Comparison of Practice in Relation to "Bolar Exception" in China and United States
Wu Yuhe and Xiong Yanfeng
Constant efforts have been made in China and the United States of America in the protection of pharmaceutical or drug patents to strike a better balance between the interest of patentees and that of the public at large. Through nearly 200 years of development, the relevant issues have been explicated in relatively great detail in the US case law and statute law. In China, law provisions along the line have also been developed and efforts have been made to amplify them. This article will be presenting an overview of some typical cases of and provisions on the new drug clinical trial exception to patent infringement in relation to clinical trials of new drugs, based on experimental use, non-commercial purposes, or “Bolar” exception, in China and the United States, with a comparison made between the two countries in terms of experimental use exception, for non-production and business purposes, and the Bolar exception, in an effort to help readers to have some idea about the present situation and the expected possible future developments of the exception to patent infringement both in China and the United States of America.
I. An overview of the United States
The experimental use exception to patent infringement first appeared in the case law in the United States in 1813, which exempted, from patent infringement，acts of using patent only for scientific experimentation. As time goes by, the scope of application of the experimental use exception has been gradually narrowed down. The Roche case in 1984 is widely viewed as a watershed between the application of the experimental use exception in the case law and that of the Bolar exception statute. After that, the experimental use exception in the case law began to decline at an accelerated pace. The Madey case in 2002 was an official declaration of its end. During the same period, over the 20 years after the Congress established the Bolar exception provision in 1984, the court developed an increasingly broad interpretation of the scope of application of the Bolar exception, and the application of the Bolar exception has in gradually replaced the experimental use exception in the case law, and has become a safe habour for exempting clinical trial of drugs from patent infringement liability.
1. Gradual decline of experimental use exception in the case law.
In the Whittemore case1 in 1813, where the experimental use exception was first applied, the US Supreme Court stated that the law was not meant to punish those undertaking scientific experimentation. In applying the experimental use exception in the Sawin case2 in the same year, the Supreme Court explained that an accused infringer’s intent was a key factor in determining infringement liability. In the following more than 150 years, the experimental use exception was repeatedly cited in court. Until the second half of the 20th century, especially after the Roche case on, the courts has been gradually narrowing down the scope of the experimental use exception.
The Roche case3: the experimental use exception should not apply to acts with business purposes
In the Roche case in 1984, the Roche Corporation (the plaintiff) owned a patent for the effective ingredient of the sleeping pill. The Bolar Corporation (the defendant) was a generic drug manufacturer, devoted to making succedaneum of patented ones. To grab market share, a generic drug manufacturer usually hopes to market a drug immediately after the term of a patented one expires, as the drug marketed first often takes up the largest market share. However, to launch a drug in the market, one has to obtain approval from the US Food and Drug Administration (FDA) first. Under the FDA’s regulations, it would possibly take more than two years to obtain the regulatory approval even through the expedited procedure, i.e. the Abbreviated New Drug Application (ANDA). In other words, the defendant, anxious to market a drug right after the expiry of the patent, had to file an application with the FDA before the expiry of the patent, containing data necessary for the FDA’s regulatory approval.
So, the defendant in the present case acquired some patented drugs from abroad six months before the patent expired, and gained the necessary data from the experimentation of said drug. The district court held that the accused act was for the purpose of research and experimentation, and ruled in favor of the Defendant.
Dissatisfied with the decision, the plaintiff appealed to the Court of Appeals for the Federal Circuit (CAFC), which reversed the district court’s ruling, finding that the application of experimental use exception should not have been expanded to those applications “for business purposes”. In other words the experimental use exception should not apply to an act for business purposes, be it an experiment or not. In the present case, in the last six months of the term of patent protection, the accused was closely related to the FDA’s drug approval, which was an act purely for business purposes, hence, the experimental use exception should not apply. It was ruled not in favor of the defendant.
In the present case, the CAFC held that the experimental use exception to patent infringement should not apply to acts for business purposes. However, what extent of business purpose would preclude acts of experimentation from the protection of by virtue of the experimental use exception? This question was further explained in the Embrex decision in 2000.
The Embrex case4: The experimental use exception should not apply to acts even slightly related to business purposes
In the Embrex case in 2000, the CAFC again refused to apply the experimental use exception to patent infringement as, besides the purpose of scientific exploration, the defendant used the patented medical device in experiment for the purpose of demonstrating its product to potential customers. In presented his concurring opinion in the judgment, Judge Rader stated that the experimental use exception should not apply to acts even slightly related to business purposes.
After that, the ruling made in the Madey case in 2002 is believed to have put the last nail to the coffin of experimental use exception.
The Madey case5: The experimental use exception should not apply as long as the accused act was done in furtherance of commercial use.
In the Madey case, the CAFC decided that the Duke University’s act to use the patented laser in academic research fell outside the experimental use exception. The CAFC held that whether the accused party acted for business purposes or not, the experimental use exception should not apply to such act as long as the act was done in furtherance of use in a certain aspect, even in directly, say making the school look better or attracting fund, students, and faculty.
This shows that by the year of 2002, the experimental use exception had been so narrowly limited in the US case law that even such non-profit institutions as universities would find it hard to use the experimental use exception. Besides, even if an act per se was not for business purposes, the experimental use exception should not apply if such an act was done in furtherance of use.
By then, the experimental use exception was eventually put to an end in the case law, and was replaced by the Bolar exception codified in 1984.
2. Emerging and development of the Bolar exception
1) Putting forth the Hatch Waxman Act
In the above-mentioned Roche case in 1984, the defendant Bolar argued that if the experimental use exception to patent infringement should not apply, a generic drug manufacturer was unable to make clinical trial for gaining, until the expiry of the relevant patent, the data to be submitted to the FDA for the regulatory approval. As a result, it was quite possible that the drug could only enter the market years after the expiry of the patent, which virtually meant extension of the protection for the patentee and prejudice to the public interest. Hence the defendant’s act should not be established as an infringement.
Nevertheless, the CAFC did not support the argument. For the CAFC, this view involved the issue of how to maximize public interest, and the court was not the proper venue to review public policy. It was the Congress’s responsibility to strike a balance between the interest of the public and that of patentees; hence the Congress should address the issue legislatively. Under the law provisions then in force, the court had to establish the infringement.
