Mapping the contours of The Experimental Use exemption:

35 U.S.C. § 271(e)(1)’s Past, Present, and Future

A patent is a device to prevent the diffusion of new methods before the original investor has recovered profit adequate to induce the requisite investment.  The justification of the patent system is that by slowing down the diffusion of technical progress it ensures that there will be more progress to diffuse. . . .  Since it is rooted in contradiction, there can be no such thing as an ideally beneficial patent system, and it is bound to produce negative results in particular instances, impeding progress unnecessarily even if its general effect is favorable on balance.

“If without fear of liability a competitor can assemble a patented item past the point of testing, [then] the . . . patent becomes worthless.” 

I.  Introduction

In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act (DPCPTR).  This Act, which resulted from the lobbying efforts of both the pharmaceutical industry and consumer interest groups, was intended to encourage greater expenditure in the area of pharmaceutical invention while simultaneously ensuring greater competition immediately after the expiration of the relevant patents.  “By rectifying distortions in the patent system created by the Food and Drug Administration’s [FDA’s] regulatory approval process, Congress struck a balance between the interests of pharmaceutical companies, . . . competing ‘generic’ manufacturers,” and consumers.  
The Drug Price Competition and Patent Term Restoration Act created several modifications to conventional patent law, including:
•	Provisions allowing for the extension of the normal term of a patent for up to five years to compensate a patent owner for the marketing time allegedly lost in satisfying government regulations requiring proof that a drug is safe and effective before it can be marketed.

•	Special procedures for challenging the validity or infringement of drug patents which, in effect, guaranteed the patent owner a statutory preliminary injunction for a period of thirty months unless the adjudication was completed in a shorter time.

•	A “bounty” for challenging patent validity, infringement or enforceability in the form of 180 days of market exclusivity to the first generic applicant to file a patent challenge against any approved drug.

•	A novel statutory exemption from claims of patent infringement for those acts of making, using, or selling a patented invention which are reasonably related to seeking FDA approval to market a drug, provided that no commercial use of a patented invention occurs before the patent expires.

This essay reviews this final provision, § 271(e)(1), which established that the use of an invention does not constitute patent infringement if that use is “reasonably related” to obtaining federal approval to market pharmaceutical or veterinary products.  Section 271(e)(1) creates a “safe harbor” that reads:
It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) 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.  

This essay examines the history and legislative intent behind § 271(e)(1)’s enactment, the statute’s subsequent interpretation by the courts, and the role that the provision may play in the future in order to illustrate the inherent tensions between the FDA’s drug approval process and the patent law and to highlight the difficulty of balancing the needs of consumers, pharmaceutical innovators, and generic drug companies.
II.  The Origins of the Experimental Use Doctrine — Creation and Early Development

A.  Whittemore v. Cutter and Its Progeny

Over 150 years before the patent law was amended to include § 271(e)(1), seeds for the statute’s enactment were sown in Whittemore v. Cutter, in an opinion written by Justice Story while sitting on the Massachusetts Circuit Court.  In Whittemore, the defendant challenged the lower court’s jury instruction “that the making of a machine fit for use, and with a design to use it for profit, was an infringement of the patent right.”  Justice Story approved of the instruction, stating 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 the described effects.”
That same year, in Sawin v. Guild, Justice Story again referred to this exemption from the patent law for experimental use.  In holding that the defendant’s sale of a patented machine for cutting brad nails constituted patent infringement, Justice Story observed that the machine had been sold “with an intent to use for profit” rather than “for the mere purpose of philosophical experiment, or to ascertain the verity and exactness of the specification.”  In order for there to be infringement, Justice Story asserted, “the making must be with an intent to infringe the patent-right, and deprive the owner of the lawful rewards of his discovery.” 
In both Whittemore and Sawin, Justice Story’s references to an exemption from the patent law for experimental use were dicta, and as a result, the early course of the exception was far from clear.  Very few early courts applied the experimental use doctrine to excuse the use of a patented invention that would otherwise constitute infringement.  Nevertheless, most commentators agree that the common law of patents provides for an exemption from infringement for experimental use to ascertain the validity and exact specifications of a patent, in order to enable an individual to challenge a patent on the grounds of non-enablement or inutility.
	The scope of Justice Story’s “philosophical experimentation” exception has been more difficult for courts and commentators to define, however, because of the inherent ambiguity of that phrase.  Early courts seeking to apply this prong of Justice Story’s exception typically focused on the experimental nature of the conduct, without elaborating upon the meaning of “philosophical experimentation.”  Thus, other than establishing that commercial use and commercial intent forestalled application of the exception, these cases did little to establish its contours.      
In more recent years, however, the exception for philosophical experimentation has been both more clearly defined and more narrowly construed.  In Pitcairn v. United States, the Court of Claims refused to apply the experimental use exception because there was a business purpose underlying the infringing action.  The court concluded that the experimental use exception was not available as a defense to infringement because the nature of the tests, demonstrations, and experiments conducted, which included testing a helicopter for lifting ability, flight speed, range, and numerous other factors, were within the legitimate business of the defendant.  Thus, patented products that were not built solely for experimental use, although primarily used for testing and experimental purposes, were excluded from the experimental use exception.  According to the reasoning of the Pitcairn court, for an experimental use to be non-infringing under Justice Story’s test, the use must be strictly for amusement, for satisfying idle curiosity, or for philosophical inquiry.
A second modern case to address the scope of Justice Story’s philosophical experimentation prong was Pfizer, Inc. v. International Rectifier Corp.  In this case, the federal district court for the Central District of California held that International Rectifier’s manufacture and use of doxycycline, a pharmaceutical compound patented by Pfizer, for bioequivalency and serum level tests, infringed Pfizer’s patent.  Although International Rectifier claimed that these tests were both solely experimental and necessary in order to obtain approval of its generic drug from the FDA, the court interpreted the history of the experimental use doctrine as suggesting that “the underlying rule of permissible experimental use demands that there must be no intended commercial use of the patented article, none whatsoever, if the exception is to be recognized at all.”  Thus, because International Rectifier intended to place its generic drug would in direct commercial competition with Pfizer’s doxycycline after the expiration of Pfizer’s patent, the court held that the experimental use exception was inapplicable.   
B.  The Federal Circuit’s Decision — Roche Products, Inc. v. Bolar Pharmaceutical Co.

