uk/patent/reference/mpp/s60_71.pdf] (providing a defense to infringement for actions “done

for experimental purposes relating to the subject-matter of the invention”).

129

Notably, a Canadian law modeled after the Hatch-Waxman Act was challenged before a

WTO tribunal on precisely this ground. The WTO dispute resolution panel upheld the

Canadian experimental use privilege based upon the particular circumstances created by the

marketing approval and patenting procedures. See Canada — Patent Protection of

Pharmaceutical Products, WTO Panel Report, WT/DS114/R (Mar. 17, 2000). Some

commentators believe that Article 30 was “certainly interpreted narrowly by the WTO

Panel.” See Sol Picciotto, “Private Rights vs. Public Interests in the TRIPS Agreement,” 97

American Society of International Law Proceedings (April 2-5 2003), 167. Whether other

narrowly tailored experimental use privileges would survive scrutiny under the TRIPS

Agreement remains uncertain.

130

See CRS Report RL31132, Multinational Patent Acquisition and Enforcement: Public

Policy Challenges and Opportunities for Innovative Firms, by (name redacted).

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costs currently associated with acquisition and use of many proprietary research

tools.”131

In weighing this approach to the experimental use issue, it is also important

to note that the TRIPS Agreement places some restrictions upon the ability of WTO

members to grant compulsory licenses. Article 31, which is among the more detailed

provisions in the TRIPS Agreement, in part requires that each application for a

compulsory license be considered on its individual merits; that the proposed user

must have made efforts to obtain a license from the patent owner; and that the legal

validity of such a license be subject to review by the courts or other independent

authority.132 Deliberations over a “compulsory license” approach to the experimental

use privilege may wish to account for these obligations.

Concluding Observations

Whether the patent law’s experimental use privilege should be retained as a

narrowly confined doctrine of limited availability, or expanded to encompass

additional experimental activities, technologies, and researchers, continues to be the

subject of active discussion in the scientific and legal communities. A limited

experimental use privilege may best encourage technological advancement by

rewarding successful researchers with patent rights that are not easily circumvented.

However, some commentators believe that the circumscribed nature of the

experimental use privilege may in fact restrict researcher access to state-of-the-art

technologies and thus discourage further technological development. Although the

courts have relied upon existing law in order to reach their decisions in particular

cases, whether a narrow experimental use privilege most appropriately serves the

contemporary scientific research community remains open to policy debate

131

See Mueller, supra note 4.

132

Schechter & Thomas, supra note 16 , at § 12.6.

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