The judgment made in the Roche case caused much uproar in the industry. Major generic drug manufacturers lobbied a great deal to the Congress. In response, the Congress issued in the same year the Drug Price Competition and Patent Term Restoration Act, also known as the Hatch-Waxman Act.
The Hatch-Waxman Act has mainly addressed two issues. First, to address the issue of impossibility for putting a drug on the market right after the expiry of a patent that results in the extension of the term of said patent, §202 thereof allows a generic drug manufacturer to make clinical trial and gain the data necessary for the FDA’s regulatory approval before a patent expires. Second, given that a patentee’s inability to market a patented product right after grant of the patent due to FDA’s regulatory approval means a loss of part of the term of said patent, the Hatch-Waxman Act provides that the term of a patent in respect of which the FDA’s regulatory approval take too long may be extended. Later, §202 was codified in the § 271 (e) (1) of the 35 U.S. C., namely the Bolar exception provision7.
In the following more than two decades of judicial practice, the courts gradually expanded the interpretation of the scope of application of the Bolar exception, from the broad interpretation of a “patented product” as including medical equipment in the Medtronic case in 1990 to the interpretation of “reasonably related” that goes beyond the original law provision in the Intermedics case in 1991, to the expanded application of the Bolar exception to acts performed to gain information in experiment, which, however, is not eventually submitted to the FDA in the Merck case in 2006, and to the decision made in the Amgen case in 2007 in which making a drug with a patented process also falls within the scope of application of the Bolar exception. In this way, the Bolar exception has gradually taken the place of the experimental use exception in the case law.
2) The Medtronic case8: the Bolar exception also applies to medical device
Literally, the Bolar exception provision of the US Patent Act covers only drugs or pharmaceuticals, without mentioning medical devices. But, in the US Supreme Court’s ruling made in the Medtronic case in 1990, the Justice Scalia held that the “federal law” as referred to in the Bolar exception provision covered medical device and food additives in addition to regulation of drugs or pharmaceuticals. The reason for the provision not to expressly cover medical devices, is lack of careful drafting. For that matter, Justice Scalia decided that “patented products” included medical devices. Further, besides the medical devices of the third class under the Food, Drug and Cosmetic Act (FDCA) which was determined as the “patented products” in the present case, the CAFC decided, in the Abtox case9 seven years later, that the medical devices of the second class were also the “patented products as defined in the Bolar exception provision. In the Amgen case to be discussed in the following section, the CAFC further included products made with patented processes or methods in the “patented products”.
3) The Elan case10: Two possible interpretations of the Bolar exception
Enforcement of any law involves the issue of how to interpret the law by the court, and the Bolar exception provision is no exception. In the present case, the US courts found, for the first time, that the Bolar exception provision would give rise to ambiguity. The provision prescribes that “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.” In English, this provision may be interpreted in two ways: one, it is not an infringement tomake, use, offer to sell, or sell a patented inventionas long as it is reasonably related to the development and submission of information to the FDA for regulatory approval, even the act is related not only to the submission of data to the FDA for regulatory approval, but to other purposes, such as business purposes; and two, it is not an infringement tomake, use, offer to sell, or sell a patented invention for usessolely reasonably related to the development and submission of information to the FDA for regulatory approval. In other words, said acts must be merely related to gaining of data for the FDA’s regulatory approval, not for any other purposes. In practice, acts of experiment for drug development or relevant acts often involve preparatory work before a drug is put on the market, that is, for gaining of the FDA data, and possibly for other uses. Then, is this an act falling within the Bolar exception? A relatively clear answer was given in the Intermedics case in the following year.
4) The Intermedics case11: The Bolar exception applies to acts for business purposes as long as they are related to gaining data for the FDA’s regulatory approval
In this case, the plaintiff owned a patent for implantable defibrillator. The defendant, to grab the market after the patent expired, made clinical trial of said implantable defibrillator, and gained the result to get ready for filing the pre-market application (PMA). During the clinical trial, the defendant made several hundreds ofimplantable defibrillator; sold them to hospitals in the U. S.; sold them to foreign retailers; and made test of them outside the US territory.
The CAFC’s considerations mainly focused on the two points as follows:
i) whether the defendant’s act fell within the scope of “reasonably related”;
ii) whether such act still met the conditions for exemption to infringement if it went beyond the scope of “reasonably related”.
The court made the ruling as to the following with regard to the defendant’s four acts:
The plaintiff accused the defendant of: (1) manufacturing the device in the United States; (2) selling the device to hospitals in the United States; (3) selling the device to international distributors and (4) testing the device, particularly in Germany. The court held that while the defendant was infringing in all cases, the defendant was also exempted because: (1) the manufacture of the device was infringing but was used to obtain FDA approval; (2) the sale of the devices to hospitals were for their use in collecting clinical data and that no sales of the devices occurred to non-clinical participants. Even though sales continued after the PMA was filed, this was defensible since the applicant had no way of knowing whether the PMA data was sufficient or whether further clinical data would be needed; (3) the sales to international distributors who subsequently resold the devices to authorized, but foreign, clinical doctors whose responsibilities included collecting information and (4) the testing in Germany was to collect data and that submission to the FDA of data derived from foreign testing sites was allowed, especially since the German doctors were preeminent doctors in the field of cardiology.
In this case, the CAFC explained that “The court refused to equate the word ‘uses’ with the word ‘purposes’ and said that Congress intended the test to be one of conduct, or actual uses, rather than motive.”
In this case, the CAFC broadly interpreted “solely” and “reasonably related”. This is also the first interpretation made in the Elan case, viz so long as to the use of a patented product is reasonably related to gaining data necessary for the FDA’s regulatory approval, the Bolar exception applies to the act, even if it is for business purposes. This interpretation has expanded the practical scope of the Bolar exception so much that it goes beyond the scope covered by the original law provision. Later, in the Integra case in 2005, the US Supreme Court made an even broader interpretation of the scope of application of the Bolar exception.
5) The Integra case12: It is also possible for the Bolar exception to apply to preclinical studies even if information gained there from is not submitted to the FDA.
