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The extraterritoriality of US patents on the pharmaceutical industry
As pharmaceutical industries have rapidly modernized and globalized, borders have been blurred and multiple entities in different countries are now involved with the manufacture, supply, distribution, dispensing and administration of even a single drug in the pharmaceutical industry. The cross jurisdictional nature of the modern pharmaceutical industry presents new challenges to limitations on the extraterritorial reach of US patents. The enforcement of US patents outside the jurisdictional boundaries of the USA has judicially evolved through cases such as Deep South, Microsoft, Bayer AG, Union Carbide, AT&T, Cardiac Pacemakers and others. This article explores the effects of recent cases on the extraterritorial enforcement of US pharmaceutical patents, particularly when different types of claims are involved.
Overview of the relevant US Patent Act & case laws The enforcement of US patents is generally limited to activities within the USA. However, in response to Deep South Packing Co. v. Laitram Corp. (p532 [1]) (holding that exporting components of a patented machine for final assembly outside the boundaries of the USA did not infringe a US patent), Congress enacted 35 USC Sections 271(f) and (g), expanding the extraterritorial reach of US patents. Section 271(f) was enacted in 1984 and contains two subparts. Section 271(f)(1) imposes liability for supplying all or a substantial portion of the components of a patented invention so as to induce combination outside the USA. Section 271(f)(2) imposes liability for the supply of any component of a patented invention that is i) especially made or adapted for use in the invention and ii) not a staple article or commodity of commerce suitable for substantially noninfringing use: • W hoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole
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or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. • W hoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. Section 271(f)(1), similar to Section 271(b), is directed to induced infringement and Section 271(f)(2), similar to Section 271(c), is directed to contributory infringement. In 1988, Congress further enacted Section 271(g) imposing liability for importing into the USA or offering to sell, selling or using in
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Special Report Park the USA, a product that is made by a process patSource code: A collection of computer ented in the USA, unless instructions. the product is materially Implantable cardioverter–defibrillator: A device changed or becomes a combining a cardioverter and a defibrillator into trivial and nonessential one implantable unit. component of another Summary judgment: A procedural device used product. Section 271(g) during civil litigation to promptly dispose of a case provides: without a trial. (g) Whoever without authority imports into the United States or offers to sell, sells or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the noncommercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after: • It is materially changed by subsequent processes; or • It becomes a trivial and nonessential component of another product. Subsequent to the enactment of Sections 271(f) and (g), Courts have been forced to consider the contours of each provision in contexts likely unforeseen when each Section was passed. Key terms
Judicial interpretation of Section 271(f)
On its face, the ‘components’ of Section 271(f) are neither defined nor limited to any particular type of claim element. In an early dispute regarding the scope of ‘components’, the US Court of Appeals for the Federal Circuit (the Federal Circuit) was asked to decide whether process steps could be patented components that would invoke Section 271(f), or whether components were somehow limited to physical embodiments. In Standard Havens Prods v. Gencor Inds (p1376 [2]), the Court determined that the provisions of Section 271(f) were not implicated by a method patent (claiming a method for producing asphalt) based on the US sale of an imported unclaimed apparatus used to perform that method. In framing its decision, the Court did not discuss statutory construction of Section 271(f) or expressly address that Section 271(f) does not apply to a method patent. Years later, in Eolas Technologies, Inc. v. Microsoft Corp. [3] , the Federal Circuit again considered the scope of ‘components’ under Section 271(f). Microsoft exported master disks containing source code for Windows and
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Internet Explorer to original equipment manufacturers outside the USA (p1339 [3]). The foreign manufacturers used the master disks to replicate the software code and installed the source code onto computer hard drives for sale (p1339 [3]). Eolas brought an infringement action against Microsoft alleging that the source code contained in the master disks that Microsoft exported to the foreign manufacturer caused the computer to perform the steps of the patented method (p1340 [3]). At issue was whether intangible software code contained in the master disks constituted a component of a patented invention under Section 271(f). In its decision, the Federal Circuit specifically discussed statutory construction of Section 271(f) and held that Section 271(f) was not limited to components that were physical structures; rather, components of every form of invention – whether physical or not – were encompassed within the statute (p1339 [3]). Therefore, the Federal Circuit found that software code included on Microsoft’s master disks was a ‘component’ of a patented invention under Section 271(f) (p1341 [3]). The Federal Circuit did not distinguish between components of a process claim and components of a product claim. That same year, in AT&T Corp. v. Microsoft Corp. [4] , the Federal Circuit again found that intangible software code is capable of being a component under Section 271(f), and was ‘supplied’ when a single copy was sent abroad with the intent that it be replicated. Again, in 2005, the Federal Circuit considered the reach of Section 271(f), and held in Union Carbide v. Shell Oil Co. [5] that Section 271(f) applied to both process and product claims. The patent at issue in Union Carbide was directed to a process for producing ethylene oxide using an improved silver catalyst containing additional metals (p1370 [5]). Shell exported the catalyst to its affiliates outside the USA and Union Carbide’s patented method was practiced using this catalyst (p1368 [5]). The Federal Circuit held the exportation of the catalyst constituted a component of a patented invention under Section 271(f) and found infringement (p1380 [5]). Relying on its earlier decision Eolas, the Federal Circuit addressed that Section 271(f) governs method/process inventions, and therefore applied this section to method claims (p1380 [5]). The Supreme Court revisited the Federal Circuit’s decision in Microsoft Corp v. AT&T Corp (p447 [6]) 2 years later, and considered the questions of whether software qualified as a component under Section 271(f) and whether components of the foreign-made computers were ‘supplied by’ Microsoft from the USA. First, the Court held that software code was not a component under Section 271(f) since it is an idea without physical embodiment and it did not meet Section 271(f)’s requirement of components that were amenable to
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combination (p451 [6]). Although Windows in the abstract (software code) did not qualify as a component under the statute, copies of Windows did so qualify (p451 [6]). The Court left open the question of whether software in the abstract, or any other intangible, could ever be a component under Section 271(f). Second, the Court found that since the master disk from the USA itself was not used on the foreign-made computers, but that foreign-made copies of Windows were actually installed, the software code was not ‘supplied by’ Microsoft (p452 [6]). Reversing the determination of infringement, the Supreme Court retreated from the broader extraterritorial scope the Federal Circuit accorded to the AT&T patent. In 2009, the Federal Circuit sitting en banc in Cardiac Pacemakers, Inc. v. St Jude Medical, Inc. [7] expressly overruled the portion of Union Carbide that held that Section 271(f) applied to both process and product claims. Cardiac Pacemakers’ patent was directed to a method of heart stimulation using implantable cardioverter–defibrillators (p1352 [7]). Cardiac Pacemakers brought an infringement action against St Jude, accusing St Jude of exporting implantable cardioverter defibrillators for use outside the USA in practicing its method claims. The Federal Circuit found that St Jude did not infringe Cardiac Pacemakers’ patent, reasoning that a ‘component’, when applied to a patented method, did not encompass the apparatus by which a method could be performed (p1366 [7]). The Court further reasoned that the legislative history of Section 271(f) was almost completely devoid of any reference to method patents, strongly indicating that Section 271(f) was not intended to apply to method patents (p1364 [7]). The Court concluded that because one could not supply the step of a patented method, a step could not be a component under Section 271(f) (p1364 [7]). The judicial evolution of Section 271(f) suggests that it applies to product claims that include physical, tangible components capable of being combined, it does not encompass steps of method or process claims. Judicial interpretation of Section 271(g)
