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Research Exemptions in Patent Law Journal of Intellectual Property Rights Vol 9, July 2004, pp 332-341 Research Exemptions in Patent Law Kalyan Chakravarthy† National Law School of India University, Nagarbhari, Bangalore-560 072 and Nandan Pendsey† 1436 River Crest Road, San Marcos, CA-92078, USA Received 4 March 2004 Providing exemptions from infringement for research on patents is equally important as granting exclusive rights to inventors. Both play a crucial role in encouraging the progress of science and technology. While exclusivity in patent rights encourages invention and innovation by providing economic incentives, exemptions for research encourage innovative improvement, testing and use of patented inventions. Research exemptions boost competitive spirit and pro- mote further development in targeted fields of technology. In order to achieve efficient progress in science and technology, a proper balance must be struck between the patentee's rights and the exemptions granted for research. Various countries have been struggling to draw a line that de- fines the proper balance. The US allows a very narrow exemption for research that is limited to philosophical use and idle curiosity, but a much wider exemption is available under Indian pat- ent law. In both USA and India, generic drug companies enjoy an exemption for research in or- der to develop information for drug approval, but the scope of exemption varies distinctly. This paper comparatively describes the patent law on research exemptions in India and USA with an intent to point out the differences and to suggest an ideal law that would properly balance the in- terests of research and exclusivity in order to achieve optimum progress in science and technol- ogy. Keywords: Research exemptions, patent law, drug approval, patented invention, philosophical use, idle curiosity, research and experiment The significance of the patent system has exclusive rights to the inventor for a lim- increased exponentially as a result of the ited period of time allowing him to reap globalization of trade and commerce. The the benefits of his skill and labour thereby most important purpose of the patent sys- providing an incentive to invent and in- tem is to promote the progress of science vest. The patent system provides exclu- and technology. The patent regime grants sive rights to the inventor for the disclo- sure of his invention to the public that is ——————— †Email:[email protected] and nandanpendsey the quid-pro-quo (give and take) incorpo- @ yahoo.com rated in it. CHAKRAVARTHY AND PENDSEY: RESEARCH EXEMPTIONS IN PATENT LAW 333 A patentee enjoys exclusive rights to exemption from infringement for the pur- make, sell, use, offer for sale or import pose of obtaining federal approval, and, the patented invention. There are very two, exemption from infringement for the few exceptions to these exclusive rights. purpose of using a patent in order to sat- Exemption for research or experimental isfy idle curiosity and for philosophical use exemption is one of such exceptions. use. It protects researchers, which may include educational institutions, research institu- Exemption for the Purpose of Federal Approval tions, non-profit organizations and other In 1984, the United States Congress establishments, from infringement actions enacted the Hatch-Waxman Act, also brought by the patentees for use of their called the Drug Price Competition and patents. Patent Term Restoration Act of 19841. There is a direct conflict between the The Hatch-Waxman Act amended the right of the patentee to exclude others and Federal Food Drug and Cosmetics Act the aim of the patent system to promote (FDCA) and the patent laws in several progress of science and technology by important respects. The objective behind giving societal access to the patented in- the legislation was to balance the compet- vention. The patent law tries to strike a ing interests of the patent owners of a balance between these conflicting ends drug patent in obtaining partial restora- and this essentially determines the scope tion for time lost on the patent term due of the exemption for research. The scope to regulatory delays in the Federal Drug of research exemption granted by the pat- Approval on one hand and the interests of ent system differs from country to coun- generic drug companies in conducting try. The difference in scope can be attrib- pre-market testing of a generic drug be- uted to the difference in ideologies fol- fore the expiration of the term of the pat- lowed by each country based on its social ented drug on the other hand2. In order to conditions and needs. Nations of the balance the conflicting interests, the world have been struggling to draw a line Hatch Waxman Act introduced a process that defines the balance between the ex- for a new