The Merck (the defendant) entrusted Scripps with experimentation with animals to identify potential pharmaceutical candidates likely to inhibit generation of blood veins. In the research, Scripps Corporation first identified three potential polypeptides, then made experiments to evaluate the particularities, effect and toxicity of these polypeptides. However, not all the data from the experiment were eventually submitted to the FDA. Integra (the plaintiff), owner of the patent relating to these polypeptides, sued Merck for infringement of its patent.
From the very beginning, the discussion was focused on three issues involved in the case:
i) The patented drugs were used in the pre-clinical studies, but the information gained was not eventually submitted to the FDA. In case like this, was such act still “reasonably related”?
ii) Unlike the previous cases, the defendant in the present case did not use the patented products for making substitution pharmaceuticals. Rather, it used them as research tools to develop new drugs. Then, should the Bolar exception apply to such an act?
iii) The defendant did not experimented on human body, but on animal. Did the Bolar exception apply to acts of experiment on animal?
Both the district court and the CAFC decided on the infringement, holding that the Bolar exception applied only to acts of experiment made for gaining information eventually submitted to the FDA.
However, the US Supreme Court reversed the decisions of the district court and Federal Circuit, and delivered a unanimous opinion holding that: (1) the exemption set forth by § 271(e)(1) includes preclinical studies of patented compounds that are appropriate for submission to the FDA in the regulatory process; (2) the exemption is not limited only to preclinical data pertaining to safety of drugs in humans; and (3) the exemption does not categorically exclude either experimentation on drugs that are not ultimately the subject of an FDA submission or the use of patented compounds in experiments that are not ultimately submitted to the FDA.
The Supreme Court's decision accepts much of the analysis offered by the Solicitor General in its amicus brief. Thus, the Court ruled:
... [W]e think it apparent from the statutory text that § 271(e)(1)'s exemption from infringement extends to ... preclinical studies of patented compounds that are appropriate for submission to the FDA in the regulatory process. There is simply no room in the statute for excluding certain information from the exemption on the basis of the phase of research in which it is developed or the particular submission in which it could be included.
In its analysis, the Court concluded that the Federal Circuit based its decision on two somewhat related propositions. First, the Federal Circuit focused on the fact that Merck's experiments did not supply information for submission to the FDA, but instead focused on identifying the best drug candidate to subject to future clinical testing under FDA processes. Second, the Federal Circuit determined that § 271(e)(1) "does not globally embrace all experimental activities that at some point, however attenuated, may lead to an FDA approval process."
The Supreme Court unanimously reversed the Federal Circuit's decision in the Integra case on June 13, 2005. Justice Scalia established the Court's pro-expansion view immediately in the opinion, commenting that "[a]s an initial matter, we think it apparent from the statutory text that § 271(e)(1)'s 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." [FN322] According to the Court, "[t]his necessarily includes preclinical studies of patented compounds that are appropriate for submission to the FDA in the regulatory process." The Court rejected Integra's position that the only information that would qualify as reasonably related to FDA approval is that related to the safety of a drug in humans. The Court stated that "the FDA does not evaluate the safety of proposed clinical experiments in a vacuum" and suggested that other *235 uses, such as those involving preclinical studies related to a drug's efficacy, mechanism of action, pharmacokinetics, and pharmacology, may also be reasonably related.
The Supreme Court noted that the CAFC's decision holding that § 271(e)(1) did not protect the activities of Merck rested upon two propositions: (1) "that the 'Scripps-Merck experiments did not supply information for submission to the [FDA], but instead identified the best drug candidate to subject to future clinical testing under the FDA processes"'; and (2) "that the exemption 'does not globally embrace all experimental activity that at some point, however attenuated, may lead to an FDA approval process."' The Court disagreed with the first proposition, stating that it ignored that even the late stages of drug development involve scientific trial and error. According to the Court, to construe § 271(e)(1) as the Federal Circuit did "is effectively to limit assurance of exemption to the activities necessary to seek approval of a generic drug." The Court did not dispute the second proposition, and explained that "[b]asic scientific research on a particular compound, performed without the intent to develop a particular drug or a reasonable belief that the compound will cause the sort of physiological effect the researcher intends to induce, is surely not 'reasonably related to the development and submission of information' to the FDA." The decision of the Federal Circuit was vacated and the case was remanded to the District Court for the Southern District of California for proceedings consistent with the current opinion.”
Then, since they were not excluded from the Bolar exception whether they were successful or not, did the Bolar exception apply to all pre-clinic experiments? The Supreme Court confined the scope to the “reasonable basis”, holding that these experiments would generate informant related to the FDA submission.
Finally, the Supreme Court concluded that “The Supreme Court reversed the decision of the Federal Circuit and delivered a unanimous opinion holding that: (1) the exemption set forth by § 271(e)(1) includes preclinical studies of patented compounds that are appropriate for submission to the FDA in the regulatory process; (2) the exemption is not limited only to preclinical data pertaining to safety of drugs in humans; and (3) the exemption does not categorically exclude either experimentation on drugs that are not ultimately the subject of an FDA submission or the use of patented compounds in experiments that are not ultimately submitted to the FDA.
In fact, the Court explicitly stated in a footnote that it was not expressing an opinion as to whether § 271(e)(1) exempts "research tools" from infringement in the development of information for the regulatory process.
Some amicus briefs filed with the Court suggested that a patented research tool does not fall within the scope of § 271(e)(1) because a research tool is not the actual or potential subject matter of the application submitted for review to the regulatory authority. See, e.g., Brief for the United States as Amicus Curiae Supporting Petitioner, 2003 U.S. Briefs 1237 at 29 (Feb. 22, 2005) (LexisNexis).