Before many of the notable Federal Circuit decisions interpreting Section 271(g) were issued, early District Court decisions provided guidance as to the contours of the new statutory provision. In Pfizer, Inc. v. Aceto Corp. [8] , it was disputed whether a foreign company who manufactured a product in China according to a US patented process and thereafter sold the product to a second company in China for eventual exportation to the USA was liable under Section 271(g), based on the ultimate importation of the product into the USA. The Court determined that nothing in the language of Section 271(g) or its legislative history suggested an expansive
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interpretation of the provision that would allow a US patentee to reach a manufacturer who was not also the importer of the product into the USA (p105 [8]). In Marion Merrell Dow, Inc. v. American Cyanamid Co. [9] , the Court addressed the ‘materially changed’ provision in the context of an Israeli manufacturer of diltiazem hydrochloride that was thereafter imported into the USA (p2 [9]). The US process patent was directed to the production of a diltiazem precursor. The imported product was based on the precursor, which was subsequently acetylated and then formed as a salt – all in Israel. Seeking summary judgment of noninfringement, the Israeli manufacturer urged that diltiazem hydrochloride (the imported product) was materially changed by acetylation (the subsequent process) since diltiazem hydrochloride and diltiazem precursor were not the same (p3 [9]). The Court found that acetylation was a reaction that produced simple derivatives and diltiazem hydrochloride and diltiazem precursor were not different products (p7 [9]). In so holding, the Court looked to the legislative history and stated that meaningful protection would not be provided if an accused infringer could avoid liability under Section 271(g) when it used a patented process to produce an intermediate, converted the intermediate to the only commercially saleable drug product of the process using conventional techniques and imported that final product (p7 [9]). In 1996, the Federal Circuit was asked to construe the meanings of the ‘materially changed’ clause of Section 271(g) in Bio-Technology General Corp. (BTG) v. Genentech, Inc. [10] , a case that addressed questions of whether a product that is made by a patented process was materially changed by subsequent processes. Genentech was the assignee of a patent directed to a method for constructing a replicable cloning vehicle (e.g., a plasmid) capable, in a microbial organism, of expressing a particular polypeptide (e.g., human growth hormone [hGH]); (p1557 [10]). BTG manufactured hGH in Israel, and planned to import the product for sale in the USA (p1557 [10]). BTG sued Genentech seeking a declaratory judgment that the Genentech patent was invalid and Genentech counterclaimed for infringement based on BTG’s importation of hGH into the USA (p1557 [10]). At issue was whether BTG’s hGH was ‘a product which is made by a process patented in the United States’, even though Genentech’s patent was directed to a method for producing a replicable cloning vehicle, not a method for producing hGH. The Court held that BTG’s hGH is a product that was made by Genentech’s patented process (p1561 [10]). In so holding, the Court acknowledged that there was little doubt that the plasmid product of Genentech’s patented process and BTG’s hGH were entirely different materials, one being more than materially changed
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Special Report Park in relation to the other (p1561 [10]). However, the Court looked the at Cefaclor: an antibiotic used to treat legislative history, which showed certain infections caused by bacteria. Congress’s intent that infringement of a process for making a plasmid could not be avoided by the importation of a product made from the product produced by the patented process (p1561 [10]). In addition, the Court stated that Genentech’s patent explicitly contemplated that its method would be used as part of an overall process for producing hGH (p1561 [10]). Therefore, the Court concluded that the production of hGH was not too remote from the claimed process of making a replicable cloning vehicle (p1561 [10]). In this case, the Court interpreted the term ‘materially changed’ flexibly according to the legislative history, rather than interpreting it rigidly. That same year, in Eli Lilly & Co. v. American Cyanamid [11] , the Federal Circuit again considered the ‘materially changed’ clause of Section 271(g) and reached a different conclusion than that reached in BTG. American Cyanamid was accused of importing into the USA an intermediate product, which was the principal component of a patented drug, Cefaclor (p1570 [11]). Lilly argued that the intermediate product of the patented process should not be considered materially changed if the principal commercial use of the intermediate product lied in its conversion into the product, which was the subject of Lilly’s patent (p1572 [11]). In comparing the intermediate product to Cefaclor, the Federal Circuit stated that although the intermediate product and Cefaclor shared the basic cephem nucleus, the cephem nucleus was common to thousands of compounds, many of which were dramatically different from others within the cephem family (p1573 [11]). In addition, the Court stated that the intermediate product and Cefaclor were different in four important structural respects, corresponding to the four discrete chemical steps between the two compounds (p1573 [11]). The Court specifically noted that while the addition or removal of a protective group, standing alone, might not be sufficient to constitute a ‘material change’ between two compounds (even though it could dramatically affect certain of their properties), the conversion process between the intermediate product and Cefaclor involved considerably more than the removal of a protective group (p1572 [11]). Therefore, the Court concluded that the intermediate was materially changed by subsequent processes to make Cefaclor (p1573 [11]). Subsequently, in 2003, the Federal Circuit considered the reach of Section 271(g), and held in Bayer AG v. Housey Pharmaceuticals, Inc. [12] that Section 271(g) applied only to the importation of physical goods that were made by the claimed process. The patent at issue in Bayer AG was directed to a method Key term
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of analyzing proteins to identify the specific effect that certain drugs have upon them (p1369 [12]). By using this method, a researcher could test whether a certain drug had a desired effect on a protein. Housey Pharmaceuticals alleged that Bayer AG infringed its patent under Section 271(g) because it sold within the USA certain drugs that were identified based on data generated abroad by the patented process. The Federal Circuit held that Section 271(g) did not apply to the drugs produced abroad based on information obtained from the process of the asserted patent (p1378 [12]). The claimed process did not involve the manufacture of final physical drug products imported in the USA. In its opinion, the Federal Circuit emphasized that the scope of ‘processes’ under Section 271(g) did not extend to information resulting from the claimed process that was used to produce products imported into the USA; rather, the products produced by the claimed process had to be the ones imported (p1378 [12]). Again, in 2009, the Federal Circuit in Amgen, Inc. v. Hoffmann–La Roche Ltd [13] addressed the interpretation of the ‘materially changed’ clause. The patent at issue in Amgen was directed to the production of the protein erythropoietin (EPO) using recombinant DNA technology (p1346 [13]). Roche sought to introduce into the US market its own drug, which it manufactured overseas, and its active ingredient was formed via a chemical reaction that bonds polyethylene glycol (PEG) to recombinant EPO produced by Amgen’s patented method. Therefore, at issue in this case was whether Roche’s product to be imported into the USA was materially changed by subsequent processes so that it was materially different from the product produced by the patented method. The Federal Circuit found that EPO–PEG was not materially changed from EPO. In its decision, the Federal Circuit pointed out that materiality was context-dependent and stated as follows (p1379 [13]): In the biotechnology context, a significant change in a protein’s structure and/or properties would constitute a material change. Cf. Eli Lilly, 82 F.3d at 1573 (‘In the chemical context, a “material” change in a compound is most naturally viewed as a significant change in the compound’s structure and properties’). A good source for determining whether a change in a product of a process is material under § 271(g) is the patent. Where the specification or asserted claims recite a structure or function for the product of the processes, then significant variations from the recited structure and function are material. What makes a variation significant enough to be a ‘material change’, however, is a question of degree. In order to show that there was no material change, Amgen presented evidence that the structural and functional differences were not material because Roche’s EPO–PEG still contained EPO, the structure of EPO
