Remedies Under Patents On Medical And Surgical Procedures

REMEDIES UNDER PATENTS ON MEDICAL AND SURGICAL PROCEDURES

by Gerald J. Mossinghoff ^*

On September 30, 1996, the President signed Public law 104-208, the Omnibus Consolidated Appropriations Act or "Continuing Resolution." In addition to providing appropriations for Fiscal Year 1997 to most of the Federal government, that law added a new subsection (c) to 35 USC § 287 to limit the remedies available with respect to a medical practitioner's performing a patented medical activity.^[1] The new subsection appears in Appendix A. This article traces the legislative history of the new subjection as that history was brought to a conclusion in the summer and autumn of 1996.

Background

The political impetus for the amendment to §287 grew out of a patent infringement case filed by Dr. Samuel L. Pallin against Dr. Jack A. Singer alleging infringement of U.S. Patent No. 5,080,111 on a patented surgical technique for use during cataract surgery. The patented method involved making a surgical incision directly in the eye in a manner that would allow the wound to be "substantially self-sealing," i.e., requiring no sutures. That lawsuit ended in a consent order signed on March 28, 1996, which invalidated four of the 29 claims of the Pallin patent and enjoined Dr. Pallin from enforcing any aspects of his patent. In an earlier decision on May 1, 1995,^[2] the District Court had declined to grant a summary judgment on patent invalidity because of "complex factual disputes."

Meanwhile, the House of Delegates of the American Medical Association's ("AMA") unanimously adopted a resolution at its 1994 Annual Meeting that the AMA "vigorously condemn the patenting of medical and surgical procedures and work with Congress to outlaw this practice."^[3] A broad coalition^[4] of medical specialty associations, led by the American Society of Cataract and Refractive Surgery ("ASCRS"), was formed to achieve that goal.^[5]

House of Representatives Actions

On March 3, 1995 Congressman Ganske (R-Iowa/4th), a surgeon in Des Moines, introduced H.R. 1127^[6] for himself and then-Congressman Ron Wyden (D-Oregon/3rd) entitled the "Medical Procedures Innovation and Affordability Act." Without amending any portion of Title 35 of the U.S. Code, the Ganske bill, as a free-standing provision of law, would have provided:

LIMITATION ON ISSUANCE OF PATENTS. On or after the date of the enactment of this Act, a patent may not be issued for any invention or discovery of a technique, method, or process for performing a surgical or medical procedure, administering a surgical or medical therapy, or making a medical diagnosis, except that if the technique, method, or process is performed by or as a necessary component of a machine, manufacture, or composition of matter or improvement thereof which is itself patentable subject matter, the patent on such machine, manufacturer, or composition of matter may claim such technique, method or process.

The Subcommittee on Courts and Intellectual Property of the House Judiciary Committee, chaired by Congressman Carlos Moorhead (R-Calif./27th), held a hearing on H.R.1127 on October 19, 1995, during which a representative of the Patent and Trademark Office ("PTO") suggested that they "may well be able to address the issues raised by the legislation of modifying their internal, administrative procedures." Congressman Moorhead, in turn, requested that the PTO pursue that approach and, as he later reported to the House of Representatives:

. . . the PTO conducted a public hearing on issues related to patenting of medical procedures. Interested parties were given the opportunity to comment and offer suggestions for improvements. The PTO is now analyzing these comments and preparing to address the problems which are identified. There is a very good chance that this problem may be resolved administratively for which the gentleman from Iowa should take full credit.^[7]

This matter was unresolved when the funding for the PTO was considered by the House of Representatives on July 24, 1996.^[8] At that point, Congressman Ganske offered an amendment to the bill to insert the following new section:

SEC. 615(a) LIMITATION ON USE OF FUNDS TO ISSUE CERTAIN PATENTS. None of the funds made available in this Act may be used by the Patent and Trademark Office to issue a patent when it is made known to the Federal official having authority to obligate or expend such funds that the patent is for any invention or discovery of a technique, method, or process for performing a surgical procedure (defined as a treatment for curing or preventing disease, injury, illness, disorder, or deformity by operative methods, in which human tissue is cut, burned, or vaporized by the use of any mechanical means, laser, or ionizing radiation, or the penetration of the skin or body orifice by any means), performing a medical procedure (defined as a nonsurgical, nondiagnostic procedure for curing or preventing a disease, injury, illness, disorder, or deformity), or making a medical diagnosis (defined as the identification of a medical condition or a disease or disorder of a body).^[9]

