District Court Rejects Argument that Hatch-Waxman Safe Harbor Applies to Genetically Modified Crops

I noticed an interesting order issued on November 16 by the District Court hearing Monsanto v. E.I. DuPont De Nemours and Pioneer Hi-Bred International.  The case gathered quite a bit of attention last August when a jury awarded Monsanto a $1 billion verdict for infringement of a patent directed towards Monsanto’s  Roundup Ready gene.  Notably, DuPont had never brought the infringing product to market.  Under Monsanto's damages theory, DuPont is liable for $1 billion in "reasonable royalty"  damages to compensate for its  use of the patented technology in developing DuPont’s Optimum GAT soybean line (which includes both Monsanto’s Roundup Ready gene and the GAT gene, an alternative to the Roundup Ready gene that also confers resistance to glyphosate (trade name Roundup)).   The GAT gene is a synthetic gene developed by Maygen over a decade ago using DNA shuffling technology. The jury's decision was discussed widely on the Internet, for example on the Patently-O blog.

The recent order grants Monsanto’s motion to exclude evidence regarding DuPont's Hatch-Waxman safe harbor defense.  Most of the order is redacted, and I have not read any other rulings or filings the parties have made, but I presume that DuPont is arguing that it's infringement of Monsanto's patent in the development of recombinant Roundup Ready corn is "reasonably related" to the development and submission of information to obtain Federal marketing approval, and thus falls within the Hatch-Waxman safe harbor.  The safe harbor is normally invoked with respect to drugs and medical devices regulated by FDA.

To my knowledge, the Hatch-Waxman safe harbor has never been successfully invoked with respect to an agricultural product, and the conventional wisdom would have it that the safe harbor is limited to drugs and medical devices (see, for example, Dennis Crouch’s Patently-O blog post cited above). According to the court’s order, DuPont has argued for a broader interpretation of the safe harbor provision by relying on the following language from the Supreme Court's 2005 decision in Merck v. Integra: “[the] exemption from infringement extends to all uses of patented inventions that are reasonably related to the development and submission of any information under the FDCA." The District Court held that DuPont had taken the Supreme Court’s statement out of context, and that “Merck did not expand the coverage of the safe harbor provision beyond pharmaceuticals and medical devices.”

The Hatch-Waxman safe harbor, codified as 35 USC 271(e)(1), states:

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States . . . a patented invention . . . solely for uses a 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 product.

Congress created the safe harbor in 1984 order to speed the approval of generic drugs, at least partially in response to Roche v. Bolar, a 1984 Federal Circuit decision which held that the common law "research use" exception does not apply to infringing activities by a generic company engaged in for the purpose of generating data necessary for FDA approval of the generic drug.  However, the courts have interpreted the statute more broadly, extending the safe harbor to non-drug products and to infringing activities not directed solely to obtaining FDA approval.

For example, in 1990, the Supreme Court held in Eli Lilly v. Medtronic that the safe harbor is not limited to drugs, but also extends to medical devices.  In assessing whether the safe harbor could also apply to an agricultural product like corn, it is informative to consider how the Supreme Court arrived at its holding in Medtronic.

To summarize, the Supreme Court found that Congress had enacted the Hatch-Waxman Act in order to eliminate to unintended distortions of the effective patent term resulting from the premarket approval required for certain products by the Food Drug and Cosmetics Act (FDCA). The first distortion was the reduction of the effective patent life caused by delays associated with obtaining FDA premarket approval. The second distortion was the de facto extension of effective patent life at the end of the patent term which resulted from the inability of a generic competitor to undertake activities necessary for obtaining FDA approval until after the patent expired. This second distortion was reinforced by the Federal Circuit's decision in Roche v. Bolar.

According to the Supreme Court, the Hatch-Waxman Act addresses the first of these distortions by providing patent term extension for patents claiming a "product" subject to regulatory delays caused by the FDA premarket approval process (codified under 35 USC 156). It addresses the second distortion by means of the safe harbor. Congress intended the safe harbor to allow competitors to begin the regulatory approval process while the patents are still in force, followed by market entry immediately upon patent expiration.

The scope of the safe harbor is determined largely by the interpretation of two critical terms in 35 USC 271(e)(1), "patented invention" and "reasonably related." In Medtronic, the Supreme Court concluded that the patent term extension and the safe harbor provisions are complementary, meant to address the two distortions, and tending to offset each other. Based on this conclusion, the Court interpreted the term "patented invention" in section 271(e)(1) to include all products listed in 35 USC 156(f) as eligible for patent term extension, including drugs, medical devices, food additives, and color additives. So while Medtronic explicitly held that the safe harbor extends to medical devices, the logic of the decision dictates that it should also extends to food additives. I haven't researched the question, but I am not aware of any judicial decisions explicitly holding that the safe harbor extends to food additives. Nevertheless, under my reading of Medtronic I think it should.