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remained intact, EPO–PEG binded to the EPO receptor and EPO–PEG retained its claimed ability to increase the production of reticulocytes and red blood cells (p1379 [13]). Roche responded by presenting evidence that the identified structural and functional changes conferred pharmacokinetic properties onto EPO–PEG that rendered it superior to EPO made by the claimed processes (p1379 [13]). In particular, Roche emphasized that EPO–PEG’s active ingredient exhibited a longer half-life in the bloodstream, producing EPO–PEG’s longer dosing interval (p1379 [13]). From this record, the Federal Circuit concluded that the structural and functional differences between EP–O-PEG and EPO recited in the process claims were not material (p1379 [13]). Although neither the Supreme Court nor the Federal Circuit has ever directly considered the issue, it has been disputed whether Section 271(g) applies to cases where a patented process is performed partly inside and partly outside the USA. There is no statutory requirement that the patented process be practiced outside the USA. By its terms the statute can be read to cover acts of infringement resulting from exploitation of a patented process partly inside and partly outside the USA. District Courts have decided this issue differently and there is a need for clarification on this point. The judicial evolution of Section 271(g) suggests that it applies only to the importation of physical goods that have undergone manufacture. Therefore, either production of information alone or transmission of information is not covered under this section. In addition, in determining whether the product is materially changed by subsequent processes, the patent at issue is referenced as a source for determining materiality. The effects on various types of pharmaceutical patent claims Product claims
There are various types of product claims that are particularly relevant to the pharmaceutical industry. These are claims directed to small molecules, large molecules (biologics), antibody–drug conjugates, formulation of drugs, diagnostic/prognostic kit (biomarker) and so on. Considering the literal language of Section 271(g) and the judicial interpretations of this section, the patentee holding a pharmaceutical product claim as above may not be able to invoke Section 271(g). Instead, a cause of action under Section 271(f) may be considered when the patentee seeks to prevent other parties from supplying all or a substantial portion of the components of a patented invention in such manner as to actively induce the combination of such components outside of the USA. As discussed above, in order to apply Section 271(f), the claims must recite physical, tangible components capable of being combined.
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Pharmaceutical product claim elements would usually meet the judicial requirements as to physical and tangible components, since they typically consist of physical and tangible chemical substances. However, it is not always clear which claimed elements are components capable of being combined. For example, • In a small-molecule patent claim directed to a certain organic compound, what are components that can be combined? Is it possible to break down the organic compound into several elements consisting of the compound and say these are the components that make up this compound? • What about large-molecule patent claim directed to antibodies? Is the antibody claimed as several components? • What about a biomarker claim comprising a certain sequence of mRNA? What are components of this claim? Can we breakdown the claimed mRNA into several mRNA segments and say these are the components of the claim? The literal language of Section 271(f) does not address many pharmaceutical compound claims. Unlike claims to a mechanical apparatus, a pharmaceutical compound cannot be produced by merely combining several components. Rather, a pharmaceutical compound is produced by synthesizing or combining various materials via several steps or by using cells, plants, animals and so on. Therefore, if a party exports materials that are used for manufacturing a pharmaceutical compound with specific instructions explaining the manufacturing steps or if a party exports genetically modified plants or animals to another country abroad to avoid patent infringement liability in the USA, the patentee may have difficulty enforcing its compound claims under Section 271(f) against the exporter of the component. If, however, a US supplier supplies a key ingredient of a claimed pharmaceutical composition to an overseas company who prepares the claimed composition, liability can be established under Section 271(f). Although Section 271(f) was enacted in an attempt to prevent a narrow patent reach in Deepsouth, Courts interpreted the language of this section narrow based on the legislative history and a judicial restraint against expansion of the extraterritoriality of US patents. Future enforcement of pharmaceutical product claims under Section 271(f) may continue to be challenging. Even though Section 271(f) may be unavailable for patentees seeking to broadly enforce US patent claims extraterritorially, manufacturers can still use non-US patents to protect products intended to be offered or sold in the USA.
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Key term
Process claims
Pharmaceutical process claims are Invisalign® technology: an alternative drawn to methods for manufacto wirebraces that uses transparent, turing a drug, methods for treating incremental aligners to adjust teeth. a disease, methods for diagnosing/ prognosing a disease, screening methods for discovering drugs and so on. These methods are generally not implicated under Section 271(f) for US parties who supply a claimed component to an overseas company under Cardiac Pacemakers, and also because the supply of an ingredient used in processes for manufacturing, treating, diagnosing and so on is not the same as the supply of the process step itself. Under Section 271(g), pharmaceutical products made abroad by patented processes are – after importation – infringing, as long as they are not materially changed by subsequent processes, and do become a trivial and nonessential component of another product. First, process claims directed to a method for manufacturing a drug may be enforced under Section 271(g). The Courts in BTG, Eli Lilly and Amgen, applying Section 271(g), addressed issues as to whether a product made by a patented process was materially changed by subsequent processes. While modification of an imported chemical intermediate by four subsequent treatment steps in Lilly was considered to result in a product that was ‘materially changed’, a protein manufactured abroad by a patented process, which protein contained an additional PEG group bound thereto, was not considered to have been materially changed. Key to both cases was the Court’s analysis of the patents in suit and the extent to which the structure and function of the ‘changed’ product differed from the product of the claimed method. Patentees seeking to assert infringement claims under Section 271(g) must consider the structure and function of the imported product relative to the product described in the patent. Second, process claims that do not result in physical products that are imported but may not be enforceable under Section 271(g). However, Courts have not uniformly considered whether, and what types, of ‘information’ that result from a patented process are physical products rather than intangible products. In CNET Networks, Inc. v. Etilize, Inc. (p987 [14]), the patent was directed to methods and processes of compiling information about consumer products into cataloged databases for online merchants. Etilize is accused of providing catalogs produced abroad by the patented method (p987 [14]). The Court found that electronic catalog of product information that resulted from the process claims was a product under Section 271(g) and that infringement claims were proper under that section (p995 [14]). In Ormco Corp. v. Align Technology, Inc. (p1061 [15]), the patent was directed to a method of processing digital