	In 1984, the then newly created Court of Appeals for the Federal Circuit first considered the scope of the experimental use doctrine in Roche Products, Inc. v. Bolar Pharmaceutical Co.  This case arose out of a dispute between Roche Products, Inc., a large research-oriented pharmaceutical company, and Bolar Pharmaceutical Co., a manufacturer of generic drugs.  In early 1983, Bolar began investigating the possibility of marketing a generic drug equivalent to Roche’s patented sleeping drug, Dalmane, after the expiration of Roche’s patent.  Bolar immediately began working to obtain federal approval to market its generic equivalent of Dalmane.  Bolar did not want to wait for Roche’s patent to expire before taking steps to achieve FDA approval of its equivalent drug “[b]ecause a generic drug’s commercial success is related to how quickly it is brought on the market, after a patent expires[,] [a]nd because approval for an equivalent of an established drug can take more than two years.”  In mid-1983, Bolar began to perform tests on the active ingredient claimed in Roche’s patent in order to obtain stability data and dissolution rates and to perform the bioequivalency and blood serum studies necessary for a New Drug Application (NDA) to the Food and Drug Administration.    
Upon learning of Bolar’s actions, Roche filed a complaint in the United States District Court for the District of New Jersey seeking to enjoin Bolar from taking, during the life of Roche’s patent, the statutory and regulatory steps necessary to market a generic version of Dalmane after its patent expired.  Bolar was subsequently granted a change of venue and the case was transferred to the federal district court for the Eastern District of New York.  After reviewing the case law and recognizing the limitation that the experimental use doctrine places on the patent right, the court held that Bolar’s generic drug testing was an experimental use.  The court concluded that although Bolar’s experimentation could not “be classified as merely for amusement or philosophical gratification[,] [a]t the same time, it [could] not be connected with any act of competition or profit during the term of the patent in either domestic or foreign markets.  Its experimentation is commercial preparation of a non-production nature for post-expiration competition.”  Because Bolar realized no benefit during the term of Roche’s patent and because Bolar’s activities did not reduce Roche’s profits during the patent’s term, the district court concluded that Bolar’s use of the patented compound for federally mandated testing did not infringe Roche’s patent.
	On appeal, the Federal Circuit reversed the district court’s holding that Bolar did not infringe Roche’s patent, stating that:  
The district court correctly recognized that the issue in this case is narrow: does the limited use of a patented drug for testing and investigation strictly related to FDA drug approval requirements during the last six months of the term of the patent constitute a use which, unless licensed, the patent statute makes actionable?  The district court held that it does not.  This was an error of law.

The court began by observing that it is well-established that the use of a patented invention, even without manufacture or sale, is actionable infringement.  Although further noting that the word “use,” as it occurs in § 271(a), “has never been taken to its utmost possible scope,” the court rejected Bolar’s argument that its intended use of flurazepam hcl fell within the experimental use exception.  The court determined that the experimental use exception is “truly narrow” and should not be expanded under the circumstances of the case.  Applying the reasoning of Pitcairn, which stated that “[t]ests, demonstrations, and experiments . . . [which] are in keeping with the legitimate business of the . . . [alleged infringer]” are infringements for which “[e]xperimental use is not a defense,” the court held that the experimental use doctrine does not apply to the “limited use of a patented drug for testing and investigation strictly related to FDA approval requirements during the last six months of the term of the patent.”  The court made a strong and eloquent statement of its interpretation of the law:
Bolar’s intended use of flurazepam hcl to derive FDA required test data is . . . 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 no 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.  

This language suggests that the Federal Circuit intended for the experimental use doctrine to be unavailable whenever a defendant’s research was motivated, even in part, by a commercial purpose.  
	In closing, the Federal Circuit addressed in detail two significant problems encountered by drug manufacturers as a result of FDA regulation.  First, the court cited a study indicating that it could take from seven to ten years to obtain FDA approval for new drugs.  The court noted that this delay in FDA approval whittled away at the length of the effective patent term.  Second, the court stated that research-oriented drug manufacturers, by enjoining the use of patented drugs for testing purposes until their patents expired, could use the threat of a patent infringement claim to  prevent competing uses of the patented invention by generic drug companies beyond the intended seventeen year statutory term.  After describing these problems, however, the court observed that it was not its place to resolve the conflict between the Federal Food, Drug, and Cosmetic Act (FDCA) and the Patent Act of 1952’s respective policies and purposes.  Although noting the tension between the patent law and the drug approval laws, the court concluded that “[i]t is the role of Congress to maximize public welfare through legislation.  Congress is well aware of the economic and societal problems which the parties debate here, and has before it legislation with respect to these issues.  No matter how persuasive the policy arguments are for or against these proposed bills, the court is not the proper forum in which to debate them.” 
III.  Roche Overruled: The Legislative History and Intent Underlying § 271(e)(1)

The Federal Circuit’s refusal in Roche to address the conflict between the FDA’s drug approval process and the patent law spurred debate within the pharmaceutical industry and among consumer groups.  In order to remedy distortions of the law and threats to the generic drug industry’s viability that the Roche holding was thought to create, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984.  This Act modified both the FDCA and the Federal Patent Code and attempted to create a compromise between the conflicting interests of established, research-oriented manufacturers and emerging, production-oriented generic manufacturers. 
A.	Regulatory Enigmas: Pre-1984 Pioneer and Generic Drug Manufacturer Conflicts

