Sparse Patent Protection for Research Tools: Expansion of the Safe Harbor Has Changed the Rules

• Publication year: 2014

Sparse Patent Protection for Research Tools: Expansion of the Safe Harbor Has Changed the Rules

Robert A. Jone

SPARSE PATENT PROTECTION FOR RESEARCH TOOLS: EXPANSION OF THE SAFE HARBOR HAS CHANGED THE RULES

Abstract

The protection provided by patent rights benefits society by encouraging inventors to disclose their inventions, but these same rights can be wielded against competitors through infringement suits, causing a chilling effect on later innovation. In the field of pharmaceutical innovation, the Hatch-Waxman Act's safe harbor has provided a defense against infringement, allowing generic manufacturers to quickly bring low-cost drugs to the public while trespassing minimally on the patent holder's rights. The Act's delicate balance of benefits and burdens has been threatened by recent judicial interpretations of the provision's scope. The scope of the safe harbor has been expanded to the point that it reduces the value of patent protection for laboratory tools and methods, and in turn threatens the patent system's role in encouraging innovation in these areas.

This Comment proposes limits to the safe harbor's scope by (1) specifying the types of inventions that are subject to the safe harbor and (2) permitting those patents to be infringed only until FDA approval has been granted. This proposed scope is supported by the legislative history, which referred extensively to the FDA approval process and repeatedly assured drug manufacturers that the purpose of the safe harbor was to reduce delays caused by the FDA approval process. In addition, this scope comports with the broader themes of patent law in that it promotes certainty in the law and provides parties with notice of their rights. However, because the language used in the safe harbor provision is expansive, textualist interpretations of the provision alone tend to worsen rather than solve the problem. For this reason, this Comment advocates legislative action to produce limits on the scope of the safe harbor that will protect and encourage innovation while promoting early access to generic drugs.

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Introduction..............................................................................................751

I. How the Hatch-Waxman Safe Harbor Exception Devolved into the Rule................................................................753

A. Factors That Influenced Congress to Enact the Hatch-Waxman Act................................................................................753
B. Textualist Interpretations of the Safe Harbor by the Supreme Court ........................................................................................... 755
C. Early Federal Circuit Interpretations of the Safe Harbor..........757
D. Discord at the Federal Circuit: Classen and Momenta .............758

II. Advocating for an Appropriate Scope of the Safe Harbor ... 762

A. Frames of Reference for Fixing the Safe Harbor's Scope..........762

1. Survey of the Act's Legislative History................................763
2. Textual Analysis of the Statute .............................................766

a. Does "Solely" Mean Only?...........................................768
b. How Reasonable Is "Reasonably Related"?.................770

3. Policy Concerns Unique to Patent Law...............................771
4. Proposed Scope of the Safe Harbor.....................................773

B. Divergence of This Proposed Scope from the Holding in Momenta ..................................................................................... 773

III. Broader Implications of the Scope of the Safe Harbor.........775

A. Future Impacts the Broad Holding in Momenta Will Have for Patent Holders and Inventors ..................................................... 775
B. Pathways for Implementing the Proposed Scope of the Safe Harbor ........................................................................................ 777

Conclusion..................................................................................................779

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Introduction

Inventors with groundbreaking ideas have the capacity to change the way society operates—even improve others' quality of life—simply by sharing these ideas with the public. When the idea has been shared, however, nothing prevents the public from using the idea without compensating the inventor absent some law to the contrary. Inventors will not have an incentive to disclose their inventions to the public if they cannot expect to receive anything in return for their work. The framers of the U.S. Constitution understood this quandary and granted congress the power to issue exclusive rights to inventors to practice their inventions "[t]o promote the Progress of . . . useful Arts."¹ Congress defined the exclusive patent rights broadly in the Patent Act of 1952, securing for the inventor the exclusive rights to use, make, sell, or offer to sell the patented invention.² These exclusive rights create a form of monopoly power, which allows an inventor to recoup the cost of innovation and incentivizes further invention and research by the inventor and others. Certain areas of innovation, such as pharmaceutical development, rely heavily on patent protection due to the high cost of research. In addition, pharmaceutical products are regulated by the Food and Drug Administration (FDA), which must approve all drugs before they can be sold to the public. Because the FDA approval process for drugs requires clinical testing, the approval process for a generic version of a drug involves "making" and "using" the drug. If the drug is still covered by a patent, then these acts are infringing acts³ : the generic manufacturer simply cannot begin seeking FDA approval until the patent expires.

