Justice Scalia Impacted Life Sciences Patents, Liability

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By John T. Aquino

Feb. 16 — Supreme Court Justice Antonin Scalia's greatest influence on the law related to the life sciences may be the result of three major written opinions and his analysis of statute texts, rather than his analysis of the science, from which discussions he explicitly excused himself, attorneys said.

Those who admire Scalia, who died on Feb. 13, and even those more critical both acknowledged the imprint he made on life sciences law.

James Ewing of Foley & Lardner, Boston, wrote Bloomberg BNA in a Feb. 15 e-mail, “Justice Scalia was undeniably a legal titan with a keen intellect who delivered masterful legal analysis. He has been influential in shaping key legal decisions with significant impact in the life sciences.”

Ewing said that Scalia's craftsmanship “is reflected in notable legal decisions such as Merck KGaA v. Integra Lifesciences I, Ltd., Eli Lilly & Co. v. Medtronic, Inc. and Bruesewitz v. Wyeth LLC where issues as diverse as the application of federal law impacting the liability of vaccine manufacturers and the metes and bounds of a ‘safe harbor' for activities that would otherwise constitute patent infringement, were addressed. Justice Scalia’s legal legacy will be long felt in the life sciences sector.”

Judith Hasko of Latham & Watkins, LLP, Menlo Park, Calif., said in a Feb. 16 e-mail, “Scalia wrote some opinions and made some concurring comments impacting greatly patent rights in the life sciences sector.”

The attorneys interviewed by Bloomberg BNA by phone and e-mail didn't see any significant immediate effect of Scalia's absence from the court, if only due to the relative lightness of life sciences cases and patent cases that could affect life sciences on the court's docket this term. They also noted that he hasn't written a majority opinion in a life sciences case for a number of years. What will be most clearly missing is his participation in oral arguments, they said.

As of this writing, how soon Scalia's successor will join the court is a matter of debate.

Concurrence, Interview Comment

Statements about Scalia's positive contribution to life sciences law must contend with a single paragraph he wrote and a comment he made about patents in a television interview.

He wrote in a one-paragraph concurrence to the court's 2013 unanimous decision in Assoc. of Molecular Pathology v. Myriad Genetics, Inc. that isolated DNA is patent ineligible as a product of nature, “I join the judgment of the Court, and all of its opinion except Part I–A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief.”

In an interview the year before on CNN, Scalia said that the most difficult decisions for him to participate in were the dull cases, singling out those on patents, which are the driver for most life sciences companies.

‘Respectably Honest Remark.'

Of the 15 attorneys interviewed by phone and e-mail by Bloomberg BNA, all of them began by citing his Myriad concurrence, and most quickly followed it by quoting the CNN interview.

For some the Myriad concurrence left a deep memory mark. An attorney, who asked not to be quoted by name, said, “It's a lot like when you go to a foreign country. If you choose not to learn the language, that's you. If, however, you go around the country making fun of the language, that's really bad. In that case, and in this, you're being dismissive, you're making fun of what people do and who they are.”

Hasko said, “It was a respectably honest remark, but at the same time, the response was noted by many in the life sciences industry, as one of the most influential jurists of our time, who clearly enjoyed a good debate, chose not to explore directly the scientific bases of the parties’ positions.”

Kevin Noonan of McDonnell Boehnen Hulbert & Berghoff LLP, Chicago, characterized Scalia's concurrence as “saying he did not understand the underlying facts and did not want anyone to interpret his agreement to mean that he did (implying that there was a risk that people would think his brethren were under the illusion that they understood it).”

Opinion, Dissents Will Endure

Commenting on Scalia's life sciences legacy, Deborah Lu of Vedder Price P.C., New York, told Bloomberg BNA in a Feb. 15 e-mail, “It seems that Scalia may not necessarily always have voted pro-patent but also that he did believe in the patent rights of valid patents.”