Before the enactment of the Drug Price Competition and Patent Term Restoration Act of 1984, manufacturers of generic forms of patented pharmaceuticals had to undergo the same lengthy regulatory approval process as pioneer drug companies.  This requirement presented efficiency losses due to redundancy and because generic drug manufacturers could not initiate the regulatory approval process before the expiration of the pioneer company’s patent without risking liability for patent infringement.  “Consequently, there was no immediate competition in the marketplace following patent expiration, and the patent holder realized a de facto extension of the expired patent.”  Thus, the intersection of the patent law and the FDA drug approval process created an unintended “grace period,” during which pioneer drug manufacturers continued to enjoy de facto market exclusivity, even after the expiration of their patents.  
Despite this grace period, pioneer drug companies also struggled with difficulties created by the FDA approval process, because large portions of their patent terms were sacrificed to the FDA’s premarket regulatory review of new drug products.  Because of the stricter FDA controls enacted in 1962, which mandated exacting clinical trials and an elongated review period, pioneer drug companies fought to maintain economic viability.  Pioneer productivity was reduced to “an average of seventeen new drugs annually between 1963 and 1972, and to twelve in 1980.”  The pioneer drug companies struggled with the increased cost of development that resulted from the FDA’s elaborate testing requirements.  The pioneer companies also experienced decreasing returns on investment, as the FDA approval process consumed greater portions of the seventeen year patent term.  As pioneer drug companies attempted to recoup these losses through raising prices, aggressively litigating their patent rights, and lobbying legislatures for “antisubstitution” laws, consumers endured higher pharmaceutical prices and decreased product choice.
Following the Roche decision, which acted as a impetus for change, both pioneer and generic drug manufacturers called upon Congress to remedy the perceived failures of the marketplace caused by the intersection of the patent law and FDA regulations.  Consumer groups and generic drug manufacturers argued that generic drug manufacturers should have earlier access to the FDA approval process, in order to bring their products to market after the expiration of the pioneer drug patents.  In turn, manufacturers of brand name pharmaceuticals lobbied Congress for extended patent terms, to compensate for the time that they expended on FDA clinical trials and approval.  “The goal of the pharmaceutical lobbyists was to induce passage of a bill that would allow restoration of portions of the patent life lost in the premarket regulatory review of new drug products (e.g., FDA approval procedures).  Competing with this objective was that of the consumer groups which called for a quicker entry into the market for generic drug manufacturers.”    
B.	Seeking Reconciliation Through the Drug Price Competition 
and Patent Term Restoration Act of 1984

Through the Drug Price Competition and Patent Term Restoration Act of 1984, Congress attempted to minimize the amount of time between the expiration of a pioneer drug company’s patent and the availability of approved generic competitors, while continuing to balance the needs of pioneer drug companies and their incentives to innovate.  The Act consists of two titles.  Title I describes “Abbreviated New Drug Applications” (ANDAs), and Title II addresses “Patent Term Restoration.”    
1.  35 U.S.C. § 156. — The first element of Title II of the DPCPTR Act is 35 U.S.C. § 156.  This provision arose out of Congress’s recognition that pioneer drug companies’ incentives to innovate were diminished because FDA premarket approval requirements reduced the effective patent life of their inventions.  In response to this problem, Congress enacted § 156, which extends the patent term for products that are subject to a regulatory review period before commercial marketing and use.  To qualify for a patent term extension under § 156, a drug company must satisfy several requirements.  “First, the term of the patent must not have expired before an application is submitted to the Commissioner for its extension.  Second, the term of the patent must not have been extended previously, and the patented product must have been subject to a regulatory review period before its commercial marketing or use.  Finally, the product must be an ‘approved product.’”  Section 156 contains the following list of “approved products”: “(A) A human drug product.  (B)  Any medical device, food additive, or color additive subject to regulation under the Federal Food, Drug, and Cosmetic Act.”	  
2.  The Role of 35 U.S.C. § 271(e)(1). — The second element of Title II’s delicate balancing of interests is the codification of the experimental use doctrine as a defense to patent infringement claims in § 271(e)(1) of the Act.  This provision of the Drug Price Competition and Patent Term Restoration Act created an exception to the patent infringement statute that permits a manufacturer of a generic form of a patented drug to conduct activities that would otherwise constitute infringement as long as the activities are “solely for uses reasonably related to the development and submission of information to the FDA.”  Through its enactment of § 271(e)(1), Congress overruled the Roche decision.  Congress rejected the strong language and reasoning of the Roche case, stating that “experimental activity does not have any adverse economic impact on the patent owner’s exclusivity during the life of the patent.”  Congress hoped that § 271(e)(1) would enable generic drug manufacturers to use patented drugs to obtain premarketing approval, which would make less expensive generic equivalents of brand name drugs available to consumers eighteen months to two years earlier than under the system established by Roche.  Thus, in § 271(e)(1), Congress espoused a much narrower vision of proscribed commercial activity than that suggested by the Federal Circuit in Roche.  As a result, testing by generic drug companies prior to the expiration of a patent term, which would have been held infringing under Roche, was deemed permissible, despite the companies’ clear competitive purpose.    
Although it is clear that § 271(e)(1) was intended to overrule Roche, Congress did not provide much information about whether the provision was intended reach beyond the specific facts presented by that case.  As written, the exception appears to offer broad-sweeping protection to any putative infringer who uses a patented invention to acquire information required to be submitted under a federal law regulating drugs or veterinary biological products.  The legislative history of the provision, however, suggests that Congress was concerned with a smaller range of activities, a narrower class of infringers, and specific types of patented inventions.  For example, the House Judiciary Committee report stated that “the only activity that will be permitted by the bill is a limited amount of testing so that generic manufacturers can establish the bioequivalency of a generic substitute.”  The report of the House Committee on Energy and Commerce further elaborated:
The information which can be developed under this provision is the type which is required to obtain approval of the drug. . . .
The purpose of Sections 271(e)(1) and (2) is to establish that experimentation with a patented drug product, when the purpose is to prepare for commercial activity which will begin after a valid patent expires, is not a patent infringement.

