1 Brand name sales totaled $220.6 billion, while generic sales accounted for the remaining $54.1 billion. Generic Pharmaceutical Association, Statistics, available at http://www.gphaonline.org/Content/NavigationMenu/AboutGenerics/Statistics/default.htm.

2 Pharmaceutical Research and Manufactures of America (PhRMA), What Goes into the Costs of Prescription Drugs … and Other Questions about Your Medicine 10 (2005), http://www.phrma.org/files/Cost_of_Perscription_Drugs.pdf.

3 Id.

4 Id. at 15.

5 Id.

6 U.S. Const. art. I, § 8, cl. 8.

7 Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 5 (1966).

8 Patent Act of 1952, 35 U.S.C. §§ 1-376 (2006).

9 In re CFLC, Inc., 89 F.3d 673, 679 (9th Cir. 1996).

10 The Cong. of the U.S. Cong. Budget Office, How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry 3 (1998), http://www.cbo.gov/ftpdocs/6xx/doc655/pharm.pdf.

11 Id.

12 Id. at 2.

13 Id. at xii.

14 See Roche Products, Inc. v. Bolar Pharm. Co., 733 F.2d 858 (Fed. Cir. 1984) (holding that performance of experiments, conducted with the goal of adapting the patented invention to the experimenter's business is a violation of the patentee's right to an exclusive monopoly for a limited period of time).

15 Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 (1984).

16 Mylan Pharms, Inc. v. Shalala, 81 F. Supp. 2d 30, 32 (D.D.C. 2000) (citing Abbott Labs. v. Young, 920 F.2d 984, 991 (D.C. Cir. 1990) (Edwards, J., dissenting)).

17 35 U.S.C. § 271(e)(1) (2006).

18 Id.

19 The Federal Food, Drug, and Cosmetic Act, 21 U.S.C §§ 301-399 (2006). The FDCA is “a federal law which regulates the manufacture, use, or sale of drugs.” Eli Lilly & Co. v. Medtronic, Inc, 496 U.S. 661, 665-666 (1990). Under the FDCA, a drugmaker must submit research data to the FDA in two stages of new-drug development. See FDA/Center for Drug Evaluation and Research, Drug Approval Application Process, available at http://www.fda.gov/cder/regulatory/applications/Default.htm. Data is submitted in an investigational new drug application (IND) to gain permission to conduct clinical trials (i.e. tests on humans). See 21 U.S.C. § 355(i) (2006). The drugmaker must then submit a new drug application (NDA) to obtain authorization to market a new drug. See 21 U.S.C. § 355(a) (2006).

20 Stanton J. Lovenworth & Melissa P. Cohen, The Research Tool Conundrum: ‘Merck’ Decision Leaves Open Questions on Boundaries of Safe Harbor, N.Y. L.J., Oct. 17, 2005, at 4, col. 1.

21 545 U.S. 193 (2005).

22 Id. at 202.

23 H.R. Rep. No. 98-857, pt. 1, at 14 (1984), as reprinted in 1984 U.S.C.C.A.N. 2647, 2647-2686. Pioneer drug is another name given to a novel and innovative brand drug.

24 Id. at 15.

25 See Bloch, David, If It's Regulated Like a Duck … Uncertainties in Implementing the Patent Exceptions of the Drug Price Competition and Patent Term Restoration Act, 54 Food & Drug L.J. 111, 120-26 (1999)Google Scholar.

26 See Sawin v. Guild, 21 F. Cas. 554 (C.C.D. Mass. 1813) (No. 12,391). In this case, Justice Story recognized the distinction between “the making with an intent to use for profit, and not for the mere purpose of philosophical experiment, or to ascertain the verity and exactness of the specification.“

27 307 F.3d 1351 (Fed. Cir. 2002). Madey sued Duke University for their alleged infringing use of his patented lasers. Id. at 1352. Duke University, relying on the common law exception for experimental use defense, argued that their use of the laser was “solely for an experimental or other non-profit purpose.” Id.

28 Id. at 1362.

29 Id. The court's narrow definition thus included virtually all of research and education as the “legitimate business” of the university and therefore not exemption for infringement.

30 See Mueller, Janice M., No “Dilettante Affair“: Rethinking the Experimental Use Exception to Patent Infringement for Biomedical Research Tools, 76 Wash. L. Rev. 1, 17–18 (2001)Google Scholar (noting that the common law experimental use exemption “has rarely been applied in favor of an accused infringer.“).