She referenced his dissent in Commil USA, LLC v. Cisco Sys., Inc., in which he wrote, “I disagree, however, with the Court’s holding that good-faith belief in a patent’s invalidity is not a defense to induced infringement. Infringing a patent means invading a patentee’s exclusive right to practice his claimed invention. Only valid patents confer this right to exclusivity—invalid patents do not. It follows, as night the day, that only valid patents can be infringed. To talk of infringing an invalid patent is to talk nonsense.”

Lu said, “Justice Scalia's spirited exchanges during oral arguments and close textual reading of statutes have been taken up by other justices and will remain. And, after memory of his Myriad concurrence dies down, his written opinions and dissents will endure.”

‘Immediacy' Under MedImmune

Noonan said that the majority opinion Scalia wrote in MedImmune, Inc. v. Genentech, Inc. “truly changed the balance of power between patentees and licensees” and “eviscerated the U.S. Court of Appeals for the Federal Circuit’s ‘reasonable expectation of suit' approach to jurisdiction in a footnote.”

Other attorneys agreed that the decision set a standard for determining whether a plaintiff challenging the validity of a patent has presented a case of sufficient “immediacy” and “reality.”

The court ruled in an 8-1 decision that Gaithersburg, Md.-based MedImmune Inc. could pursue an appeal of a patent on which it still was paying royalties under a licensing agreement, regardless of whether the traditional reasonable apprehension of harm test to establish court jurisdiction over the case was met.

Scalia rejected the argument that allowing the action to go forward violated the principle that a party cannot challenge a contract while still benefiting from it. According to the court, this rule was inapplicable in this case.

“Petitioner is not repudiating or impugning the contract while continuing to reap its benefits,” Scalia wrote. “Rather, it is asserting that the contract, properly interpreted, does not prevent it from challenging the patents, and does not require the payment of royalties because the patents do not cover its products and are invalid.”

At a 2007 conference, John Duffy of George Washington University Law School said, “MedImmune makes every potential defendant much more likely to be a potential plaintiff,” a party who, given the ability to take action and seek declaratory relief against patentees, would benefit from expanded venue and jurisdictional provisions .

Noonan wrote that, while far-reaching, the MedImmune decision wasn't outside of the traditional view of the Supreme Court that patent power should be narrowly construed as creating a disfavored monopoly.

“This is no doubt because there have been many more antitrust lawyers than patent lawyers on the Court,” he said. “Indeed, the decision was entirely consistent with Lear, Inc. v. Adkins, 395 U.S. 653 (1969), which stated that a licensee was perhaps the most motivated party to challenge an invalid patent.”

‘Reasonably Related' Under Merck

Another influential majority opinion Scalia authored was Merck KGaA v. Integra Lifesciences I Ltd.. It concerned a provision of the Hatch-Waxman Act, 35 U.S.C. §271(e)(1), that provides a safe harbor for a defendant in a patent infringement suit if that defendant engages in conduct to gain federal regulatory approval of a medical device or drug.

In the 2005 majority opinion, Scalia wrote that the high court didn't “quibble” with the Federal Circuit's assertion that the exemption “does not globally embrace all experimental activity that at some point, however attenuated, may lead to an FDA [Food and Drug Administration] approval process.”

However, Scalia wrote, this limitation doesn't mean that the safe harbor doesn't apply when the substances being experimented on aren't eventually submitted to the FDA for approval. He noted that a researcher can't know in advance when experiments will succeed in producing a safe and effective pharmaceutical product. Otherwise, the court said, the exemption would be “illusory.”

The key to the exemption is that the experiments are “reasonably related” to such submissions and the court set forth the parameters of this standard, Scalia wrote.

“At least where a drugmaker has a reasonable basis for believing that a patented compound may work, through a particular biological process, to produce a particular physiological effect, and uses the compound in research that, if successful, would be appropriate to include in a submission to the FDA, that use is ‘reasonably related' to the ‘development and submission of information under [federal law].' ” The exemption even applies when the results of a particular experiment aren't ultimately submitted to the FDA, Scalia wrote.

