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Federal Circuit: Finding the Safe Harbor in Drug Development’s Choppy Waters

December 24, 2019

The US Court of Appeals for the Federal Circuit recently upheld the district court’s denial of a judgment as a matter of law (JMOL) or, alternatively, motion for a new trial, reinforcing the fine line that exists between protected and unprotected activity under the Safe Harbor exemption to infringement. Practitioners should remain mindful of the fact-dependent nature of the Safe Harbor exemption and that the relevant inquiry is the specific act of infringement, not how the party later uses the results of the infringing act.

In Amgen Inc. v. Hospira, Inc.[1], the Federal Circuit recently issued a precedential opinion affirming the district court’s denial of Hospira Inc.’s (Hospira’s) motion for JMOL or, alternatively, motion for a new trial. The Federal Circuit not only upheld the jury’s verdict that (1) Hospira infringed one of Amgen Inc. and Amgen Manufacturing, Ltd.’s (Amgen’s) two asserted patents, and (2) Amgen was entitled to $70 million in damages, but also affirmed the jury’s determination that (3) the Safe Harbor provision of 35 USC § 271(e)(1) did not cover 14 batches of Amgen’s biosimilar product, a recombinant human erythropoietin (EPO).

In so concluding, the Federal Circuit rejected Hospira’s argument that the jury instructions improperly focused on why each EPO batch was manufactured rather than how the batches were used or whether those uses were reasonably related to the development and submission of information to the Federal Drug Administration (FDA). The court then determined substantial evidence supported the jury’s conclusion that Hospira did not manufacture the 14 batches at issue “solely for uses reasonably related to the development and submission of information” to FDA.

Factual and Procedural History

Following Hospira’s 2014 submission to the US Food and Drug Administration (FDA) of its Biologics License Application (BLA) for a biosimilar to Amgen’s Epogen product, Amgen sued Hospira for infringement of US Patent No. 5,865,298 (the ’298 Patent) and 5,756,349 (the ’349 Patent). In particular, Amgen asserted that Hospira’s manufacture of 21 batches of its EPO biosimilar infringed certain claims of these patents.

In response, Hospira argued that the batches of its biosimilar were covered by the Safe Harbor provision of 35 USC § 271(e)(1), which provides:

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 . . . 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.

A jury found that Hospira failed to show the patents invalid by clear and convincing evidence. It further found that Hospira infringed two claims of the ’298 Patent, but not any claims of the ’349 Patent, and that only seven of the 21 accused drug substance batches were entitled to the Safe Harbor defense. The jury awarded Amgen $70 million in damages.

Both Amgen and Hospira moved for JMOL, which the district court denied. On appeal, Hospira challenged (1) the district court’s claim construction, (2) the jury instructions regarding the Safe Harbor defense, (3) the jury’s findings regarding the Safe Harbor defense and denial of JMOL on the Safe Harbor issue, (4) the evidentiary rulings regarding Amgen’s damages expert, and (5) the denial of JMOL of non-infringement and invalidity. On cross appeal, Amgen challenged the district court’s denial of JMOL of infringement of the ’349 Patent and the denial of its motion for a new trial.

The Federal Circuit affirmed each of the district court’s decisions, concluding that (1) the district court properly instructed the jury regarding the Safe Harbor defense, and (2) the jury reasonably found that the Safe Harbor defense did not protect 14 of the 21 batches of the drug substance.

Jury Instructions on the Safe Harbor Defense

Hospira asserted that the district court’s jury instructions “improperly focused the jury on the reasons why each batch of EPO was manufactured, not how each batch was used or whether that use was reasonably related to the development and submission of information to support Hospira’s BLA.”[2] In particular, Hospira contested the last sentence of the jury instructions:

You must evaluate each of the accused activities separately to determine whether the Safe Harbor applies. If you find that an accused activity was reasonably related to the development and submission of information to the FDA for the purpose of obtaining FDA approval, then Hospira has proved its Safe Harbor defense as to that activity. If Hospira has proved that the manufacture of a particular batch was reasonably related to developing and submitting information to the FDA in order to obtain FDA approval, Hospira’s additional underlying purposes for the manufacture and use of that batch do not remove that batch from the Safe Harbor defense.[3]

Hospira argued that “it only had to prove that the use of the patented invention was reasonably related to submission of information to the FDA, not the manufacture.”[4] Amgen responded by contending that the jury instructions “properly focused the jury on Hospira’s use of the patented invention, that is, the manufacture of [Hospira’s EPO] drug substance, and then asked whether each act of manufacture was for uses reasonably related to seeking FDA approval.”[5]

The Federal Circuit agreed with Amgen, holding that the “jury instructions properly articulated the legal principles underlying the Safe Harbor inquiry.”[6] According to the Federal Circuit, Section 271(e)(1)’s exemption from infringement extends to all uses of the patented inventions reasonably related to the development and submission of any information under the Federal Food, Drug, and Cosmetic Act (FDCA) and applies as long as a reasonable basis exists for believing that the use of the patented invention will produce information relevant to an FDA submission.[7] But the exemption does not exclude information based on the phase of research in which it is developed or the particular submission that it could have been included.[8]

Applying this understanding, the Federal Circuit noted that “the patented inventions are Amgen’s claimed methods of manufacture” and the “accused activity is Hospira’s use of Amgen’s claimed methods of manufacture.”[9] Thus, the court ruled that the relevant inquiry is whether Hospira reasonably used each act of manufacture to submit information to FDA, not how Hospira used each batch it manufactured, and the jury instructions properly captured this inquiry.[10] Indeed, as the Federal Circuit noted, “the instructions struck the appropriate balance by telling the jury that Hospira’s additional underlying purposes do not matter as long as Hospira proved that the manufacture of any given batch of drug substance was reasonably related to developing information for FDA submission.”[11]

