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Congressional Research Service Ü The Library of Congress CRS Report for Congress Received through the CRS Web Order Code RL30756 Patent Law and Its Application to the Pharmaceutical Industry: An Examination of the Drug Price Competition and Patent Term Restoration Act of 1984 ("The Hatch-Waxman Act") Updated January 10, 2005 Wendy H. Schacht Specialist in Science and Technology Resources, Science, and Industry Division John R. Thomas Visiting Scholar in Economic Growth and Entrepreneurship Resources, Science, and Industry Division Patent Law and Its Application to the Pharmaceutical Industry: An Examination of the Drug Price Competition and Patent Term Restoration Act of 1984 ("The Hatch-Waxman Act") Summary Congressional interest in the availability of prescription drugs has focused attention on the role of patents in the pharmaceutical industry.

The industry has been described as patent-intensive. Enterprises within this sector frequently obtain patent protection and enforce patent rights, and reportedly place a higher comparative value on patents than do competitors in many other markets. The patent law is based upon the Patent Act of 1952, codified in Title 35 of the United States Code.

This statute allows inventors to obtain patents on processes, machines, manufactures, and compositions of matter that are useful, new, and nonobvious. Granted ... more. less.

patents confer the right to exclude others from making, using, selling, offering to sell, or importing into the United States the patented invention. The Drug Price Competition and Patent Term Restoration Act of 1984 (the 1984 Act) 3 commonly known as the cHatch-Waxman Act d 3 made several significant changes to the patent laws designed to encourage innovation in the pharmaceutical industry while facilitating the speedy introduction of lower-cost generic drugs. These changes include provisions for extending the term of a patent to reflect regulatory delays encountered in obtaining marketing approval by the Food and Drug Administration (FDA); a statutory exemption from patent infringement for activities associated with regulatory marketing approval; establishment of mechanisms to challenge the validity of a pharmaceutical patent; and a reward for disputing the validity, enforceability, or infringement of a patented and approved drug. The 1984 Act also provides the FDA with certain authorities to offer periods of marketing exclusivity for a pharmaceutical independent of the rights conferred by patents. Many experts agree the 1984 Act has had a significant effect on the availability of generic substitutes for brand name drugs. Lower cost generics tend to be rapidly marketed after patent expiration. Increasing investment in R&D and gains in the research intensity of the pharmaceutical industry appear to indicate that the act has not deterred the development of new drugs. However, some questioned whether the law is needed to achieve the stated goals. Critics maintained the necessity of patent- related incentives for innovation is mitigated by other federal activities. Supporters of the existing approach argued that these incentives are precisely what foster a robust pharmaceutical industry. Of fundamental interest was whether alterations of the act were in order to reflect any perceived changes in the research environment since the legislation was enacted in the 1980s. This background report covers issues through the year 2002. Modifications of the Hatch-Waxman Act were implemented in P.L. 108-173, the Medicare Prescription Drug and Modernization Act of 2003. For the latest information on these recent initiatives see CRS Report RL32377, The Hatch-Waxman Act: Legislative Changes Affecting Pharmaceutical Patents, April 30, 2004. Contents Introduction......................................................1 Role of Patents in Pharmaceutical Innovation............................2 Principles of Patentability...........................................5 Patentable Subject Matter.......................................5 Utility.......................................................6 Novelty and Nonobviousness.....................................8 Patent Acquisition Procedures........................................9 Preparing a Patent Application...................................9 USPTO Examination..........................................10 Publication of Pending Patent Applications........................10 Interferences.................................................11 Post-Grant USPTO Proceedings.................................11 Patent Term.....................................................12 Patent Enforcement...............................................13 The Exclusive Rights..........................................13 The Process Patents Amendment Act of 1988.......................15 Infringement Litigation........................................16 Remedies...................................................17 Patent Assignments and Licenses....................................17 The Drug Price Competition and Patent Term Restoration Act of 1984.......18 Background of the 1984 Act....................................18 The Role of the FDA and the USPTO in the Pharmaceutical Industry............................................18 The Generic Drug Approval Process..........................19 Generic Drug Development and Patent Infringement.............20 Principal Provisions of the 1984 Act..............................23 Accelerated Generic Drug Approval Process...................23 Patent Term Restoration...................................23 Market Exclusivity........................................24 Patent Infringement.......................................25 Subsequent Legislative Developments............................28 Implementation of the 1984 Act.....................................29 Brief Overview of the Pharmaceutical Industry......................30 Effects on Generic Drugs ......................................31 Effects on Brand Name Drugs...................................32 Possible Issues and Potential Concerns............................36 1 For additional discussion of the Hatch-Waxman Act, including recent legislative activity see CRS Report RL32377, The Hatch-Waxman Act: Legislative Changes Affecting Pharmaceutical Patents , by Wendy H. Schacht and John R. Thomas; and CRS Report RL31379, The cHatch-Waxman d Act: Selected Patent-Related Issues , by Wendy H. Schacht and John R. Thomas. Patent Law and Its Application to the Pharmaceutical Industry: An Examination of the Drug Price Competition and Patent Term Restoration Act of 1984 ("The Hatch-Waxman Act") Introduction Congressional interest in methods to provide drugs at lower cost, particularly for the elderly, has rekindled a discussion over the role the federal government plays in facilitating the creation of new pharmaceuticals for the marketplace. Among the various federal laws that affect technology development are those dealing with intellectual property rights, particularly patents. Legislation concerning the ownership of inventions is intended to encourage additional private sector investments often necessary to further develop marketable products. The current approach attempts to balance the public sector 9s interest in new and improved technologies with concerns over providing companies valuable benefits without adequate accountability or compensation. Questions have been raised as to whether or not this balance is appropriate, particularly with respect to drug discovery. Critics maintain that the need for technology development incentives in the pharmaceutical and/or biotechnology sectors is mitigated by industry access to government-supported work at no cost, monopoly power through patent protection, and additional regulatory and tax advantages such as those conveyed through the Drug Price Competition and Patent Term Restoration Act and the Orphan Drug Act. Supporters of the existing approach argue that these incentives are precisely what are required and have given rise to robust pharmaceutical and biotechnology industries. This report examines the role of patents in pharmaceutical innovation and provides an overview of the general principles of patent law as applied to inventions of the pharmaceutical industry. The study explores the provisions of several relevant statutes including the Drug Price Competition and Patent Term Restoration Act of 1984 (the 1984 Act), commonly known as the cHatch-Waxman Act. d 1 Issues and opportunities associated with the implementation of this law are addressed, since the CRS-2 2 Bale Jr., Harvey E., cPatent Protection and Pharmaceutical Innovation, d 29 New York University Journal of International Law and Politics (1996-97), 95. 