In a footnote, the Supreme Court expressly declined to express a view about whether or to what extent the safe harbor exempts from infringement the use of research tools in the development of information for the regulatory process. See id. at 2382, fn. 7. Interestingly, the Supreme Court characterized one class of experiments performed by Scripps as "more basic research on organic mimetics designed to block <<alpha>>v<<beta>>3 integrin in a manner similar to the RGD peptides ... [where] it appears that Scripps used the RGD peptides in these tests as positive controls against which to measure the efficacy of the mimetics." Id. at 2379. The use of a *126 compound as positive control could be considered analogous to the use of a research tool. It remains to be seen how the Court of Appeals will consider these experiments on remand.… (5)”13
The case was then returned to the CAFC for retrial, and the CAFC made another judgment of non-infringement on 27 July 2007. Judge Newman decided mainly as to the following two aspects:
(1) challenged experiments met criteria of being reasonably related to research that, if successful, would have been appropriate to include in submission to Food and Drug Administration (FDA)s, and
(2) challenged experiments were not deprived of FDA exemption to patent infringement by their contribution to scientific knowledge.
(i) the accused act was reasonably related to research (if successful) for gaining application data to the FDA; and
(ii) The accused act was not deprived of its entitlement to the Bolar exception due to its contribution to the scientific knowledge.
Unfortunately, the CAFC did not address the issue of research tool used in the retrial. In the retrial, the two parties and the CAFC denied that the patented products had been used as research tools. The issue was not touched upon, and was yet to be dealt with in future cases.
6) The Amgen case: The Bolar exception also applied to products made with patented process if the “reasonably related” requirement was met.
In the latest Amgen case, Amgen (the plaintiff) sued Roche (the defendant) in the US International Trade Commission (ITC) for infringing its patent right by importing into the United States recombinant human erythropoietin and its derivatives (collectively known as EPO). The defendant argued that since the imported drug was used to gain data for the regulatory approval from the FDA, the act of import should not be deemed to be an infringement as the Bolar exception might apply. The ITC supported its argument, and decided that its act was not an infringement.
In its appeal to the CAFC, the plaintiff argued against applying the Bolar exception to the defendant’s act in suit on the ground that it was not an act of importing the “patented product” in the strict sense under the Bolar exception provision. Rather, the defendant used the plaintiff’s patented process to make made the drug in suit, which was then imported into the United States.
On 14 October 2007, the CAFC affirmed the ITC’s decision, believing that the Bolar exception provision applied both to acts of importing patented products and to acts of importing drugs made with patented processes. In the ruling, the CAFC mainly cited the above-mentioned Integra and Medtronic cases. The court reiterated that the Bolar exception applied as long as an act of using a patented invention was reasonably related to gaining data necessary for the FDA’s regulatory approval. In the Medtronic case, the court pointed out that the “patented inventions” mentioned in the Bolar exception was not restricted to pharmaceutical inventions. Now that the defendant’s act was reasonably related to gaining data necessary for the FDA’s regulatory approval, and the “patented inventions” mentioned in the Bolar exception provision was not strictly confined to pharmaceutical inventions, why shouldn’t the Bolar exception apply to the defendant’s act? Besides, as mentioned in the two cases, the Congress passed the Bolar exception provision in order to eliminate barriers and expedite FDA’s examination of pharmaceutical products, with which the defendant’s act was undoubtedly compatible. Accordingly, the CAFC upheld the ITC’s decision, holding that the Bolar exception should apply to the defendant’s act of importing the drug made with the patented process, and such acts were not deemed to be an infringement.
II. An overview of experimental use exemption in China
The Patent Law was enacted in 1984 in China, with general provisions set forth for acts of patent infringement and the circumstances where patent was exempted from use infringement liability. In the first case of dispute arising from patent infringement involving clinical trial heard by a court in China, the court ruled in favour of the patentee. How to define the boundary between exemption of experiment and infringement liability has long been puzzling the authorities. Scholars have come up with their own explanation, and the Beijing Higher Court has also developed its relevant judicial recommendations. In 2002, the State Drug Supervision Administration put in place a limited “patent linkage” system, providing a way to deal with conflicts between regulatory approval of clinical trial of new drugs and patent infringement. Meanwhile, these conflicts drew attention from the courts and the State Intellectual Property Office (SIPO). The Beijing Higher People’s Court, the Supreme People’s Court and the SIPO put forth, one after another, drafted proposals on the “experimental use” exemption. Between 2006 and 2007, the courts in Beijing handled a series of case of dispute arising from patent infringement arising from clinical trial, and decided that clinical trial of patented drugs for making new drugs did not constitute patent infringement.
1. Definition of patent infringement and “experimental use” exemption in the Patent Law
The Patent Law, as first enacted in 1984 in China, generally provided for the circumstances of patent infringement as follows:
“After a patent for invention or utility model is granted, unless otherwise provided for in the law, no entity or individual shall exploit the patent without being licensed by the patentee, that is, it or he shall not make, use or sell its or his patented product, or use its or his patented process for business purposes.”
And the “experimental use” exemption as follows:
“Anyone of the following circumstances shall not be deemed to have constituted patent infringement:…(4) using a patented process solely for scientific research and experimentation.”
The Patent Law was amended twice in 1992 and 2000 respectively, and the preceding provisions remain substantially unchanged, renumbered though14.
2. Glaxo v. the Southwest Synthetic Pharmaceuticals Plant, a case of patent infringement: the court implicitly affirmed that clinical trial of new drug constituted patent infringement
Ten years after the Chinese Patent Law entered into force, the first dispute arising from patent infringement involving clinical trial was handled by the court in 1995.
In this case, the plaintiff Glaxo owned the invention patent ZL85105643, claiming the drug of 恩丹西酮 and a method for preparing the relevant compounds. Upon learning that the Southwest Synthetic Pharmaceuticals Plant had prepared 恩丹西酮 and used it in its clinical trial of a new drug, and was granted the new drug certificate by the Ministry of Health, the plaintiff sued in May 1995 in the Chongqing City Intermediate People’s Court, requesting the defendant to cease its act of infringement, make a public apology, and pay for the damage of RMB 320,000 yuan, which was calculated by multiplying the quantities of the drugs (those supplied to hospitals) made by the defendant during its clinical trial of the new drug by the unit profit of the plaintiff’s drug.
