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35 U.S.C. § 271(g) Does Not Cover Production of Information Used to Make Product

August 22, 2003

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Last Month at the Federal Circuit - September 2003

Judges: Dyk (author), Mayer, and Prost

In Bayer AG v. Housey Pharmaceuticals, Inc., No. 02-1598 (Fed. Cir. Aug. 22, 2003), the Federal Circuit affirmed the district court’s dismissal of Plaintiff Housey Pharmaceuticals, Inc.’s (“Housey”) counterclaim for infringement for failure to state a claim.

Housey is the assignee of several patents directed toward “a method of screening for substances which specifically inhibit or activate a particular protein affecting the cultural or morphological characteristics of the cell expressing the protein.”

The patented technology is premised upon the notion that if a protein of interest is expressed by a cell line, that cell line changes in at least one identifiable way. Therefore, a cell line that expresses a high level of the protein of interest can be identified and developed. In this way, if a disease is linked to a specific protein, according to the patented method, agents can be identified that will either increase or decrease the activity of the protein. Claim 1 of U.S. Patent No. 4,980,281, for example, is directed toward a method of determining whether a substance is an inhibitor or activator of a protein whose production by a cell evokes a responsive change in a phenotypic characteristic other than the level of said protein in said cell per se.

In the district court, Defendants Bayer AG and Bayer Corporation (collectively “Bayer”) sought a DJ of invalidity, unenforceability, and noninfringement of the Housey patents. Housey counterclaimed for infringement, alleging that Bayer both induced others to infringe Housey’s patents and directly infringed the method claims under 35 U.S.C. § 271(g). According to Housey, Bayer used Housey’s patented process to make the characterization of a pharmacologically active agent. Using this characterization, Bayer then allegedly produced a drug product, and 35 U.S.C. § 271(g) prevented such activity. The district court, however, agreed with Bayer and dismissed Housey’s counterclaim.

On appeal, Housey argued that the information produced by the process was a product protected under § 271(g). Bayer countered that the statute only applied to manufactured products, and information is not a manufactured product. The Federal Circuit affirmed the district court’s judgment that the statute only applies to physical goods, not intangible information. The Court determined that other provisions of the statute, including exceptions for situations wherein products are materially changed by a subsequent process or wherein products become a trivial and nonessential component of another product, indicated a statutory intent to protect only physical goods.

The Court also reviewed the legislative history of the statute and found nothing that contemplated protecting intangible products produced by a patented process. Thus, in light of this legislative silence, the Court refused to expand the scope of coverage contemplated by § 271 to include “information,” when Congress could do so expressly if it so chose.

Accordingly, the Court held that in order for a product to have been made by a patented process in the United States, as required by 35 U.S.C. § 271(g), it must be a physical article that was manufactured. The production of information is not covered.

Alternatively, Housey argued that its infringement counterclaim additionally encompassed a pharmaceutical composition (i.e., the drug itself) containing an activator or inhibitor of a protein, where the activating or inhibiting effect was discovered through the use of Housey’s patented method. Thus, according to Housey, the drug itself was produced by the patented product and fell within the protection afforded by § 271(g).

Citing Bio-Technology General Corp. v. Genentech, Inc., 80 F.3d 1553, 1561 (Fed. Cir. 1996), the Court noted that the proximity of the product produced to the patented process should be determined on a case-by-case basis. In this case, the Court found that the patented process is not used in the actual synthesis of the physical drug product because the information derived from the process is not an actual step in manufacturing the drug. Therefore, the drug product was not made by a process patented in the United States, as required by § 271(g).

Accordingly, the Federal Circuit found that neither the method-of-use claims nor the drugproduct claims were protected under § 271(g) and affirmed the district court’s dismissal of Housey’s infringement counterclaim for failure to state a claim.