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Foley & Lardner s Richard Warburg on Merck v. Integra and RNAi

Richard Warburg
Foley & Lardner

At A Glance

Name: Richard Warburg

Position: Partner, Foley & Lardner

Background: JD, Suffolk Law School — 1990

PhD, molecular biology, Birmingham University — 1981

BSc, biological sciences, Birmingham University — 1978

Though he started out as a bench scientist, Richard Warburg eventually made the jump to law after becoming a patent consultant for a law firm and ultimately passing the bar. At Foley & Lardner, he has combined his science and legal training and handled cases involving proteomics, antisense, neutron radiation devices, and computer hardware and software, among other fields.

Recently, Warburg spoke with RNAi News about the recent Supreme Court decision on the Merck KGaA v. Integra LifeSciences decision, and how it could affect the RNAi sector.

In the case, Integra sued Merck for infringing a number of its patents in the course of drug discovery. Though Merck has been offered licenses to Integra's patented compounds, it declined to take them, asserting that its use of the technology covered by the patents was protected by a statutory patent exemption: 35 U.S.C. 271 (e)(1). [see sidebar, below, for text exemption]

Text of 35 U.S.C. 271 (e)(1)

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.

While a court originally ruled in Integra's favor, the US Supreme Court recently handed down a decision on the case finding for Merck, essentially giving drug companies significant leeway in ignoring other companies' patented compounds during the course of early-stage research.

I saw you at [an RNAi] conference in 2003 giving a presentation on IP, and at the time you were talking about the Merck/Integra lawsuit. Now that the case has reached a resolution, could you talk about it?

The history there is interesting and it's been an important case for some time. The history starts back in 1999, where I did litigation on behalf of Infigen, an animal cloning company, against Advanced Cell Technologies. We sued them because they were cloning cows using two patented technologies: One was a culture medium that you grow the embryos in, and the other was a method of activation of the eggs. We actually ended up winning the case on a summary judgment motion. In other words, there was no fact dispute; they lost as a matter of law. The court found that [ACT's] claim to not being infringers and not being liable was based on a research exemption [applicable to academic researchers.] The judge said that was 'wishful thinking.' She was quite straightforward about that one.

[ACT's other defense] was that they were exempt under 271 (e)(1), which is what this issue is all about. It's a statute that says, basically, 'You are exempt from patent infringement if you are performing research with an aim toward getting approval to sell a drug from the FDA.' In other words, if you're doing clinical work, which is required by the FDA in order to sell your drug, you're exempt during that period. That stems from the Roche v. Bolar case, back in '86 I think, where Bolar was held to be an infringer even though they were developing a generic drug and performing the relevant clinical trials. That's when [the courts] reversed this decision and said there is going to be this exemption.

n '99, at the Infigen case, the judge said, 'No. You don't get an exemption to infringement because you're developing cows in which you're going to express drugs in the milk, then harvest the drugs from the milk, and ultimately have to get FDA approval to sell the drugs. That's just too far away, and moreover, the two patents you're accused of infringing wouldn't even have any application to [the] Hatch-Waxman [Act, which includes 35 U.S.C. 271 (e)(1)] because there's a quid pro quo here.'

The generics are able to develop [drugs] and do a clinical trial during the period of the patent, but in return the patent can be extended a certain amount of time — the time it takes to get FDA approval, basically. On the one hand, you are able to start using the [patented technology] before [its patent] expires, but on the other hand you have to wait to become generic not just until the time the patent expires, but through the time the patent might have been extended. For the two patents we had at issue, that wasn't the case — you couldn't get a patent extension on those so the judge said [the defense] doesn't apply.

After that case, there were a couple other cases … where the district courts said, "Hey, you guys are using the drugs, you're trying to do research and find new drugs. We want to promote that, and [your efforts] seem reasonably related to FDA approval, so we think we should take a broad view.'

That, I think, is when you heard me talking first about the Integra case, because the ruling came down from the district court, and it said, 'No, there is no exemption for that.' It was just like the Infigen case, but more closely applied because it was a really therapeutic drug using patents that extensions could be obtained on.

Before [the] Integra [ruling] came down I said, 'Gloom and doom. If this is the way the courts are interpreting it, we might as well give up because in the therapeutic business it means basically you can do anything you want and there's nothing that can be done to stop you until you actually get onto the market. Given that many of these patents expire before [a new drug] gets onto the market, this is the end of biotech as we see it.'

Then [the Integra decision finding against Merck] came down and I said, 'Thank goodness.' None of the other cases went to the federal circuit on this issue. The federal circuit hadn't ruled, and it was ambiguous how [it] would rule. So when Integra went to the federal circuit, it was the first decision we were getting at the appellate level. When [the ruling] came down and supported the district court and said, 'This is a very narrow exemption, and you can read it to say it only applied to generics.' That's not what it actually says, but you can read it as narrowly as that. This was great. I said, 'Well, biotech we're back in business. We now know that if you're working as a biotech or university — and you're not a big pharma — you can at least have your patents be enforced against those guys who would develop drugs inappropriately.'