Similarly, although the statute does not facially restrict its applicability to any class of infringer, the legislative history suggests that the provision was drafted to benefit generic drug manufacturers alone.  The legislative history describes the exception as providing that “it is not an act of patent infringement for a generic drug maker to . . . test a patented drug,” and states that the provision is intended to enable “a generic drug manufacturer . . . [to] obtain a supply of a patented drug product during the life of the patent.” 
IV.  Judicial Interpretation of the § 271(e)(1) Exemption for Experimental Use

Because of the ambiguity of § 271(e)(1)’s language and the apparent conflict between its stated provisions and its legislative history, courts have struggled to define its parameters.  Several decisions interpreting section 271(e)(1), which highlight its indeterminacy, followed shortly after its enactment.
A.  The Scripps Cases: Range of Infringing Activities Protected Under § 271(e)(1)

1.  Scripps Clinic & Research Foundation v. Genentech Inc. — The first published decision interpreting § 271(e)(1) arose in Scripps Clinic & Research Foundation v. Genentech Inc., a lawsuit involving several biotechnology patents on Factor VIII:C.  Scientists at Genentech began research to produce Factor VIII:C through recombinant DNA technology before the Scripps patents issued and continued these efforts after the patents issued.  After Genentech used Scripps’s patented product, purified Factor VIII:C, to determine its amino acid sequence, clone the Factor VIII:C gene, and produce Factor VIII:C by recombinant DNA techniques, Scripps sued Genentech for patent infringement, seeking damages and an injunction against further use by Genentech of purified Factor VIII:C.  The court focused on the “solely for” language of § 271(e)(1) and refused to apply the experimental use exception to Genentech’s activities because, although they might eventually lead to submission of data to the FDA, that was not the company’s “sole purpose.”  The court concluded that Genentech’s use of purified Factor VIII:C therefore constituted infringement.    
2.  Scripps Clinic & Research Foundation v. Baxter Travenol Laboratories, Inc. — In Scripps Clinic & Research Foundation v. Baxter Travenol Laboratories, Inc., a case which also involved Factor VIII:C, Baxter defended against Scripps’s charges of infringement, asserting that its activities were protected under § 271(e)(1).  Although Baxter had used Factor VIII:C to generate data both for FDA premarketing approval and to submit to foreign regulatory agencies, the United States District Court for the District of Delaware denied Scripps’s motion.  The court stated that the Genentech court had interpreted § 271(e)(1) overly narrowly and without regard to the “reasonably related” language of the statute:
The question of law, then, is whether any foreign activities can be “reasonably related” to FDA approval.  If not, then Baxter’s activities would fall outside of Section 271(e)(1) and Baxter’s defense would be insufficient. . . . [The Genentech court] was faced with this issue, but [it] interpreted the statute only to cover activities that were “solely related” to FDA approval and did not consider what acts are “reasonably related” to it.  

Such reliance on one element of the statute at the expense of its other elements was in error, the court argued.  In conclusion, the court observed that § 271(e)(1)’s legislative history failed to “provide guidance” on the matter of interpretation and suggested that the doctrine needed to be “more fully developed before the Court . . . decide[s] it.”
B.  Eli Lilly & Co. v. Medtronic, Inc.: Range of Inventions Protected Under § 271(e)(1) 

