Integra Lifesciences I, Ltd. v. Merck Kgaa, 02-1052.

• Decision Date: 06 June 2003
• Docket Number: No. 02-1052.,No. 01-1065.,02-1052.,01-1065.
• Citation: 331 F.3d 860
• Parties: INTEGRA LIFESCIENCES I, LTD. and The Burnham Institute, Plaintiffs-Cross Appellants, and Telios Pharmaceuticals, Inc., Plaintiff-Appellee, v. MERCK KGaA, Defendant-Appellant, and The Scripps Research Institute and Dr. David A. Cheresh, Defendants.
• Court: U.S. Court of Appeals — Federal Circuit

331 F.3d 860

INTEGRA LIFESCIENCES I, LTD. and The Burnham Institute, Plaintiffs-Cross Appellants, and Telios Pharmaceuticals, Inc., Plaintiff-Appellee, v. MERCK KGaA, Defendant-Appellant, and The Scripps Research Institute and Dr. David A. Cheresh, Defendants.

No. 02-1052.

No. 01-1065.

United States Court of Appeals, Federal Circuit.

June 6, 2003.

COPYRIGHT MATERIAL OMITTED

Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Washington, DC, argued for defendant-appellant Merck KGaA. With him on the brief were Thomas H. Jenkins, David A. Manspeizer, and Rachel H. Townsend. Of counsel on the brief were M. Patricia Thayer, Heller Ehrman White & McAuliffe, LLP, of San Francisco, CA; and William C. Rooklidge, Howrey Simon Arnold & White, LLP, of Irvine, CA. Of counsel was Esther H. Lim, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Washington, DC.

Mauricio A. Flores, Campbell & Flores LLP, of San Diego, CA, argued for plaintiffs-cross appellants Integra LifeSciences I, Ltd. and The Burnham Institute. With him on the brief was David M. Beckwith. Of counsel on the brief were Raphael V. Lupo, Mark G. Davis, and Natalia V. Blinkova, McDermott, Will & Emery, of Washington, DC. Of counsel was Donna M. Tanguay.

Before NEWMAN, RADER, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge RADER. Concurring-in-part, dissenting-in-part opinion filed by Circuit Judge PAULINE NEWMAN.

RADER, Circuit Judge.

Following a jury trial, the United States District Court for the Southern District of California ruled that Merck KgaA (Merck) infringed U.S. Patent Nos. 4,988,621 ('621 patent), 4,792,525 ('525 patent) 5,695,997 ('997 patent), 4,879,237 ('237 patent), and 4,789,734 ('734 patent), belonging to Integra Lifesciences I, Ltd., the Burnham Institute and Telios Pharmaceuticals, Inc.¹ (Integra). The district court held that subsection (e) of 35 U.S.C. § 271 did not immunize Merck against liability for infringement of the '525, '237, '997, and '734 patents. See 35 U.S.C. § 271(e)(1) (2000). The district court, however, granted Merck's motion for summary judgment of invalidity of claim 2 of the '621 patent. Integra LifeSciences I Ltd. v. Merck KGaA, 50 USPQ2d 1846, 1850, 1999 WL 398180 (S.D.Cal.1999). The jury awarded a reasonable royalty of $15,000,000. Because the district court correctly construed the claims and determined that Merck's infringing activity did not fall within the safe harbor of § 271(e), this court affirms those aspects of the district court's order. Because substantial evidence does not support the jury's reasonable royalty award, however, this court remands for further consideration of damages.

I.

Integra owns the '621, '525, '997, '237, and '734 patents, all of which are related to a short tri-peptide segment of fibronectin having the sequence Arg-Gly-Asp (in single-letter notation, referred to as the "RGD peptide"). The RGD peptide sequence promotes cell adhesion to substrates in culture and in vivo. The RGD sequence promotes this beneficial cell adhesion by interacting with α_vβ₃ receptors on cell surface proteins called integrins. In sum, the RGD sequence attaches to the α_vβ₃ receptors on the surface of cells. This bond adheres the cells to the substrate containing RGD. In theory, inducing better cell adhesion and growth should promote wound healing and bio-compatibility of prosthetic devices. In addition, blood vessels grow new branches due to controlled interactions with integrins.

Dr. David Cheresh, a scientist at Scripps, discovered that blocking α_vβ₃ receptors inhibits angiogenesis, the process for generating new blood vessels. Inhibiting angiogenesis showed promise as a means to halt tumor growth by starving rapidly dividing tumor cells. Similarly, anti-angiogenic therapies might also treat diabetic retinopathy, rheumatoid arthritis, psoriasis, and inflammatory bowel disease.

