The experimental use exception: looking towards a legislative alternative.

• Jurisdiction: United States
• Date: 01 January 2006
• Author: DeFranco, Denise W.,Levy, Carla Miriam,Pogach, Miriam L.
• Published date: 01 January 2006
• Author: DeFranco, Denise W.

INTRODUCTION I. THE CONTOURS OF THE EXPERIMENTAL USE EXCEPTION A. The Embrex decision: Commercial Use is Not Experimental Use B. The Madey Decision: Use at an Academic Institution is Not Experimental When Related to Legitimate Business Interests C. Experimental Use after Embrex and Madey: A Narrow Exception II. THE EXPERIMENTAL USE EXCEPTION AND [section] 271(E)(1) A. The Roche decision and the Safe Harbor Provision of [section] 271(e)(1) B. The Integra decision: Experimental Use and [section] 271(e)(1) C. The Interaction between Experimental Use and [section] 271(e)(1): Can They Fit Together? III. THE FUTURE OF THE EXPERIMENTAL USE EXCEPTION A. The Legislative Alternative: A Policy-Driven Solution B. Legislation: A New Approach to Experimental Use CONCLUSION Introduction

Under the patent statute, one who uses a patented invention without authorization from the patent holder is liable for patent infringement. (1) However, an accused infringer can escape a finding of infringement by invoking the common-law experimental use exception, (2) which permits a de minimis use of a patented invention where the use was motivated by an experimental purpose. (3) Recent decisions from the Federal Circuit addressing experimental use have demonstrated that the exception is extremely narrow and unavailable in most practical circumstances. In this article we explore some of the problems posed by the present state of the exception and propose a policy-driven alternative. Part I summarizes the major cases discussing the experimental use exception, describing the current state of the exception. Part II discusses the interaction between the experimental use exception and the infringement "safe harbor" of the Hatch-Waxman Act, which exempts certain uses of a patented invention from liability for patent infringement. In Part III, we explore the policy arguments in favor of and against an experimental use exception, and advocate for replacing the judicially created exception with a legislative exemption that carefully balances the competing policies behind the patent system.

1. The Contours of the Experimental Use Exception (4)

   1. The Embrex decision: Commercial Use is Not Experimental Use

      In Embrex v. Service Engineering Corp. the Federal Circuit narrowly construed the experimental use exception. (5) Plaintiff Embrex was the exclusive licensee of a patent directed to methods primarily used to vaccinate birds from disease while still in the egg. (6) Embrex designed machinery that implemented the claimed vaccination method in industrial chicken farms. (7) In attempts to design around the patent, defendant Service Engineering Corp. ("SEC") hired a professor to develop a prototype that would inject vaccine into the chorioallantoic sac ("CAS"), a part of the egg that was outside the scope of the method specified in the patent. (8) SEC offered its prototype for sale while it was being tested. (9) Although SEC's design-around attempts ultimately failed, some of the test vaccinations were inadvertently injected into areas covered by the patent during testing due to the difficulty of injecting into the CAS. (10) Embrex sued for patent infringement and SEC claimed that it was entitled to the benefit of the experimental use exception. (11)

      Despite language in the patent statute suggesting that "any and all uses of a patented invention" constitute infringement, the Embrex court recognized early precedent that carved out a narrow defense "for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry." (12) However, because SEC's tests were conducted in furtherance of its business venture, SEC was not protected by the experimental use exception even though its use of the patented method was for testing and was accidental. (13) The commercial character of the use rendered the experimental use exception inapplicable, irrespective of whether SEC realized a profit. (14) Thus, after Embrex, it was clear that the experimental use exception was only available to non-commercial uses of a patented invention.

