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IP Alert: Patent Infringement Safe Harbor Covers Inducers

September 28, 2015

Securing approval to market a drug, medical device, or diagnostic test from the Food and Drug Administration (FDA) can be a difficult endeavor. Doing so requires submitting information to the FDA demonstrating safety and efficacy, and once approval is obtained, retaining the continued right to sell the regulated product often requires maintaining records regarding manufacturing quality for FDA inspection. The patent statute 35 U.S.C. § 271(e)(1) provides that acts performed solely for uses reasonably related to the development and submission of information required by the FDA to begin or continue marketing any product regulated by the FDA do not constitute patent infringement. This provision of U.S. patent law is often referred to as the Hatch-Waxman Safe Harbor, since it was introduced as part of the Hatch-Waxman Act, an act passed with the intent of encouraging the development of generic drugs. 

Over the years the Safe Harbor provision has been interpreted by the courts to allow for a wide variety of conduct when such conduct can be linked by the infringing company to its development and submission of information to the FDA. Less clear, however, has been the availability of the Safe Harbor to protect companies assisting other companies in developing and submitting such information to the FDA. On September 24, 2015, in Shire LLC v. Amneal Pharmaceuticals, LLC, the Court of Appeals for the Federal Circuit provided some clarity by extending the protection of the Safe Harbor to the company helping Amneal Pharmaceuticals and a host of other companies to develop information necessary for the approval of generic Vyvanse®.

The filing of an FDA application for approval to market a generic drug claimed by a patent that claims the name-brand drug or its FDA-approved use constitutes patent infringement under section 271(e)(2). Amneal Pharmaceuticals and several other companies filed applications with the FDA for permission to market generic versions of Vyvanse, a drug used for the treatment of attention deficit hyperactivity disorder (ADHD). Shire, the holder of four patents claiming a component of the drug and its use for the treatment of ADHD, promptly filed suit. 

The component of Vyvanse claimed by Shire’s patents is the active ingredient LDX mesylate. The rate at which LDX mesylate enters the blood stream—its bioavailability—depends in part on the inactive ingredients within Vyvanse. To secure FDA approval, Amneal needed to demonstrate that its generic product had the same LDX mesylate bioavailability as a Vyvanse capsule. As such, Amneal had to develop a capsule containing LDX mesylate and other inactive ingredients that would provide the same bioavailability of LDX mesylate as Vyvanse. Amneal obtained LDX mesylate from a supplier, Johnson Matthey, Inc. 

Shire then sued Johnson Matthey and alleged inducement of infringement. The district court held Johnson Matthey liable for inducing infringement under section 271(e)(2), and Johnson Matthey appealed. 

The Federal Circuit reversed, holding that the sale of LDX mesylate and the use of the purchased LDX mesylate by Amneal were reasonably related to the development and submission of the information required for Amneal’s FDA submission. In reaching this conclusion the Federal Circuit noted that Johnson Matthey did “nothing more than provide material for use by [Amneal] in obtaining FDA approval.” As such, Amneal’s use of the LDX mesylate obtained from Johnson Matthey was not infringement under section 271(e)(1). Because Amneal’s use was not infringement, Johnson Matthey cannot be considered to have induced infringement. Therefore the Federal Circuit held that “Johnson Matthey’s activities are protected by the safe harbor of § 271(e)(1).” 

It may be best not to read the broad language used in this case as extending past situations where induced infringement under section 271(e)(2) is asserted. In the past the Federal Circuit has refused to extend the safe harbor of section 271(e)(1) to protect companies against allegations of direct infringement for selling a patented device to companies whose use of the device was not patent infringement under section 271(e)(1). 

For instance, in Proveris Scientific Corp. v. Innovasystems, Inc., the Federal Circuit refused to bestow the protection of the Safe Harbor to Innovasystems. In that case the Federal Circuit was asked to decide if the Safe Harbor would excuse direct patent infringement by a company exclusively supplying an infringing device to the FDA and by pharmaceuticals companies that used the device to gather information necessary to obtain FDA approval to market their products. Just as with Johnson Matthey’s customers, the use of the patented product by Innovasystems’ customers was not infringement under section 271(e)(1) because they were using the device to develop and submit information to the FDA to obtain approval to market a drug. Additionally, Innovasystems, like Johnson Matthey, was not itself seeking FDA approval to market a drug. However, Proveris, unlike Shire, asserted that Innovasystems’ sales directly infringed under section 271(a). In contrast, Shire asserted that Johnson Matthey’s sales induced infringement under section 271(e)(1). The difference in these two cases appears to be the type of infringement asserted.  

Accordingly, while the Federal Circuit has extended the protection of the Hatch-Waxman Safe Harbor to those accused of inducing patent infringement under section 271(e)(2) by providing the means for another company to develop and submit information required by the FDA to market an FDA-regulated product, it is questionable whether or not the same would be true for an allegation of direct infringement under section 271(a). It may, therefore, be safest to limit the assistance provided to those developing and marketing FDA-regulated products to actions that do not directly infringe a patent. 

If you have questions on the above decisions, please contact Fitch Even attorney James A. Zak, author of this alert.


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