3 Bale, Jr., Harvey E., cThe conflicts between parallel trade and product access and innovation: the case for pharmaceuticals, d 1 Journal of International Economic Law (1998), 637, 641. 4 John B. Shoven, cIntellectual Property Rights and Economic Growth, d in eds. Charls Walker and Mark A. Bloomfield, Intellectual Property Rights and Capital Formation in the (continued...) pharmaceutical industry has been described as a patent-intensive one. 2 Enterprises within this sector frequently obtain patent protection and enforce patent rights, and reportedly place a higher comparative value on patents than do competitors in many other markets. 3 Role of Patents in Pharmaceutical Innovation The patent system is grounded in Article I, Section 8, Clause 8 of the U.S. Constitution and is intended to stimulate new discoveries and their reduction to practice, commonly known as innovation. The Constitution states that cThe Congress Shall Have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.... d The award of a patent permits the creator of an idea to exclude others temporarily from use of that concept without compensation (currently 20 years from the date of filing). It also places the information associated with an invention within the public domain. Patent ownership is perceived to be an incentive to innovation, the basis for the technological advancement that contributes to economic growth. It is through the commercialization and use of new products and processes that productivity gains are made and the scope and quality of goods and services are expanded. Award of a patent is intended to stimulate the investment necessary to develop an idea and bring it to the marketplace embodied in a product or process. Patent title provides the recipient with a limited-time monopoly over the application of his discovery in exchange for the public dissemination of information contained in the patent application. This is intended to permit the inventor to receive a return on the expenditure of resources leading to the discovery but does not guarantee that the patent will generate commercial benefits. The requirement for publication of the patent is expected to stimulate additional innovation and other creative means to meet similar and expanded demands in the marketplace. Innovation typically is knowledge-driven 3 based on the application of knowledge, whether it is scientific, technical, experiential, or intuitive. Innovation also produces new knowledge. One characteristic of knowledge that underlies the patent system is that it is a cpublic good, d a good that is not exhausted when it is used. As John Shoven of Stanford University points out, c[t]he use of an idea or discovery by one person does not, in most cases, reduce the availability of that information to others. d 4 Therefore the marginal social cost of the widespread CRS-3 4 (...continued) Next Decade , (New York, University Press of America, 1988), 46. 5 Robert P. Benko, cIntellectual Property Rights and New Technologies, d in Walker, et. al., Intellectual Property Rights and Capital Formation in the Next Decade , 27. 6 Stanley M. Besen and Leo J. Raskind, cAn Introduction to the Law and Economics of Intellectual Property, d Journal of Economic Perspectives , Winter 1991, 5. 7 For a list of relevant research in this area see Council of Economic Advisors. Supporting Research and Development to Promote Economic Growth: The Federal Government 9s Role , (October 1995), 6-7. 8 David J. Teece, cProfiting from Technological Innovation: Implications for Integration, Collaboration, Licensing, and Public Policy, d in The Competitive Challenge, ed. David J. Teece, (Cambridge: Ballinger Publishing Co., 1987), 188. 9 Edwin Mansfield. cIntellectual Property Rights, Technological Change, and Economic Growth, d in Intellectual Property Rights and Capital Formation in the Next Decade , eds. Charls E. Walker and Mark A. Bloomfield (New York: University Press of America, 1988), 10-11. 10 Kenneth W. Dam, cThe Economic Underpinnings of Patent Law, d Journal of Legal Studies , January 1994, 247. application of that information is near zero because the stock of knowledge is not depleted. cOrdinarily, society maximizes its welfare through not charging for the use of a free good. d 5 However, innovation typically is costly and resource intensive. Patents permit novel concepts or discoveries to become cproperty d when reduced to practice and therefore allow for control over their use. They c. . . create incentives that maximize the difference between the value of the intellectual property that is created and used and the social cost of its creation. d 6 Studies demonstrate that the rate of return to society as a whole generated by investments in research and development (R&D) leading to innovation is significantly larger than the benefits that can be captured by the person or organization financing the work. It is estimated that the social rate of return on R&D spending is over twice that of the rate of return to the inventor. 7 Ideas often are easily imitated, the knowledge associated with an innovation dispersed and adapted to other products and processes that, in turn, stimulate growth in the economy. That can happen in the absence of appropriability defined as c. . . factors, excluding firm and market structure, that govern an innovator 9s ability to capture the profits generated by an innovation. d 8 The appropriability of an invention depends on the level of competition in the industry and the type of information related to the innovation; the more competition and the more basic the knowledge, the less appropriable it is. 9 The difficulty in securing sufficient returns to spending on research and development has been associated with underinvestment in those activities. The patent process is designed to resolve the problem of appropriability. If discoveries were universally available without the means for the inventor to realize a return on investments, there would result a c. . . much lower and indeed suboptimal level of innovation. d 10 While research is often important to innovation, studies have shown that it constitutes only 25% of the cost of commercializing a new technology or technique. Thus, it is the expenditure of a substantial amount of additional CRS-4 11 Robert P. Merges, cCommercial Success and Patent Standards: Economic Perspectives on Innovation, d California Law Review , July 1988, 876. 12 Dam , The Economic Underpinnings of Patent Law , 266-267. Scope is determined by the number of claims made in a patent. Claims are the technical descriptions associated with the invention. In order for an idea to receive a patent, the law requires that it be c. . .new, useful [novel], and nonobvious to a person of ordinary skill in the art to which the invention pertains. d See footnote 12, p. 7. 