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Safe Harbor Provision of 35 U.S.C. § 271(e)(1) Does Not Apply to Patented Inventions That Are Not Themselves Subject to FDA Regulation

August 05, 2008

Decision icon Decision

Last Month at the Federal Circuit - September 2008

Judges: Schall (author), Bryson, Gajarsa

[Appealed from: D. Mass., Judge Young]

In Proveris Scientific Corp. v. Innovasystems, Inc., No. 07-1428 (Fed. Cir. Aug. 5, 2008), the Federal Circuit concluded that Innovasystems, Inc. (“Innova”) was not entitled to the protection of the Hatch- Waxman “safe harbor” provision. The Court also affirmed the district court’s grant of JMOL in favor of Proveris Scientific Corporation (“Proveris”) on infringement and validity of claims of U.S. Patent No. 6,785,400 (“the ’400 patent”).

The ’400 patent is directed to a system and apparatus for characterizing aerosol sprays commonly used in various drug delivery devices. According to the ’400 patent, spray characterization plays an important role in the regulatory approval process of the FDA. Innova makes and sells the Optical Spray Analyzer (“OSA”) device, which measures the physical parameters of aerosol sprays used in nasal spray drug delivery devices, and thus is used in connection with FDA regulatory submissions. Neither the system and apparatus claimed in the ’400 patent nor the OSA device are subject to FDA approval.

Proveris sued Innova, alleging that the OSA device infringed claims 1-10 and 13 of the ’400 patent. The district court ruled as a matter of law that the safe harbor provision of the Hatch-Waxman Act did not immunize Innova’s OSA from infringement. Further, the district court granted JMOL in favor of Proveris with respect to infringement of claims 3-10 and 13 of the ’400 patent and with respect to invalidity defenses of obviousness and anticipation. After a jury found claims 1 and 2 not infringed, the district court entered final judgment of infringement and issued a permanent injunction against Innova.

On appeal, Innova argued that the district court erred in ruling as a matter of law that its manufacture and sale of the OSA device were not immunized by the safe harbor provision of the Hatch-Waxman Act. The Federal Circuit disagreed, noting that Congress enacted the Hatch-Waxman Act to eliminate two unintended distortions of the effective patent term that resulted from the premarket approval required for certain products by the FDA. The first distortion was patent term reduction, where patentees spent the early years of their patent terms obtaining premarket approval rather than generating profits. The second distortion was de facto patent term extension, where competitors could not begin premarket approval until patent expiration. These distortions were addressed in 35 U.S.C. §§ 156(f) and 271(e)(1), respectively.

As part of its defense, Innova invoked this provision, arguing that its allegedly infringing activities are immunized because its OSA devices are used by third parties solely for the development and submission of information to the FDA. The Federal Circuit disagreed. The Court noted that Innova was not a party seeking FDA approval for a product to enter the market to compete with the patentee. As such, Innova was not a party who, prior to enactment of the Hatch-Waxman Act, could be said to have been adversely affected by de facto patent term extension. The Court also noted that Proveris was not a party who, prior to enactment of the Hatch-Waxman Act, could be said to have been adversely affected by patent term reduction. Accordingly, Proveris’s patent product was not eligible for the benefit of patent term extension under § 156(f), while Innova’s OSA did not need the protection afforded by § 271(e)(1). Thus, the Court held that the district court did not err in ruling that Innova’s marketing and sale of its OSA device were not exempted from infringement by the safe harbor provision of § 271(e)(1).

Aside from the safe harbor contentions, Innova also alleged that the district court erred in granting JMOL of infringement of claims 3-10 and 13. The Federal Circuit affirmed the granting of the JMOL, noting that the record showed that Innova conceded infringement of these claims.

Finally, Innova alleged the district court erred in excluding or limiting testimony of its invalidity experts and, consequently, granting JMOL in favor of Proveris. First, Innova argued that expert testimony was not required because the ’400 patent was simple and easily understood. Second, Innova argued that because its two experts were both persons of ordinary skill in the art, the district court improperly excluded or limited their testimony.

The Federal Circuit found no abuse of discretion in the district court’s rulings. The Court first stated that the subject matter of the ’400 patent is sufficiently complex to fall beyond the grasp of an ordinary layperson. The Court then held that the district court acted within its discretion when it excluded the testimony of Innova’s first expert because he did not submit a written expert report in compliance with Fed. R. Civ. P. 26(a)(2)(B). Further, the Court stated that the district court acted within its discretion when it limited the testimony of Innova’s second expert, a patent attorney with a mechanical engineering background. The Court noted that the expert’s training was not related to the issue at hand. The Federal Circuit concluded it could not say the district court did not act within its discretion in finding the second expert was unqualified to testify about laboratory equipment used in the development of drug delivery devices. Because Innova did not present meaningful argument as to why, if the district court’s evidentiary rulings stand, the grant of JMOL was improper, the Federal Circuit affirmed the district court’s holding in favor of Proveris on the issue of invalidity.