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data for use in facilitating the orthodontic treatment of a patient. The patented method included the step of scanning 3D surfaces that have the shapes of a patient’s teeth and generating data thereof and the step of producing digital representations of the shapes of the patient’s teeth from the generated data (p1061 [15]). The commercial embodiment of the accused infringer is better known as Invisalign® technology. The Court found that a 3D digital file resulting from the patented process was not merely information, but rather a tangible creation produced by practicing method steps and therefore a product under Section 271(g) (p1076 [15]). Under CNET, and Ormco, patentees may consider drafting claims directed to methods of producing products in a way that the resultant products can be construed as a physical article rather than ‘information’. Patentees may wish to avoid claims directed to ‘methods for determining’ where the result of the claimed process is a determination based on a comparison or test – rather than a tangible product. Third, process claims directed to a method for treating a disease are not generally enforceable under Section 271(g) in view of the literal language of the statute and Courts stating that the claimed process must result in a product. Typical method of treatment claims under current US practice may recite: A method of treating DISEASE X, comprising administering COMPOUND A to a human in need thereof. The above claim recites as claim limitations: (a) the disease to be treated; (b) the administering step; (c) the drug to be administered; and, (d) that the human be “in need of” treatment. Such claims invoke questions of multi-actor infringement under Section 271(a), where a human must be administered the claimed compound (whether self administered or administered by another), and the subject must be “in need of” such compound (which may involve a diagnosis by a physician who determines the ‘need’ for the compound). In Jansen v. Rexall Sundown, Inc. (p1333 [16]), in a claim directed to a method of treating or preventing pernicious anemia in humans by administering a certain vitamin preparation to “a human in need thereof,” the Federal Circuit held that the preamble was not merely a statement of effect that may or may not be desired or appreciated, but rather was a statement of the intentional purpose for which the method must be performed. The Court concluded that the claim required that the vitamin preparation must be administered to a human with a recognized need to treat or prevent pernicious anemia (p1334 [15]). While the law governing the standards of proving multiparty infringement is currently under review in Limelight Networks, Inc. v. Akamai Technologies, Inc. [17] , method of treatment
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claims have been successfully enforced under Section 271(b). Under Section 271(b), induced infringement of method of treatment claims has been proven where a manufacturer supplies a drug product along with a product label directing patients and physicians how to use the product. So long as the label instructs how to use the drug product in a method for treating the claimed condition, Courts have not hesitated to impose liability on manufacturers for induced infringement. Future perspective Sections 271(f) and (g) and relevant case law do not provide a cause of action for every situation regarding that patentees holding pharmaceutical patent claims would enforce their patents against those who practice the patents abroad in a manner to avoid patent infringement liability in the USA. In view of the legislative history expanding the extraterritorial reach of US patents in certain infringement scenarios, such as Section 271(f) or (g), another legislative attempt to remedy this problem in the future may be considered as a possible approach to give a legal ground for enforcing those patents. However, as we have seen through the
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development of relevant cases, the literal language of the statute drafted based on certain factual scenarios and the Court’s narrow and rigid interpretations of the language of the statute based on the legislative history will in result similar situations like Section 271(f) or (g). In addition, expanding extraterritorial reach of US patents through legislative action may invite a political conflict with other countries. Therefore, legislative action does not appear to be an intrinsic remedy. Maybe, we already have an answer to solve this problem. It is acquiring patents in those countries we can expect that the patent may be practiced. This seems to be the most reliable and even cost-effective approach, rather than relying on the extraterritorial effect of US patent right and spending time and money in the Court to enforce the patent. Financial & competing interests disclosure The author has no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties. No writing assistance was utilized in the production of this manuscript.
Executive summary Background • This article explores the effects of recent cases on the extraterritorial enforcement of US pharmaceutical patents.
Overview of the relevant US Patent Act & case laws • The judicial evolution of 35 U.S.C. Section 271(f) suggests that it applies to product claims that include physical, tangible components capable of being combined, it does not encompass steps of method or process claims. • Section 271(g) applies only to the importation of physical goods that have undergone manufacture. In determining whether the product is materially changed by subsequent processes, the patent at issue is referenced as a source for determining materiality.
The effects on various types of pharmaceutical patent claims • The literal language of Section 271(f) does not address many pharmaceutical compound claims. Although Section 271(f) was enacted in an attempt to prevent a narrow patent reach in Deepsouth, Courts interpreted the language of this section narrow based on the legislative history and a judicial restraint against expansion of the extraterritoriality of US patents. Future enforcement of pharmaceutical product claims under Section 271(f) may continue to be challenging. • Pharmaceutical process claims are generally not implicated under Section 271(f) in view of Cardiac Pacemakers. • Process claims directed to a method for manufacturing a drug may be enforced under Section 271(g). Patentees seeking to assert infringement claims under Section 271(g) must consider the structure and function of the imported product relative to the product described in the patent. • Process claims that do not result in physical products that are imported but may not be enforceable under Section 271(g). Patentees may wish to avoid claims directed to “methods for determining” where the result of the claimed process is a determination based on a comparison or test – rather than a tangible product. • Process claims directed to a method for treating a disease are not generally enforceable under Section 271(g) in view of the literal language of the statute and Courts stating that the claimed process must result in a product.
Future perspective • This section discusses possible approaches to deal with issues regarding the extraterritorial enforcement of US pharmaceutical patent.
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1
Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972).
2
Standard Havens Prods. v. Gencor Inds., 953 F.2d 1360 (Fed. Cir. 1991).
3
Eolas Technologies, Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005).
4
AT&T Corp. v. Microsoft Corp., 414 F.3d 1366 (Fed. Cir. 2005).
5
Union Carbide Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005).
6
Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007).
7
Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 576 F.3d 1348 (Fed. Cir. 2009).
8
Pfizer, Inc. v. Aceto Corp., 853 F. Supp. 104 (S.D. N.Y. 1994).
9
Marion Merrell Dow, Inc. v. American Cyanamid Co., 1994 WL 173806 (D.N.J. 1994).
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10
Bio-Technology General Corp. v. Genentech, Inc., 80 F.3d 1533 (Fed. Cir. 1996).
11
Eli Lilly & Co. v. American Cyanamid., 82 F.3d 1568 (Fed. Cir. 1996).
12
Bayer AG v. Housey Pharmaceuticals, Inc., 340 F.3d 1367 (Fed. Cir. 2003).
13
Amgen, Inc. v. Hoffmann-La Roche Ltd., 580 F.3d 1340 (Fed. Cir. 2009).
14
CNET Networks, Inc. v. Etilize, Inc., 528 F. Supp. 2d 985 (N.D. Cal. 2007).
15
Ormco Corp. v. Align Technology, Inc., 609 F. Supp. 2d 1057 (C.D. Cal. 2009).
16
Jansen v. Rexall Sundown, Inc., 342 F.3d 1329 (Fed. Cir. 2003).
17
Limelight Networks, Inc. v. Akamai Technologies, Inc., 692 F.3d (S. Ct. 2014).