13 Robert P. Merges and Richard R. Nelson, cOn the Complex Economics of Patent Scope, d Columbia Law Review , May 1990, 908. resources that brings most products or processes to the marketplace. The grant of a patent provides the inventor with a means to capture the returns to his invention through exclusive rights on its practice for 20 years from date of filing. That is intended to encourage those investments necessary to further develop an idea and generate a marketable technology. Issuance of a patent provides the inventor with a limited-time monopoly that is influenced by other mitigating factors, particularly the requirements for information disclosure, the length of the patent, and the scope of rights conferred. The process of obtaining a patent places the concept on which it is based in the public domain. In return for a monopoly right to the application of the knowledge generated, the inventor must publish the ideas covered in the patent. As a disclosure system, the patent can, and often does, stimulate other firms or individuals to invent caround d existing patents to provide for parallel technical developments or meet similar market needs. The patent system thus has dual policy goals 3 providing incentives for inventors to invent and encouraging inventors to disclose technical information. 11 Disclosure requirements are factors in achieving a balance between current and future innovation through the patent process, as are limitations on scope, novelty mandates, and nonobviousness considerations. 12 They give rise to an environment of competitiveness with multiple sources of innovation, which is viewed by some experts as the basis for technological progress. This is important because, as Robert Merges (Boston University) and Richard Nelson (Columbia University) found in their studies, when only c. . . a few organizations controlled the development of a technology, technical advance appeared sluggish. d 13 Not everyone agrees that the patent system is a particularly effective means to stimulate innovation. It is argued that patents do not work in reality as well as in theory because they do not confer perfect appropriability. In other words, they allow the inventor to obtain a larger portion of the returns on his investment but do not permit him to capture all the benefits. Patents can be circumvented and infringement cannot always be proven. Thus, patents are not the only way, nor necessarily the most efficient means, for the inventor to protect the benefits generated by his efforts. A study by Yale University 9s Richard Levin and his colleagues concluded that lead time, learning curve advantages (e.g. familiarity with the science and technology under consideration), and sales/service activities were typically more important in exploiting appropriability than were patents. That was true for both products and processes. However, patents were found to be better at protecting the former than the CRS-5 14 Richard C. Levin and Alvin K. Klevorick, Richard R. Nelson, Sidney G. Winter. cAppropriating the Returns for Industrial Research and Development, d Brookings Papers on Economic Activity , 1987, in The Economics of Technical Change , eds. Edwin Mansfield and Elizabeth Mansfield (Vermont, Edward Elgar Publishing Co., 1993), 254. 15 Ibid., 255 and 257. See also: Mansfield, Intellectual Property Rights, Technological Change, and Economic Growth, 12 and 13. 16 Levin, et. al., Appropriating the Returns for Industrial Research and Development , 253. 17 Ibid., 269. 18 Edwin Mansfield, Mark Schwartz, and Samuel Wagner. cImitation Costs and Patents: An Empirical Study, d The Economic Journal , December 1981, in The Economics of Technical Change , 270. latter. The novel ideas associated with a product often can be determined through reverse engineering 3 taking the item apart to assess how it was made. That information then could be used by competitors if not covered by a patent. Because it is more difficult to identify the procedures related to a process, other means of appropriation are seen as preferable to patents, with the attendant disclosure requirements. 14 The utility of patents to companies varies among industrial sectors. Patents are perceived as critical in the drug and chemical industries. That may reflect the nature of R&D performed in these sectors, where the resulting patents are more detailed in their claims and therefore easier to defend. 15 In contrast, one study found that in the aircraft and semiconductor industries patents are not the most successful mechanism for capturing the benefits of investments. Instead, lead time and the strength of the learning curve were determined to be more important. 16 The degree to which industry perceives patents as effective has been characterized as c. . . positively correlated with the increase in duplication costs and time associated with patents. d 17 In certain industries, patents significantly raise the costs incurred by nonpatent holders wishing to use the idea or invent around the patent 3 an estimated 40% in the pharmaceutical sector, 30% for major new chemical products, and 25% for typical chemical goods 3 and are thus viewed as important. However, in other industries, patents have much smaller impact on the costs associated with imitation (e.g. in the 7%-15% range for electronics), and may be considered less successful in protecting resource investments. 18 Principles of Patentability Patentable Subject Matter Patent law is based upon the Patent Act of 1952, codified in Title 35 of the United States Code. Section 101 defines the subject matter that may be patented. According to the statute, one who cinvents or discovers any new and useful process, machine, manufacture, or any composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and CRS-6 19 35 U.S.C. § 101. 20 See Diamond v. Chakrabarty , 447 U.S. 303 (1980). 21 See In re Pleuddemann , 910 F.2d 823 (Fed. Cir. 1990) . 22 35 U.S.C. § 100(b). 23 See Titanium Metals Corp. v. Banner , 778 F.2d 775 (Fed. Cir. 1985). 24 35 U.S.C. § 101. 25 See Mitchell v. Tilghman , 86 U.S. (19 Wall.) 287, 396 (1873). requirements of this title. d 19 An invention that falls within one of the four statutory categories 3 processes, machines, manufactures, and compositions of matter 3 may be subject to a so-called cutility patent. d Actors within the pharmaceutical industry principally claim inventions that are compositions of matter or processes. In addition to such things as mixtures and alloys, compositions of matter include chemical compounds. 20 When a composition of matter is presented in the fashion of a patent claim, it is defined in terms of its constituent elements. A patent claim that is expressed as a series of steps is known as a process or method claim. Process claims are commonly divided into two sorts: cmethod of using d and cmethod of making d claims. 21 Suppose that an inventor manufactures a new pharmaceutical compound and also discovers that the compound may be used to treat a particular ailment. The manner in which the pharmaceutical may be employed to achieve a result may be drafted in the form of a claim towards a method of using. As well, the inventor may obtain claims for a method of making the compound, stating the techniques he employed to synthesize the compound. Section 100(b) of the Patent Act notes that a process cincludes a new use of known process, machine, manufacture, composition of matter, or method. d 22 The statute thus allows inventors to obtain a proprietary interest in a newly discovered property of a known product. Suppose, for example, that an inventor discovers that a well-known chemical compound, understood to act as an explosive, also serves as a heart medication. The inventor could not obtain patent protection on a compound that already lies within the public domain. But he could seek a patent claiming a process of using the compound as a heart medication. 23 Utility Section 101 of the Patent Act also mandates that patents issue only to cuseful d inventions. 24 Utility ordinarily presents a minimal requirement that the invention be capable of achieving a pragmatic result. 