During the brief debate on the Ganske amendment, no one spoke against the basic thrust of the legislation, i.e., to proscribe patents on medical and surgical procedures. Rather, the debate centered around the jurisdictional issue -- whether substantive legislation was appropriate as an amendment to a funding bill -- and the possible adverse effect of the legislation on advances in the biotechnology industry. Despite these concerns, the Ganske amendment was adopted overwhelmingly by a vote of 295-128, with 195 Republicans voting in favor of the measure.

Congressman Ganske was very specific that he did not intend for his amendment in any way to affect the patentability of pharmaceutical, diagnostic or biological products. He stated:

I would encourage possible opponents of this bill to carefully examine the language of this amendment. The amendment specifies: All presently patentable new drugs will remain patentable; all presently patentable machinery and devices for treating and diagnosing disease will remain patentable; all presently patentable biologic products will remain patentable; all presently patentable new uses for nonpatentable drugs and biological products will remain patentable. I even added an additional exception for biotechnological process to make absolutely clear that this amendment does not, let me repeat, does not prohibit patents on gene therapy or other similar procedures.^[10]

The Ganske amendment was opposed by the U.S. Department of Commerce, the American Bar Association ("ABA"), the American Intellectual Property Law Association ("AIPLA"), the Biotechnology Industry Organization ("BIO"), the Intellectual Property Owners, and the Pharmaceutical Research and Manufacturers of America ("PhRMA").^[11] It was supported by the AMA, the ASCRS and the Medical Procedure Patents Coalition.

Although the intention underlying the Ganske amendment to H.R.3814 was very clear, the actual impact of the bill, if it were to be enacted into law, was far from clear, for several reasons:

(1)Because the amendment would not have changed substantive patent law, patent applications on medical or surgical procedures could continue to be legally filed.^[12]

(2)Such applications, once properly filed, would be entitled as a matter of law to an examination by the PTO.

(3)The Commissioner for Patents and Trademarks, once the patentability of such applications was established by the examinations, would be required to issue patents on them.^[13]

(4)If the Commissioner were to fail to issue such patents, the applicants would continue to have access to the courts to obtain judicial mandates to force the issuance.^[14] If appropriations were not available, presumably applicants could simply offer to pay appropriate printing, processing and distribution costs.

(5)Since the fee income "appropriated" to the PTO is available without fiscal year limitation, ^[15] the Office would for some time have "no-year money" available to issue patents on medical procedures notwithstanding the Ganske limitation on FY 1997 appropriations.

Senate Actions

On October 18, 1995, Senator Bill Frist (R-Tenn.), a heart and lung transplant surgeon, introduced S.1334, also referred to as the "Medical Procedures Innovation and Affordability Act." This bill would not have changed what would be patentable under 35 USC § 101; instead, it would have amended 35 USC §271 by adding a new subsection (j) to provide that:

For any patent issued on or after the effective date of this subsection, it shall not be an act of infringement for a patient, physician, or other licensed healthcare practitioner, or a healthcare entity with which a physician or licensed healthcare practitioner is professionally affiliated, to use or induce others to use a patented technique, method, or process for performing a surgical or medical procedure, administering a surgical or medical therapy, or making a medical diagnosis. This section does not apply to the use of, or inducement to use, such a patented technique, method, or process by any person engaged in the commercial manufacturer, sale, or offer for sale of a drug, medical device, process, or other product that is subject to regulation under the Federal Food Drug, and Cosmetic Act or the Public Health Service Act.^[16]

Meanwhile, H.R.3418 -- containing the Ganske amendment -- was referred to the Subcommittee on Commerce, Justice, State, and the Judiciary of the Senate Committee on Appropriations, chaired by Senator Judd Gregg (R-NH). Because Dartmouth College was involved in the Pallin litigation, Chairman Gregg fully supported the thrust of the Ganske amendment.