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The extraterritoriality of US patents on the pharmaceutical industry
As pharmaceutical industries have rapidly modernized and globalized, borders have been blurred and multiple entities in different countries are now involved with the manufacture, supply, distribution, dispensing and administration of even a single drug in the pharmaceutical industry. The cross jurisdictional nature of the modern pharmaceutical industry presents new challenges to limitations on the extraterritorial reach of US patents. The enforcement of US patents outside the jurisdictional boundaries of the USA has judicially evolved through cases such as Deep South, Microsoft, Bayer AG, Union Carbide, AT&T, Cardiac Pacemakers and others. This article explores the effects of recent cases on the extraterritorial enforcement of US pharmaceutical patents, particularly when different types of claims are involved.
Overview of the relevant US Patent Act & case laws The enforcement of US patents is generally limited to activities within the USA. However, in response to Deep South Packing Co. v. Laitram Corp. (p532 [1]) (holding that exporting components of a patented machine for final assembly outside the boundaries of the USA did not infringe a US patent), Congress enacted 35 USC Sections 271(f) and (g), expanding the extraterritorial reach of US patents. Section 271(f) was enacted in 1984 and contains two subparts. Section 271(f)(1) imposes liability for supplying all or a substantial portion of the components of a patented invention so as to induce combination outside the USA. Section 271(f)(2) imposes liability for the supply of any component of a patented invention that is i) especially made or adapted for use in the invention and ii) not a staple article or commodity of commerce suitable for substantially noninfringing use: • W hoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole
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or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. • W hoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. Section 271(f)(1), similar to Section 271(b), is directed to induced infringement and Section 271(f)(2), similar to Section 271(c), is directed to contributory infringement. In 1988, Congress further enacted Section 271(g) imposing liability for importing into the USA or offering to sell, selling or using in
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Special Report Park the USA, a product that is made by a process patSource code: A collection of computer ented in the USA, unless instructions. the product is materially Implantable cardioverter–defibrillator: A device changed or becomes a combining a cardioverter and a defibrillator into trivial and nonessential one implantable unit. component of another Summary judgment: A procedural device used product. Section 271(g) during civil litigation to promptly dispose of a case provides: without a trial. (g) Whoever without authority imports into the United States or offers to sell, sells or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the noncommercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after: • It is materially changed by subsequent processes; or • It becomes a trivial and nonessential component of another product. Subsequent to the enactment of Sections 271(f) and (g), Courts have been forced to consider the contours of each provision in contexts likely unforeseen when each Section was passed. Key terms
Judicial interpretation of Section 271(f)
On its face, the ‘components’ of Section 271(f) are neither defined nor limited to any particular type of claim element. In an early dispute regarding the scope of ‘components’, the US Court of Appeals for the Federal Circuit (the Federal Circuit) was asked to decide whether process steps could be patented components that would invoke Section 271(f), or whether components were somehow limited to physical embodiments. In Standard Havens Prods v. Gencor Inds (p1376 [2]), the Court determined that the provisions of Section 271(f) were not implicated by a method patent (claiming a method for producing asphalt) based on the US sale of an imported unclaimed apparatus used to perform that method. In framing its decision, the Court did not discuss statutory construction of Section 271(f) or expressly address that Section 271(f) does not apply to a method patent. Years later, in Eolas Technologies, Inc. v. Microsoft Corp. [3] , the Federal Circuit again considered the scope of ‘components’ under Section 271(f). Microsoft exported master disks containing source code for Windows and
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Internet Explorer to original equipment manufacturers outside the USA (p1339 [3]). The foreign manufacturers used the master disks to replicate the software code and installed the source code onto computer hard drives for sale (p1339 [3]). Eolas brought an infringement action against Microsoft alleging that the source code contained in the master disks that Microsoft exported to the foreign manufacturer caused the computer to perform the steps of the patented method (p1340 [3]). At issue was whether intangible software code contained in the master disks constituted a component of a patented invention under Section 271(f). In its decision, the Federal Circuit specifically discussed statutory construction of Section 271(f) and held that Section 271(f) was not limited to components that were physical structures; rather, components of every form of invention – whether physical or not – were encompassed within the statute (p1339 [3]). Therefore, the Federal Circuit found that software code included on Microsoft’s master disks was a ‘component’ of a patented invention under Section 271(f) (p1341 [3]). The Federal Circuit did not distinguish between components of a process claim and components of a product claim. That same year, in AT&T Corp. v. Microsoft Corp. [4] , the Federal Circuit again found that intangible software code is capable of being a component under Section 271(f), and was ‘supplied’ when a single copy was sent abroad with the intent that it be replicated. Again, in 2005, the Federal Circuit considered the reach of Section 271(f), and held in Union Carbide v. Shell Oil Co. [5] that Section 271(f) applied to both process and product claims. The patent at issue in Union Carbide was directed to a process for producing ethylene oxide using an improved silver catalyst containing additional metals (p1370 [5]). Shell exported the catalyst to its affiliates outside the USA and Union Carbide’s patented method was practiced using this catalyst (p1368 [5]). The Federal Circuit held the exportation of the catalyst constituted a component of a patented invention under Section 271(f) and found infringement (p1380 [5]). Relying on its earlier decision Eolas, the Federal Circuit addressed that Section 271(f) governs method/process inventions, and therefore applied this section to method claims (p1380 [5]). The Supreme Court revisited the Federal Circuit’s decision in Microsoft Corp v. AT&T Corp (p447 [6]) 2 years later, and considered the questions of whether software qualified as a component under Section 271(f) and whether components of the foreign-made computers were ‘supplied by’ Microsoft from the USA. First, the Court held that software code was not a component under Section 271(f) since it is an idea without physical embodiment and it did not meet Section 271(f)’s requirement of components that were amenable to
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combination (p451 [6]). Although Windows in the abstract (software code) did not qualify as a component under the statute, copies of Windows did so qualify (p451 [6]). The Court left open the question of whether software in the abstract, or any other intangible, could ever be a component under Section 271(f). Second, the Court found that since the master disk from the USA itself was not used on the foreign-made computers, but that foreign-made copies of Windows were actually installed, the software code was not ‘supplied by’ Microsoft (p452 [6]). Reversing the determination of infringement, the Supreme Court retreated from the broader extraterritorial scope the Federal Circuit accorded to the AT&T patent. In 2009, the Federal Circuit sitting en banc in Cardiac Pacemakers, Inc. v. St Jude Medical, Inc. [7] expressly overruled the portion of Union Carbide that held that Section 271(f) applied to both process and product claims. Cardiac Pacemakers’ patent was directed to a method of heart stimulation using implantable cardioverter–defibrillators (p1352 [7]). Cardiac Pacemakers brought an infringement action against St Jude, accusing St Jude of exporting implantable cardioverter defibrillators for use outside the USA in practicing its method claims. The Federal Circuit found that St Jude did not infringe Cardiac Pacemakers’ patent, reasoning that a ‘component’, when applied to a patented method, did not encompass the apparatus by which a method could be performed (p1366 [7]). The Court further reasoned that the legislative history of Section 271(f) was almost completely devoid of any reference to method patents, strongly indicating that Section 271(f) was not intended to apply to method patents (p1364 [7]). The Court concluded that because one could not supply the step of a patented method, a step could not be a component under Section 271(f) (p1364 [7]). The judicial evolution of Section 271(f) suggests that it applies to product claims that include physical, tangible components capable of being combined, it does not encompass steps of method or process claims. Judicial interpretation of Section 271(g)