31 H.R. Rep. No. 98-857, pt. 2, at 27 (1984), as reprinted in 1984 U.S.C.C.A.N. 2647, 2711.

32 Roche, 733 F.2d at 860.

33 Id. at 860.

34 Id.

35 Id.

36 Id.

37 Id.

38 Bolar claimed that their use of the patent compound was for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry. Id. at 862.

39 Id. at 863.

40 Id.

41 Id. at 864.

42 Id. at 864-65.

43 Coggio, Brian & Dominic Cerrito, F., The Safe Harbor Provision of the Hatch-Waxman Act: Present Scope, New Possibilities, and International Considerations, 57 Food & Drug L.J. 161, 161-62 (2002)Google Scholar.

44 Mylan Pharms, Inc. v. Shalala, 81 F. Supp. 2d 30, 32 (D.D.C. 2000).

45 Id.

46 H.R. Rep. No. 98-857, pt. 1, at 16-18 (1984), as reprinted in 1984 U.S.C.C.A.N. 2647, 2649-51.

47 See 21 U.S.C. § 355(j) (2006).

48 See 21 U.S.C. § 355(j)(2)(A)(ii) - (iv) (2006). See also 21 U.S.C. § 355(j)(8)(b) (2006). Bioequivalence concerns the dose and rate of absorption. A drug is considered a bioequivalent to a listed drug if the rate and extent of absorption of the drug is not significantly different than that of the listed drug at the same dosage when taken in the prescribed amount. 21 U.S.C. § 355(j)(7)(B) (2006).

49 H.R. Rep. No. 98-857, supra note 46, pt. 1, at 15.

50 Id.

51 Section 156(a) aims to reduce front-end distortion by extending the patent term. The statue reads in relevant part, “The term of a patent … shall be extended in accordance with this section from the original expiration date of the patent …” 35 U.S.C. § 156(a) (2006). See also Davidson, Angela M., Shrinking Waters in the Safe Harbor: Has Integra Lifesciences v. Merck turned the Tide by Narrowing Available Exempted Infringing Uses?, 59 Food & Drug L. J. 79, 82 (2004)Google Scholar.

52 Davidson, supra note 51, at 81-82.

53 Id. In 1983, an average of 7 to 10 years was needed or a pharmaceutical company to satisfy the regulatory requirements, reducing the effective life of patent protection possibly as low as 7 years. Roche, 733 F.2d at 864.

54 H.R. Rep. No. 98-857, supra note 46, pt. 2, at 6. Id. at pt. 1, at 17-18.

55 Section 271(e)(1), known as the “safe harbor” provision for patent infringement reads in relevant part: “[it] shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention … solely for uses reasonably related to the development and submission of information under Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.” 35 U.S.C § 271(e)(1) (2006).

56 This provision allows researchers to begin experimenting on drugs and receive protection from liability from § 271(e)(1). Researchers no longer have to wait until the patent expires before working towards ANDA and thus eliminating the unintended expansion of patent protection.

57 Davidson, supra note 51, at 81.

58 See In re ‘639 Patent Litigation, No. 97-12416-RCL, 1999 WL 528806, at *1 (D. Mass. June 15, 1999).

59 666 F. Supp. 1379 (N.D. Cal. 1987).

60 Id. at 1382.

61 Id. at 1383.

62 Id.

63 Id. U.S. Patent No. 4,361,509 (filed Dec. 14, 1981) (issued Nov. 30, 1982); U.S. Reissue Patent No. 32,011 (issued Oct. 22, 1985).

64 Id. at 1384.

65 Id. 66 Id.

67 Id. at 1384-85.

68 Id. at 1396.

69 Id.

70 Id.

71 496 U.S. 661 (1990).

72 Id. at 663-64.

73 Id. at 664.

74 Id.

75 Id.

76 Id. at 670, n.3.

77 Id. at 672. “It seems most implausible to us that Congress, being demonstrably aware of the dual distorting effects of regulatory approval requirements in this entire area –dual distorting effects that were roughly offsetting, the disadvantage at the beginning of the term producing a more or less corresponding advantage at the end of the term--should choose to address both those distortions only for drug products; and for other products named in § 201 should enact provisions which not only leave in place an anticompetitive restriction at the end of the monopoly term but simultaneously expand the monopoly term itself, thereby not only failing to eliminate but positively aggravating distortion of the 17-year patent protection.” Id. at 672-73 (emphasis added).

78 Davidson, supra note 51, at 85.

79 775 F. Supp. 1269 (N.D. Cal. 1991).