The Scripps cases highlight courts’ attempts to determine the range of infringing activities exempted under § 271(e)(1).  But courts have also experienced difficulty in determining the types of products that are exempt from patent infringement charges under § 271(e)(1).  The plain language of the statute is not plain at all, but rather refers cryptically to “a patented invention” and “a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.”  In 1990, the Supreme Court was called upon to determine the scope of the products exempted by § 271(e)(1) in Eli Lilly & Co. v. Medtronic, Inc.
In 1983, Eli Lilly’s predecessor in interest sued Medtronic in the United States District Court for the Eastern District of Pennsylvania seeking to enjoin Medtronic from testing and marketing an implantable heart defibrillator.  Medtronic called upon § 271(e)(1), claiming that its activities were “reasonably related to the development and submission of information” under the FDCA, and thus were exempted from infringement under the statute.  The district court rejected Medtronic’s argument, holding that § 271(e)(1) did not apply to the development and submission of information related to medical devices.  Although the court acknowledged that such devices are “patented inventions,” the sale of which is “regulated” by the FDCA, it interpreted § 271(e)(1) as providing an exemption for drugs only. 
On appeal, the Court of Appeals for the Federal Circuit reversed the lower court’s ruling, “holding that by virtue of § 271(e)(1), [Medtronic’s] activities could not constitute infringement if they had been undertaken to develop information reasonably related to the development and submission of information necessary to obtain regulatory approval under the FDCA.”  The court determined that the § 271(e)(1) exemption is not limited to drugs, but extends as well to medical devices that are subject to FDA approval.
The Supreme Court granted certiorari, and, in a 6–2 decision, affirmed.  Rather than considering the language of the individual statutory provisions separately, in his opinion for the  Court, Justice Scalia relied on the structure of the Drug Price Competition and Patent Term Restoration Act as a whole, and concluded that the phrase “patented invention” in § 271(e)(1) is “defined to include all inventions, not drug-related inventions alone.”  The Court rejected Eli Lilly’s contention that the statutory phrase “a Federal law which regulates the manufacture, use, or sale of drugs” referred only to those individual provisions of federal law that regulate drugs, rather than to the entirety of any Act in which at least some of the provisions relate to drugs.  Instead, the Court adopted Medtronic’s broader reading, concluding that “the phrase ‘a Federal law which regulates the manufacture, use, or sale of drugs’ more naturally summons up the image of an entire statutory scheme of regulation.”  This reading, the Court asserted, was supported by the historical meaning of the phrase “a Federal law,” which typically refers to an entire act or scheme of regulation, rather than to individual provisions of an act.  The Court also noted that if Congress had intended to refer only to drug products in the statute, then there were “infinitely more clear and simple ways of expressing that intent and it is hard to believe the convoluted manner petitioner suggests was employed would have been selected.” 
Because he believed that the text of the provision was “not plainly comprehensible on anyone’s view,” however, Justice Scalia next considered the structure of the statute as a whole.  Justice Scalia concluded that the Drug Price Competition and Patent Term Restoration Act of 1984 was “designed to respond to two unintended distortions of the seventeen-year patent term produced by the requirement that certain products must receive premarket regulatory approval”:  
First, the holder of a patent relating to such products would as a practical matter not be able to reap any financial rewards during the early years of the term.  When an inventor makes a potentially useful discovery, he ordinarily protects it by applying for a patent at once.  Thus, if the discovery relates to a product that cannot be marketed without substantial testing and regulatory approval, the “clock” on his patent term will be running even though he is not yet able to derive any profit from the invention.
The second distortion occurred at the other end of the patent term.  In 1984, the Court of Appeals for the Federal Circuit decided that the manufacture, use, or sale of a patented invention during the term of the patent constituted infringement . . . even if it was for the sole purpose of conducting tests and developing information necessary to apply for regulatory approval.  Since that activity could not be commenced by those who planned to compete with the patentee until expiration of the entire patent term, the patentees de facto monopoly would continue for an often substantial period until regulatory approval was obtained.  In other words, the combined effect of the patent law and the premarket regulatory approval requirement was to create an effective extension of the patent term. 

Because the Drug Price Competition and Patent Term Restoration Act sought to eliminate this distortion from both ends of the patent period, the Court concluded that the patent term extension provisions of the Act should apply to all FDCA-regulated products, whether drugs or devices.  The Court found further support for this interpretation from the textual indications of §§ 201 and 202 of the Drug Price Competition and Patent Term Restoration Act, because the two sections contain complementary omissions and inclusions.  “Interpreting § 271(e)(1) as the Court of Appeals did here appears to create a perfect ‘product’ fit between the two sections.  All of the products eligible for a patent term extension under § 201 are subject to § 202, since all of them — medical devices, food additives, color additives, new drugs, antibiotic drugs, and human biological products — are subject to premarket approval under various provisions of the FDCA . . . or under the [Public Health Service] Act.”  Because the sections of the statute appear to be intended to balance each other, the Court concluded that products that gain the benefits of § 201 should also be subject to the limitations of § 202, and vice versa.  As a result, it held that medical devices are included in the § 271(e)(1) exemption from patent infringement.
	Writing in dissent, Justice Kennedy, with whom Justice White joined, argued that the majority opinion applied a meaning to § 271(e)(1) that was contrary to the most plausible reading of the statute.  Justice Kennedy proposed that § 271(e)(1)’s text should be read narrowly, because it explicitly identifies drugs, while failing to mention any other type of invention.  Justice Kennedy believed that it would be inappropriate to expand § 271(e)(1)’s exemption to include a broader range of products, merely because they are regulated under the same statute that regulates drugs.
C.	Scripps Revisited: Intermedics, Inc. v. Ventritex, Co. and 
Telectronics Pacing Systems, Inc. v. Ventritex, Inc.