Before many of the notable Federal Circuit decisions interpreting Section 271(g) were issued, early District Court decisions provided guidance as to the contours of the new statutory provision. In Pfizer, Inc. v. Aceto Corp. [8] , it was disputed whether a foreign company who manufactured a product in China according to a US patented process and thereafter sold the product to a second company in China for eventual exportation to the USA was liable under Section 271(g), based on the ultimate importation of the product into the USA. The Court determined that nothing in the language of Section 271(g) or its legislative history suggested an expansive
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interpretation of the provision that would allow a US patentee to reach a manufacturer who was not also the importer of the product into the USA (p105 [8]). In Marion Merrell Dow, Inc. v. American Cyanamid Co. [9] , the Court addressed the ‘materially changed’ provision in the context of an Israeli manufacturer of diltiazem hydrochloride that was thereafter imported into the USA (p2 [9]). The US process patent was directed to the production of a diltiazem precursor. The imported product was based on the precursor, which was subsequently acetylated and then formed as a salt – all in Israel. Seeking summary judgment of noninfringement, the Israeli manufacturer urged that diltiazem hydrochloride (the imported product) was materially changed by acetylation (the subsequent process) since diltiazem hydrochloride and diltiazem precursor were not the same (p3 [9]). The Court found that acetylation was a reaction that produced simple derivatives and diltiazem hydrochloride and diltiazem precursor were not different products (p7 [9]). In so holding, the Court looked to the legislative history and stated that meaningful protection would not be provided if an accused infringer could avoid liability under Section 271(g) when it used a patented process to produce an intermediate, converted the intermediate to the only commercially saleable drug product of the process using conventional techniques and imported that final product (p7 [9]). In 1996, the Federal Circuit was asked to construe the meanings of the ‘materially changed’ clause of Section 271(g) in Bio-Technology General Corp. (BTG) v. Genentech, Inc. [10] , a case that addressed questions of whether a product that is made by a patented process was materially changed by subsequent processes. Genentech was the assignee of a patent directed to a method for constructing a replicable cloning vehicle (e.g., a plasmid) capable, in a microbial organism, of expressing a particular polypeptide (e.g., human growth hormone [hGH]); (p1557 [10]). BTG manufactured hGH in Israel, and planned to import the product for sale in the USA (p1557 [10]). BTG sued Genentech seeking a declaratory judgment that the Genentech patent was invalid and Genentech counterclaimed for infringement based on BTG’s importation of hGH into the USA (p1557 [10]). At issue was whether BTG’s hGH was ‘a product which is made by a process patented in the United States’, even though Genentech’s patent was directed to a method for producing a replicable cloning vehicle, not a method for producing hGH. The Court held that BTG’s hGH is a product that was made by Genentech’s patented process (p1561 [10]). In so holding, the Court acknowledged that there was little doubt that the plasmid product of Genentech’s patented process and BTG’s hGH were entirely different materials, one being more than materially changed
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Special Report Park in relation to the other (p1561 [10]). However, the Court looked the at Cefaclor: an antibiotic used to treat legislative history, which showed certain infections caused by bacteria. Congress’s intent that infringement of a process for making a plasmid could not be avoided by the importation of a product made from the product produced by the patented process (p1561 [10]). In addition, the Court stated that Genentech’s patent explicitly contemplated that its method would be used as part of an overall process for producing hGH (p1561 [10]). Therefore, the Court concluded that the production of hGH was not too remote from the claimed process of making a replicable cloning vehicle (p1561 [10]). In this case, the Court interpreted the term ‘materially changed’ flexibly according to the legislative history, rather than interpreting it rigidly. That same year, in Eli Lilly & Co. v. American Cyanamid [11] , the Federal Circuit again considered the ‘materially changed’ clause of Section 271(g) and reached a different conclusion than that reached in BTG. American Cyanamid was accused of importing into the USA an intermediate product, which was the principal component of a patented drug, Cefaclor (p1570 [11]). Lilly argued that the intermediate product of the patented process should not be considered materially changed if the principal commercial use of the intermediate product lied in its conversion into the product, which was the subject of Lilly’s patent (p1572 [11]). In comparing the intermediate product to Cefaclor, the Federal Circuit stated that although the intermediate product and Cefaclor shared the basic cephem nucleus, the cephem nucleus was common to thousands of compounds, many of which were dramatically different from others within the cephem family (p1573 [11]). In addition, the Court stated that the intermediate product and Cefaclor were different in four important structural respects, corresponding to the four discrete chemical steps between the two compounds (p1573 [11]). The Court specifically noted that while the addition or removal of a protective group, standing alone, might not be sufficient to constitute a ‘material change’ between two compounds (even though it could dramatically affect certain of their properties), the conversion process between the intermediate product and Cefaclor involved considerably more than the removal of a protective group (p1572 [11]). Therefore, the Court concluded that the intermediate was materially changed by subsequent processes to make Cefaclor (p1573 [11]). Subsequently, in 2003, the Federal Circuit considered the reach of Section 271(g), and held in Bayer AG v. Housey Pharmaceuticals, Inc. [12] that Section 271(g) applied only to the importation of physical goods that were made by the claimed process. The patent at issue in Bayer AG was directed to a method Key term
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of analyzing proteins to identify the specific effect that certain drugs have upon them (p1369 [12]). By using this method, a researcher could test whether a certain drug had a desired effect on a protein. Housey Pharmaceuticals alleged that Bayer AG infringed its patent under Section 271(g) because it sold within the USA certain drugs that were identified based on data generated abroad by the patented process. The Federal Circuit held that Section 271(g) did not apply to the drugs produced abroad based on information obtained from the process of the asserted patent (p1378 [12]). The claimed process did not involve the manufacture of final physical drug products imported in the USA. In its opinion, the Federal Circuit emphasized that the scope of ‘processes’ under Section 271(g) did not extend to information resulting from the claimed process that was used to produce products imported into the USA; rather, the products produced by the claimed process had to be the ones imported (p1378 [12]). Again, in 2009, the Federal Circuit in Amgen, Inc. v. Hoffmann–La Roche Ltd [13] addressed the interpretation of the ‘materially changed’ clause. The patent at issue in Amgen was directed to the production of the protein erythropoietin (EPO) using recombinant DNA technology (p1346 [13]). Roche sought to introduce into the US market its own drug, which it manufactured overseas, and its active ingredient was formed via a chemical reaction that bonds polyethylene glycol (PEG) to recombinant EPO produced by Amgen’s patented method. Therefore, at issue in this case was whether Roche’s product to be imported into the USA was materially changed by subsequent processes so that it was materially different from the product produced by the patented method. The Federal Circuit found that EPO–PEG was not materially changed from EPO. In its decision, the Federal Circuit pointed out that materiality was context-dependent and stated as follows (p1379 [13]): In the biotechnology context, a significant change in a protein’s structure and/or properties would constitute a material change. Cf. Eli Lilly, 82 F.3d at 1573 (‘In the chemical context, a “material” change in a compound is most naturally viewed as a significant change in the compound’s structure and properties’). A good source for determining whether a change in a product of a process is material under § 271(g) is the patent. Where the specification or asserted claims recite a structure or function for the product of the processes, then significant variations from the recited structure and function are material. What makes a variation significant enough to be a ‘material change’, however, is a question of degree. In order to show that there was no material change, Amgen presented evidence that the structural and functional differences were not material because Roche’s EPO–PEG still contained EPO, the structure of EPO