25 Patent applicants need only supply a single, operable use of the invention that is credible to persons of ordinary skill in the art. Although the utility requirement is readily met in most fields, it may present a significant obstacle to patentability for pharmaceutical inventions. Here, inventors sometimes synthesize compounds without a precise knowledge of how they may be used to achieve a practical working result. When patent applications are filed CRS-7 26 385 U.S. 419 (1966). 27 Ibid., p. 534-35. claiming such compounds, they may be rejected as lacking utility within the meaning of the patent law. The utility requirement should be viewed in light of the considerable incentives chemists, biologists and physicians possess to obtain patent protection on compounds of interest as soon as possible. For example, in the case of pharmaceutical compounds, food and drug authorities require considerable product testing before the pharmaceutical can be broadly marketed. Before investing further time and effort on laboratory testing and clinical trials, actors in the pharmaceutical field desire to obtain patent rights on promising compounds even where their particular properties are, as yet, not well understood. But when patent applications are filed too close to the laboratory bench, inventors have discovered that the utility requirement may block the issuance of a patent. The Supreme Court opinion in Brenner v. Manson addressed such a situation. 26 The inventor Manson filed a patent application claiming a method of making a known steroid compound. Although the particular compound Manson was concerned with was already known to the art, chemists had yet to identify any setting in which it could be gainfully employed. However, as skilled artisans knew that another steroid with a very similar structure had tumor-inhibiting effects in mice, Manson 9s new method of making the compound was a research tool of interest to the scientific community. The U.S. Patent and Trademark Office (USPTO) Board of Patent Appeals affirmed the examiner 9s rejection of the application. The Board reasoned that because Manson could not identify a single use for the steroid he produced, the utility requirement was not satisfied. The Board was unimpressed that a similar compound did have beneficial effects, noting that in the unpredictable art of steroid chemistry, even minor changes in chemical structure often lead to significant and unforeseeable changes in the performance of the compound. Manson then appealed to the Court of Customs and Patent Appeals (CCPA), which reversed. Key to the CCPA 9s reasoning was that the sequence of process steps claimed by Manson would produce the steroid of interest. According to the CCPA, because the claimed process worked to produce a compound, the utility requirement was satisfied. The Supreme Court granted certiorari and once more reversed, thereby upholding the Patent Office rejection. At least within the context of scientific research tools, the Court imposed a requirement that an invention may not be patentable until it has been developed to a point where cspecific benefit exists in currently available form. d 27 Chief among the Court 9s concerns was the breadth of the proprietary interest that could result from claims such as those in Manson 9s application. cUntil the process claim has been reduced to production of a product shown to be useful, the metes and bounds of that monopoly are not capable of precise delineation. . . . . Such a patent may confer power to block whole areas of scientific CRS-8 28 Ibid., p. 535. 29 Ibid., p. 536 (quoting Application of Ruschig , 343 F.2d 965, 970 (CCPA 1965)). 30 51 F.3d 1560 (Fed. Cir. 1995). 31 Ibid., p. 1565. 32 Ibid ., p. 1568. 33 Machin, Nathan. Prospective Utility: A New Interpretation of the Utility Requirement of Section 101 of the Patent Act, 87 California Law Review (1999), p. 421, 432. 34 51 F.3d at 1564-68. development, without compensating benefit to the public. d 28 The Court closed by noting that ca patent is not a hunting license. It is not a reward for the search, but compensation for its successful conclusion. 8A patent system must be related to the world of commerce rather than to the realm of philosophy. 9 d 29 Although Brenner v. Manson appears to take a strict view of the utility requirement, a more recent lower court opinion on utility, In re Brana , 30 suggests a more limited role. Like Manson, Brana claimed chemical compounds and stated they were useful as antitumor substances. The scientific community knew that structurally similar compounds had shown antitumor activity during both in vitro testing, done in the laboratory using tissue samples, and in vivo testing using mice as test subjects. The latter tests had been conducted using cell lines known to cause lymphocytic tumors in mice. The USPTO Board rejected the application for lack of utility, and on appeal the United States Court of Appeals for the Federal Circuit (Federal Circuit) reversed. Among the objections of the USPTO was that the tests cited by Brana were conducted upon lymphomas induced in laboratory animals, rather than real diseases. The Federal Circuit responded that an inventor need not wait until an animal or human develops a disease naturally before finding a cure. 31 The USPTO further argued that Brana cited no clinical testing, and therefore had no proof of actual treatment of the disease in live animals. The Federal Circuit reasoned that proof of utility did not demand tests for the full safety and effectiveness of the compound, but only acceptable evidence of medical effects in a standard experimental animal. 32 The holding of Brana , along with its failure to discuss or even cite Brenner v. Manson , suggests that the Federal Circuit will adopt a more liberal approach to the utility requirement than did the Supreme Court. 33 The Federal Circuit did indicate that, in cases where the invention lacks a well-established use in the art, the applicant must disclose a specific, credible use within the patent 9s specification. 34 Novelty and Nonobviousness To be patentable, a pharmaceutical invention must be judged both new and nonobvious. To be considered novel, the invention must not be wholly anticipated by the so-called cprior art, d or public domain materials such as publications and other CRS-9 35 35 U.S.C. § 102. 36 35 U.S.C. § 103(a). 37 37 C.F.R. § 1.16. 38 35 U.S.C. § 112 ¶ 1. 39 See Atlas Powder Co. v. E.I. DuPont de Nemours & Co. , 750 F.2d 1569 (Fed. Cir. 1984). 40 See Vas-Cath Inc. v. Marhurkar , 935 F.2d 1555 (Fed. Cir. 1991). 41 See Glaxo Inc. v. Novopharm Ltd. , 52 F.3d 1043 (Fed. Cir. 1995). 42 35 U.S.C. § 112 ¶ 2. 43 See Orthokinetics, Inc. v. Safety Travel Chairs, Inc. , 806 F.2d 1565 (Fed. Cir. 1986). patents. 35 The nonobviousness requirement is met if the invention is beyond the ordinary abilities of a person of ordinary skill in the art in the appropriate field. 36 Patent Acquisition Procedures Preparing a Patent Application An inventor who wishes to obtain patent protection must first prepare an application. Although inventors may represent themselves before the USPTO, the vast majority engage the services of a patent attorney or agent for this purpose. An application must include several components. First, the application must be accompanied by a filing fee. As of October 1, 2002, the filing fee was set to $740. 37 The application must also contain a specification, or description of the invention. Section 112 subjects the specification to three requirements. 38 First, the specification must enable persons of ordinary skill in the art to which the patent pertains to make and use the invention. 39 Second, the specification must contain a cwritten description d of the invention, sufficient to show that the inventor was in possession of the invention at the time he filed the application. 40 Finally, the specification must detail the cbest mode d contemplated by the inventor of practicing the invention. 