This overlapping federal regulation in the area of pharmaceutical products provided layers of monopoly protection for the holders of drug patents, to the detriment of consumers. In 1984, Congress created a statutory experimental use exception to patent infringement—the Hatch-Waxman "safe harbor"⁴ —to expedite the entry of generic drugs into the market. This exception involved a delicate balancing of interests between patent owners and generic manufacturers and made it possible for generic drugs to begin the FDA approval process before the patents on the drugs expired. The safe harbor

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created an exception to infringement permitting anyone to use a patented invention, so long as the purpose of that use was related to submission of information to the FDA.⁵ The scope of the safe harbor was long understood to mean that patented drugs and medical devices could be used and experimented with for purposes of seeking FDA approval,⁶ but that scope has been expanded by the courts.

With its recent holding in Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc.,⁷ the Court of Appeals for the Federal Circuit has expanded the scope of the safe harbor exception such that it now covers far more than just drugs for which FDA approval is being sought.⁸ The safe harbor now covers all uses of every sort of patented invention, and exempts these uses from infringement suits so long as the use is related to information that could ever be requested by the FDA.⁹ This expansion decreases the protection available to patents on drug-related inventions, such as laboratory tools and manufacturing methods (collectively, "research tools"), and consequently reduces the inventor's incentive to disclose these inventions through seeking patent protection.¹⁰ This Comment argues that the scope of the Hatch-Waxman safe harbor should be limited to cover only (1) patents on inventions regulated by the FDA¹¹ and (2) infringing actions leading up to FDA approval.¹² The first limitation is needed because allowing the safe harbor to cover the use of research tools for their ordinary purpose creates the very distortion the safe harbor was designed to correct. The second limitation is necessary to prevent too great a reduction of patentees' rights. Part I of this Comment examines the factors Congress considered when enacting the safe harbor exception, and how the courts have interpreted the provision. Part II formulates a revised scope of the safe harbor by balancing congressional intent with interpretation of the text of the safe harbor and overarching policy concerns unique to patent

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jurisprudence. Finally, Part III of this Comment addresses the viability of this revised scope and possible pathways for its induction into law.

I. How the Hatch-Waxman Safe Harbor Exception Devolved into the Rule

The safe harbor provision of the Hatch-Waxman Act began as the keystone of a delicate congressional compromise but has since been expanded through judicial interpretation into a one-size-fits-all defense to infringement in pharmaceutical patent litigation.¹³ Because the safe harbor involves the highly lucrative field of pharmaceutical products, the scope of the safe harbor has been the subject of intense litigation. This Part first illustrates the factors that influenced Congress's deliberations regarding the Hatch-Waxman Act, then discusses the relevant interpretations of the Act by the courts, and concludes by analyzing the split of authority at the Court of Appeals for the Federal Circuit. But before considering the scope of the Hatch-Waxman Act, it is important to understand the factors that contributed to its passage.

A. Factors That Influenced Congress to Enact the Hatch-Waxman Act

Congress's power to promote inventive activity is granted by the Constitution.¹⁴ All of patent law hinges on this grant, and Congress has chosen to exercise its power to both establish statutory regimes that protect inventions and to update those statutes over time.¹⁵ Due to the high costs associated with research and development, the pharmaceutical industry relies heavily on patent protection and the limited monopoly it provides as a method of securing a return on investment.¹⁶...