Each year the AMA Board of Trustees meets with the Board of Directors of PhRMA to discuss matters of mutual interest. At a joint meeting on June 18, 1996, the issue of patents on medical and surgical procedures was discussed at length with an earnest request from the leadership of AMA that PhRMA undertake to reach a compromise on this issue which would achieve AMA's goal, but which would in no way prejudice the research-based pharmaceutical, biotechnology or diagnostic industries. As a result, intense negotiations were initiated among representatives of BIO and PhRMA on one side of the table, and the AMA, ASCRS, and the Medical Procedure Patents Coalition on the other side. Several corporate patent counsel participated directly in the discussions and negotiations, together with representatives of Senators Frist and Gregg. Because of the sincere assurance of Congressman Ganske and Senators Frist and Gregg that they had no intention of adversely affecting America's research-based pharmaceutical, biotechnology or diagnostic industries, it was decided early that the focus of the negotiations would center not on what is patentable under 35 USC § 101 or what constitutes an infringement under 35 USC §271, but instead on 35 USC §287, relating to remedies available to patent owners.

The negotiations included lengthy discussions of several drafts of a new subsection (c) to §287 and what would be recommended to the Congress as an agreed upon interpretation or "legislative intent" of the new subsection. The result was an agreement on the new subsection (c) of 35 USC §287 that was ultimately enacted into law, and on interpretations of key phrases used in the new subsection that would be recommended to the Congress. The House and Senate adopted those interpretations on their own in enacting 35 USC §287(c).^[17] They appear in Appendix B.

Because of H.R.3418, as such, was never considered on the Senate floor,^[18] Senator Frist did not have an opportunity to offer the compromise legislation as an amendment to it. He did adopt the compromise and expressed pleasure that was included in the Omnibus Consolidated Appropriations Act as an alternative to the Ganske language. As he stated:

My legislation enjoys the support of the American Medical Association as well as numerous medical speciality groups that are very concerned about this matter. And, while the biotech and pharmaceutical industries opposed the Ganske amendment, they were instrumental in crafting this narrower approach.^[19]

Senator Orrin hatch (R-Utah), Chairman of the Senate Judiciary Committee, expressed strong opposition to the provision and its inclusion in the Omnibus Consolidated Appropriations Act. Senator William V. Roth, Jr. (R-Del), Chairman of the Senate Committee on Finance, joined Senator Hatch in opposing the provision. A major thrust of Senators Hatch's and Roth's opposition concerned the relationship of the compromise and the landmark Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), administered by the World Trade Organization under the GATT Uruguay Round Agreement.^[20]

Relationship of the Compromise to TRIPs

Article 27(l) of TRIPs proscribes member states from discriminating in their patent systems against any field of technology.^[21] As representatives of an industry that historically has been discriminated against -- patents on biotechnology and pharmaceutical products continue to be unreasonably denied in a number of countries -- BIO and PhRMA worked vigorously to assure the inclusion of Article 27(l) in TRIPs, and they continue to urge strict compliance with it.

At the same time, it is recognized that Article 30 of TRIPs^[22] provides that:

Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. (Emphasis added)

In interpreting TRIPs provisions, parties must look to real-world practices and experience and not speculate about hypothetical examples. Under the new 35 USC §287(c), the very narrow exception to the exclusive rights conferred by a patent would not unreasonably conflict with the normal exploitation of patents in the medical field. The overwhelming majority of patents in that field are owned by the biotechnology and pharmaceutical industry, and the companies in that industry do not sue medical practitioners performing medical activities, as those terms are defined in the new subsection. Such suits are simply not involved in the "normal exploitation" of the industry's patents.^[23]

That latter point cannot be overemphasized. In any instance where an exception to the exclusive rights conferred by a patent would conflict with normal or historically documented exploitation of a patent in practice, the exception would not fall within the meaning of Article 30 of TRIPs, and thus, such an exception would clearly violate the TRIPs agreement.

Conclusion

The Biotechnology and pharmaceutical industry -- together with all of the national patent law associations -- opposed the Ganske amendment to the PTO appropriations bill when it was considered by the House on July 24, 1996. It was also opposed by the Chairman and Ranking Democrat of the House Judiciary Subcommittee having jurisdiction over patents -- Chairman Carlos Moorhead and Representative Patricia Schroeder (D-Colo./1st) -- and the Floor Manager of the bill, Representative Harold Rogers (R-Ky./5th). Nevertheless, it was passed by a vote of 295-128, with not one Member speaking against its basic thrust.