When the Supreme Court came back, three or four weeks ago, and reversed the Integra decision, you'd probably think, 'Gloom and doom again because we're back to square one.' The answer is: No, we're not because the Supreme Court was careful to provide a standard that I think is appropriate and I think will stand up. It was a unanimous decision by the court and there's no reason for the Congress to change it, and I'm not sure anybody is advocating that change.

Basically, [the Supreme Court] said, 'What is reasonably related to FDA approval.' That means if you have already selected a drug that you want to go and get approval for, then you are free to do so. But, if you're doing screening assays or using research tools or things like that, the court declined to rule on [the issue]. In a footnote, [the court] made it pretty clear that it felt there was no exemption [for research tools] that would be applied in early-stage type research. That would still be subject to patent infringement. That means that biotech companies … or universities … that have platform technologies can rest easy that those patents will be enforceable and there won't be exemptions to patent infringement, so that they can at least get some value out of that technology.

That's the way the Supreme Court balanced it. [It said,] 'Go off and use these drugs and develop them and feel free to do so,' versus, 'Don't go off and try and find the drugs.' …

How RNAi is going to be treated is going to depend to some extent on its size. If it's small, it becomes more like a chemical. If it's large, then you start being more concerned about whether it's got a secondary structure, tertiary structure, or other complex molecules bound to it.

Why is this helping us develop new, proprietary drugs? The reason is that you now have a mechanism set where if you've developed a drug and it happens to fall within five or six patents, you actually don't care because you know that if you're just doing clinical trials, you're exempt. Those patents that cover you [might] expire during those clinical trials, which is not unlikely because it takes 10 or 15 years to develop some of these drugs. If they haven't expired, then they many have such little life left it is a relatively straightforward negotiation to get a license. It may be an expensive license, but at least it's one you're willing to take to get the drug on the market. [One might be] willing to pay 25 percent if necessary just to get the income coming in. The patentee is happy because they're getting that money, [and] it's not really a competitive drug because [a company] wouldn't have developed a competitive drug — it doesn't make any business sense to do so because [the company] would just reduce the size of the market. It will be a new drug with new advantages.

If [a company] can't get a license, I would question whether the patentee can shut [the company] down anyway because judges when they give an injunction have to balance the public interest. If this is a drug to treat AIDS or cancer and it's going to save lives, why would [he] shut it down? …

It gets really interesting when you start putting your big-picture hat on and say, 'Hey, how does this [ruling] affect other types of drugs, not just chemical drugs we've been talking about but biologics such as antibodies, human growth hormone, interferon …


SiRNAs may or may not be within that. They may be within the strict chemical [category]. The reason I say that is because a lot of the siRNAs will be chemically synthesized, and therefore you can say it is a simple chemical drug and treat it as such. If that's true, that fine. No problem at all. Again, you'll need to get your own patent on it.

If you treat it as a biologic, the problem is it's not possible to make a generic [version]. There is just no mechanism right now — and that may change over the next 10 years, and there are a lot of people talking about it — to do so. The reason is [it is uncertain how] to prove bio-equivalency [of a generic biologic drug] … because there are so many differences in the chemical structure. So this may not apply to siRNAs depending on how you make them. It will apply if you make it in vivo — in other words, you're throwing in DNA and having it made in vivo. Then it will depend on whether the DNA is the same or not. I think it is more likely that [siRNAs will be treated] as a regular drug rather than a biologic, but the scientists will know better than I about that. …

I don't know where it's going to fall. You can make small proteins, you can synthesize small proteins, but those count as biologics. … How RNAi is going to be treated is going to depend to some extent on its size. If it's small, it becomes more like a chemical. If it's large, then you start being more concerned about whether it's got a secondary structure, tertiary structure, or other complex molecules bound to it. But it's more how you make it. Biologics tend to be made in a biological system rather than chemically synthesized. The majority [of siRNAs] are being made chemically, therefore it's more like a drug. It's certainly on the edge there, but the only difference in the analysis is whether you need to get your own patent on it. The answer is: Most people are always going to want to get their own patent even though you could get away with using trade secrets. That would be more at the venture capital level where they'd take that kind of risk. I think at the large pharma level, they're less likely to want to do that.

Through all this, as far as I can tell, the patents on research tools and screening methods, things companies like Invitrogen and Bio-Rad are using, have not been changed. The question is, 'What is the value of those patents?' In Integra/Merck, the judge and the jury came back with a $6.4 million verdict. On a therapeutic, $6.4 million is nothing, a slap on the hand. If that's the cost of infringement, I'm sure a lot of less scrupulous people will say that's just the cost of doing business. On a research tool basis, you've got to find out if the research tool is being used, and you've got to be able to show you've been injured by that use. [Also], once the use has taken place, you probably can't get an injunction on the fruits of that use so it has less and less value.

I still think [a research tool patent] has the same value as before the Integra case, but I think the cost and value of that patent, and how you can hope to enforce it … needs to be thought about.

Would RNAi for research purposes fall under that?

I believe it would because you're not using it as a drug. The answer [however] is not clear. We're going to be fighting over this, but I think you've got a good argument either way that if you're using RNAi to screen for target genes, you've got arguments as to why it wouldn't infringe, but there are also equally good arguments as to why it would be an infringement.

There might have to be another court case altogether.

Yeah. What's come out of the Supreme Court is that there are going to be a lot more fights.

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