Merck recognized the importance of Dr. Cheresh's discovery, and hired Scripps and Dr. Cheresh to identify potential drug candidates that might inhibit angiogenesis. Dr. Cheresh's research showed that cyclic peptide EMD 66203 displayed good inhibition of α_vβ₃ receptors. Merck then entered into an agreement with Scripps to fund the "necessary experiments to satisfy the biological bases and regulatory (FDA) requirements for the implementation of clinical trials" with EMD 66203 or a derivative thereof. The agreement contemplated commencing clinical trials with a drug candidate within three years.

Scripps' research led to the discovery of EMD 85189, and then EMD 121974-both derivatives of EMD 66203. Scripps scientists conducted several in vivo and in vitro experiments "to evaluate the specificity, efficacy, and toxicity of EMD 66203, 85189 and 121974 for various diseases, to explain the mechanism by which these drug candidates work, and to determine which candidates were effective and safe enough to warrant testing in humans." In particular, these tests assessed the action of the cyclic RGD peptides, including the histopathology, toxicology, circulation, diffusion, and half-life of the peptides in the bloodstream. These tests also examined the proper mode of administering the peptides for optimum therapeutic effect. In 1997, the Scripps research team chose EMD 121974 as the best candidate for clinical development.

Integra learned of the Scripps Merck agreement. Believing the angiogenesis research was a commercial project that infringed its RGD-related patents, Integra offered Merck licenses to the patents-in-suit. After lengthy negotiations, Merck declined. Integra then sued Merck, Scripps, and Dr. Cheresh. Merck answered that its work with Scripps falls under the safe harbor afforded by 35 U.S.C. § 271(e)(1). Merck also contended Integra's patents were invalid. Before trial, Integra limited its request for monetary damages to Merck's alleged infringement, and sought only a declaratory judgment against Scripps and Cheresh. After the close of all evidence, the district court granted Scripps' and Dr. Cheresh's motion to dismiss Integra's claim for declaratory judgment.

At trial, the jury found Merck liable for infringing the '525, '997, '237, and '734 patents. The district court determined that the exemption of § 271(e)(1) did not embrace the infringing activity between 1994 and 1998.² The district court, however granted Merck's summary judgment motion on claim 2 of the '621 patent. The district court invalidated this claim based on anticipation by a 1984 Nature article. The parties filed various post-trial motions. In particular, Merck filed motions for JMOL before and after jury deliberations, asserting, inter alia, that the accused experiments were exempt from infringement under 35 U.S.C. § 271(e)(1); that Integra did not prove infringement of any patents; and that substantial evidence did not support the damages award. The district court denied Merck's motions.

Merck timely appeals, asserting error in the district court's interpretation of § 271(e)(1), in claim construction, and in the refusal to reconsider the amount of the damages award. Integra cross-appeals the denial of its motion for declaratory judgment of infringement by Scripps and Dr. Cheresh, the invalidity finding on the '621 patent, and the court's refusal to enhance the damages award. This court has exclusive jurisdiction. 28 U.S.C. § 1295(a)(1) (2000).

II.

This court reviews statutory interpretation without deference. Vectra Fitness, Inc. v. TNWK Corp., 162 F.3d 1379, 1381, 49 USPQ2d 1144, 1146 (Fed. Cir.1998). Similarly, this court reviews claim construction without deference. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456, 46 USPQ2d 1169, 1172 (Fed. Cir.1998) (en banc). Determining a reasonable royalty is an issue of fact, which this court reverses only in the absence of substantial evidence. Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 517, 36 USPQ2d 1540, 1544 (Fed.Cir.1995); Richardson v. Suzuki Motor Co., 868 F.2d 1226, 1240-41, 9 USPQ2d 1913, 1924 (Fed. Cir.1989). Finally, this court reviews the denial of JMOL following a jury verdict without deference. SIBIA Neurosciences, Inc. v. Cadus Pharm. Corp., 225 F.3d 1349, 1354, 55 USPQ2d, 1927, 1930 (Fed. Cir.2000).

A.

35 U.S.C. § 271(e)(1) defines a safe harbor against patent infringement:

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States 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) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) 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 or veterinary biological products.

This provision entered title 35 in 1984 as part of the Drug Price Competition and Patent Term Restoration Act of 1984, Pub.L. No. 98-417, 98 Stat. 1585 (1984) (the 1984 Act). The 1984 Act had two purposes. In the first place, the 1984 Act sought to restore patent term to pharmaceutical inventions to compensate for the often-lengthy period of pre-market testing pending regulatory approval to sell a new drug. These regulatory delays can deprive a patentee of many years of its patent's term. The second reason for the 1984 Act responded to this court's decision in Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858, 221 USPQ 937 (Fed.Cir.1984). Specifically, the Act sought to ensure that a patentee's rights did not de facto extend past the expiration of the patent term because a generic competitor also could not enter the market without regulatory approval. See Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 669-70, 110 S.Ct. 2683, 110 L.Ed.2d 605 (1990). Thus, the ...