Eli Lilly and Company v. Medtronic, Inc, No. 89-243

• Court: United States Supreme Court
• Writing for the Court: SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and BRENNAN, MARSHALL, BLACKMUN, and STEVENS, JJ., joined. KENNEDY, J., filed a dissenting opinion, in which WHITE, J., joined, post, p. ----. O'CONNOR
• Citation: 496 U.S. 661,110 L.Ed.2d 605,110 S.Ct. 2683,15 USPQ2d 1121
• Parties: ELI LILLY AND COMPANY, Petitioner v. MEDTRONIC, INC
• Docket Number: No. 89-243
• Decision Date: 18 June 1990

496 U.S. 661 110 S.Ct. 2683 110 L.Ed.2d 605 ELI LILLY AND COMPANY, Petitioner

v.

MEDTRONIC, INC.

No. 89-243. Argued Feb. 26, 1990. Decided June 18, 1990. Rehearing Denied Aug. 13, 1990.

See 497 U.S. 1047, 111 S.Ct. 11.

Syllabus

Claiming infringement of two of its patents, petitioner Eli Lilly's predecessor-in-interest filed suit to enjoin respondent Medtronic's testing and marketing of a medical device. Medtronic defended on the ground that its activities were undertaken to develop and submit to the Government information necessary to obtain premarketing approval for the device under § 515 of the Federal Food, Drug, and Cosmetic Act (FDCA) and were therefore exempt from a finding of infringement under 35 U.S.C. § 271(e)(1), which authorizes the manufacture, use, or sale of a patented device "solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs." The District Court concluded that § 271(e)(1) does not apply to medical devices and, after a jury trial, entered judgment on verdicts for Eli Lilly. The Court of Appeals reversed on the ground that, under § 271(e)(1), Medtronic's activities could not constitute infringement if they were related to obtaining regulatory approval under the FDCA, and remanded for the District Court to determine whether that condition had been met.

Held: Section 271(e)(1) exempts from infringement the use of patented inventions reasonably related to the development and submission of information needed to obtain marketing approval of medical devices under the FDCA. Pp. 665-679.

(a) The statutory phrase of § 271(e)(1), "a Federal law which regulates the manufacture, use, or sale of drugs," is ambiguous. It is somewhat more naturally read (as Medtronic asserts) to refer to the entirety of any Act, including the FDCA, at least some of whose provisions regulate drugs, rather than (as Eli Lilly contends) to only those individual provisions of federal law that regulate drugs. However, the text, by itself, is imprecise and not plainly comprehensible on either view. Pp. 665-669.

(b) Taken as a whole, the structure of the 1984 Act that established § 271(e)(1) supports Medtronic's interpretation. The 1984 Act was designed to remedy two unintended distortions of the standard 17-year patent term produced by the requirement that certain products receive premarket regulatory approval: (1) the patentee would as a practical matter not be able to reap any financial rewards during the early years of the term while he was engaged in seeking approval; and (2) the end of

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the term would be effectively extended until approval was obtained for competing inventions, since competitors could not initiate the regulatory process until the term's expiration. Section 202 of the Act addressed the latter distortion by creating § 271(e)(1), while § 201 of the Act sought to eliminate the former distortion by creating 35 U.S.C. § 156, which sets forth a patent-term extension for inventions subject to a lengthy regulatory approval process. Eli Lilly's interpretation of § 271(e)(1) would allow the patentee of a medical device or other FDCA-regulated nondrug product to obtain the advantage of § 201's patent-term extension without suffering the disadvantage of § 202's noninfringement provision. It is implausible that Congress, being demonstrably aware of the dual distorting effects of regulatory approval requirements, should choose to address both distortions only for drug products, and for other products named in § 201 should enact provisions which not only leave in place an anticompetitive restriction at the end of the monopoly term but simultaneously expand the term itself, thereby not only failing to eliminate but positively aggravating distortion of the 17-year patent protection. Moreover, the fact that § 202 expressly excepts from its infringement exemption "a new animal drug or veterinary biological product"—each of which is subject to premarketing licensing and approval under, respectively, the FDCA and another "Federal law which regulates the manufacture, use, or sale of drugs," and neither of which was included in § 201's patent-term extension provision—indicates that §§ 201 and 202 are meant generally to be complementary. Interpreting § 271(e)(1) as the Court of Appeals did appears to create a perfect "product" fit between the two sections. Pp. 669-674.