   2. The Madey Decision: Use at an Academic Institution is Not Experimental When Related to Legitimate Business Interests

      In 2002, two years after the Embrex decision, the Federal Circuit decided Madey v. Duke University. (15) Madey, a research professor at Stanford University, conducted a research program through which he operated a free electron laser ("FEL") research laboratory. (16) He was the exclusive owner of patents directed to two FEL devices, both of which were used in his laboratory. (17) Madey later took a position at Duke University and brought his patented equipment with him to establish an FEL laboratory at Duke. (18) After Madey resigned, Duke continued to use the equipment in the FEL laboratory, prompting Madey to bring an action for patent infringement. (19) Duke moved for summary judgment of non-infringement, arguing that use of the FEL equipment was protected by the experimental use exception. (20) The district court granted the motion, concluding that Duke was entitled to the experimental use exception based on Duke's "evidence that all of its uses of the devices covered by [Madey's patents] have been in furtherance of its educational purpose or for experimentation only." (21)

      On appeal to the Federal Circuit, Madey argued that the court should abrogate the common-law experimental use exception. Madey reasoned that under Supreme Court precedent, intent was irrelevant in an infringement analysis, while "the experimental use defense necessarily incorporates an intent inquiry." (22) While the Federal Circuit declined to do away with the exception entirely, it reiterated the exception's narrow scope as expressed in Embrex. (23) Although Embrex had framed the experimental use inquiry around a distinction between commercial and non-commercial use, the Madey court refocused the inquiry on whether the accused use is "in furtherance of the alleged infringer's legitimate business." (24) If it is, it cannot qualify as experimental use for purposes of the exception. (25) Since Duke was a major academic institution in the business of research and education, the Federal Circuit concluded, Duke's use of the equipment in the FEL laboratory for educational purposes could be outside the bounds of the experimental use defense. (26) On these grounds, the court reversed the district court's grant of summary judgment of non-infringement and remanded for the district court to asses whether Duke's use fell within the clarified scope of the exception. (27)

      After remand, Duke again moved for partial summary judgment of non-infringement, again invoking the experimental use exception. (28) The district court denied Duke's motion, noting that because Duke's use of the patented invention was for educational purposes, it was, at least in part, in furtherance of a legitimate business purpose. Duke therefore did not qualify for the experimental use exception under the Federal Circuit's formulation. (29)

   3. Experimental Use after Embrex and Madey: A Narrow Exception

      While the experimental use exception has not been abrogated, it has lost any practical application following the decisions in Embrex and Madey. Embrex and Madey render almost any use of a patented invention for testing or designing around infringing, unless the use is in no way related to a legitimate business purpose. (30) Even if Embrex had left open an avenue for research institutions to rely upon the experimental use exception for scientific use, Madey closed it. Prior to Madey, it was assumed that use of patented inventions by research institutions in pursuit of science, knowledge, and education qualified as experimental use. (31) Madey's recognition that academic research institutions have business interests in addition to educational interests, many of which are furthered by using patented inventions, undermined that assumption. Instead, Madey fundamentally questioned the nature of academic research, considering the financial and commercial benefits that academic institutions receive through their scientific studies and advances. (32) As a result, research universities can not rely on the exception when they use patented inventions. (33)

      Although some commentators argue that Madey's holding will stifle research, (34) Madey merely recognizes that research at universities is often conducted in pursuit of commercial goals or in conjunction with commercial entities. (35) It follows that when a university benefits financially from its use of a patented idea, it should pay royalties to the patent holder or be liable for infringement. This is especially true when the university derives considerable revenue from licensing its own patents, many of which presumably result from research conducted at the institution. (36) Madey only updates the experimental use exception to make it consistent with the present realities of the research world.

      The narrow scope of the post-Madey experimental use exception raises the question of when, if at all, the defense may be successful. Embrex suggested that use associated with testing or designing around a patent was not experimental. Madey held that use at research institutions in pursuit of scientific knowledge would not be excepted if it is too closely tied to the institution's business interests. Thus, the only remaining experimental use is that by an individual on his or her own time out of general interest in the invention without any intent to profit. (37) Since the exception ultimately remains only for small-scale tinkering with inventions, there is little practical application of the doctrine, especially with respect to sophisticated biotechnology research tools and scientific machinery that are generally inaccessible to the casual tinkerer. (38) The exception is unlikely to be litigated in such cases, however; neither the value of an injunction against such de minimis use nor any royalty for such use would be worth the cost of...