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remained intact, EPO–PEG binded to the EPO receptor and EPO–PEG retained its claimed ability to increase the production of reticulocytes and red blood cells (p1379 [13]). Roche responded by presenting evidence that the identified structural and functional changes conferred pharmacokinetic properties onto EPO–PEG that rendered it superior to EPO made by the claimed processes (p1379 [13]). In particular, Roche emphasized that EPO–PEG’s active ingredient exhibited a longer half-life in the bloodstream, producing EPO–PEG’s longer dosing interval (p1379 [13]). From this record, the Federal Circuit concluded that the structural and functional differences between EP–O-PEG and EPO recited in the process claims were not material (p1379 [13]). Although neither the Supreme Court nor the Federal Circuit has ever directly considered the issue, it has been disputed whether Section 271(g) applies to cases where a patented process is performed partly inside and partly outside the USA. There is no statutory requirement that the patented process be practiced outside the USA. By its terms the statute can be read to cover acts of infringement resulting from exploitation of a patented process partly inside and partly outside the USA. District Courts have decided this issue differently and there is a need for clarification on this point. The judicial evolution of Section 271(g) suggests that it applies only to the importation of physical goods that have undergone manufacture. Therefore, either production of information alone or transmission of information is not covered under this section. In addition, in determining whether the product is materially changed by subsequent processes, the patent at issue is referenced as a source for determining materiality. The effects on various types of pharmaceutical patent claims Product claims
There are various types of product claims that are particularly relevant to the pharmaceutical industry. These are claims directed to small molecules, large molecules (biologics), antibody–drug conjugates, formulation of drugs, diagnostic/prognostic kit (biomarker) and so on. Considering the literal language of Section 271(g) and the judicial interpretations of this section, the patentee holding a pharmaceutical product claim as above may not be able to invoke Section 271(g). Instead, a cause of action under Section 271(f) may be considered when the patentee seeks to prevent other parties from supplying all or a substantial portion of the components of a patented invention in such manner as to actively induce the combination of such components outside of the USA. As discussed above, in order to apply Section 271(f), the claims must recite physical, tangible components capable of being combined.
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Pharmaceutical product claim elements would usually meet the judicial requirements as to physical and tangible components, since they typically consist of physical and tangible chemical substances. However, it is not always clear which claimed elements are components capable of being combined. For example, • In a small-molecule patent claim directed to a certain organic compound, what are components that can be combined? Is it possible to break down the organic compound into several elements consisting of the compound and say these are the components that make up this compound? • What about large-molecule patent claim directed to antibodies? Is the antibody claimed as several components? • What about a biomarker claim comprising a certain sequence of mRNA? What are components of this claim? Can we breakdown the claimed mRNA into several mRNA segments and say these are the components of the claim? The literal language of Section 271(f) does not address many pharmaceutical compound claims. Unlike claims to a mechanical apparatus, a pharmaceutical compound cannot be produced by merely combining several components. Rather, a pharmaceutical compound is produced by synthesizing or combining various materials via several steps or by using cells, plants, animals and so on. Therefore, if a party exports materials that are used for manufacturing a pharmaceutical compound with specific instructions explaining the manufacturing steps or if a party exports genetically modified plants or animals to another country abroad to avoid patent infringement liability in the USA, the patentee may have difficulty enforcing its compound claims under Section 271(f) against the exporter of the component. If, however, a US supplier supplies a key ingredient of a claimed pharmaceutical composition to an overseas company who prepares the claimed composition, liability can be established under Section 271(f). Although Section 271(f) was enacted in an attempt to prevent a narrow patent reach in Deepsouth, Courts interpreted the language of this section narrow based on the legislative history and a judicial restraint against expansion of the extraterritoriality of US patents. Future enforcement of pharmaceutical product claims under Section 271(f) may continue to be challenging. Even though Section 271(f) may be unavailable for patentees seeking to broadly enforce US patent claims extraterritorially, manufacturers can still use non-US patents to protect products intended to be offered or sold in the USA.
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Key term
Process claims
Pharmaceutical process claims are Invisalign® technology: an alternative drawn to methods for manufacto wirebraces that uses transparent, turing a drug, methods for treating incremental aligners to adjust teeth. a disease, methods for diagnosing/ prognosing a disease, screening methods for discovering drugs and so on. These methods are generally not implicated under Section 271(f) for US parties who supply a claimed component to an overseas company under Cardiac Pacemakers, and also because the supply of an ingredient used in processes for manufacturing, treating, diagnosing and so on is not the same as the supply of the process step itself. Under Section 271(g), pharmaceutical products made abroad by patented processes are – after importation – infringing, as long as they are not materially changed by subsequent processes, and do become a trivial and nonessential component of another product. First, process claims directed to a method for manufacturing a drug may be enforced under Section 271(g). The Courts in BTG, Eli Lilly and Amgen, applying Section 271(g), addressed issues as to whether a product made by a patented process was materially changed by subsequent processes. While modification of an imported chemical intermediate by four subsequent treatment steps in Lilly was considered to result in a product that was ‘materially changed’, a protein manufactured abroad by a patented process, which protein contained an additional PEG group bound thereto, was not considered to have been materially changed. Key to both cases was the Court’s analysis of the patents in suit and the extent to which the structure and function of the ‘changed’ product differed from the product of the claimed method. Patentees seeking to assert infringement claims under Section 271(g) must consider the structure and function of the imported product relative to the product described in the patent. Second, process claims that do not result in physical products that are imported but may not be enforceable under Section 271(g). However, Courts have not uniformly considered whether, and what types, of ‘information’ that result from a patented process are physical products rather than intangible products. In CNET Networks, Inc. v. Etilize, Inc. (p987 [14]), the patent was directed to methods and processes of compiling information about consumer products into cataloged databases for online merchants. Etilize is accused of providing catalogs produced abroad by the patented method (p987 [14]). The Court found that electronic catalog of product information that resulted from the process claims was a product under Section 271(g) and that infringement claims were proper under that section (p995 [14]). In Ormco Corp. v. Align Technology, Inc. (p1061 [15]), the patent was directed to a method of processing digital