41 Section 112 also requires that the specification cconclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention. d 42 The claims are considered the most important part of the patent instrument, setting forth the boundaries of the invention that the inventor claims as his own. Claims are subject to a requirement of definiteness, which mandates that they be sufficiently precise so that others may have notice of the patentee 9 proprietary interest. 43 Inventors possess no duty to perform a prior art search prior to filing a patent application. However, if an applicant does know of a prior art reference that is CRS-10 44 37 C.F.R. § 1.56. 45 Levine, Russell E., et al., cEx Parte Patent Practice and the Rights of Third Parties, d 45 American University Law Review (1996), 1987. 46 35 U.S.C. § 132. 47 See In re Oetiker , 977 F.2d 1443 (Fed. Cir. 1992). 48 35 U.S.C. §§ 120, 133, 134. 49 American Inventors Protection Act of 1999, Pub. L. No. 106-113. material to the patentability of the claimed invention, then he must disclose it to the USPTO. 44 USPTO Examination Once an inventor has completed an application, he must forward it to the USPTO for further consideration. Prosecution of a patent at the USPTO is an ex parte procedure. Members of the public, and in particular the patent applicant 9s competitors, do not participate in patent prosecution procedures. As well, USPTO examiners do not possess a competing interest relative to the applicant. Instead, they assist the applicant in fulfilling the statutory requirements for obtaining a patent grant. 45 Once the USPTO receives a patent application, USPTO staff will forward it to the examining group bearing responsibility for that sort of invention. A supervisory patent examiner then assigns the application to an individual examiner. The examiner will review the application and conduct a search of the prior art. The examiner then judges whether the application properly discloses and claims a patentable invention. The examiner must notify the applicant of her response to the application. Termed an Office Action, this response may allow the application to issue or reject it in whole or in part. 46 If the claim is rejected, the examiner ordinarily must establish a prima facie case of unpatentability by a preponderance of the evidence. 47 If a rejection has resulted, the attorney will usually respond by either amending the claims or asserting that the rejection was improper. An examiner who remains unconvinced by the applicant 9s response will issue a second Office Action termed a cFinal Rejection. d The applicant ordinarily has three options: abandon the application, persist in prosecution by filing a so-called ccontinuing application, d or seek review of the examiner 9s action by filing a petition to the Commissioner or appeal to the Board of Patent Appeals and Interferences. 48 Publication of Pending Patent Applications The Domestic Publication of Foreign Filed Patent Applications Act of 1999 requires the USPTO to publish pending patent applications 18 months from the earliest filing date (to which they are entitled under the law). 49 Significantly, if an applicant certifies that the invention disclosed in the application will not be the CRS-11 50 35 U.S.C. § 122. 51 35 U.S.C. § 135. 52 35 U.S.C. § 102(g). 53 35 U.S.C. § 251. 54 35 U.S.C. § 302. 55 35 U.S.C. § 303. 56 35 U.S.C. § 304. 57 35 U.S.C. § 307. subject of a patent application in another country that requires publication of applications 18 months after filing, then the application shall not be published in the United States. This act also creates provisional rights, equivalent to a reasonable royalty, owed from persons who employ the invention as claimed in the published patent application. 50 Interferences Sometimes multiple individuals seek patent rights on the same invention. For example, two companies may have contemporaneously developed a particular pharmaceutical and filed patent applications. In such cases, the USPTO will declare a so-called cinterference d proceeding. 51 A patent interference is a complex administrative proceeding that ordinarily results in the award of a patent to one of its participants. The prevailing party in the interference is usually the individual who was the first to invent the claimed technology. 52 Post-Grant USPTO Proceedings USPTO involvement in the patent system does not necessarily end when it formally grants a patent. Two significant post-grant proceedings are worthy of note here. First, a patentee may employ the reissue proceeding to correct a patent that he believes to be inoperative or invalid. 53 For example, suppose that subsequent to the issuance of a patent, the patentee discovers prior art that would invalidate the patent due to anticipation or obviousnesss. By incorporating additional limitations into the patent claims through the reissue proceeding, the patentee may yet be able to define a patentable advance over the prior art. The second significant post-grant proceeding is known as reexamination. A feature of U.S. law since 1981, the reexamination statute allows that any individual, including the patentee, a licensee, and even the USPTO Director himself, may cite a patent or printed publication to the USPTO and request that a reexamination occur. 54 If the USPTO determines that this reference raises ca substantial new question of patentability, d 55 then it will essentially reinitiate examination of the patent. 56 A certificate of cancellation results if the USPTO judges the claims to be unpatentable over the cited reference. Otherwise the USPTO issues a certificate of confirmation upholding the claims in their original or amended form. 57 CRS-12 58 American Inventors Protection Act of 1999, Pub. L. No. 106-113. See Janis, Mark D., cInter Partes Reexamination, d 10 Fordham Intellectual Property, Media & Entertainment Law Journal (2000), 481. 59 35 U.S.C. §§ 252, 307(a). 60 35 U.S.C. § 154(a). 61 See Lemley, Mark A. An Empirical Study of the Twenty-Year Patent Term, 22 American Intellectual Property Law Association Quarterly Journal (1994), p. 369. The Optional Inter Partes Reexamination Procedure Act of 1999 provides third parties with an additional option. 58 They may employ the traditional reexamination system, which has been renamed an ex parte reexamination. Or, they may opt for a minimal degree of participation in a newly minted inter partes reexamination. During inter partes reexamination, third party requesters may opt to submit written comments to accompany patentee responses to the USPTO. The requester may also appeal USPTO determinations that a reexamined patent is not invalid to the USPTO Board and the Court of Appeals for the Federal Circuit. To discourage abuse of inter partes reexamination proceedings, the statute provides that third party participants are stopped from raising issues that they raised or could have raised during reexamination. Amendments to a patent introduced during reissue or reexamination may trigger so-called cintervening rights d that benefit competitors of the patentee. Congress recognized that third parties may have made commercial decisions based upon the precise wording of the claims of an issued patent. If these claims are later amended during reissue or reexamination, this reliance interest could be frustrated. The patent statute therefore allows the competitors of a reissued or reexamined patent to sell, continue to use, or otherwise employ the claimed invention in appropriate circumstances. 59 Patent Term Once the USPTO issues a patent, that patent enjoys an effective term established by the statute. The publication of this report finds the patent law in a transition period concerning patent term. For patents resulting from publications filed after June 8, 1995, the patent term is ordinarily twenty years from the date the patent application was filed. 60 For patents issued prior to June 8, 1995, as well as for patent resulting from applications pending at the USPTO as of that date, the patent endures for the greater of twenty years from filing or seventeen years from grant. 