A fractured affirmance of a district court decision to dismiss an infringement action under 35 U.S.C. § 271(e)(1) was the occasion for the Federal Circuit to illustrate the continued debate over the scope of the safe harbor enacted as part of the Hatch-Waxman Act in Edwards Lifesciences Corp. v. Meril Life Sciences Pvt.
The case arose over a brief (one week) importation of two transcatheter heart valve systems (Class III medical devices, subject to regulatory approval by FDA) by Meril in conjunction with attendance by their representatives at a medical conference. These representatives were instructed not to engage in any sales activities for U.S sales (and indeed their activities did not include any ex-U.S. sales either) nor did the infringing article ever leave the bag in which they were carried. The purported purpose of Meril's attendance at the medical conference was to attract interest from doctors who would be willing to be involved in clinical trials required by the FDA for regulatory approval of the devices, which involved displays and presentations regarding those devices. The opinion notes that Meril had performed clinical trials in India and obtained approval for its devices in that country as well as obtained CE certification for marketing in Europe. Further evidence before the District Court showed that Meril had begun work on a premarket submission and planning for a three-arm clinical trial that could be part of future submissions to FDA, had contacted FDA regarding such trials, and had worked with a medical device consulting company (CardioMed LLC) to assist in preparing its premarket submission documents.
Based on these activities, Edwards filed suit against Meril for patent infringement, i.e., importing the devices into the U.S. without a license. The District Court granted summary judgment in favor of Meril based on their activities falling within the scope of the § 271(e)(1) safe harbor, and this appeal followed.
The Federal Circuit affirmed, in an opinion by Judge Stoll joined by Judge Cunningham; Judge Lourie dissented. The majority opinion was based on the broad scope of the safe harbor tailored by the Supreme Court in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 670–71, 674 (1990) (which expanded the safe harbor to include medical devices like the ones Meril imported into the U.S.), and Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005) (which held that it "provides a wide berth for the use of patented [inventions] in activities related to the federal regulatory process"), as it has been further developed by several Federal Circuit cases (which Judge Lourie maintained in his dissent had been, at least in part, wrongly decided). The majority emphasized the scope of the application of the statute, to include "all uses of patented inventions that are reasonably related to the development and submission of any information under the [FDA]," that this scope was not limited in when the activities occurred, and that it applied "even if the information is never ultimately submitted to the FDA" under Merck. The majority opinion sets forth the Federal Circuit's explication of the evolution of the doctrine at its hands, illustrated by three cases: AbTox, Inc. v. Exitron Corp., 122 F.3d 1019, 1027 (Fed. Cir. 1997); Momenta Pharm., Inc. v. Teva Pharm. USA Inc., 809 F.3d 610, 619 (Fed. Cir. 2015); and Amgen Inc. v. Hospira, Inc., 944 F.3d 1327, 1338 (Fed. Cir. 2019), which merit brief consideration here as characterized by the majority.
"Starting with Abtox," the opinion asserts that the statute "does not look to the underlying purposes or attendant consequences of the activity . . . as long as the use is reasonably related to FDA approval." This statutory construction is supported, according to the majority, because the language therein is that otherwise infringing acts were in the safe harbor provided they were performed "'solely for uses reasonably related to' FDA approval" (emphasis in opinion; this emphasis on uses rather than the solely requirement is the major philosophical distinction between the majority and Judge Lourie in dissent). The rationale asserted by the Court in Abtox was that "intent or alternative uses" were "irrelevant" to the invocation of § 271(e)(1) because "the statutory language allows [defendant] to use its data from the tests for more than FDA approval," citing Telectronics Pacing Sys., Inc. v. Ventritex, Inc., 982 F.2d 1520, 1524–25 (Fed. Cir. 1992). Turning to Momenta, the majority asserts that activities such as "routine record retention" associated with "post-approval, commercial production" was not protected under § 271(e)(1). Finally, in Amgen the Court affirmed jury instructions to the effect that "additional underlying purposes [for alleged safe harbor activity] do not matter as long as [defendant] proved that the manufacture of any given batch of drug substance was reasonably related to developing information for FDA submission" under circumstances where 7 of 21 otherwise infringing batches were found to fall under the safe harbor because they were used for "pre-approval inspection" while the others, used for "various types of [commercial] testing" did not.