In said case, refusing to furnish the proof of the method for making its products, the defendant failed to meet its burden of proof. The Chongqing Intermediate People’s Court held that the accused method was identical with the plaintiff’s patented method, and the defendant should cease the infringing act immediately and pay the total damages claimed by the plaintiff.15
In the Glaxo’s case, while not specifying whether the use of another party’s patent during clinical trial of a new drug constituted an infringement or not, the court supported the plaintiff’s claim for the total damages caused during the clinical trial of the new drug, which showed the judge’s view on this issue.
3. Academic understanding of “experimental use” exception and “production and business purposes”
The Glaxo ruling involves interpretation of the acts of patent infringement mentioned in Article 11 and the “experimental use” exception mentioned in Article 62 (5) of the Patent Law as of 1984.
The term “experimental use” was interpreted in the Interpretation of the Patent Law published before the Glaxo case:
“the expression of ‘specially for scientific research and experimentation’ means the research is conducted only for the purpose of scientific research and experimentation is performed only for the purpose of experimentation”; the use of related patent includes use of patented product in scientific researches and experimentation, and includes performing scientific researches and experimentation made by using the patented process as well”.16
The term “experimental use” was also interpreted in the Interpretation of the New Patent Law published after the Glaxo case:
“This Article provides for ‘use of relevant patent for scientific research and experimentation’, in which the expression ‘scientific research and experimentation’ refers to those made specifically to the patent technology, for the purpose of identifying the technical features or technical effect of the patent technology, or for the purpose of making further improvement of said patented technology; it does not refer to general scientific research and experimentation; said ‘use of a relevant patent’ means making a patented product or using a patented process according to the published patent documents for said purpose, analysing or reviewing the patented technology, rather than using the patented technology as a means to conduct other scientific research and experimentation.”
In the Interpretation of the New Patent Law, “for the production or business purposes” is interpreted as:
“The so-called ‘for the production or business purposes’, which covers a wide scope, means for the purposes of industrial or agricultural production or business operation. ‘For the production or business purposes’ should not be construed as ‘for the purpose of making profit’, which covers a much narrower scope, and such a stringent limitation should not be imposed on the protection of the patent rights.
Whether a certain act is done for the production or business purposes may be determined from three perspectives: the mode, the actor and the nature and scope of an act. As for the mode of an act, offering for sale and selling are generally considered to be for the production or business purposes, regardless of whether the actor is an entity or an individual; making, using and importing may sometimes be considered to be for the production or business purposes, but sometimes not. As for the actor, an act carried on by an enterprise or profit entity is usually for the production or business purposes, while an act done by a government agency, non-profit institution, or social organisation is usually not for the production or business purposes. The nature and scope of an act should be specifically determined according to the practical circumstances under which the act has been performed. It should be specially noted that the nature of an entity is by no means the key factor in determining an act of exploiting a patent. An act of making, using or importing by a government agency, non-profit institution, or social organisation for the production or business purposes. For example, a hospital uses a patented device for treatment of a disease.”
In respect to “the production or business purposes” and “experimental use”, it is stated in the Interpretation of the New Patent Law as follows:
“Today when the market economy system is being established in China, it is virtually meaningless to discuss whether the scientific research and experimentation is for the production or business purposes in nature, as the two are very much related. Besides, the gap between scientific research and production is now being bridged in China to make them more closely related to or associated with each other. Therefore, in determining whether this provision is applicable or not, attention should not be focused on the matter of whether an act is done for the production or business purposes.”17
4. The Beijing Higher People’s Court’s guiding opinions on “experimental use” exception
In 2001, the Beijing Higher People’s Court developed the Opinions on Several Issues Relating to Patent Infringement Adjudication (Tentative), and issued it to the Beijing Nos.1 and 2 Intermediate People’s Courts for implementation. Article 98 thereof provides as follows:
“Any act of using the patent concerned solely for the purpose of scientific research and experimentation is not deemed to be an infringement of the patent right. In this regard, a distinction should be made between the experimentation on the patented product and use of the patented product in experimentation.
1). The use of the patent concerned solely for the purpose of scientific research and experimentation should include the act of manufacturing the patented product solely for the purpose of scientific research and experimentation;
2). The use solely for the purpose of scientific research and experimentation is for the purpose of studying, testing or improving another person’s patented technology and the result of this use is the making of a new technology achievement on the basis of the existing patented technology; and
3). The manufacture with, or use of, another person’s patented technology in the course of scientific research and experimentation, which is not for the purpose of research or improvement of another person’s patented technology, with the result being not directly related to the patented technology, constitutes an infringement of the patent right.”
5. The Drug Supervision Administration’s establishment of the limited “patent-linkage” system
Once a clinical trial of a new drug is brought in a patent infringement allegation, a request would be first filed with the State Drug Supervision Administration, the new drug approval authority, since a patentee, when finding that a generic drug manufacturer’s new drug infringes her patent right, often reports to the drug administrative agency seeking injunction or rejection of the application for the regulatory approval of said new drug.
In the practice of the early years, the Drug Supervision Administration would state in written approval of a new drug that “the technology for making the present drug possibly conflicts with another party’s patent. The owner thereof shall be responsible in case of patent infringement dispute.”
In 2002, the Drug Supervision Administration promulgated the Measures for the Registration and Administration of Drugs. Article 11 thereof requires that “an applicant for the registration of a drug shall present all the Chinese patent related to the medicament applied for registration or the prescription or technology for making the medicament and explain the ownership of the patent, guarantee that the registration does not infringe any other party’s patent, and promise that she would be responsible for the consequence of any possible infringement”; Article 13 provides that “as for a drug for which a Chinese patent is granted, another party may file an application for registration of said drug within two years before expiry of said drug patent; where the State Drug Supervision Administration examines a drug under these Measures and the drug that meets the provisions is approved for production or importation after the patent expires”; and Article 12 shows the approach to dispute resolution: “where a dispute arises from patent infringement after approval of the registration of a drug, the interested parties may resolve the dispute themselves or by the judicial authority or an administrative agency under the relevant laws or regulations”.
It is worth noting that Article 13 of the Measures for the Registration and Administration of Drugs as of 2002 disallows application for regulatory approval of a generic drug to be filed two year before the expiry of the patent.
6. The Supreme People’s Court’s view on the “experimental use” exception
The conflicts of clinical trial and regulatory approval of new drugs with patent infringement have drawn attention from the Supreme People’s Court.