61 Although the life of the patent is measured from the filing date, individuals gain no enforceable rights merely by filing a patent application. These rights accrue only at such time that the patent issues, and potentially include the power to enjoin infringers and obtain an award of damages. If the application was published in accordance with the Domestic Publication of Patent Applications Filed Abroad Act of 1999, then the patentee also obtains provisional rights equivalent to a reasonable royalty. Although provisional rights extend from the time the patent application was published, the patentee may not assert them until the patent issues. CRS-13 62 Pub. L. No. 98-417, 98 Stat. 1585 (1984). 63 37 C.F.R. § 1.16. 64 35 U.S.C. § 271(a). 65 Johnston v. IVAC Corp. , 885 F.2d 1574, 1580 (Fed.Cir.1989). 66 733 F.2d 858 (Fed. Cir. 1984). Four significant qualifications may alter the basic patent term. Most significant for the pharmaceutical industry is that the term of a patent may be extended under 35 U.S.C. § 156. This provision was introduced by the Drug Price Competition and Patent Term Restoration Act of 1984. 62 This complex statute authorizes increased patent terms on inventions that have been subject to a premarket approval process under the Federal Food, Drug and Cosmetic Act. Under 35 U.S.C. § 154(b), patentees may also obtain term extensions of up to five years due to certain prosecution delays, including the declaration of an interference of the successful pursuit of appeal to the Board of Patent Appeals and Interferences or federal court. As well, the Patent Term Guarantee Act of 1999 provides certain deadlines that, if not met by the USPTO, result in an automatic extension (day for day) of the term of individual patents. Among these deadlines are fourteen months for a First Office Action and four months for a subsequent Office Action. The prosecution also must be completed within three years of the filing date, with exceptions granted for continuing applications and appeals. Finally, enjoyment of the full patent term is subject to the payment of maintenance fees. A patent expires after four, eight, or twelve years if maintenance fees are not timely paid on each occasion. As of October 1, 2002, the amounts due are $880 by the fourth year, $2,020 by the eighth year, and $3,100 by the twelfth year. 63 Patent Enforcement The Exclusive Rights A patent provides its proprietor with exclusive rights in the patented invention. An individual who cwithout authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. d 64 Modern courts consider the phrase cpatented invention d to mean the invention as recited in the claims. If an accused product or process meets every element and limitation of the claims, then the patent is said to be literally infringed. 65 As noted, the Patent Act states that all unauthorized cuses d of the patented invention constitute an infringement. In Roche Products, Inc. v. Bolar Pharmaceutical Co., 66 the Federal Circuit held that this language on its face prohibits all unauthorized uses of the patented invention, including those that might be deemed cexperimental d in character. The Roche v. Bolar court did leave open a narrow CRS-14 67 35 U.S.C. § 271(b), (c). 68 See Chimuinatta Concrete Concepts, Inc. v. Cardinal Industries, Inc. , 145 F.3d 1303 (Fed. Cir. 1998). 69 Graver Tank v. Linde Air Products Co. , 339 U.S. 605 (1950). 70 520 U.S. 17 (1997). 71 See Jurgens v. CBK, Ltd. , 80 F.3d 1566, 1572 n.2 (Fed. Cir. 1996). 72 Leatherman Tool Group Inc. v. Cooper Industries Inc. , 131 F.3d 1011, 1015 (Fed. Cir. 1996). possibility that the use of a patented invention wholly for experiment, amusement or curiosity might be judged noninfringing. However, where experimental uses of the invention are in fact motivated by commercial purposes, this cexperimental use d doctrine will not serve as an infringement defense. As described above, Congress subsequently modified these cexperimental use d principles with an eye towards the pharmaceutical industry. The patent statute also includes provisions concerning contributory infringement and the active inducement of another 9s infringement. 67 Under these statutes, individuals who encourage the unauthorized practice of another 9s patent infringement may themselves be liable for patent infringement in certain circumstances. Suppose, for example, that a supplier sells a medication that has both infringing and noninfringing uses. If the supplier provides instructions, distributes advertising or offers training that promotes the infringing use, then it may be guilty of active inducement and liable for patent infringement. 68 Although the exclusive rights provided by a patent are founded upon the claims, they are not necessarily limited to them. Although the courts have long recognized the value of clear and certain claims, they have sometimes expanded the scope of protection associated with a patent under the so-called cdoctrine of equivalents. d The doctrine of equivalents arose from judicial efforts to stop competitors who would introduce insignificant modifications from the claimed invention in order to avoid literal infringement. 69 As provided in the 1997 Supreme Court opinion in Warner- Jenkinson Co. v. Hilton Davis Chemical Co. , an accused product or process that presents insubstantial differences from the claimed invention will judged an equivalent and therefore an infringement. 70 A defendant 9s intent is irrelevant to the outcome of an infringement inquiry. Even an individual who has never previously known of the asserted patent may be found to be an infringer. 71 As well, the exclusive patent rights do not provide an affirmative right for the patentee to employ the invention himself. 72 For example, the fact that an inventor obtains a patent on a pharmaceutical compound does not allow him to market this medication to others. Approval of the appropriate food and drug authorities must also be obtained. CRS-15 73 See Bio-Technology General Corp. v. Genentech Inc. , 80 F.3d 1553, 1559 (Fed. Cir.), cert. denied , 117 S. Ct. 274 (1996). 74 See Dowagiac Mfg. Co. v. Minnesota Moline Plow Co. , 35 U.S. 641, 650 (1915). 75 See Intel Corp. v. ULSI Corp. , 995 F.2d 1566 (Fed. Cir. 1993), cert. denied , 510 U.S. 1092 (1994). 76 See Joy Technologies, Inc. v. Flakt, Inc. , 6 F.3d 770 (Fed. Cir. 1993). 77 Pub. L. No. 100-418. The patents of others might also interfere with the patentee 9s ability to practice his own patented invention. 73 Suppose, for example, that a hypothetical entity, Alpha Co., obtains a patent on a chemical compound using for treating hypertension. Later, another hypothetical entity, Beta Co., discovers that the chemical compound is also useful for treating male pattern baldness. Even if Beta obtains a patent on a method of using the chemical to treat baldness, Beta cannot practice that method without infringing Alpha 9s patent. Nor can Alpha use the compound to treat baldness without infringing Beta 9s patent. In this case, the Alpha patent is said to be a blocking, or dominant patent over Beta 9s improvement or subservient patent. In such instances the holders of the dominant and subservient patent often possess incentives to cross- license one another. The rights provided by U.S. patents are ordinarily effective only in the United States. They generally provide no protection against acts occurring in foreign countries. 74 Individuals must obtain patent protection in each nation where they wish to guard against unauthorized use of their inventions. Under the cfirst sale d or cexhaustion d doctrine, an authorized, unrestricted sale of a patented product depletes the patent right with respect to that product. As a result of this doctrine, the purchaser of a patented good ordinarily may use or resell the good without further regard to the patentee. The courts have reasoned that when a patentee sells a product without restriction, it impliedly promises its customer that it will not interfere with the full enjoyment of the product. 