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271(e) Safe Harbor Applies to Unfair Import Investigations Until Infringing Acts are Reasonably Likely to Occur

By William F. Heinze

In Amgen Inc. v. International Trade Comission (March 19, 2008), the Federal Circuit
affirmed that the safe harbor provisions of 35 U.S.C. 271(e)(1) apply to process patents in actions under Section 337, when the imported product is used for the exempt purposes of 271(e)(1).

Under the "safe harbor" provisions of section 271(e)(1):

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 a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

According to Circuit Judge Newman,

In Kinik v. United States International Trade Commission, 362 F.3d 1359 (Fed. Cir. 2004) this court explained that '271(g) provided a new right and remedy in the district court, but held that the Tariff Act remedy of exclusion based on practice of a patented process was unchanged, and that the exceptions set forth in '271(g)(1) and (2), shown supra, did not apply in Section 337 cases. . . .

[Under 35 U.S.C. '271(g), " 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. . . . A product which is made by a patented process will, for purposes of this title, not be considered to be so made after--
(1) it is materially changed by subsequent processes; or
(2) it becomes a trivial and nonessential component of another product."]

We conclude that the Commission's ruling is in consonance with congressional policy as set forth in enactment of '271(g), and as elaborated by the Supreme Court in its applications of the safe harbor statute.

In enacting '271(g) the legislative history included the policy statement that:

Specifically, the Committee does not intend that it shall be an act of infringement to import a product which is made by a process patented in the United States "solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs." See 271(e)(1) of title 35, United States Code. Congress previously decided that certain actions do not constitute patent infringements and this Act does not change that prior policy decision.

S. Rep. No. 100-83, 48 (1987). Implementing in other contexts this broadly stated congressional policy, in Merck KgaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005) the Court explained that Congress intended that the immunity of regulatory activity not be inhibited, stating that "'271(e)(1)'s exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA." Id. at 202 (emphasis in original). And in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990) the Court held that '271(e)(1) includes medical devices, although the statute mentions only drugs and veterinary products; the Court stated that "[t]he phrase 'patented invention' in '271(e)(1) is defined to include all inventions, not drug-related inventions alone." Id. at 665. In both Merck and Eli Lilly the Court stressed the congressional purpose of removing patent-based barriers to proceeding with federal regulatory approval of medical products. This purpose and its application in precedent weigh heavily against selectively withholding the '271(e)(1) exemption depending on whether the infringement action is in the district court or the International Trade
Commission. We thus affirm the Commission's ruling that the safe harbor statute
applies to process patents in actions under Section 337, when the imported product is used for the exempt purposes of '271(e)(1).

. . . To the extent that the Commission held all importation and all uses exempt while FDA approval was pending, the safe harbor statute does not so provide.

. . . Although '271(e)(1) negates infringement by the imported EPO, the projected FDA approval established the Commission's jurisdiction to review and provide remedy to take effect as appropriate after the approval is granted and '271(e)(1) no longer shelters liability. When it has been shown that infringing acts are reasonably likely to occur, the Commission's obligation and authority are properly invoked.
The Commission erred in holding that it lacked jurisdiction under Section 337 absent actual sale or contract for sale of the imported EPO.

Full post as published by I/P Updates on March 20, 2008 (boomark / email).