Whether or not DuPont is entitled to rely on the safe harbor could hinge largely on whether its product is a “food additive” is under 35 USC 156.  The infringement results from the unauthorized introduction of the Roundup Ready gene into DuPont’s soybean line. So the question becomes, is the Roundup ready gene (and its protein product) a food additive under 35 USC 156 that qualifies for the safe harbor under Medtronic?

I'm no expert on FDA regulation of genetically modified plants, and I have not researched the issue in any depth, but my sense is that there is no clear answer to the question of whether Roundup Ready corn should be treated as a food additive eligible for the safe harbor. Section 201(s) of the FDCA defines a “food additive” broadly to include all substances that may reasonably be expected to become components of food, but expressly excludes substances that are generally recognized as safe (“GRAS”). My understanding is that the FDA has taken the position that, with respect to foods derived from genetically modified plants, both the genetic construct and the protein expressed by the gene, could be considered food additives. However, it has also indicated that most foods derived from genetically modified plants are presumptively GRAS. According to a white paper published by the Pew Initiative on Food and Biotechnology, entitled Guide to US Regulation of Genetically Modified Food and Agricultural Biotechnology Products, the only genetically modified food that has triggered the food additive process is Calgene’s FLAVR SAVR tomato.  FDA approved the selectable marker gene used in the tomato, which encodes resistance to the antibiotic kanamycin and its gene product as a food additive in 1994. 59 Fed. Reg. 26,700.

Again, based on my understanding, it seems that the Roundup ready gene and its product are probably not food additives simply because Monsanto (and other developers of Roundup ready products) have represented to FDA that the gene and its product is GRAS, and FDA has acquiesced. But what if DuPont had chosen to treat the Roundup Ready gene as a food additive, and sought premarket approval from FDA? Wouldn't that make the Roundup ready gene a food additive, and hence eligible for the safe harbor? And is it too late for DuPont to seek FDA approval for Roundup ready as a food additive? Would not that render Roundup ready a food additive just like Calgene's kanamycin resistance gene?

Even if DuPont does not seek FDA approval of Roundup ready as a food additive, I think that Federal Circuit precedent does not rule out the possibility that Roundup Ready is nonetheless a food additive eligible for the safe harbor. To illustrate, in 1997 the Federal Circuit held in AbTox v. Exitron that the safe harbor applies to "all inventions" within 35 USC 156, regardless of whether the product qualifies for patent term extension. In particular, the safe harbor applies to Class II medical devices, even though these medical devices are ineligible for patent term extension (Medtronic involved a Class III medical device, a category of medical device that is eligible for patent term extension).   In other words, the Federal Circuit extended the range of safe harbor-eligible subject matter to include products lacking the symmetry of an offsetting patent term adjustment. I could imagine some judges on the Federal Circuit deciding that a recombinant trait such as Roundup ready is a food additive, even if the manufacturer did not seek pre-marketing approval as a food additive, based on the fact that FDA can regulate recombinant genes and their products as food additives, and apparently has done so at least once in the past.

Assuming for the sake of discussion that DuPont could establish that the Roundup ready trait in its soybean is a food additive  for purposes of the safe harbor, the safe harbor would only apply if DuPont’s infringing activity was "reasonably related" to potentially securing FDA approval. In 1992, the Federal Circuit held in Telectronics Pacing Systems v. Ventritrex that demonstrating a medical device at medical conferences was "reasonably related" to FDA approval because it facilitated the selection of clinical trial investigators. In 2005, the Supreme Court in Merck v. Integra held that "reasonably related" activity does not require actual submission of information to FDA, but also includes those situations in which a party has a "reasonable basis for believing that a patented compound may work, . . . and uses the compound in research that, if successful, would be appropriate to include in a submission to the FDA." On remand, the Federal Circuit held that the preclinical research in question was "reasonably related" to FDA approval. Perhaps DuPont could show that its pre-marketing activities developing the infringing Roundup ready soybean were reasonably related to the generation of data that might plausibly have been submitted to FDA.

Genetically modified agricultural products generally require pre-marketing approval from EPA and/or USDA.  This form of pre-marketing approval is outside the FDCA, and so does not appear to fall within the literal scope of the safe harbor statute, i.e., these are not Federal laws "which regulate the manufacture, use, or sale of drugs or veterinary biological products.”  However, with the imminent expiration of RoundupReady patents, there is a great deal of interest in providing a pathway for the approval of "generic" recombinant agricultural products. Congress could consider expanding the safe harbor, for example by removing the statutory limitation to laws which regulate drugs, to include other regulatory laws, such as those applicable non-drug technologies that require premarket approval, genetically modified plants for instance.