75 The Process Patents Amendment Act of 1988 Special infringement provisions concerning process patents impact the pharmaceutical industry. Traditionally the patent law held that a process claim could be directly infringed only by the performance of those steps. Suppose, for example, that an inventor holds a patent on a particular method of making a pharmaceutical. By itself, the act of selling the pharmaceutical does not infringe this method patent. The seller would also have to make the pharmaceutical by the patented method in order to be liable for infringement. 76 This general principle was altered to some degree in the Process Patents Amendment Act of 1988. 77 There, Congress provided process patent owners with the right to exclude others from using or selling in the United States, or importing into CRS-16 78 35 U.S.C. § 271(g). 79 35 U.S.C. § 271(g)(1), (2). See Eli Lilly & Co. v. American Cyanamid Co. , 82 F.3d 1568 (Fed. Cir. 1996). 80 35 U.S.C. § 287(b). 81 Rohm and Haas Co. v. Brotech Corp. , 127 F.3d 1089 (Fed. Cir. 1997). 82 35 U.S.C. § 295. 83 35 U.S.C. § 281. 84 35 U.S.C. § 282. the United States, products made by a patented process. 78 For example, suppose that an enterprise based abroad manufactures a pharmaceutical employing a process patented in the United States. If the foreign company exports the pharmaceutical into the United States, it may face liability even though it performed every step of the patented process abroad. A number of exceptions limit liability under the Process Patents Amendment Act. If the accused product is materially changed by subsequent processes, or becomes a trivial or nonessential component of another product, then there is no infringement. 79 The Process Patents Amendment Act also included complex provisions that modified the usual scheme of remedies available for patent infringement. 80 Among other features, they include a grace period for individuals unaware of the patent implications of a particular process. Such persons may, upon receiving notice of infringement, dispose of infringing products and avoid liability. The Process Patents Amendment Act also modified the burden of proof for certain charges of process patent infringement. Ordinarily, the patentee is the moving party during infringement litigation and bears the burden or proving that infringing acts have occurred. 81 However, Congress recognized that patentees may face great difficulties in proving that a particular product resulted from the performance of the patented process. The Patent Act therefore creates a presumption that a product is made by a patented process if two conditions are met. 82 First, there must be a substantial likelihood that the product was made by the patented process. Second, the plaintiff must have made a reasonable effort to determine the process actually used in the production of the product and was unable to so determine. The effect of the presumption is that the accused infringer has the burden of asserting that the accused product was not made by the patented process. Infringement Litigation The patentee may file a civil suit in federal district court in order to enjoin infringers and obtain monetary remedies. 83 Although issued patents enjoy a presumption of validity, accused infringers may assert that the patent is invalid or unenforceable. 84 In patent matters, appeals from the district courts go to the United States Court of Appeals for the Federal Circuit. The Federal Circuit also hears CRS-17 85 The Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25 (1982). 86 35 U.S.C. § 283. 87 See Mentor Graphics Corp. v. Quickturn Design Systems, Inc. , 150 F.3d 1374, 1377, 47 USPQ2d 1683, 1685 (Fed. Cir. 1998). 88 35 U.S.C. § 284. 89 35 U.S.C. § 286. 90 See General Motors Corp. v. Devex Corp. , 461 U.S. 648 (1983). 91 35 U.S.C. § 261. 92 Ibid. appeals from the USPTO. Federal Circuit decisions are subject to review at the Supreme Court. 85 Remedies The Patent Act sets forth the remedies a patentee may obtain upon a finding of infringement. Section 283 allows courts to cgrant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, or such terms as the court deems reasonable. d 86 A patentee may also obtain a preliminary injunction against an accused infringer. Courts assess the traditional four factors when considering whether to grant such an injunction. The factors are typically stated as: (1) the probability of success on the merits; (2) the possibility of irreparable harm to the patentee if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest. 87 The Patent Act also provides for the award of damages cadequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer. d 88 In practice, patentees seek lost profits damages when they are able to make the required showing. Otherwise a reasonable royalty serves as the default measure of damages. The Patent Act limits recovery to six years prior to the filing of the complaint or counterclaim for patent infringement. 89 Courts ordinarily award prejudgment interest in order to afford the patentee full compensation for the infringement. 90 Patent Assignments and Licenses Patents possess the attributes of personal property and may be assigned or licensed to others. 91 An assignment, which is essentially the sale of the patent, must be in writing to be effective. 92 A patent owner may also grant a license. A license is generally not a full ownership interest in the patented invention. Instead, a patent license amounts to a promise by the patentee not to sue the licensee for infringement in exchange for some CRS-18 93 Spindelfabrik Suessen-Schurr v. Schubert & Salzer , 829 F.2d 1075, 1081 (Fed.Cir. 1987), cert. denied , 484 U.S. 1063 (1988). 94 Adelman, Martin J., et al., Cases and Materials on Patent Law (1998), 1231. 95 Pub. L. No. 98-417, 98 Stat. 1585 (1984). 96 Rea, Teresa Stanek, cStriking the Right Balance Between Innovation and Drug Price Competition: Understanding the Hatch-Waxman Act 3An Introduction of Speakers, d 54 Food Drug Law Journal (1999), 223, 224. 97 See, e.g., Glaxo, Inc. v. Novopharm, Ltd. , 110 F.3d 1562, 1568 (Fed. Cir. 1997). 98 See, e.g., McGough, Kevin J. , cPreserving the Compromise: The Plain Meaning of Waxman-Hatch Exclusivity, d 45 Food, Drug and Cosmetic Law Journal (1990), 487. consideration. 93 Licenses are generally classified as either exclusive or nonexclusive. An exclusive licensee has received a promise that it alone may make, use, sell, offer to sell, or import into the United States the patented invention without facing an infringement suit. 94 The Drug Price Competition and Patent Term Restoration Act of 1984 The Drug Price Competition and Patent Term Restoration Act of 1984 (the 1984 Act) 95 introduced several significant changes to the patent laws. These include patent term extension; a statutory exemption for patent infringement relating to regulatory marketing approval; procedures for challenging the validity of pharmaceutical patents; and a reward for challenging the validity, enforceability, or infringement of a patented and approved drug. Through these provisions, the 1984 Act attempts to balance two competing objectives within the pharmaceutical industry. First, the 1984 Act aimed to encourage the introduction of widely available generic drugs. Second, the 1984 Act hoped to ensure that adequate incentives remain for individuals to invest in the development of new drugs. 96 The 1984 Act is today commonly known as the cHatch-Waxman Act. d 97 At the time of its enactment, however, the 1984 Act was generally referred to as the cWaxman-Hatch Act. d 98 In light of this conflicting nomenclature, this report refers to the Drug Price Competition and Patent Term Restoration Act of 1984 as the 1984 Act. Background of the 1984 Act The Role of the FDA and the USPTO in the Pharmaceutical Industry. Both the Patent and Trademark Office and the Food and Drug Administration (FDA) have a role to play in the pharmaceutical industry. The USPTO allows patents to issue on the compounds that comprise a pharmaceutical as well as methods of making and using them. Patents confer the right to exclude others from making, CRS-19 99 35 U.S.C. § 271(a). 