80 Id. at 1282. The activities complained of included manufacture, sale and demonstration of the defibrillator. Id.

81 Id. at 1276.

82 Id. at 1280.

83 Id. Likewise if there are uses which are not reasonably related to generating data for the FDA, the exemption will not protect a defendant. Id.

84 Id. at 1289.

85 Id. at 1280.

86 Id.

87 Id. The court framed the question as “would it have been reasonable, objectively, for a party in defendant's situation to believe that there was a decent prospect that the ‘use’ in question would contribute (relatively directly) to the generation of kinds of information that was likely to be relevant in the processes by which the FDA would decide whether to approve the product?” Id.

88 Id.

89 Id. at 1277.

90 See Abtox, Inc. v. Exitron Corp., 122 F.3d 1019 (Fed. Cir. 1997); Telectronics Pacing Sys. v. Ventritex, Inc., 982 F.2d 1520 (Fed. Cir. 1992); Nexell Therapeutics, Inc. v. AmCell Corp., 199 F. Supp. 2d 197 (D. Del. 2002); Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., No. 95 Civ. 8833 (RPP), 2001 WL 1512597 (S.D.N.Y. Nov. 28, 2001); Amgen, Inc. v. Hoechst Marion Roussel, Inc., 3 F. Supp. 2d 104 (D. Mass. 1998).

91 545 U.S. 193 (2005).

92 Id. at 197. U.S. Patent Nos. 4,988,621, 4,792,525, 5,695,997, 4,879,237, and 4,879,734. Integra Lifesciences I, Ltd. v. Merck KGaA, 331 F.3d 860, 862 (Fed. Cir. 2003). RGD peptides are “a short tri-peptide segment of fibronectin having the sequence Arg-Gly- Asp.” Id.

93 Merck, 545 U.S. at 197. “[T]he RGD sequence attaches to the αvβ3 receptors on the surface of cells. This bond adheres the cells to the substrate containing RGD. In theory, inducing better cell adhesion and growth should promote wound healing and biocompatibility of prosthetic devices. In addition, blood vessels grow new branches due to controlled interactions with integrins.” Integra, 331 F.3d at 862-63.

94 Merck, 545 U.S. at 197.

95 Integra, 331 F.3d at 863. “[A]nti-angiogenic therapies might also treat diabetic retinopathy, rheumatoid arthritis, psoriasis, and inflammatory bowel disease.” Id.

96 Merck, 545 U.S. at 198. Merck began funding research at Scripps in 1988, after Dr. Cheresh identified a monoclonal antibody having activity as an inhibitor of integrin activity. Integra, 331 F.3d at 873 (Newman, J., concurring). “The collaboration was enlarged in 1995 with increased funding by Merck, after Dr. Cheresh discovered that a Merck-provided peptide … inhibits new blood vessel growth by interaction with a specific integrin. In this collaboration, cyclic RGD peptides of various structures and composition were synthesized and studied … . It was discovered … that some products [of the cyclic peptide] have antiangiogenic properties, of interest for treatment of such diseases as cancer, macular degeneration, rheumatoid arthritis, and others. “Angiogenic” refers to the process of generating new blood vessels, a process essential to tumor growth… . [T]he purpose of the research was to ‘(1) assess the potential efficacy of the peptides as therapeutic agents; (2) discover the mechanism of action of the peptides; and (3) shed light on histopathology, toxicology, circulation, diffusion, and half-life of the peptides in the bloodstream.’ The ultimate goal of the research was undisputed: it was to find a product that would be sufficiently effective in the treatment of angiogenic disease that it could be developed and brought to market for this purpose.” Id. at 873-74.

97 Merck, 545 U.S. at 199.

98 Id. at 200.

99 Id.

100 Id. at 201.

101 Id. (citing Integra, 331 F.3d at 866).

102 Id. at 205 (citing Integra, 331 F.3d at 865). The Court of Appeals concluded that the Scripps work sponsored by Merck was not “solely for uses reasonably related to” clinical testing for the FDA. Id.

103 Id. (citing Integra, 331 F.3d at 867). The court used this proposition to suggest a limited construction of the safe harbor is necessary to protect “research tools.” Id.

104 Merck KGaA v. Integra Lifesciences I, Ltd., 543 U.S. 1041 (2005).

105 Merck, 545 U.S. at 202.

106 Id.

107 Id.

108 Id. at 203. In Integra's view, “preclinical studies related to a drug's efficacy, mechanism of action, pharmacokinetics, and pharmacology are not reasonably included in an IND or an NDA, and are therefore outside the scope of the exemption.” Id.

