Eli Lilly & Co. v. Medtronic, Inc.

Citations: 110 L. Ed. 2d 605; 110 S. Ct. 2683; 496 U.S. 661; 1990 U.S. LEXIS 3184Docket: 89-243

Court: Supreme Court of the United States; August 13, 1990; Federal Supreme Court; Federal Appellate Court

Combined Opinion SummaryCombined Opinion Original

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Eli Lilly and Company filed a patent infringement suit against Medtronic, Inc. regarding a medical device, claiming infringement of two patents. Medtronic argued its actions were exempt under 35 U.S.C. § 271(e)(1), which allows for the use of patented inventions for developing information required for regulatory approval under the FDCA. The District Court found that § 271(e)(1) did not apply to medical devices, resulting in a judgment for Eli Lilly. However, the Court of Appeals reversed this decision, stating that if Medtronic's activities were for regulatory approval, they would not constitute infringement. 

The Supreme Court held that § 271(e)(1) does indeed exempt from infringement the use of patented inventions related to obtaining marketing approval for medical devices under the FDCA. The Court noted the ambiguity in the phrase "a Federal law which regulates the manufacture, use, or sale of drugs," suggesting it could refer to the entire FDCA rather than only specific provisions. The structure of the 1984 Act, which created § 271(e)(1), supports Medtronic's interpretation, as it aimed to correct distortions in patent terms caused by regulatory approvals. Eli Lilly's interpretation could lead to an unfair competitive advantage and contradict Congress's intent to address regulatory-related patent distortions equally across various products. The Court emphasized that provisions regarding patent-term extensions and exemptions from infringement are intended to be complementary.

Interpreting 35 U.S.C. § 271(e)(1) aligns it with other sections, specifically § 271(e)(2) and § 271(e)(4), which address patent infringement remedies exclusively for drug products, but do not limit § 271(e)(1) to drug products. The latter sections focus on the regulatory approval procedures initiated by the 1984 Act, which solely pertain to drugs. The case at hand evaluates whether activities aimed at developing and submitting FDA-required information for medical devices can be deemed non-infringing under § 271(e)(1). In 1983, Eli Lilly initiated legal action against Medtronic over alleged infringements related to a cardiac defibrillator. Medtronic defended its actions as being reasonably related to FDA submissions, a claim the District Court rejected. Following a jury's verdict for Eli Lilly, the Federal Circuit reversed the decision, ruling that Medtronic's activities fell under the exemption provided by § 271(e)(1) if they were indeed related to FDA submissions, and remanded the case for further determination. The Supreme Court granted certiorari to address the interpretation of the 1984 Act concerning this exemption.

The original text of 35 U.S.C. 271(e)(1) states that making, using, or selling a patented invention is not considered infringement if it is solely for purposes related to developing and submitting information under federal law regulating drugs, excluding new animal drugs or veterinary biological products. The dispute centers on whether this exemption applies to the development and submission of information for marketing medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA). Petitioner asserts that the phrase "a Federal law which regulates the manufacture, use, or sale of drugs" pertains only to specific provisions governing drugs, thereby excluding the FDCA provisions related to medical devices. In contrast, respondent argues that this phrase encompasses the entirety of any federal law that includes drug regulation, suggesting that 271(e)(1) applies to all relevant sections of the FDCA. The interpretation of "a Federal law" could refer to either individual statutory sections or entire Acts, with the broader interpretation seeming more fitting in this context. The surrounding language in 271(e)(1) supports the notion that it references a comprehensive regulatory scheme rather than isolated provisions, as indicated by the use of "under a Federal law," implying compliance with a complete statutory framework. The legislative history also suggests that when the 1984 Act intended to refer to specific provisions, it clearly differentiated by using terms like "under the provision of law."

The legislation differentiates between patents for drugs and patents for devices, emphasizing that the focus should be on this distinction rather than the type of application for approval. The petitioner argues that the language used could lead to ambiguity regarding the scope of "patented drug," suggesting clearer alternatives could have been employed. The respondent's interpretation, which aligns more closely with the text's natural reading, raises questions about the rationale for tying noninfringement to the development of information under drug regulations. The complexity arises from Congress's potential intention to encompass future regulatory requirements beyond existing laws. Both interpretations struggle with clarity, and while the Court of Appeals' understanding is favored, legislative history does not provide clear guidance. The overall structure of the 1984 Act supports the Court of Appeals' interpretation. Additionally, the excerpt clarifies that under federal law, a patent grants exclusive rights for a term of seventeen years, as outlined in 35 U.S.C. 154.