Textualist Yet Interpretative

Noonan told Bloombeg BNA, “Especially in the Merck case, [Scalia] eschewed evidence from the legislative history (famously, from Judge Randall Rader who had been on the staff of Sen. Orrin Hatch (R-Utah) when the law was passed and wrote the Federal Circuit opinion in the case) in favor of the ‘plain language' of the statute.”

Hasko wrote, “He applied his textualist analysis to this statute [in Merck], although one can question whether the metes and bounds of the statute set out in the opinion had as much grounding in the text as he would have liked.” Scalia wrote, ‘Though the contours of this provision are not exact in every respect, the statutory text makes clear that it provides a wide berth for the use of patented drugs in activities related to the federal regulatory process.' The reference to a ‘wide berth' for permitted non-infringing uses of drugs under 271(e) could be viewed as veering from a strictly textualist approach, as it is seemingly based on applied knowledge of the regulatory approval process and the type of information generated in connection with that process for potential submission to the FDA.”

Scalia had previously visited 35 U.S.C. §271(e)(1) in writing the majority opinion in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 1990, in which the court held that the safe harbor exemption covers medical devices and not just drugs.

David P. Halstead of Ropes and Gray, Boston, and Melissa S. Rones, a Boston-based intellectual property rights management associate, wrote after the Merck decision that Medtronic and Merck “pushed the exemption beyond the simple innovator/generic dichotomy and established a relatively broad exemption for pre-approval clinical and even pre-clinical research related to a product regulated by the FDCA [Federal Food, Drug, and Cosmetic Act].”.

Bruesewitz, Vaccine Design

Scalia again utilized a close reading of the statute text in Bruesewitz v. Wyeth .

At issue was Section 22(b)(1) of the Vaccine Act, which says, “No vaccine manufacturer shall be liable in a civil action for damages arising from a vaccine-related injury or death associated with the administration of a vaccine after October 1, 1988, if the injury or death resulted from side effects that were unavoidable even though the vaccine was properly prepared and was accompanied by proper directions and warnings.”

Scalia wrote, “The ‘even though' clause clarifies the word that precedes it. It delineates the preventative measures that a vaccine manufacturer must have taken for a side-effect to be considered ‘unavoidable' under the statute.”

As long as there was proper manufacture and warning, Scalia wrote, “any remaining side effects, including those resulting from design defects, are deemed to have been unavoidable. State-law design-defect claims are therefore preempted.”

If a manufacturer could be held liable for failure to use a different design, “the word ‘unavoidable' would do no work,” Scalia said. “A side effect of a vaccine could always have been avoidable by use of a differently designed vaccine not containing the harmful element.”

The statutory language, Scalia wrote, “thus suggests that the design of the vaccine is a given, not subject to question in the tort action.”

Spirited Questioning

Sometimes Scalia's influence was also seen in his spirited questioning from the bench.

During oral arguments of Merck , Scalia asked Merck's attorney about the Federal Circuit's conclusion that, in the appeals court's words, Merck's research “was not clinical testing to supply information to the FDA, but only general biomedical research to identify new pharmaceutical compounds. [T]hus, the [work] wasn't ‘solely for uses reasonably related' to clinical testing for [the] FDA.”

Scalia said, “It's not at all clear in the opinion that the court was using ‘clinical' and ‘pre-clinical' in the sense that you are using them.” The attorney agreed that the usage wasn't clear.

Later in the arguments, Integra's attorney urged the court to avoid being taken in by the “atmospherics” of the case. Justice Stephen G. Breyer pointed out that Merck was saying “that they think they're using the wrong standard. I don't see how we can avoid looking at what you call the ‘atmospherics.'” Scalia asked, “How could you rule on the question before you unless you have in your head what is in the safe harbor?”

To contact the reporter on this story: John T. Aquino in Washington at jaquino@bna.com

To contact the editor responsible for this story: Randy Kubetin at rkubetin@bna.com