Accordingly, the Federal Circuit held that “reading the instructions as a whole,” it was “not legal error to instruct the jury that ‘[i]f Hospira has proved that the manufacture of a particular batch,’ that is, Hospira’s use of Amgen’s patented methods, ‘was reasonably related to developing and submitting information to the FDA…Hospira’s additional underlying purposes for the manufacture and use of that batch do not remove that batch from the Safe Harbor defense’.”[12]

JMOL on the Safe Harbor Defense

Beyond the jury instruction issue, Hospira argued that no reasonable jury could have found that the Safe Harbor did not protect some of its EPO batches because Hospira used all batches to develop and submit information included in the original BLA or in a later response to a Complete Response Letter (CRL) from FDA.[13] Specifically, Hospira used the 21 batches manufactured from 2013 to 2015 for biosimilarity testing, release specification revisions, stability testing, and continued process verification (CPV).[14]

The Federal Circuit determined that substantial evidence supported the jury’s finding that the Safe Harbor did not protect 14 of the 21 batches.[15] Amgen’s expert testified that any batches manufactured after 2012 were only part of a “continuing program for stability that is a post-approval commitment”; CPV is not a prerequisite for FDA approval; and the CRL did not require Hospira to manufacture additional batches.[16]

In a critical footnote, the Federal Circuit further rejected Hospira’s argument that merely “submitting information about a drug substance lot to the FDA” automatically “brings the manufacture of that lot within the Safe Harbor.”[17] Quoting Momenta Pharmaceuticals, Inc. v. Teva Pharmaceutical USA, Inc., 809 F.3d 610, 620-21 (Fed. Cir. 2015), the court explained that the Safe Harbor does not protect “routine record retention requirements associated with testing and other aspects of the commercial production process.”[18]

The Federal Circuit also relied on documentary evidence showing that Hospira planned for “the balance of the material from the 2013 campaign (approximately 50%) and most of the material from the 2014 and 2015 campaigns [to] serve as commercial inventory to support single dose vial launch stock.”[19] According to the court, “this evidence was probative of whether Hospira’s use of Amgen’s patented process was reasonable related to seeking FDA approval.”[20]

Based on this evidence, the Federal Circuit concluded that a reasonable jury could have found 14 of the 21 batches were not manufactured “solely for uses reasonably related to the development and submission of information” to FDA.[21] Accordingly, the court affirmed the district court’s denial of JMOL on Hospira’s Safe Harbor defense.[22]

Conclusion

The Federal Circuit’s opinion reinforces the fine line between protected and unprotected activity under the Safe Harbor exemption in an industry riddled with manufacturing and regulatory complexities. The Federal Circuit’s treatment of the jury instruction issue reinforces that the relevant inquiry for the Safe Harbor exemption is the specific act of infringement—e.g., the act of manufacturing in Hospira’s case—rather than how the party later uses the results of the infringing act. The court’s treatment of the JMOL issue also underscores the fact-dependent nature of the Safe Harbor inquiry that is not resolved by merely showing a manufacturer submitted information about a drug substance lot to FDA. As such, practitioners should anticipate district courts and the Federal Circuit continuing to refine the Safe Harbor exemption’s scope and application as different factual scenarios arise in infringement actions.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors, Michael Abernathy, Christopher Betti, Maria Doukas, or Karon Fowler in our Chicago office, or any of the following lawyers from Morgan Lewis’s IP disputes team:

Boston
Joshua M. Dalton

Century City
Olga Berson, Ph.D.
Andrew V. Devkar
Seth M. Gerber

Chicago
Jeffrey R. Gargano
Wan-Shon Lo
Hersh Mehta
Sanjay K. Murthy
Kevin P. Shortsle
Krista Vink Venegas, Ph.D.
Jason C. White
Amanda S. Williamson

Houston
Winstol D. “Winn” Carter
C. Erik Hawes
David J. Levy
Rick L. Rambo

Miami
David W. Marston Jr.

Orange County
Christopher D. Bright

Philadelphia
Eric Kraeutler

San Francisco
Brent A. Hawkins
Carla B. Oakley
John A. Polito
Sharon R. Smith

Silicon Valley
Dion M. Bregman
Andrew J. Gray IV
Michael J. Lyons
Yalei Sun

Washington, DC
Natalie A. Bennett
Robert C. Bertin
J. Kevin Fee
Robert J. Gaybrick
Eric S. Namrow
Collin W. Park

Wilmington
John V. Gorman



[1] Nos. 2019-1067, 2019-1102, slip op. (Dec. 16, 2019).

[2]      Id. at 13-14 (emphasis in original).

[3]      Id. at 13 (emphasis added).

[4]      Id. at 14 (emphasis in original).

[5]      Id. (emphasis in original).

[6]      Id.

[7]      Id.

[8]      Id.

[9]      Id.

[10]     Id. at 14-15.

[11]     Id. at 15.

[12]     Id.

[13]     Id. at 16.

[14]     Id.

[15]     Id. at 16-17.

[16]     Id. at 17.

[17]     Id. at 17 n.3.

[18]     Id.

[19]     Id. at 17-18.

[20]     Id. at 18.

[21]     Id. at 17; see 35 U.S.C. § 271(e)(1).

[22]     Id. at 18.