Whoever makes, uses, or sells a patented invention in the United States without authority infringes the patent, as outlined in 35 U.S.C. § 271(a). The 1984 Act aimed to correct two issues caused by the requirement for premarket regulatory approval, which affected the effective duration of the 17-year patent term. First, patent holders for products requiring extensive testing could not profit early in the patent term, as the patent would be in effect while the product awaited regulatory approval. Second, a 1984 court ruling determined that any use or sale of a patented invention for testing purposes constituted infringement, thereby prolonging the patentee's monopoly until the patent expired, effectively extending the patent term due to regulatory delays.

To address these concerns, Section 201 of the 1984 Act allows for up to a five-year extension of patents for products undergoing lengthy regulatory processes, specifically defined to include human drugs and certain medical devices. The extension is applicable if the product was subject to a regulatory review period before its marketing and if the marketing was the first under the relevant law. Section 202 introduced a noninfringement provision stating that making, using, or selling a patented invention solely for regulatory information development is not considered infringement. This enables competitors to conduct necessary activities for regulatory approval before the patent expires.

The interpretation of these provisions may lead to scenarios where a patent holder benefits from the extension while not facing the infringement disadvantage, or vice versa.

Petitioner's interpretation suggests that a general rule of disequilibrium applies to patents for all products, excluding drugs, that are named in section 201 and require premarket approval under the FDCA. This includes medical devices, food additives, and color additives, all of which receive patent-term extensions. However, since the regulatory approval provisions for these products differ from those for drugs, they are not covered by the noninfringement provision of 271(e)(1). The argument posits it is implausible that Congress would only address regulatory distortions for drug products while leaving other products to face extended monopoly terms and anticompetitive restrictions, implying a lack of strong evidence for such an interpretation.

Additionally, there are textual indications that sections 201 and 202 are designed to complement each other. For example, new animal drugs and veterinary biological products, while subject to regulatory approval under the FDCA, are excluded from the patent-term extension in section 201 and thus from section 202 as well. The Court of Appeals’ interpretation of section 271(e)(1) aligns all products eligible for patent term extension under section 201 with those covered by section 202, as all must undergo premarket approval. Conversely, products not eligible for extension, such as new animal drugs and veterinary biological products, are similarly excluded from section 202.

Petitioner argues that a broad interpretation of section 271(e)(1) is contradicted by sections (e)(2) and (e)(4), which establish that submitting an application for a drug covered by a patent constitutes infringement if the application is intended to enable commercial manufacture before the patent expires.

For acts of infringement outlined in paragraph (2), the court is mandated to set the effective date for drug approval as no earlier than the patent expiration date. Injunctive relief can be issued against infringers to halt the commercial manufacture, use, or sale of the drug, and monetary damages are available only if there has been commercial activity involving the approved drug. These remedies are exclusive, except for potential attorney fees under section 285. 

The petitioner notes that these protections apply solely to drug patent holders, arguing that had Congress intended a broader application of the infringement exemption, it would have included other patents. The provisions are designed to create a specific act of infringement related to drug applications, addressing the issue of de facto patent term extensions through the 1984 Act, which introduced abbreviated new drug applications (ANDAs) that streamline the approval process for generic drugs. 

ANDA applicants can reference bioequivalence data instead of conducting extensive safety and effectiveness studies required for new drug applications. The 1984 Act also permitted paper new drug applications (paper NDAs), which use existing literature to meet safety and efficacy requirements, allowing applicants to bypass costly studies.

The law requires pioneer drug applicants to disclose patent information to the FDA, and ANDAs and paper NDAs must include one of four certifications regarding the status of any listed patents. The nature of the certification affects the timing of drug approval: immediate approval is granted for certain certifications, while others may delay approval until patent expirations or legal determinations are made.