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data for use in facilitating the orthodontic treatment of a patient. The patented method included the step of scanning 3D surfaces that have the shapes of a patient’s teeth and generating data thereof and the step of producing digital representations of the shapes of the patient’s teeth from the generated data (p1061 [15]). The commercial embodiment of the accused infringer is better known as Invisalign® technology. The Court found that a 3D digital file resulting from the patented process was not merely information, but rather a tangible creation produced by practicing method steps and therefore a product under Section 271(g) (p1076 [15]). Under CNET, and Ormco, patentees may consider drafting claims directed to methods of producing products in a way that the resultant products can be construed as a physical article rather than ‘information’. Patentees may wish to avoid claims directed to ‘methods for determining’ where the result of the claimed process is a determination based on a comparison or test – rather than a tangible product. Third, process claims directed to a method for treating a disease are not generally enforceable under Section 271(g) in view of the literal language of the statute and Courts stating that the claimed process must result in a product. Typical method of treatment claims under current US practice may recite: A method of treating DISEASE X, comprising administering COMPOUND A to a human in need thereof. The above claim recites as claim limitations: (a) the disease to be treated; (b) the administering step; (c) the drug to be administered; and, (d) that the human be “in need of” treatment. Such claims invoke questions of multi-actor infringement under Section 271(a), where a human must be administered the claimed compound (whether self administered or administered by another), and the subject must be “in need of” such compound (which may involve a diagnosis by a physician who determines the ‘need’ for the compound). In Jansen v. Rexall Sundown, Inc. (p1333 [16]), in a claim directed to a method of treating or preventing pernicious anemia in humans by administering a certain vitamin preparation to “a human in need thereof,” the Federal Circuit held that the preamble was not merely a statement of effect that may or may not be desired or appreciated, but rather was a statement of the intentional purpose for which the method must be performed. The Court concluded that the claim required that the vitamin preparation must be administered to a human with a recognized need to treat or prevent pernicious anemia (p1334 [15]). While the law governing the standards of proving multiparty infringement is currently under review in Limelight Networks, Inc. v. Akamai Technologies, Inc. [17] , method of treatment
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claims have been successfully enforced under Section 271(b). Under Section 271(b), induced infringement of method of treatment claims has been proven where a manufacturer supplies a drug product along with a product label directing patients and physicians how to use the product. So long as the label instructs how to use the drug product in a method for treating the claimed condition, Courts have not hesitated to impose liability on manufacturers for induced infringement. Future perspective Sections 271(f) and (g) and relevant case law do not provide a cause of action for every situation regarding that patentees holding pharmaceutical patent claims would enforce their patents against those who practice the patents abroad in a manner to avoid patent infringement liability in the USA. In view of the legislative history expanding the extraterritorial reach of US patents in certain infringement scenarios, such as Section 271(f) or (g), another legislative attempt to remedy this problem in the future may be considered as a possible approach to give a legal ground for enforcing those patents. However, as we have seen through the
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development of relevant cases, the literal language of the statute drafted based on certain factual scenarios and the Court’s narrow and rigid interpretations of the language of the statute based on the legislative history will in result similar situations like Section 271(f) or (g). In addition, expanding extraterritorial reach of US patents through legislative action may invite a political conflict with other countries. Therefore, legislative action does not appear to be an intrinsic remedy. Maybe, we already have an answer to solve this problem. It is acquiring patents in those countries we can expect that the patent may be practiced. This seems to be the most reliable and even cost-effective approach, rather than relying on the extraterritorial effect of US patent right and spending time and money in the Court to enforce the patent. Financial & competing interests disclosure The author has no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties. No writing assistance was utilized in the production of this manuscript.
Executive summary Background • This article explores the effects of recent cases on the extraterritorial enforcement of US pharmaceutical patents.
Overview of the relevant US Patent Act & case laws • The judicial evolution of 35 U.S.C. Section 271(f) suggests that it applies to product claims that include physical, tangible components capable of being combined, it does not encompass steps of method or process claims. • Section 271(g) applies only to the importation of physical goods that have undergone manufacture. In determining whether the product is materially changed by subsequent processes, the patent at issue is referenced as a source for determining materiality.
The effects on various types of pharmaceutical patent claims • The literal language of Section 271(f) does not address many pharmaceutical compound claims. Although Section 271(f) was enacted in an attempt to prevent a narrow patent reach in Deepsouth, Courts interpreted the language of this section narrow based on the legislative history and a judicial restraint against expansion of the extraterritoriality of US patents. Future enforcement of pharmaceutical product claims under Section 271(f) may continue to be challenging. • Pharmaceutical process claims are generally not implicated under Section 271(f) in view of Cardiac Pacemakers. • Process claims directed to a method for manufacturing a drug may be enforced under Section 271(g). Patentees seeking to assert infringement claims under Section 271(g) must consider the structure and function of the imported product relative to the product described in the patent. • Process claims that do not result in physical products that are imported but may not be enforceable under Section 271(g). Patentees may wish to avoid claims directed to “methods for determining” where the result of the claimed process is a determination based on a comparison or test – rather than a tangible product. • Process claims directed to a method for treating a disease are not generally enforceable under Section 271(g) in view of the literal language of the statute and Courts stating that the claimed process must result in a product.
Future perspective • This section discusses possible approaches to deal with issues regarding the extraterritorial enforcement of US pharmaceutical patent.
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1
Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972).
2
Standard Havens Prods. v. Gencor Inds., 953 F.2d 1360 (Fed. Cir. 1991).
3
Eolas Technologies, Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005).
4
AT&T Corp. v. Microsoft Corp., 414 F.3d 1366 (Fed. Cir. 2005).
5
Union Carbide Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005).
6
Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007).
7
Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 576 F.3d 1348 (Fed. Cir. 2009).
8
Pfizer, Inc. v. Aceto Corp., 853 F. Supp. 104 (S.D. N.Y. 1994).
9
Marion Merrell Dow, Inc. v. American Cyanamid Co., 1994 WL 173806 (D.N.J. 1994).
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10
Bio-Technology General Corp. v. Genentech, Inc., 80 F.3d 1533 (Fed. Cir. 1996).
11
Eli Lilly & Co. v. American Cyanamid., 82 F.3d 1568 (Fed. Cir. 1996).
12
Bayer AG v. Housey Pharmaceuticals, Inc., 340 F.3d 1367 (Fed. Cir. 2003).
13
Amgen, Inc. v. Hoffmann-La Roche Ltd., 580 F.3d 1340 (Fed. Cir. 2009).
14
CNET Networks, Inc. v. Etilize, Inc., 528 F. Supp. 2d 985 (N.D. Cal. 2007).
15
Ormco Corp. v. Align Technology, Inc., 609 F. Supp. 2d 1057 (C.D. Cal. 2009).
16
Jansen v. Rexall Sundown, Inc., 342 F.3d 1329 (Fed. Cir. 2003).
17
Limelight Networks, Inc. v. Akamai Technologies, Inc., 692 F.3d (S. Ct. 2014).
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