With regard to the term "solely" in the statute, the majority states that it modifies the phrase "for uses," and thus that "the safe harbor is available only for acts or uses that bear a reasonable relation to the development and submission of information to the FDA," relying on Merck. Importantly, the majority went on to say that the statute does not require "that the use must only be reasonably related to the development and submission of information to the FDA" (emphasis in opinion, and somewhat ironic insofar as "solely" and "only" are synonymous).
Using this explication as prelude, the majority determined that "the relevant inquiry is not why Meril imported the two transcatheter heart valve systems, or how Meril used the imported transcatheter heart valve systems, but whether the act of importation was for a use reasonably related to submitting information to the FDA" (emphases again in the opinion). Accordingly, the majority affirmed the District Court grant of summary judgment in view of the undisputed facts (set forth above).
The majority rejected Edwards's three arguments on appeal. First, Edwards argued that there were genuine issues of material fact disregarded by the District Court, that the actions of Meril's representatives were commercially driven. The majority rejected this contention in light of the evidence that the representatives were expressly told not to pursue commercial goals for U.S. sales and while they were under no such strictures regarding non-U.S. sales no such sales-directed activity occurred. That the representatives did not bring their devices with them to dinners and other activities with clinical scientists to be recruited to direct clinical trials was also not probative to the majority of intent outside the scope of the safe harbor. The majority also rejected Edwards's contention that Meril's disregard of some of the advice given by its FDA consultant and guidance from FDA was evidence that Meril did not intend to enter clinical trials for FDA submission, finding no basis in the undisputed evidence before the District Court. In an interesting twist of emphasis, the majority rejected Edwards's arguments because, in their view, "no reasonably minded juror" would have inferred that "Meril's sole purpose for importing [its devices] was to support its commercial sales efforts, and the importation was wholly unrelated to recruiting clinical investigators and wholly unrelated to any FDA submission," turning the question of "sole" purpose on its rhetorical head (emphasis in opinion).
The majority also rejected Edwards's second argument, that Meril's failure to use the imported devices stripped them from the protection of the safe harbor as a matter of law because the District Court "deem[ed] Meril's intent irrelevant in the absence of evidence of a protected use." This argument failed for two reasons, according to the majority: first, that there was nothing in the statute that required such a use to provide safe harbor protection and that importation itself was so eligible (as the District Court held). Second, and relevant to the dissent's position, the majority asserted that:
[O]ur interpretation of § 271(e)(1) applies the safe harbor regardless of the defendant's intent or purpose behind the otherwise infringing act (citing Amgen, 944 F.3d at 1338–39; and AbTox, 122 F.3d at 1030). Nothing in our jurisprudence suggests that the availability of the safe harbor turns on the party's subjective intent behind an act. And that remains true regardless of whether there are additional uses by defendant.
Finally, Edwards argued that the District Court had improperly relied on declaration evidence from one of Meril's representatives, which argument the majority rejected because the District Court relied on other evidentiary bases for its decision.
Judge Lourie's dissent went straight to the point:
I [dissent] because the majority perpetuates the failure of this court and others to recognize the meaning of the word "solely" in interpreting § 271(e)(1). The majority also errs in following the error of AbTox, Inc. v. Exitron Corp., 122 F.3d 1019 (Fed. Cir.), opinion amended on reh'g, 131 F.3d 1009 (Fed. Cir. 1997), and its progeny that the purposes of the infringing act do not matter in evaluating the safe harbor.
I believe that "solely" creates a safe harbor only for uses, sales, and importations that solely are for, as the statute says, development of information for the FDA. The purpose of the infringing act is meaningful and important to determining the safe harbor. And attempts to tie the word "solely" to be modifying one or another subsequent term does not change that meaning.