In 2003, the Supreme People’s Court issued the draft judicial interpretation, the Provisions on Several Issues Relating to Trial of Cases of Dispute From Patent Infringement, wherein Article 84 (2) provides as follows:
“Where in order to exploit a patented technology immediately after expiry of the patent, the patented product is made or used, or a patented process is used, and a product directly obtained with a patented process for the purpose of clinical trial, the People’s Court shall deal with the matter under Article 63, paragraph one (4) of the Patent Law”.
In other words, exploitation of another party’s patented technolgy for the purpose of regulatory approval of a new drug is brought within the scope of “experimental use” exception under these Provisions. These Provisions are yet to become effective despite rounds of discussion.
7. The State Council and the SIPO: Amendment to the Patent Law by addition of the specific provisions on the Bolar exception
In 2006, the SIPO proposed amending the Patent Law, and one of the proposed amendments was to add specific provisions on the Bolar exception to the Patent Law. The acts to be added are not deemed to the infringement of patent right include:
“Article 74
…
(6) the making, using or importing of a patented pharmaceutical product or patented medical treatment instrument exclusively for obtaining and providing information necessary for the regulatory examination and approval of the pharmaceutical product or medical treatment instrument, and the making and importing of the patented pharmaceutical product or patented medical treatment instrument and sale of the product or instrument for the above-identified purpose.
Besides, Article 63, paragraph four of the present Patent Law is kept to be the provision in Article 74, paragraph five of the amended Patent Law:
“Article 74
…
(5) Where any person uses the relevant patent solely for the purposes of scientific research and experimentation.”
The SIPO has submitted the Draft Amendment to the Patent Law to the State Council for review. Like the Supreme People’s Court’s comments and view, these amendments are yet to become legally effective.
8. Sankyo v. Beijing Wansheng Drug Industry Co., Ltd.18, a case of patent infringement: The court found that clinical trial of new drugs and application for regulatory approval of production thereof are not for the production and business purposes.
In this case of patent infringement, the court has given its explicit judicial view on the matter of whether or not use of another party’s patent during clinical trial constitutes a patent infringement.
The plaintiff, the Sankyo Corporation owned an invention patent (ZL 97126347.7), claiming the pharmaceutical of 奥美沙坦 and a method for making the relevant compounds; the other plaintiff, the Sankyo Drug Manufacturing Corporation, was the non-exclusive licensee of said patent. They learned that the defendant, Wangsheng, was infringing the plaintiff’s patent right by having made a lot of products of “奥美沙坦酯片” in the course of applying for the registration of the new drug and for the regulatory approval of making the same.
Upon hearing the case, the Beijing No.2 Intermediate People’s Court held that [a]lthough the defendant used the patented process in suit to make said drug for the purposes of clinical trial and for applying for the regulatory approval of the production of it, its act of making the drug was done to meet the requirement of the relevant State agency for the regulatory approval of the drug by testing the safety and effectiveness of the drug it made. Given that the defendant did not make the drug in suit directly for the purpose of marketing it, its act was not one to exploit the patent for the production and business purposes as defined in the Patent Law of the People’s Republic of China. Accordingly, it was decided that the defendant’s act did not constitute an infringement of the patent right in suit.
In this case, the court did not come up with an interpretation of the “experimental use” exception provided for in Article 63 of the Patent Law. Rather, it explained the provision on “for the production and business purposes” in Article 11 of the Patent Law. In the ruling on said case, it seemed that the court tried to avoid any potential conflict with the specific proposal made by the Supreme People’s Court and the SIPO with regard to the “experimental use” exception, creating another reference case for exemption of use of another party’s patent in clinical trial of a new drug. Since both parties did not appeal, the ruling in the case has become effective.
9. Eli Lilly and Company v. Ganli 19, a case of patent infringement: the court reiterated that clinical trial of new drugs and application for regulatory approval of production thereof are not for the production and business purposes.
After the Sankyo case, the Eli Lilly and Company brought the dispute of almost the same nature before the Beijing No.2 Intermediate People’s Court. Since the patent in suit related to 5 independent patents, the court handled them in five separated cases.
The Eli Lilly and Company, in the five cases, enforced the Chinese invention patents for the methods and preparations for making insulin analogues, believing that Ganli’s acts to apply, with the State Drug Supervision Administration, for the regulatory approval of the “重组赖脯 insulin” and “双时相重重组赖脯 insulin injection 75/25” to obtain the approval of clinical trial thereof, and advertise on the internet the medicament “速秀霖” (having the 赖脯 insulin as the active element) for which it applied for regulatory approval constituted an imminent infringement by offering it for sale, thus infringing its patent right.
The court held that, according to the evidence available, Ganli’s allegedly infringing medicament “重组赖脯 insulin” and “双时相重重组赖脯 insulin injection 75/25” were pending in the stage of the regulatory examination for approval for registration, and were not ready to enter the market. While the defendant made the clinical trial and applied for the regulatory approval of production, it acted to meet the needs imposed by the relevant State agency for regulatory approval of drugs and test the safety and effectiveness of the drug it had made. While the “重组赖脯 insulin injection” Ganli applied for was granted the regulatory approval and ready to enter the market, the Eli Lilly and Company failed to present evidence to show that Ganli had accordingly made and marketed said drug. Therefore, Ganli’s act of making the drug in suit was not done directly for the marketing purposes, so it was not an act of exploiting another party’s patent for the production and business purposes as defined by the Chinese Patent Law.
As for Ganli’s advertising content of the drug “速秀霖” published on the internet, the court believed that it should not be determined that in Ganli’s drug had been used the product directly obtained with the Eli Lilly and Company’s patented method in suit. Besides, the available evidence could not show that Ganli had actually made the drug in suit for marketing. Accordingly, the Eli Lilly and Company’s claim that Ganli’s acts constituted an imminent infringement and an act of offering for sale was not based on sufficient evidence, so not supported by the court.
While the ruling is a first-instance ruling yet to take effect, the judicial view as embodied therein has a far-reaching impact on the clinical trial of new drugs and regulatory approval of production thereof. Like in the Sankyo case, the court only explained the provision on “for the production and business purposes” as mentioned in Article 11 of the Patent Law, without citing the provision on “experimental use” exception of Article 63.
