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Researchers Beware: Not All Experiments are Exempt from Patent Infringement Suits

NEW YORK, July 14 - When the US Supreme Court recently let stand a ruling that allowed a university to be sued for patent infringement, this underscored a message to all research organizations, universities, non-profit institutes, and corporations about how to evaluate research plans.  


The case, Madey v. Duke University, involves a former Duke University professor who sued the University for patent infringement when it continued to use equipment that he had patented after he left. The university argued that it could not be liable for patent infringement because its uses were for "solely for research, academic, or experimental purposes." The Federal Circuit, reversing a lower court, made it very clear that this so-called experimental use defense does not apply to all non-profit research.


This decision flies in the face of the belief that purely scientific research is exempt from patent infringement. This belief was bolstered by court decisions in which patent owners were prohibited from impeding the use of their patented technology in research, particularly non-profit research. However, over the years, US laws and the courts have increasingly recognized the direct commercial value of nearly all research, ranging from basic research to product development. Additionally, the concept of what constitutes a "research tool" has broadened and been accompanied by an increasing understanding of its commercial value.


It is not surprising that these changes have been accompanied by a narrowing of the "experimental use" defense to patent infringement. The defense is commonly traced to an 1813 US Supreme Court case, Whittemore v. Cutter. This ruling stated that patent owners could not receive monetary damages and enforce injunctions against would-be patent infringers who use the patented methods or products for purely academic purposes or to evaluate whether the patented subject matter performed as claimed. The doctrine was hardly challenged for many years.  However, soon after the creation of the US Court of Appeals for the Federal Circuit, this court began to chip away at the scope of activities qualifying as experimental use. The Court's decision in Roche Prods., Inc. v. Bolar Pharm. Co. held that scientific inquiry that has "definite, cognizable, and not insubstantial commercial purposes" did not qualify as experimental use. That decision, as applied to pharmaceuticals, was subsequently rendered moot by Congress when it enacted a special exception to this limitation in 35 U.S.C. §271(e)(1). However, in 2002, the Federal Circuit held in Embrex, Inc. v. Service Engineering Corp. that the experimental use defense applied only to actions performed "for amusement, to satisfy idle curiosity, or strictly for philosophical inquiry."


The Roche and Embrex decisions made it clear that experimental use was generally unavailable to any sort of commercial endeavor absent special legislation by Congress. However, its applicability to academic research remained unsettled. In the recent Madey v. Duke University decision, experimental use was essentially eliminated as a defense for academic research as well. In the case, Duke asserted at trial that, regardless of whether or not it infringed Madey's patents, its uses were for "solely for research, academic or experimental purposes".  The District Court agreed with Duke and dismissed Madey's infringement claim on summary judgement (i.e. without a trial); Madey appealed to the Federal Circuit.


The Federal Circuit disagreed sharply with the District Court and rendered an opinion favorable to Madey.  Specifically, the court excluded from experimental use all uses of patented methods or products that are in any way commercial in nature or in keeping with the alleged infringer's business, regardless of the commercial implications. 


Applied to Duke, the court held that the research furthered the university's business objectives and, therefore, was not experimental. It did not matter whether the business was for-profit or non-profit. The research furthered Duke's business objectives, including educating and enlightening students and faculty participating in projects using the infringing equipment, increasing the status of the institution, luring lucrative grants, students and faculty, and obtaining revenue from patent licenses. 


After setting forth the above considerations, the court noted that a given use would have to be "solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry" to qualify as an experimental use and be a defense to patent infringement. The Madey decision clearly changes the way all research organizations, from universities and non-profit institutes to corporations, should evaluate research plans. Present and planned research projects should be subject to at least a cursory IP review. Although this does pose some additional burden and potential liability on researchers, it also provides benefits. 


The primary benefit to research institutions is an increase in the value of research tool patents. Such patents are by definition used in "experiments." The narrowing of the Madey experimental use defense gives research tool patent owners greater control over how those tools are used and by whom. Additionally, although such patent owners cannot usually obtain "reach-through" claims to discoveries made with the tools, they can license such "reach-though" products. Accordingly, the developer of a research tool can now clearly prevent its use in other research unless the developer receives some sort of compensation for its efforts in developing the research tool. Such compensation may be in the form of royalties or other payments, but in effect it allows the tool developer to receive the benefits of whatever is discovered using the research tool. 


Another benefit lies in the opportunity to cross-license and collaborate. A patent review may identify potential collaborators the scientists would not otherwise locate. An institution's own patents may be used to leverage a collaboration with another entity that might otherwise be reluctant to establish a collaboration.


This is not to say that Duke v. Madey does not pose problems for research institutions and corporations alike.  Technology transfer professionals and legal counsel must now inform their scientists of the need to avoid patent infringement when preparing research plans, or risk an injunction (and possibly even damages). This daunting task may be best approached by initially laying out the benefits of Duke v. Madey such as those described above. 


Companies will also have to undertake a more careful review of sponsored research projects to ensure that the sponsored teams of scientists are not creating infringement liability for the company. 


Rochelle K. Seide is a partner at the law firm of Baker Botts. She is experienced in biotechnology, intellectual property, and patent issues, and also has a PhD in human genetics. Michelle LeCointe is an associate at Baker Botts and a registered patent agent. They can be reached at [email protected] and [email protected]

TrendSpotter is a GenomeWeb column that focuses on how trends in politics, patent law, and the US and European markets will affect the genomics industry. To access previous columns just enter the word "Trendspotter" in the archive search window on the homepage.


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