109 Id. “[T]he FDA directs that an IND must provide sufficient information for the investigator to ‘make his/her own unbiased risk-benefit assessment of the appropriateness of the proposed trial.’” Id. at 204.

110 Id. at 204.

111 U.S. Food & Drug Admin., Good Laboratory Practices (GLP) for Non-Clinical Laboratory Studies, available at http://www.fda.gov/ohrms/dockets/98fr/980335s1.pdf. See also 21 C.F.R. § 58 (2007).

112 Merck, 545 U.S. at 204. The FDA regulations “do not apply to preclinical studies of a drug's efficacy, mechanism of action, pharmacology, or pharmacokinetics.” Id.

113 Id. at 206.

114 Id. at 207. Manufactures of a generic drug know at the outset that their activities fall under §271(e)(1) because any application to the FDA is the result of work done with a drug already approved by the FDA. Id.

115 Id.

116 Id.

117 Id.

118 See U.S. Const. art. 1, § 8, cl. 8.

119 Sam Mamudi, Supreme Court Provides IP Guidance: The US Supreme Court this Year Handed Down Rulings in Two of the Most Anticipated IP Cases in Recent Years, 153 Managing Intell. Prop. S6 (Oct. 2005), available at 2005 WLNR 17873657.

120 See Michel I. Hunt, National Institute for Health Care Management, Prescription Drugs and Intellectual Property Protection: Finding the Right Balance Between Access and Innovation, NIHCM Issue Brief, at 1 (Aug. 2000), available at http://www.nihcm.org/prescription.pdf.

121 Id. For example, the Uruguay Round Agreements Act changed the terms of all patents in the U.S. from 17 years from the date of issue to 20 years from the date of application and allows the longer of the two terms for some drugs already on the market. 19 U.S.C. §§ 3501-3624 (2006). In addition, The Orphan Drug Act provides seven years of market exclusivity to any drug the FDA certifies as an orphan drug, i.e. medicines which treat diseases or conditions affecting fewer than 200,000 patients in the U.S. 21 U.S.C. §§ 360aa-ee (2006).

122 See Dreyfuss, Rochelle, Symposium: Biotechnology Patents Get Special Treatment: Protecting the Public Domain of Science: Has the Time for an Experimental Use Defense Arrived?, 46 Ariz. L. Rev. 457, 472 (Fall 2004)Google Scholar (“If it was important to define the scope of intellectual property rights when the default was the public domain, I think it is equally important to define the scope of researchers’ rights when the default is private ownership: it is time to put some serious thought into protecting the vitality of the public domain of science.”); see also, Mueller, Janice M., The Evanescent Experimental Use Exemption from United States Patent Infringement Liability: Implications for University and Nonprofit Research and Development, 56 Baylor L. Rev. 917, 922 (2004)Google Scholar (calling for Congressional action in response to judicial refusal to apply and experimental use defense); Groombridge, Nicholas & Calabro, Sheryl, Integra LifeSciences v. Merck – Good for Research of Just Good for Just Good for Research Tool Patent Owners?, 22 Biotechnology L. Rep. 462, 471 (2003)Google Scholar.

123 See Merck, 545 U.S. at 193.

124 Integra, 331 F.3d at 865.

125 35 U.S.C. § 271(e)(1) (2006).

126 See Merck, 545 U.S. at 206.

127 See Pharmaceutical Research and Manufactures of America, Pharmaceutical Industry Profile 2005: From Laboratory to Patient: Pathways to Biopharmaceutical Innovation, (PhRMA, Washington D.C.) Mar. 2005, at 3, available at http://www.phrma.org/files/2005IndustryReport.pdf.

128 See id.

129 Id. at 3-4. See also U.S. Food and Drug Administration, The New Drug Development Process: Steps from the Test Tube to the New Drug Application Review, available at http://www.fda.gov/cder/handbook/develop.htm.

130 PhRMA, supra note 127, at 4-5. Figure 1.3 displays that the drug discovery process averages 5 years. Id.

131 Before the licensing negotiations could even begin, it seems likely that a lawyer would be necessary to give a freedom-to-operate opinion as to the availability of any item used to identify or evaluate a candidate compound.

132 Henry, Michelle R. et al., A Pilot Survey on Licensing of DNA Inventions, 31 J.L. Med. & Ethics 442, 446 (2003)Google Scholar (reporting that nearly three quarters of all respondents had had at least one licensing negotiation agreement breakdown within the past year).