10. Possible future developments
The Sankyo case has changed the ambiguous view of the court hearing the Glaxic case, and made it clear that use of another party’s patent for the purpose of regulatory approval of a new drug does not constitute a patent infringement. Given that the ruling in the Sankyo case has taken effect, the conclusion made in the case now serves as a judicially valuable reference. Unless the Beijing Higher People’s Court makes another ruling in the Eli Lilly and Company’s case, it will be an expected judicial conclusion in litigation between patentees and generic drug manufacturers that an act of using another party’s patent for the purpose of regulatory approval of a new drug is not one performed for production and business purposes, so not an infringement of a patent right .
On the other hand, it may be reasonably anticipated that the more detailed provisions as proposed or recommended by the Supreme People’s Court and the State Council on the “experimental use” exception will become statutory prescriptions in the near future.
III. Comparison between China and In the United States
In this section, a comparison will first be made between the provisions on the experimental use exception to which amendment is proposed and that on Bolar exception in China and the corresponding provisions in the United States, in addition to the comparision of determination of “for the production and business purposes” or “for commercial purposes” in the two countries. After that a brief comparison will also be made regarding the matter of extended term of patent protection, with a generation finally made with respect to the circumstances of application of Bolar exception to medical devices.
1. “Production and business purposes” or “commercial purposes”
Under the present situation where the Bolar exception is not put in place in the Patent Law in China, the adjudicative basis on which the court in China has ruled that use of another party’s patent in clinical trial is not use for “the production and business purposes”, so does not constitute a patent infringement, which has become an umbrella of protection under the current framework of the Patent Law for generic drug manufacturers’ use of others’ patents for the purpose of regulatory approval of new drugs.
The US courts ruled respectively in the Roche, Embrex and Madey cases that the accused acts are determined as acts to which the experimental use exemption did not applied for being for business purposes, slightly for business purposes, capable of promoting commercial development, and thus constituted patent infringement. These conclusions are different from that drawn in the Sankyo case.
In the cases involving Intermedics and Integra, the US courts also recognised the commercial purposes of the accused acts. But, based on the Bolar exception statute, the courts were very tolerant toward such purpose. Presence of the commercial (or production and business) purposes did not affect the application of the Bolar exception. It applied to an accused act so long as it was related to gaining data for the FDA’s regulatory approval even if it was for commercial purposes, and such an act was not deemed to be an infringement. The conclusion was the same as that drawn in the Sankyo case in China, with different reasoning though.
2. Experimental use exception
In China, in the Glaxo case, while it was not explicated in the ruling whether use of another party’s patent in clinical trial of a new drug constituted a patent infringement or not, the court supported the plaintiff’s claim for the damages in full caused during the clinical trial of the new drug. This demonstrated the judge’s view on the matter: not applying the experimental use exception. Besides, in the two cases involving Sankyo and Eli Lilly and Company in China, the court did not accept clinical trial of a new drug as a circumstance of experimental use exception in the sense of the Patent Law.
In the proposed third amendment to the Chinese Patent Law, the former Article 63 (4) is to be kept, and will become Article 74 (5). According to the Interpretation of the New Patent Law and the court’s judicial interpretation, in China, scientific research and experimentation solely refer to those made in direction to a patented technology per se, not to the use of a patented product or process to develop another product, and such use includes “making, using or importing a patented product, or using a patented process, and making, importing and marketing a patented product for the purpose of the use”.
In the US Roche case, the district court, once believing that the accused infringing act was an act of research and experimentation, decided that it was not an infringement. But the CAFC reversed the decision, holding that the accused infringing act was for commercial purpose, to which the experimental use exception should not apply. In the later Embrex and Madey cases, the CAFC decided that the experimental use exception to patent infringement did not apply so long as the accused act was performed slightly for commercial purpose or was capable of promoting commercial development.
Comparatively speaking, the experimental use exception in the United States. It is impossible for it to apply to any act that is slightly related to commercial purpose, and even indirectly promotes commercial development with exception to experimentation and scientific research in strict sence related to the fulfillment of curiosity, and amusement. It may be said that the conditions for the application of experimental use exception is much more demanding or strigent in the United States.
3. The Bolar exception
Given the rulings made by the US courts that the experimental use exception should not apply to acts of using another parties’ patents in clinical trial of new drugs for or with commercial purposes, and such acts constitute patent infringement, the US Congress has made the Bolar exception statute to regulate and balance the interest of the patentees and that of the generic drug manufacturers.
Similar provisions have also been set forth in the proposed third Amendment to the Patent Law made by the State Council and the SIPO, that is, a paragraph has been added to Article 63 of the Patent Law now in force, that is, Article 74 (6):
“Where a patented pharmaceutical product or patented medical treatment instrument is made, used or imported exclusively for obtaining and providing information necessary for the administrative examination and approval of the pharmaceutical product or medical treatment instrument, and the patented pharmaceutical product or patented medical instrument is made, or imported or sold to it or him.”
Obviously, the US provision on the Bolar exception is much less stringent than that in China, where acts to which the Bolar exception applies are limited to acts performed solely for obtaining and providing information for the regulatory approval. In other words, for an accused actor’s act not to constitute an infringement, such an act must be performed solely for obtaining and providing information for the regulatory approval. By contrast, for the US Bolar exception provision to apply, it is not necessary to first consider the accused actor’s subjective will. Whether the accused actor takes it as his or its start point to act for obtaining and providing information for the regulatory approval, as long as the accused act is objectively and reasonably related to the obtainment and provision, it does not constitute an infringement. Thus, the US practice is much less stringent than the judgment made from the perspective of subject intention in China, and it has actually made the evidence adduction easier. Next, in the U. S., an accused act is not necessarily to be merely reasonably related to obtaining and providing information for the regulatory approval. It may also be slightly for commercial purpose. As long as an accused act is reasonably related to obtaining and providing information for the regulatory approval, it does not constitute an infringement even if the information obtained is not actually submitted.
