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Patent infringement liability changes

By Diane R. Meyers, Esq.

A new law exempts medical practitioners from liability for infringement of patents for medical and surgical procedures issued after enactment of the law. Shielded from liability are medical practitioners licensed by a state to provide medical and/or surgical procedures, those acting under the direction of such a person, and health care entities affiliated with such a person, including nursing homes, hospitals, universities, medical schools, health maintenance organizations, group medical practices and medical clinics.

Public Law 104-208, signed by President Clinton on September 30, 1996, denies patent owners the right to enforce patents covering medical or surgical procedures that do not involve patented drugs or devices. Patents on medical and surgical procedures performed on a human body, organ cadaver, or even on an animal used in medical research or instruction relating to the treatment of humans, are now unenforceable.

United States patent law gives a patent owner the right to exclude others from making, using, offering for sale, selling or importing their patented process, machine, manufacture or composition of matter. Anyone engaging in such activities can be held liable for infringement of the patent. Anyone who actively induces others to infringe a patent or contributes to infringement by others, such as by selling a component of a patented product or process knowing that it will be used by another to infringe, also can be held liable. In C. R. Bard, Inc. v. Advanced Cardiovascular Systems, Inc., for example, Bard, the owner of a patent on a method of using a catheter in performing an angioplasty, accused Advanced Cardiovascular Systems of contributory infringement and inducing infringement by selling catheters that would be used in a method that infringed its patent.

Infringement of a patent can be literal—directly copying what the patent claims—or can be under the doctrine of equivalents—making only insubstantial changes to the claimed invention. In Marion Merrell Dow, Inc. v. Baker Norton Pharmaceuticals Inc, Marion Merrell Dow failed to establish that its patent for terfenadine acid metabolite (TAM) had been infringed either literally or under the doctrine of equivalents. Baker Norton was accused of inducing infringement by patients, since terfenadine, which Baker Norton was planning to sell, metabolizes to TAM in the body. The court declined to find literal infringement, holding that the naturally produced TAM did not infringe the synthetically produced TAM claimed in the patent. The court further declined to apply the doctrine of equivalents, stating that the equitable remedies which the doctrine is designed to offer were not appropriate in this case.

An infringer can be held liable for damages to compensate for the infringement. Damages must be at least equal to a reasonable royalty rate for the use made of the patented invention, and could be as high as the profits lost as a result of the infringement. The patent holder may also be able to recover attorneys fees. Under Public Law 104-208, holders of patents directed to certain medical or surgical procedures are no longer able to recover such damages for infringement of their patents.

Legislation leading to Public Law 104-208 was prompted by Samuel L. Pallin M.D. v. Jack A. Singer M.D. and The Hitchcock Clinic. That case involved a patent held by Dr. Pallin for a method of performing a cataract operation. The novelty of the invention was that the incision used allowed the procedure to be performed without sutures. Dr. Pallin brought suit against Dr. Singer and his affiliated hospital for infringement of the patent. A consent decree was entered into in the case, which invalidated several claims of the patent and prohibited Dr. Pallin from enforcing his patent. Under the new law, Pallin’s patent would be clearly unenforceable.

The new law targets “pure” medical procedures—medical procedures wherein the novelty is the technique for performing a procedure and not, for example, in a new drug, new piece of equipment or a new use of old drugs or equipment for performing the procedure. A patent directed to a new method for removing an appendix, for example, could not be enforced if the novelty of the method was the length, location or type of incision made.

Still covered under the patent infringement laws, however, are those activities that use a patented process, machine, manufacture, composition of matter or involve the practice of a patented use of a composition of matter. Patentable uses of drugs, patentable uses of chemical or biological reagents for diagnostic purposes, patentable methods of scheduling or timing administration of drugs and patentable methods for combining drug therapies will all be subject to patent protection. Surgical and medical procedures incorporating such patentable drugs, reagents and methods will be similarly protected by patent remedies. If the new appendectomy procedure discussed above used a patentable piece of equipment, a method patent directed to the procedure, including the equipment, would still be enforceable.

As a further example, if a surgical procedure for replacing a heart involves novel and nonobvious surgical procedures and includes the use of a conventional anesthetic, the procedure would be considered a medical activity and remedies for infringing a patent directed to such a procedure would not be available. If, however, the same surgical procedure included the use of a novel anesthetic or a novel dosing schedule, remedies for infringing a patent covering the procedure would still be available, the procedure now falling under the “practice of a patented use of a composition of matter” exception. Thus, when the patented use of a composition of matter contributes to the patentability or objective of the overall procedure, patent infringement remedies may still be available.

Also excluded from the rubric of “medical activity” for which liability is excused is the practice of a process in violation of a biotechnology patent. Such patents may be direct to, for example, patentable methods of providing genetic or other biological materials to patents, methods for inducing an organism to express an exogenous nucleotide sequence, or methods to inhibit, promote or alter expression of an endogenous nucleotide sequence. Under this exception, patents for making or using genetic or other biological materials manipulated ex vivo at the cellular or molecular level can still be enforced. Biological material includes a variety of cellular, intracellular, extracellular and acellular substances such as cultured microbial and mammalian cells, genetic materials such as DNA and RNA, proteins and other molecules secreted or excreted by cells, and viruses and other vectors for transmitting genetic material.

The new law does not preclude relief for infringement of patents on gene therapy or similar procedures. For example, a patient directed to a method of introducing an exogenous gene into a host through cells manipulated ex vivo, such that the gene will be taken up by and subsequently expressed by the host, would still be enforceable.

If the heart transplant procedure discussed above includes the use of a heart-lung machine, such a procedure would not fall under the biotechnology exception because it involves manipulation in vivo, not ex vivo, and does not involve a manipulation of the cellular or molecular characteristics of the heart. The procedure could, however, fall under another exception, if the heart-lung machine was patentable. The Act gives no relief to those engaged in the commercial development, manufacture, sale, importation or distribution of a machine, manufacture, composition of matter or the provision of pharmaceutical or clinical laboratory services regulated under the Federal Food, Drug and Cosmetic Act, the Public Health Services Act, or the Clinical Laboratories Improvement Act. These people would still be liable for patent infringement. Clinical laboratory services provided in a physician’s office are still categorized as a medical activity, however.

Proponents of the law think it is needed to ensure the availability of medical and surgical procedures that could be routinely and widely practiced. Furthermore, the law brings the United States into accord with most European countries, which prohibit the patenting of certain medical activities. Patent infringement claims can still be asserted for new drugs, machines and devices for treating and diagnosing diseases, biological products, new uses for drugs and biological products, and biotechnological processes such as gene therapy.

Critics of the law, however, assert that the new law threatens the biotechnology industry, and will have a chilling effect on the investment of both time and money in this area. Although there are biotechnology protections in the law, there is concern that limitations on remedies for patent infringement will extend to various areas of the biotech field. Moreover, critics say, without the potential for protecting inventions, members of the medical community and biotechnology researchers will have little incentive to develop new procedures.

Diane R. Meyers, Esq., is a member of the intellectual property department at Eckert Seamans Cherin and Mellott, LLC, a national law firm headquartered in Pittsburgh.

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