drug application (NDA) that clusive rights granted to the patentee and extended the patent term after the grant of exemptions granted for research. While FDA approval and created an abbreviated some countries have granted a wide ex- new drug application (ANDA) process ception for research, the others have made for generic drug developers to obtain it very narrow. To avoid problems due to FDA approval3. Section 1564 provides for diversity in the scope of research exemp- the extension of the term of a patent for tions in various countries, a uniform compensating the time lost in FDA ap- global policy on research exemptions has proval, and, Section 271(e)(1)5 allows to be adopted by all nations of the world. generic companies to enter the market as Research Exemptions in USA soon as the patent term on the drug ex- Research exemptions under US law pires by permitting them to conduct tests can be classified into two categories. One, for FDA approval during the patent term. 334 J INTELLEC PROP RIGHTS, JULY 2004 The Hatch Waxman Act was passed by tent of the exemption under Section the US Congress in response to the deci- 271(e)(1)7 have been extensively litigated sion of the Court of Appeal for the Fed- in the light of the phrases used in it. eral Circuit in Roche Products Inc v Bo- 6 lar Pharmaceutical Co Inc where the Scope of the Term Patented Invention court held the competitor's use of a pat- The phrase ‘patented invention’ as it ented drug for the purpose of FDA ap- appears in Section 271 (e)(1) refers to an proval of its generic version to be infring- invention that requires federal approval ing in spite of the fact that the generic before entry into the market. The scope drug was not to be marketed until the ex- and extent of this phrase was the subject piration of the patent term. This decision of controversy before the US courts. It closed the door on tests conducted by ge- was contended that the phrase should be neric companies during the patent term, limited to the inventions covered under which would have enabled entry into the Section 1568 as Section 271(e) was market immediately upon expiration of passed along with Section 156 in the the patent term. The decision effectively Hatch-Waxman Act. Section 156 pro- extended the term of a patent by allowing vides for extension of the patent term if the patent holder an extra period of exclu- the product has been subject to a regula- sivity during the period of federal ap- tory review period before its commercial proval of the generic companies. In order marketing or use9. Litigants contend that to neutralize this anomaly, the US Con- Sections 156 and 271(e)(1) were passed gress responded with the Hatch-Waxman at the same time with the same objective, Act and provided an exemption for the and, therefore, inventions that are covered use of a patented invention if it is rea- under Section 271(e)(1) should be limited sonably related to the development and only to inventions covered under Section submission of information under federal 156. The United States Supreme Court, law. Section 271(e)(1) 7 deals with the however, rejected this argument by hold- exemption provisions. It provides that ing that the patented invention of Section ‘It shall not be an act of infringement 271(e)(1) is defined to include all inven- to make, use, offer to sell, or sell within tions and not just drug related inventions the United States or import into the covered under Section 15610. United States a patented invention … The decisions of the Federal Circuit solely for uses reasonably related to the have interpreted Section 271(e)(1) to ex- development and submission of informa- tend to all patented inventions whether or tion under a Federal law which regulates not covered under the scope of Section the manufacture, use, or sale of drugs or 156. In Abtox Inc v Exitron Corp11, the veterinary biological products.’ Federal Circuit held that a plasma steri- The section provides an exemption lizer, a class II medical device, would fall from infringement to generic companies under the scope of patented invention for the development of information to under Section 271(e)(1) even though Sec- obtain FDA approval. The scope and ex- tion 156 does not cover it. In Chartex Int'l CHAKRAVARTHY AND PENDSEY: RESEARCH EXEMPTIONS IN PATENT LAW 335 PLE v M D Pers Prod Corp12, the patent tive uses for the information is irrelevant owner alleged that the defendant's female to the inquiry. condom, which was either a Class I or II In Intermedic Inc v Ventritex Inc14, the medical device, was not within the scope Court stated that the phrase ‘reasonably of Section 271(e)(1) because neither a related’ (to development of information Class I nor Class II device is eligible for a for the FDA) as used in Section 271(e)(1) patent extension under Section 156.
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