(c) Sections 271(e)(2) and 271(e)(4), which establish and provide remedies for a certain type of patent infringement only with respect to drug products, do not suggest that § 271(e)(1) applies only to drug products as well. The former sections have a technical purpose relating to the new abbreviated regulatory approval procedures established by the 1984 Act, which happened to apply only to drug products. Pp. 675-678.

872 F.2d 402 (Fed.Cir.1989), affirmed and remanded.

SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and BRENNAN, MARSHALL, BLACKMUN, and STEVENS, JJ., joined. KENNEDY, J., filed a dissenting opinion, in which WHITE, J., joined, post, p. ----. O'CONNOR, J., took no part in the consideration or decision of the case.

Timothy J. Malloy, for petitioner.

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Arthur R. Miller, for respondent.

Charles L. Gholz, Jeffrey H. Kaufman, Oblon, Spivak, McClelland, Maier & Neustadt, Arlington, Va. (Robert L. Nelson, Arlington, Va., of counsel), for amicus curiae Paralyzed Veterans of America in support of respondent.

David L. Garrison, Garrison & Stratton P.S., Seattle, Wash., for Dr. Gust H. Bardy as amicus curiae in support of respondent.

Justice SCALIA delivered the opinion of the Court.

This case presents the question whether 35 U.S.C. § 271(e)(1) (1982 ed., Supp. V) renders activities that would otherwise constitute patent infringement noninfringing if they are undertaken for the purpose of developing and submitting to the Food and Drug Administration (FDA) information necessary to obtain marketing approval for a medical

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device under § 515 of the Federal Food, Drug, and Cosmetic Act (FDCA), 90 Stat. 552, 21 U.S.C. § 360e.

I

In 1983, pursuant to 28 U.S.C. § 1338(a), the predecessor-in-interest of petitioner Eli Lilly filed an action against respondent Medtronic in the United States District Court for the Eastern District of Pennsylvania to enjoin respondent's testing and marketing of an implantable cardiac defibrillator, a medical device used in the treatment of heart patients. Petitioner claimed that respondent's actions infringed its exclusive rights under United States Patent No. Re 27,757 and United States Patent No. 3,942,536. Respondent sought to defend against the suit on the ground that its activities were "reasonably related to the development and submission of information under" the FDCA, and thus exempt from a finding of infringement under 35 U.S.C. § 271(e)(1). The District Court rejected this argument, concluding that the exemption does not apply to the development and submission of information relating to medical devices. Following a jury trial, the jury returned a verdict for petitioner on infringement of the first patent, and the court directed a verdict for petitioner on infringement of the second patent. The court entered judgment for petitioner and issued a permanent injunction against infringement of both patents.

On appeal, the Court of Appeals for the Federal Circuit reversed, holding that by virtue of § 271(e)(1) respondent's activities could not constitute infringement if they had been undertaken to develop information reasonably related to the development and submission of information necessary to obtain regulatory approval under the FDCA. It remanded for the District Court to determine whether in fact that condition had been met. 872 F.2d 402 (1989). We granted certiorari. 493 U.S. 889, 110 S.Ct. 232, 107 L.Ed.2d 183 (1989).

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II

In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 (1984 Act), 98 Stat. 1585, which amended the FDCA and the patent laws in several important respects. The issue in this case concerns the proper interpretation of a portion of § 202 of the 1984 Act, codified at 35 U.S.C. § 271(e)(1). That paragraph, as originally enacted, provided:

"It shall not be an act of infringement to make, use, or sell a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913)) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs." 35 U.S.C. § 271(e)(1) (1982 ed., Supp. II).¹

The parties dispute whether this provision exempts from infringement the use of patented inventions to develop and submit information for marketing approval of medical devices under the FDCA.

A.

The phrase "patented invention" in § 271(e)(1) is defined to include all inventions, not drug-related inventions alone. See 35 U.S.C. § 100(a) ("When used in this title unless the context otherwise indicates . . . [t]he term 'invention' means invention or discovery"). The core of the present controversy is that petitioner interprets the statutory phrase, "a Federal law which regulates the manufacture, use, or sale of drugs," to refer only to those individual provisions of federal law that regulate drugs, whereas respondent interprets it to refer to the entirety of any Act (including, of course, the

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FDCA) at least some of whose provisions regulate drugs. If petitioner is correct, only such provisions of the FDCA as § 505, 52 Stat. 1052, as amended, 21 U.S.C. § 355, governing premarket approval of new drugs, are covered by § 271(e)(1), and respondent's submission of information under 21 U.S.C. § 360e, governing premarket approval of medical devices, would not be a noninfringing use....