After the Supreme Court extended the scope of § 271(e)(1) beyond generic drugs to medical devices and other products subject to an FDA approval process in Eli Lilly, courts’ interpretation of the scope of infringing activities protected by the provision underwent a similar expansion.  In the Ventritex cases, plaintiffs brought suit against Ventritex for allegedly infringing their patents on implantable pacemakers.  Ventritex defended by claiming exemption under § 271(e)(1), because it was a potential manufacturer of a patented medical device subject to the FDA approval process.  These cases presented the United States District Court for the Northern District of California with an opportunity to reevaluate its stance in the “solely for” versus “reasonably related” debate and offered the Federal Circuit its first opportunity to address the issue.
1. Intermedics, Inc. v. Ventritex, Co. — In Intermedics, Inc. v. Ventritex, Co., the plaintiff accused Ventritex of engaging in a broad range of infringing activities, including selling the patented devices in the United States, where the devices were used in clinical trials; making and selling the patented devices to international distributors, where the distributors resold them to FDA-approved clinical investigators; permitting testing of the devices by German officials, where testing was a prerequisite to German import approval; testing the devices in Germany, where the test results were submitted to the FDA; and demonstrating the devices at trade shows.  At trial, Intermedics claimed that Ventritex could not use its clinical trial data, gathered under the protection of § 271(e)(1), for such “collateral activities,” because they were not “solely for uses reasonably related” to obtaining FDA approval.  
The United States District Court for the Northern District of California rejected Intermedics’s argument and reevaluated the narrow interpretation of § 271(e)(1) that it had adopted in Genentech.  The court “invoked the ‘reasonably related’ language of section 271(e)(1) to exempt a broad range of activities from infringement,” ultimately concluding that if it would have been reasonable for a party in the defendant’s position to believe that there was a “decent prospect” that the use in question would contribute to the generation of information relevant to the FDA approval process, then that use is protected under § 271(e)(1).  The court determined that Congress used the phrase “reasonably related” in order to communicate “its intention that the courts give parties some latitude in making judgments about the nature and extent of the otherwise infringing activities that they would engage in as they sought to develop information to satisfy the FDA.”  “[T]he court vigorously resisted any attempt to limit [a defendant manufacturer’s] collateral use of data that was otherwise properly collected under the § 271(e)(1) exemption.”  
2. Telectronics Pacing Systems, Inc. v. Ventritex, Inc. — The Federal Circuit had an opportunity to expand upon the debate over the “solely for” versus “reasonably related” language of § 271(e)(1) in Telectronics Pacing Systems, Inc. v. Ventritex, Inc.  In Telectronics, Ventritex had conducted clinical trials on its version of Telectronics’s patented implantable defibrillators in order to obtain data required by the FDA.  After Ventritex used the results of these clinical trials for fundraising and displayed its device at medical conferences, Telectronics sued, arguing that Ventritex’s uses were not exempt under § 271(e)(1) because they were not “solely for uses reasonably related to FDA approval.”  Thus, the Northern District of California was called upon once again to address Ventritex’s use of clinical trial data to raise investment capital.  The district court adhered to the position that it had espoused in Intermedics and held that such collateral activity did not void § 271(e)(1)’s exemption.   
	On appeal, the Federal Circuit conducted a two-step analysis of Ventritex’s activities, first determining whether its activities fell within the definition of infringement set forth in § 271(a), and then determining whether its activities fell within the § 271(e)(1) exemption.  “The court found that Ventritex’s demonstrations of its defibrillator at medical conferences were unauthorized uses of Telectronics’s invention that would fall under section 271(a), but that they were exempt from infringement under section 271(e)(1) because of Ventritex’s need to find qualified investigators to conduct clinical trials.  The court characterized Ventritex’s other activities as ‘dissemination of . . . data developed for FDA approval,’ which is not an act of infringement under section 271(a).”  The court flatly rejected Telectronics’s assertion that Ventritex’s use of its clinical data for non-regulatory purposes should place its activities outside of § 271(e)(1)’s scope.  Because the data was initially gathered for FDA-approval purposes, the court determined that § 271(e)(1)’s exemption should remain available, despite Ventritex’s use of the data for collateral fundraising activities.  
This interpretation of § 271(e)(1) was consistent with its legislative history, the court asserted, because through its statutory enactment, Congress intended to place generic drug manufacturers “in a position to market their products as soon as . . . legally permissible.”  The court presumed that this intent was sufficiently broad to encompass fundraising activities, because of the need of generic manufactures to “raise funds for developing and testing” their products.  The court concluded that preventing generic drug manufacturers from using their clinical data for “fundraising and other business purposes” would inhibit their ability to compete in the marketplace.  Therefore, the court refused to impose any limitation on collateral uses of clinical data initially developed for submission to the FDA.  
D.  Return to Eli Lilly: Abtox, Inc. v. Exitron Corp.

	Although Eli Lilly settled conclusively § 271(e)(1)’s applicability to medical devices, the Court’s reliance on § 201 of the DPCPTR Act to interpret the statutory framework created a new area of uncertainty.  “By relying on the impact of premarket approval requirements, with their attendant regulatory delays, in section 201 to fashion its interpretation of section 202, the Court opened the question of whether devices that are not required to go through the most demanding premarket approval process can claim protection under section 202.”  Because the FDCA subjects various types of medical devices to different regulatory review requirements, it is unclear whether all classes of medical devices are subject to the same protection under § 271(e)(1).
In Abtox, Inc. v. Exitron Corp., the District of Massachusetts held that Exitron’s use of the patented invention to gather information required to satisfy the FDA’s premarket notification requirements for Class II medical devices did not constitute infringement because the activities qualified for § 271(e)(1)’s exemption.  Abtox unsuccessfully argued that § 271(e)(1) should not apply to the invention at issue, a device for sterilizing medical instruments using partially ionized gas, because, as a Class II medical device, it would not be subject to the lengthy premarket regulatory approval process.  
On appeal, the Federal Circuit noted that this case presented “ a novel question of law,” because the device at issue in Eli Lilly was a Class III medical device.  The court considered the plain language of § 271(e)(1), its legislative history, and the Supreme Court’s decision in Eli Lilly, before concluding that the statute applied to all medical devices, regardless of FDA classification.  Although the court acknowledged that the Supreme Court’s broad holding in Eli Lilly appeared to conflict with the narrower reasoning that it applied in reaching that holding, it concluded that it was bound by the broader holding, “which remains in force despite a potential conflict with its own narrower reasoning.”  The court held that “[s]ection 271(e)(1) makes no distinctions based upon the different FDA classes of medical devices or drugs.”  As a result of the Federal Circuit’s holding in Abtox, § 271(e)(1)’s exemption now protects a broad array of activities and applies to all medical devices ranging from simple devices, such as tongue depressors, to complex cardiac defibrillators.   
V.  Conclusion: The Future of § 271(e)(1)