An applicant filing a fourth certification must notify the patent holder of the alleged invalidity or non-infringement of their patent, detailing the factual and legal grounds for their position. If the patent owner does not initiate a lawsuit within 45 days of receiving this notice, approval for the ANDA or paper NDA can take effect immediately. However, if a lawsuit is initiated, approval is delayed until the court determines non-infringement or until 30 months have passed. The legal framework established by 35 U.S.C. 271(e)(1) creates an artificial act of infringement through the submission of an ANDA or paper NDA, even if actual commercial activities have not occurred. This framework permits litigation regarding these certifications, but monetary damages are only applicable if there has been actual commercial activity. The provisions under subsections (e)(2) and (e)(4) are specifically relevant to drug applications. The Court of Appeals’ decision was affirmed, affirming that 35 U.S.C. 271(e)(1) provides a defense against patent infringement claims for activities aimed solely at obtaining marketing approval. Justice Kennedy dissented, arguing that the Court's interpretation of the statutory language is implausible and contrary to its intended meaning.

Congress's phrase "a Federal law which regulates the manufacture, use, or sale of drugs" encompasses any Act that has a regulatory component related to drugs, including the FDCA. Consequently, while the respondent sought approval under the FDCA for a medical device, the Court determined that 271(e)(1) could be a defense for patent infringement. However, the author contests this interpretation, arguing that 271(e)(1) is limited to the testing of drugs and does not extend to medical devices, despite the FDCA's broader regulatory scope. The author emphasizes that 271(e)(1) specifically pertains to drugs and does not authorize the use or sale of other products simply because they may also be regulated under the FDCA. As a result, the respondent lacks a defense under this section.

The author critiques the Court's interpretation, suggesting it assigns an unusual meaning to the language of 271(e)(1) that deviates from standard legislative intent, which typically employs terms according to their ordinary meanings. To illustrate, the author compares it to various legislative provisions that regulate specific areas without granting blanket exemptions based on incidental regulation. Examples include ERISA’s preemption language and Texas and Missouri statutes, which do not intend to invalidate related laws merely because they encompass broader regulatory contexts. The author concludes that the Court's reading of 271(e)(1) is inconsistent with established interpretations of similar legislative language.

271(e)(1) specifically pertains to the regulation of drugs and does not extend exemptions for the testing of medical devices from patent infringement. This section distinguishes between drugs and medical devices, acknowledging that testing a medical device typically impacts the patent holder's rights more significantly than testing a drug. Manufacturers can test generic drugs under abbreviated procedures, but testing medical devices usually involves clinical trials directly on patients, allowing manufacturers to recover costs. The court notes that while some drugs incur high costs, it does not show that drug testing affects patent holder sales as drug testing does not equate to the impact of device testing. Legislative history references primarily drugs, but this does not preclude effects on devices. The relationship between sections 201 and 202 is viewed as interconnected in legislative intent. The petitioner’s claim of inequity regarding the noninfringement provision in relation to patent term extensions is challenged, emphasizing that lack of extension generally stems from the patentee's decision not to apply, particularly for follow-on products.

The regulatory approval procedures established by Title I of the 1984 Act streamline the process for certain drugs, eliminating delays that would justify patent term extensions under 35 U.S.C. § 156. The petitioner argues that Congress had valid reasons for creating an infringement exemption for drugs but not for medical devices, citing the greater economic impact of testing devices, which can be significantly more expensive (e.g., $17,000 for defibrillators) and have a limited customer base. However, the petitioner’s concerns regarding economic harm also apply to high-cost drugs, with examples provided of drugs like Cyclosporine, AZT, and Growth Hormone, which can cost thousands of dollars per dosage.

The excerpt discusses the broader implications of 21 U.S.C. § 202 regarding product coverage under drug regulations, noting that only new animal drugs and veterinary biological products have a premarket approval requirement. Other products, such as food and cosmetics, are governed by general standards. A 1986 amendment introduced a premarket approval requirement for new infant formulas, making them exempt from patent infringement under 35 U.S.C. § 271(e)(1), but this does not alter the interpretation of the statute. Additionally, a 1988 amendment added new animal drugs to the patent term extension under § 156 while removing their infringement exemption under § 271(e)(1).

The petitioner raises concerns about potential constitutional issues under the Fifth Amendment's takings clause if the statute were interpreted to allow infringement of medical devices. However, the response indicates that such constitutional questions do not significantly alter the statutory interpretation, as the competitive injury from noninfringement could still be substantial in certain cases.