133 Integra, 331 F.3d at 863.

134 Mamudi, supra note 119.

135 See 35 U.S.C. § 101 (2006).

136 See 35 U.S.C. § 112 (2006). To receive a patent, an inventor must satisfy the requirements of §112: (1) enablement; (2) written description; (3) definiteness of claims; and (4) best mode. Id.

137 Hunt, supra note 120, at 5.

138 Julie E. Cohen et al., Copyright in a Global Information Economy 63 n.1 (Aspen Law & Business 2002).

139 Compare Title I and II of the Hatch-Waxman Act: the patent term restoration with the abbreviated new drug application process.

140 Pioneer drug companies have engaged in a number of tactics aimed at prolonging their patent term in an anticompetitive manner as a means of allowing the pioneer to keep its market share. One such approach involves pioneer drug companies negotiating agreements with generic manufacturers, paying the generic company in exchange for not releasing the generic version of the drug, thus enabling the pioneer to keep its market share. See Guile, Laura, Promoting Generic Drug Availability: Reforming the Hatch-Waxman Act to Prevent Unnecessary Delays to Consumers, 75 St. John's L. Rev. 357, 370 (2001)Google Scholar.

141 See id. at 365-66.

142 21 U.S.C. § 355(j)(5)(B)(iii) (2006) (“If the applicant made a certification [under 21 U.S.C. § 355(j)(2)(A)(vii)] … the approval shall be made effective immediately unless, before the expiration of 45 days after the date on which the notice … is received, an action is brought for infringement … . If such an action is brought … the approval shall be made effective upon the expiration of the thirty-month period … .”).

143 See Mamudi, supra note 119.

144 Id.

145 Id.

146 Lovenworth, supra note 20.

147 Kaiser Family Foundation, Prescription Drug Trends (Fact Sheet) (Nov. 2005), available at http://www.kff.org/insurance/upload/3057-04.pdf.

148 Id.

149 Jonathan Weisman, Aging Population Poses Global Challenges, Wash. Post, Feb. 2, 2005, at A1.

150 See American Association of Retired Persons (AARP), Prescription Drug Use among Midlife and Older Americans, (Jan. 2005) at 6, available at http://assets.aarp.org/rgcenter/health/rx_midlife_plus.pdf (finding that the cost of the drug was the main reason people 50+ did not fill their prescriptions).

151 Advertising aimed at ordinary consumers tripled from 1996-2000 to around $2.5 billion per year. CBS News, Drug Advertising Skyrockets, Feb. 13, 2002, http://www.cbsnews.com/stories/2002/02/13/health/main329293.shtml.

152 Groombridge, supra note 122, at 471.

153 Mueller, supra note 30, at 38. Similarly, the patent laws of Japan provide that “‘[t]he effects of the patent right shall not extend to the working of the patent right for the purposes of experiment or research.’” Id. at 39.

154 Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 207 (2005).

155 35 U.S.C. § 271(g) (2006) (“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.”).

156 Id.

157 340 F.3d 1367 (Fed. Cir. 2003).

158 Id. at 1368 (emphasis added).

159 See Featherstone, Donald J. & Goldstein, Jorge A., Federal Circuit Holds that Importing Data is Not Patent Infringement, 10 No. 2 Intell. Prop. Strategist 1, 1 (2003)Google Scholar.

160 Ross C. DeVol et al., Milken Institute, Biopharmaceutical Industry Contributions to State and U.S. Economies, at 1 (Oct. 2004), available at http://www.milkeninstitute.org/pdf/biopharma_report.pdf.

161 Id. When the full multiplicative impact is captured, the biopharmaceutical industry is responsible for 2,724,800 jobs and 2.1% of total employment in the nation. Id. Each job in the industry creates another 5.7 jobs elsewhere in the economy, substantially above the average for all industries. Id.

162 Id. The biopharmaceutical industry is among the most productive sectors in the U.S. economy with real output per worker of $157,300. Id. In addition, biopharmaceuticals was directly responsible for $63.9 billion in real output in 2003 and a total of $172.7 billion when the economic ripple effects across other sectors are incorporated. Id.

163 Id.

164 Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005).

165 Integra Lifesciences I, Ltd. v. Merck KGaA, 331 F.3d 860, 866 (Fed. Cir. 2003).

166 Mylan Pharms, Inc. v. Shalala, 81 F. Supp. 2d 30, 32 (D.D.C. 2000) (citing Abbott Labs. v. Young, 920 F.2d 984, 991 (D.C. Cir.1990) (Edwards, J., dissenting)).