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Firms Find Relief in High Court Ruling

A recent Supreme Court ruling that allows drug makers to ignore rivals’ patents in conducting animal research and clinical trials, but failed to address research tools used to study those drugs, should be a relief for some San Diego-based biotech companies, according to a local attorney.

Richard Warburg, a partner with Foley & Lardner in Del Mar, said the high court’s June 13 ruling solely allows drug companies to experiment with drugs covered by other companies’ patents, if the information is relevant to the U.S. Food and Drug Administration.

The FDA, the federal agency that regulates the drug industry, requires drug makers to prove that their products are safe and effective.

The case, which was closely followed by biotechnology and pharmaceutical companies, pitted Plainsboro, N.J.-based Integra Lifesciences Ltd. against Darmstadt, Germany-based pharmaceutical company Merck KgaA.

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Integra accused Merck , which has no relation to the American drug company of the same name , of infringing on a patent belonging to the New Jersey-based company on compounds that Merck used for research. Integra sued Merck in 1996.

A jury ruled in 2000 that Merck had infringed on Integra’s patents and ordered Merck to pay $15 million, which was later lowered to $6.4 million.

A U.S. Court of Appeals for the Federal Circuit last year sided with Integra, but the Supreme Court last week ruled for Merck.

Despite the court’s decision, Integra has received moral support from many biotechs and research institutions that believe a broader exemption from patent infringement would put them out of business, since their work is not being done with the specific goal of developing products meeting FDA rules.

The Supreme Court said in a footnote that the case was about research using patented drugs, not about tools used to study those drugs, Warburg said.


Not A Global Embrace

Specifically, the court ruling stated that the exemption “does not globally embrace all experimental activity that at some point, however, attenuated, may lead to an FDA approval process.”

Warburg interpreted the court’s decision as seemingly agreeing that the exemption does not extend to patents on research tools, which are chemicals and methods used to find drug candidates.

Carlsbad-based Invitrogen Corp., which develops a wide array of scientific research tools, also interpreted the ruling favorably.

“While the court found that companies may use patented inventions in research activities related to the drug compounds or targets themselves, it excluded patented research tools from its ruling,” said Alan Hammond, Invitrogen’s chief intellectual property counsel. “We believe, therefore, that the ruling will not have a material effect on Invitrogen’s business.”

Warburg believes that the exemption is also good from an investment point of view.

“Those companies can therefore hope for funding from angel and venture capitalists to still be available,” he said.

He gave the example of another local biotechnology company , Ligand Pharmaceuticals Inc., which has several cancer drugs approved in the U.S. and in Europe.

“Ligand was formed on research tools. The patents that were used for screening the new drugs is what venture capital groups were investing in,” Warburg said.

However, the ruling doesn’t mean the end of patent disputes.


Questions Remain

The questions of what is covered in the Supreme Court ruling and what isn’t covered remains, Warburg said.

Warburg speculated that some people may use patented research tools in the hope that no one will find out, though he advises his clients against it. While it may be difficult to detect later on if someone infringed a patented research tool, there have been lawsuits won around that issue, he said.

“The goal is to find what a compound can do without using proprietary technology,” he said.

In the case of Merck vs. Integra, the Supreme Court sent the case back to the appeals court for reconsideration.

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