Judge Lourie recognized that the District Court "reasonably followed" these earlier decisions and that the error was in the Court's earlier safe harbor precedent, due to their decisions having given "short shrift" to the word "solely" in the statute. Using the proper interpretation of that statute, Meril's activities would have raised a genuine issue of material fact (precluding summary judgment) regarding whether importing the devices was "solely for uses reasonably related to the development and submission of information" (emphasis in dissent). In view of the legislative history and intent of the Hatch-Waxman Act (wherein the safe harbor abrogated the Court's decision in Roche Prods., Inc. v. Bolar Pharm. Co., 733 F.2d 858, 861 (Fed. Cir. 1984), rendering infringing any activity prior to patent expiry), Judge Lourie opines that "[t]he word 'solely' was included in the statute to ensure that infringing activity that was performed for purposes other than the development and submission of information under a federal law regulating drugs would not be exempt" (citing portions of that legislative history). Relying on the Oxford English Dictionary, Judge Lourie distinguished the meaning of "solely" ("a single person (or thing); without any other as an associate, partner, sharer, etc.; alone; occasionally, without aid or assistance" or "[a]part from or unaccompanied by others; solitary") from "partially," "slightly," "jointly," or have "any other ambiguous meaning." Judge Lourie also noted that it was well recognized by commentators at the time that the legislative history precluded the safe harbor from "permit[ting] the commercial sale of a patented drug by the party using the drug to develop [federal regulatory] information," i.e., commercial sales were not exempt even if they resulted in such information (the Judge further stating that importation was similar prohibited unless the exemption applied).
The consequence of the Federal Circuit's improper interpretation of the statute, according to the dissent, was that by following it "the district court here wholly ignored the presence of the word 'solely' in the statute," noting that the word was completely absent from the District Court's analysis and holding, something that "was not merely a harmless omission." Judge Lourie called out in particular the statement, relegated to a footnote in the District Court's opinion, that "[b]ecause intent and alternative uses are not relevant to the application of the safe harbor once it is determined that the allegedly infringing acts were reasonably related to FDA approval, the Court need not reach the issue of Meril's alleged commercial intent," which cited AbTox and Amgen for support of this principle. Judge Lourie sets forth in this regard his own explication of Abtox, Momenta, and Amgen (as well as Telectronics Pacing Systems) in assessing the responsibility for this error to properly be placed at the Federal Circuit's doorstep. In this analysis, he noted instances where the word "solely" did not appear in the Court's reasoning (Telectronics), where intent was specifically disregarded (Abtox, which stated that the safe harbor "does not look to the underlying purposes or attendant consequences of the activity . . . , as long as the use is reasonably related to FDA approval"), Momenta (which expanded the scope of the safe harbor), and Amgen. To be sure, Judge Lourie found at least the impetus for this trend in the Supreme Court's expansive interpretation of the statute in Merck (wherein the Court included activities resulting in experimental evidence that was not for whatever reason submitted to FDA), but asserts that the Court's decision did not mandate the disregard of the statutory restrictions imposed by the word "solely" that the Federal Circuit's case law had sanctioned. In particular, Judge Lourie finds support in the Merck decision for his thesis regarding the error in Federal Circuit's interpretation, wherein the Court stated that "[b]asic scientific research on a particular compound, performed without the intent to develop a particular drug or a reasonable belief that the compound will cause the [desired physiological effect], is surely not 'reasonably related to the development and submission of information' to the FDA."
Judge Lourie's remedy is en banc review, to permit the full Federal Circuit to reconsider its precedent. While it is somewhat remarkable that such a fundamental interpretation of the statute is necessary forty years after enactment it is consistent with a judicial philosophy generally in favor of interpreting narrowly exemptions to patent law protections for innovators. Whether Judge's Lourie's brethren recognize the distinctions he has drawn shall be seen.
Edwards Lifesciences Corp. v. Meril Life Sciences Pvt. Ltd. (Fed. Cir. 2024)
Panel: Circuit Judges Lourie, Stoll, and Cunningham
Opinion by Circuit Judge Stoll; dissenting opinion by Circuit Judge Lourie
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