100 Chisum, Donald S., Principles of Patent Law (Foundation Press, New York, New York, 1998), 5. 101 21 U.S.C. § 355(b). Prior to 1962, the drug approval process was solely directed towards safety. See Mossinghoff, Gerald J., cOverview of the Hatch-Waxman Act and Its Impact on the Drug Development Process, d 54 Food and Drug Law Journal (1998), 187. 102 See In re Brana , 51 F.3d 1560 (Fed. Cir. 1995). 103 21 U.S.C. § 355(b). Prior to 1962, the drug approval process was solely directed towards (continued...) using, selling, offering to sell, or importing into the United States the patented invention. 99 The grant of a patent does not provide its proprietor with the affirmative right to market the patented invention, however. 100 For many products of the pharmaceutical industry, the FDA must approve the product for sale to consumers. Federal laws generally require that pharmaceutical manufacturers show their products are safe and effective in order to market these products. 101 USPTO issuance of a patent and FDA marketing approval are distinct events that depend upon different criteria. 102 The FDA might consider a pharmaceutical safe and effective for consumer use, for example, but the USPTO could rule that the compound does not present a sufficient advance over public domain knowledge to be worthy of a patent. Alternatively, it is readily within the power of the FDA to judge that a pharmaceutical presents too great a risk for use as a medication within the United States, despite the fact that the USPTO has allowed a patent to issue claiming that pharmaceutical. As a result of the independence of patent ownership and marketing approval, the pharmaceutical industry must account for both. In order to sell a drug without fear of civil or criminal liability, an enterprise must both obtain FDA approval and consider whether that drug has been patented. Often the entity which owns the patent on a pharmaceutical is the first to be awarded marketing approval. Sometimes the enterprise which has been awarded marketing approval and the patent owner are separate entities, however. In this latter case, the patentee may commence infringement litigation against the approved drug manufacturer. A court may issue an injunction and award monetary liability for patent infringement despite the fact of FDA marketing approval. Although the 1984 Act maintained the independence between the award of a patent and the process of seeking FDA market approval, it did establish a procedural interface between these two events. Before describing these procedures in greater detail, this report first considers core features of the patent and food and drug laws as they stood prior to the 1984 Act. The Generic Drug Approval Process. Since 1962, federal law has required pharmaceutical manufacturers to demonstrate that their products are safe and effective. 103 Prior to the 1984 Act, however, the federal food and drug law CRS-20 103 (...continued) safety. See Mossinghoff, supra note 8, at 187. 104 Engelberg, Alfred B., cSpecial Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness?, d 39 IDEA: Journal of Law and Technology (1999), 389, 396. Generic drugs are versions of brand-name prescription drugs that are often sold without a trademark and that contain the same active ingredients, but not necessarily the same inactive ingredients, as the original. United States v. Generix Drug Co. , 460 U.S. 435, 455 (1983). 105 Buchanan, J. Matthew, cMedical Device Patent Rights in the Age of FDA Modernization: the Potential Effect of Regulatory Streamlining on the Right to Exclude, d 30 University of Toledo Law Review (1999) 305, 316. 106 Engelberg, supra note 103, at 396-97. 107 Buchanan, supra note 104. 108 35 U.S.C. § 271(a). 109 29 F.Cas. 1120, 1121 (C.C.Mass. 1813)(No. 17,600). contained no separate provisions addressing generic versions of drugs that had previously been approved. 104 The result was that would-be generic drug manufacturers had to file their own cNew Drug Application d (NDA) in order to market their drug. Some generic manufacturers could rely on published scientific literature demonstrating the safety and efficacy of the drug. These sorts of studies were not available for all drugs, however. Further, at times the Food and Drug Administration requested additional studies to deal with safety and efficacy questions that arose from experience with the drug following its initial approval. The result is that some generic manufacturers were forced to prove independently that the drug was safe and effective, even though their product was identical to that of a previously approved drug. Some commentators believed that the approval of a generic drug was a needlessly costly, duplicative and time-consuming process prior to the 1984 Act. 105 FDA safety and efficacy requirements sometimes required clinical trials, for example, which could prove very expensive. Some observers noted that although patents on important drugs had expired, manufacturers were not moving to introduce generic equivalents for these products. 106 As the introduction of generic equivalents often causes prices to decrease, the interest of consumers was arguably not being served through these observed costs and delays. 107 Generic Drug Development and Patent Infringement. The patent law grants patent proprietors the right to exclude others from making, using selling, offering to sell, or importing into the United States the patented invention. 108 Accused infringers may offer several defenses to avoid liability for patent infringement, however. One potential defense lies under the so-called cexperimental use d doctrine. Perhaps the first discussion of this infringement defense occurred in the 1813 decision in Whittemore v. Cutter . 109 There, Justice Joseph Story explained that cit could never have been the intention of the legislature to punish a man, who constructed such a [patented] machine merely for philosophical experiments, or for the purpose of ascertaining the sufficiency of the machine to produce its described effects. d By 1861, the court in Poppenhausen v. Falke was able to state that the law CRS-21 110 19 F.Cas. 1048, 1049 (C.C.S.D.N.Y. 1861) (No. 11,279). 111 See Note, cExperimental Use as Patent Infringement: The Impropriety of a Broad Exception, d 100 Yale Law Journal (1991), 2169. 112 Bee, Richard E., cExperimental Use as An Act of Patent Infringement, d 39 Journal of the Patent Office Society (1957), 357. 113 733 F.2d 858 (Fed. Cir. 1984). 114 See U.S. Patent No. 3,299,053 ( cNovel 1 and/or 4-substituted alkyl 5-aromatic-3H-1,4- benzodiazepines and benzodiazepine-2-ones. d). was cwell-settled that an experiment with a patented article for the sole purpose of gratifying a philosophical taste, or curiosity, or for mere amusement is not an infringement of the rights of the patentee. d 110 Commentators have noted that the number of accused infringers who have successfully pled an experimental use defense are few, however. 111 As a practical matter, perhaps infringement charges were only rarely brought against philosophers or amusement seekers. 112 The possibility of an experimental use defense took on a new characteristic with the advent of drug marketing approval procedures, however. When a competitor becomes interested in marketing the generic equivalent of a drug patented by another, it may wish to commence the clinical trials and other procedures during the term of the patent. As a result, the competitor would be able to market the drug immediately upon expiration of the patent. Whether the regulatory compliance activities of a generic drug manufacturer amounted to a patent infringement, or were exempted by the experimental use defense, was for many years an open legal question. The 1984

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