The above observations show that Article 74 (5) and (6) of the currently proposed Amendment to the Chinese Patent Law have been set apart, on the basis of an actor’s subjective will, with the former being specially concerning acts of scientific research and experimentation of a patented technology per se. Acts of the nature, if happening in the U .S., are likely to be those to which the Bolar exception applies according to the case law involving Integra since the result of the experiment may possibly be the data to be submitted for regulatory approval in the future despite that it is impossible for the experimental use exception to apply to them, and they do not constitute an infringement. By contrast, Article 74 (6) has been designed for acts related to obtaining and providing data for regulatory approval, wherein the acts related to scientific research and experimentation of a patented technology per se actually cover a much smaller scope though they superficially correspond to the Bolar exception. Take the four accused acts involved in the US Intermedics case for example, the acts done were not only for the purposes of obtaining and providing information for the regulatory approval, but also with commercial purposes. In the U. S., the Bolar exception is applicable to them. But it seems that this circumstance is not a related cause a mentioned in the provision (6) in China as they are done not solely for gaining data for regulatory approval. Further, it is literally difficult for Article 74 (5) to apply to them for they, are not acts related to scientific research and experimentation of a patented technology per se. In other words, in the U. S., the Bolar exception covers the most circumstances that fall within the experimental use exception to patent infringement in China, and, as well, even what the Bolar exception does not cover in China. Accordingly, it may be concluded that in terms of balance between the public interest and that of the patentees, China is more in favour of the latter with regard to clinical trial exemption.
3. Extended term of protection
It is provided in another provision in the case law involving the Hatch Waxman as discussed above that to make up for the time a patentee loses of the term of protection by her in the beginning patent because of the FDA’s regulatory review and approval, the term of protection of a patent under prolonged FDA’s regulatory approval is extended. The extended term helps protect the patentee’s lawful rights and interest, so as to equate it with the extra protection under the Bolar exception statute without adding to it any provision on the extending of the term of patent for pharmaceuticals/medical devices. In this aspect, China evidently favours the public in its consideration of the interest between the public and the patentees.
4. Research tools
In the provision on experimental use exception, in China, have been precluded the acts of using patented products as tools for research to develop other products, while in the U. S., the issue of tools for research was mentioned only in the Integra case involving the Bolar exception. Unfortunately, in Integra case, neither the US Supreme Court nor the CAFC gave any explicit opinions on whether the Bolar exception might apply to the issue of tools for research.
5. Medical instruments
Toward this, the two countries take more or less the same attitude: the Bolar exception is applicable.
6. Pharmaceuticals and medical instruments made with patented processes
According to the judgement made in the US Amgen case, the Bolar exception applies to use of products made with patented processes if the use is related to the FDA data.
Relatively, the “Bolar exception” provided for in Article 74 (5) and (6) of the proposed Third Amendment to the Chinese Patent Law is literally directed to “patented pharmaceuticals or medical devices”. It is impossible to reach similar conclusion in China to that in the U.S..
Nonetheless, considering the inclusion of enforcement of the patent right for process in the cases involving the Sankyo and Eli Lilly and Company, if use of a product made with a patented process is an exploitation of the process patent only specifically for obtaining and providing information necessary for the regulatory approval of a drug or medical device, then the “patented pharmaceuticals or medical devices” mentioned in said provision would possibly be construed as covering “drugs or medical devices made with process patents”.
IV. Conclusion
In China, while the US Bolar exception has been incorporated in the amendment to the Chinese Patent Law, its practice along the line is still in the stage of preliminary trial with the literal provision only allowing application of the Bolar exception within a certain scope. Some circumstances of the Bolar exception in the U.S. are likely to be put under the traditional experimental use exception to patent infringement, or are circumstances of non-infringement not for the production and business purposes. In addition, the courts in China are possible to interpretate the Bolar exception with some degree of free discretion in the future, just as the “production and business purposes” were interpreted in the Sankyo case, and it is now not considered in China to give patentees corresponding compensation by way of extending the term of the patents. It is positive that in China there is still room for considerable development of the Bolar exception both in law and in practice.
The authors: Wu Yuhe, Attorney-at-law and Patent Attorney, and Xiong Yanfeng, US Patent Attorney of the China Patent Agent (H.K.) Ltd.
1 Whittemore v. Cutter, 29 F. Cas. 1120 (C.C.D. Mass. 1813)
2 Sawin v. Guild, 21 F. Cas. 554 (C.C.D. Mass. 1813)
3 Roche Products, Inc. v. Bolar Pharmaceutical Co. 733 F.2d 858 (Fed. Cir. 1984)
4 Embrex, Inc. v. Service Engineering Corp.216 F.3d 1343 (Fed.Cir. 2000)
6 Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518
7 35 U.S.C.§271(e)(1):“it shall not be an act of infringement to make, use, offer to sell, or sell . . . 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.”
8 Eli Lilly and Co. v. Medtronic, Inc.，496 U.S. 661 （1990)
9 Abtox, Inc. v. Exitron Corp., 122 F.3d 1019 (Fed. Cir. 1997)
10 Elan. Transdermal Ltd. v. Cygnus Therapeutics Systems., 24 U.S.P.Q.2d 1926 (N.D. Cal. 1992)
11 Intermedics, Inc. v. Ventritex, Inc., 991 F.2d 808 (1993)
13 See Brief for the United States as Amicus Curiae Supporting Petitioner, 2003 U.S. Briefs 1237 at 29 (Feb. 22, 2005).
14 See Articles 11 and 63 of the Patent Law of the People’s Republic of China as of 2000.
15 See Chongqing City No.1 Intermediate People’s Court’s Civil Judgment No. Chongjingchuzi 406/1995.
16 See the Interpretation of the Patent Law, the Patent Documentation Publishing House, 1994, P.188.
17 See Yin Xintian (ed), the Interpretation of the New Patent Law as prepared by the Legal Affairs Department of the SIPO, the Intellectual Property Publishing House, 2001, P?.
18 See the Beijing No.2 Intermediate People’s Court’s Civil Judgment No. Erzhongminchuzi 04134/2006.
19 See the Beijing No.2 Intermediate People’s Court’s Civil Judgment No. Erzhongminchuzi 6026/2005.