Since its enactment over fifteen years ago, courts have struggled to define the precise contours of § 271(e)(1)’s exemption from patent infringement in light of its often unedifying legislative history and statutory text.  Even after all this time, the scope of permissible noninfringing experimentation with patented inventions remains unclear.  Nevertheless, the courts’ broadening interpretation of § 271(e)(1), which “currently allows competitor manufacturers of products regulated by the FDA under the FDCA . . . to legally conduct a wide array of otherwise infringing activities,” suggests that generic drug companies will continue to gain in the coming years at the expense of pioneer drug companies. 
By virtue of its expansive interpretation by the courts, § 271(e)(1) has placed an increasing strain on the ability of pioneer drug companies to innovate and compete with generic drug companies.  By seemingly ignoring the fact that it is far easier to copy a new drug than it is to invent one, § 271(e)(1) may skew drug manufacturers’ incentives and fail to provide adequate patent protection to for pioneer drug companies.  “Strong patent protection gives the inventive entity, as well as others, the incentive to continue to invent knowing that their intellectual property will be secure while benefiting society.”  In the absence of such strong protection, pioneer drug companies, confronted both by the increased costs of innovation and increased encroachment of their patent terms under § 271(e)(1), may become less inclined to devote time and resources to pursuing innovative solutions to human ailments. 
Section 271(e)(1)’s breadth should not be permitted to grow unchecked.  If the trend of broad-sweeping judicial interpretation continues, § 271(e)(1) may be interpreted to encompass an even broader range of inventions, new FDA regulations, or activities only peripherally related to compliance with FDA requirements.  The pharmaceutical industry currently stands alone in exempting infringers from liability for violations of patent exclusivity.  Given the rarity of a provision such as § 271(e)(1) in the patent law, the wisest course may be to restrict the breadth of the clinical trial exemption.

SOURCES CITED

I.  Books

1.	Peter Barton Hutt & James C. Morrison, Abbreviated New Drug Applications (1985)

2.	National Academy of Engineering, The Competitive Status of the U.S. Pharmaceutical Industry (1983)

3.	Joan Robinson, The Accumulation of Capital (1956)

4.	W. Robinson, The Law of Patents for Useful Inventions (1890)

5.	Joseph Schumpeter, Capitalism, Socialism, and Democracy (1950)

II.  Law Review Articles

6.	David J. Bloch, If It’s Regulated Like a Duck . . . Uncertainties in Implementing the Patent Exceptions of the Drug Price Competition and Patent Term Restoration Act, 54 Food & Drug L.J. 111 (1999)

7.	Courtenay C. Brinckerhoff, Can the Safe Harbor of 35 U.S.C. § 271(e)(1) Shelter Pioneer Drug Manufacturers?, 53 Food & Drug L.J. 643 (1998)

8.	Matthew Buchanan, Medical Device Patent Rights in the Age of FDA Modernization: The Potential Effect of Regulatory Streamlining on the Right to Exclude, 30 U. Tol. L. Rev. 305 (1999)

9.	William T. Christiansen, Patent Term Extension of Pharmaceuticals in Japan: So you Say You Want to Rush That Generic Drug to Market in Japan. . . . Good Luck!, 6 Pac. Rim L. & Pol’y J. 613 (1997) 

10.	Brian D. Coggio & Francis D. Cerrito, The Application of the Patent Laws to the Drug Approval Process, 52 Food & Drug L.J. 345 (1997)

11.	Rebecca S. Eisenberg, Patents and the Progress of Science: Exclusive Rights and Experimental Use, 56 U. Chi. L. Rev. 1017 (1989)

12.	Alfred B. Engelberg, Special Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness?  A Political, Legislative and Legal History of U.S. Law and Observations for the Future, 39 IDEA: J.L. & Tech. 389 (1999) 

13.	Ellen J. Flannery & Peter Barton Hutt, Balancing Competition and Patent Protection in the Drug Industry: The Drug Price Competition and Patent Term Restoration Act of 1984, 40 Food Drug Cosm. L.J. 269 (1985)

14.	Henry G. Grabowski & John M. Vernon, A Sensitivity Analysis of Expected Profitability of Pharmaceutical Research and Development, 3 Man. & Decision Econ. 36 (1982)

15.	Ronald D. Hantman, Experimental Use as an Exception to Patent Infringement, 67 J. Pat. & Trademark Off. Soc’y 617 (1985) 

16.	Ned A. Israelsen, Making, Using, Selling Without Infringing: An Examination of 35 U.S.C. Section 271(e) and the Experimental Use Exception to Patent Infringement, 16 Am. Intell. Prop. L. Ass’n Q.J. 457 (1989)

17.	Samuel M. Kais, A Survey of 35 U.S.C. § 271(e)(1) as Interpreted by the Courts: The Infringement Exemption Created by the 1984 Patent Term Restoration Act, 13 Santa Clara Computer & High Tech. L.J. 575 (1997)

18.	Susan Kopp Keyack, The Drug Price Competition and Patent Term Restoration Act of 1984: Is it a Healthy Long Term Solution?, 21 Rutgers L.J. 147 (1989)

19.	Alan D. Lourie, A Review of Recent Patent Term Extension Data, 71 J. Pat. Off. Soc’y 171 (1989)

20.	Timothy John McCoy, FDA Medical Device Approval: The Noninfringing Experimental Use Defense Is Expanded: Eli Lilly & Co. v. Medtronic, Inc., 110 S. Ct. 2683 (1990), 14 Hamline L. Rev. 201 (1990)

21.	Suzanne T. Michel, The Experimental Use Exception to Infringement Applied to Federally Funded Inventions, 7 High Tech. L.J. 369 (1992)

22.	Ned Milenkovich, Deleting the Bolar Amendment to the Hatch-Waxman Act: Harmonizing Pharmaceutical Patent Protection in a Global Village, 32 J. Marshall L. Rev. 751 (1999)

23.	Thomas F. Poche, The Clinical Trial Exemption From Patent Infringement: Judicial Interpretation of Section 271(e)(1), 74 B.U. L. Rev. 903 (1994)

24.	Todd A. Rathe, Patent Law — Medical Device Experimental Use Exception in Patent Infringement: Eli Lilly v. Medtronic, 16 J. Corp. L. 625 (1991) 

25.	Joseph P. Reid, A Generic Drug Price Scandal: Too Bitter a Pill for the Drug Price Competition and Patent Term Restoration Act to Swallow?, 75 Notre Dame L. Rev. 309 (1999)

26.	Amy Stark, The Exemption from Patent Infringement and Declaratory Judgments: Misinterpretation of Legislative Intent?, 31 San Diego L. Rev. 1057 (1994)

27.	James J. Wheaton, Generic Competition and Pharmaceutical Innovation: The Drug Price Competition and Patent Term Restoration Act of 1984, 35 Cath. U. L. Rev. 433 (1986)
III.  Cases

A.  Supreme Court Cases

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

29.	Sony Corp. of America v. Universal City Studios, Inc., 104 S. Ct. 774 (1984)

30.	Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964)

B.  Appellate Court Cases

31.	Abtox v. Exitron, 122 F.3d 1019 (Fed. Cir. 1997)

32.	Intermedics, Inc. v. Ventritex, Inc., 26 U.S.P.Q.2d (BNA) 1525 (Fed. Cir. 1993)

33.	Chartex Int’l Plc. v. M.D. Personal Prods. Corp., 5 F.3d 1505, 1993 WL 306169 (Fed. Cir. 1993)

34.	Telectronics Pacing Systems, Inc. v. Ventritex, Inc., 982 F.2d 1520 (Fed. Cir. 1992)

35.	Eli Lilly & Co. v. Medtronic, Inc., 872 F.2d 402 (Fed. Cir. 1989)

36.	Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir. 1984)

37.	Paper Converting Mach. Co. v. Magna-Graphics Corp., 745 F.2d 11 (Fed. Cir. 1984)

38.	Coakwell v. United States, 372 F.2d 508 (1967)

C.  District Court Cases

39.	Scripps Clinic & Research Foundation v. Baxter Travenol Laboratories, Inc., 7 U.S.P.Q.2d (BNA) 1562 (D. Del. 1998)

40.	Abtox, Inc. v. Exitron Corp, 888 F. Supp. 6 (D. Mass. 1995)

41.	NeoRx Corp. v. Immunomedics, Inc., 877 F. Supp. 202 (D.N.J. 1994)

42.	Elan Transdermal Ltd. v. Cygnus Therapeutic Sys., 24 U.S.P.Q.2d (BNA) 1226 (N.D. Cal. 1992)

43.	Intermedics, Inc. v. Ventritex, Inc., 775 F. Supp. 1269 (N.D. Cal. 1991)

44.	Telectronics Pacing Sys., Inc. v. Ventritex, Inc., 19 U.S.P.Q.2d (BNA) 1960 (N.D. Cal. 1991)

45.	Eli Lilly & Co. v. Medtronic, Inc., 5 U.S.P.Q.2d 1760 (E.D. Pa. 1987)

46.	Scripps Clinic & Research Foundation v. Genentech Inc., 666 F. Supp. 1379 (N.D. Cal. 1987)

47.	Scripps Clinic & Research Foundation v. Genentech Inc., 231 U.S.P.Q. (BNA) 978 (N.D. Cal. 1986)

48.	Roche Prods., Inc. v. Bolar Pharmaceutical Co., 572 F. Supp. 255 (E.D.N.Y. 1983)

49.	Pfizer, Inc. v. International Rectifier Corp., 217 U.S.P.Q. (BNA) 157 (C.D. Cal. 1982)

D.  Other Cases

50.	Pitcairn v. United States, 547 F.2d 1106 (Ct. Cl. 1976)

51.	Peppenhausen v. Falke, 19 Fed. Cas. 1048 (C.C.S.D.N.Y. 1861) (No. 11,279)

52.	Sawin v. Guild, 21 F. Cas. 554 (C.C.D. Mass. 1813) (No. 12,391)

53.	Whittemore v. Cutter, 29 F. Cas. 1120 (C.C.D. Mass. 1813) (No. 17,600)

IV.  Constitutions, Statutes, and Regulations

54.	U.S. Const., art. I, § 8, cl. 8

55.	21 U.S.C. §§ 301–92 (1982)

56.	21 U.S.C. § 355(c) (1994) 

57.	21 U.S.C. § 355(j)(5)(B)(iv) (1994)

58.	21 U.S.C. § 360c(a)(1)(A)–(C)

59.	35 U.S.C. § 100(a)

60.	35 U.S.C. § 156 (1994)

61.	35 U.S.C. § 271(a) (1994)

62.	35 U.S.C. § 271(e)(1) (1994)

63.	35 U.S.C. § 271(e)(2)–(4) (1994)

64.	58 Stat. 682, as amended, 42 U.S.C. § 201, et. seq.

65.	Pub. L. No. 98-417, Title II, 98 Stat. 1585 (1984)
V.  Legislative History

66.	H.R. Rep. No. 98-857, 98th Cong., 2d Sess., pt. 1 (1984), reprinted in 1984 U.S.C.C.A.N. 2647–48, 2679, 2686

67.	H.R. Rep. No. 98-857, 98th Cong., 2d Sess., pt. 2 (1984), reprinted in 1984 U.S.C.C.A.N. 2686, 2692, 2713

VI.  Online Sources

68.	Jeffrey P. Cohen, The Beginnings: Laboratory and Animal Studies, FDA Consumer (Nov. 1987), revised as reprinted in FDA Consumer Special Report on New Drug Development in the United States (Jan. 1995), available in FDA, The Beginnings: Laboratory and Animal Studies (visited Jan. 18, 2000) <http://www.fda.gov/fdac/special/newdrug/begin.html>.

69.	Reginald Rhein, BIO, PhRMA Call For Longer Patent Lives to Make Up for FDA Review Lags, Biotech. Newswatch, Mar. 18, 1996, available in 1996 WL 8452664