In the Senate, Senator Gregg, Chairman of the Appropriations Subcommittee with jurisdiction over PTO appropriations, strongly supported the Ganske measure, in part because of his interest in the Pallin litigation. Given those political realities and the usual suspension of regular procedures to enact funding bills at the end of each Congress, enactment this year of some form of legislation dealing with patents on medical procedures seemed highly likely, if not inevitable.

Significantly, the agreed-upon compromise will have no effect on what is patentable under 35 USC §101 and no effect on what constitutes an infringement under 35 USC §271. Moreover, the new subsection (c) to 35 USC §287 appropriately and specifically exempts the commercial activities of biotechnology, diagnostic and pharmaceutical companies and does not limit in any manner their ability to enforce their patents against their competitors.

APPENDIX A

Section 616 of P.L. 104-208 provides as follows:

Section 287 of title 35, United States Code, is amended by adding at the end the following new subsection:
(c)(1) With respect to a medical practitioner's performance, of a medical activity that constitutes an infringement under section 271 (a) or (b) of this title, the provisions of sections 281, 283, 284, and 285 of this title shall not apply against the medical practitioner or against a related health care entity with respect to such medical activity.
(2) For the purposes of this subsection:
(A) the term "medical activity" means the performance of a medical or surgical procedure on a body, but shall not include (i) the use of a patented machine, manufacture, or composition of matter in violation of such patent, (ii) the practice of a patented use of a composition of matter in violation of such patent, or (iii) the practice of a process in violation of a bio-technology patent.
(B) the term "medical practitioner" means any natural person who is licensed by a State to provide the medical activity described in subsection (c) (1) or who is acting under the direction of such person in the performance of the medical activity.
(C) the term "related health care entity" shall mean an entity with which a medical practitioner has a professional affiliation under which the medical practitioner performs the medical activity, including but not limited to nursing home, hospital, university, medical school, health maintenance organization, group medical practice, or a medical clinic.
(D) the term "professional affiliation" shall mean staff privileges, medical staff membership, employment or contractual relationship, partnership or ownership interest, academic appointment, or other affiliation under which a medical practitioner provides the medical activity on behalf of, or in association with, the health care entity.
(E) the term "body" shall mean a human body, organ or cadaver, or a nonhuman animal used in medical research or instruction directly relating to the treatment of humans.
(F) the term "patented use of a composition of matter" does not include a claim for a method of performing a medical or surgical procedure on a body that recites the use of a composition of matter where the use of that composition of matter does not directly contribute to achievement of the objective of the claimed method.
(G) the term "State" shall mean any state or territory of the United States, the District of Columbia, and the Commonwealth of Puerto Rico.
(3) This subsection does not apply to the activities of any person, or employee or agent of such person (regardless of whether such person is a tax exempt organization under section 501(c) of the Internal Revenue Code), who is engaged in the commercial development, manufacture, sale, importation, or distribution of a machine, manufacture, or composition of matter or the provision of pharmacy or clinical laboratory services (other than clinical laboratory services provided in a physician's office), where such activities are:
(A) directly related to the commercial development, manufacture, sale, importation, or distribution of a machine, manufacture, or composition of matter or the provision of pharmacy or clinical laboratory services (other than clinical laboratory services provided in a physician's office), and
(B) regulated under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, or the Clinical Laboratories Improvement Act.
(4) This subsection shall not apply to any patent issued before the date of the enactment of this subsection.

APPENDIX B

The Report of the House and Senate Conference accompanying P.L. 104-208 explains the legislative intent of the new subsection (c) of 35 USC §287 as follows:

Sec. 616. -- The conference agreement includes section 616, which includes language not in either the House or the Senate-reported bill, that addresses the subject included in the House bill as section 619 and deleted by the Senate-reported bill. The provision included in this conference agreement precludes the filing of civil action for damages or injunctive relief against a medical practitioner licensed by the State to provide the medical activity or related health care entity who performs a medical activity that would otherwise constitute an infringement or inducement to infringe under 35 U.S.C. 271(a) or (b) for patents issued after its enactment.
The term "medical activity" as defined in subsection 287(c)(2)(A) does not include "the practice of a patented use of a composition of matter." The term "patented use of a composition of matter" as used in subsection (c)(2)(A)(ii) is limited by subsection (c)(2)(F). Subsection (c)(2)(F) provides that the term "patented use of a composition of matter" does not include any claim for performing a medical or surgical procedure on a body that recites the use of the composition of matter where the use of the composition of matter does not directly contribute to the achievement of the objective of the claimed method. A use of a composition of matter as a step in a claim will direct contribute to the achievement of the objective of the claimed method if it is itself novel or if it contributes to or is necessary to establish the non-obviousness of the claim as a whole.
For a method claim in which each of the method steps recites a "use of a composition of matter" the claim cannot represent a "medical activity" because the use of a composition of matter must necessarily contribute to the novelty -- and, therefore, to the objective -- of the claimed method. "Uses of compositions of matter" include, without limitation, novel uses of drugs, novel uses of chemical or biological reagents for diagnostic purposes, novel methods of scheduling or timing administration of drugs, novel methods of combining drug therapies, and novel methods for providing genetic or other biological materials to a patient (including gene therapies.) A particular example would be claim that recites only the novel use of drug for the treatment of diabetes that involves the administration of a drug at a particular time of day and/or at a specified dose and/or with a specified concomitant medicinal therapy could not be construed as a "medical activity."
For a "hybrid" claim, is, a claim with at least one step that recites the use of a composition of matter and at least one step that is not directed to the use of a composition of matter (e.g., a surgical step), the test established by subsection (c)(2)(F) must be applied to determine whether the claim as a whole is exempted from the definition of a "medical activity" because it is a patented use of a composition of matter. The first step in this test is to determine the objective of the claimed method taking into account all of the process steps set forth in the claim. The second part of this test is to determine whether the steps involving the use of one or more compositions of matter either alone or in combination contribute directly to the achievement of the objective of the claimed method. It is interested that this part of the test will have been met if the uses of the compositions of matter, either individually or collectively, represents novel subject matter, or if one or more of these steps contributes to or are necessary to establish the non-obviousness of the claim as a whole. Thus, even where the steps involving uses of one or more compositions of matter are not novel individually or in combination with each other, these uses may still directly contribute to the achievement of the objective of the claimed method if, in combination with the steps that involve collectively obvious medical or surgical techniques, they produce a novel and non-obvious method.
As an example, in the case of a surgical method of transplanting a healthy heart into a patient with a diseased heart, the inclusion of the step administering a conventional anaesthetic in a claim reciting a novel and non-obvious surgical transplantation procedure would not cause the surgical procedure to be treated as a patented use of a composition of matter within the meaning of subsection (c)(2)(A)(ii). Therefore, assuming none of the other exceptions in subsection (c)(2)(A) apply, the claimed surgical method would necessarily qualify as a medical activity. In contrast, where the administration of the anaesthesia was accomplished, for example, using a novel anaesthetic or a novel dosing schedule, the objective of the claimed method would include the provision of a novel use of an anaesthetic in transplantation surgery and the use of the composition of matter (i.e., the anaesthetic) would directly contribute to the achievement of the objective.
It is intended that the applicability of the exception of (c)(2)(A)(ii) for a patented use of a composition of matter can usually be decided by a motion to dismiss or summary judgment under Rule 12(b) or Rule 56, respectively, of the Federal Rules of Civil Procedure. For example, an accused infringer seeking to invoke the relief from remedies afforded under 287(c)(1) would ordinarily prevail under such a motion if the following conditions are met: (1) the movant shows by clear and convincing evidence that the recited uses of the compositions of matter, both individually and collectively, lack novelty, and (2) the movant also shows by a preponderance of the evidence that the steps of the claimed method that do not involve uses of compositions of matter (i.e., the medical or surgical procedure steps) are, by themselves, novel and non-obvious, provided, however, that the movant may concede the non-obviousness in lieu of making the required evidentiary showing. Paragraph (c)(2)(A)(iii) excludes from the definition of "medical activity" the practice of a patented process in violation of a biotechnology patent. For the purposes of this provision, the definition of the term "biotechnology patent" includes a patent on a "biotechnological process" as defined in 35 U.S.C. §103(b), as well as a patent on a process of making or using biological materials, including treatment using those materials, where those materials have been manipulated ex vivo at the cellular or molecular level.
Biological materials which may be manipulated ex vivo at the cellular or molecular level include a variety of cellular, intracellular, extracellular, and acellular substances. Cellular substances include (but are not limited to) cultured microbial and mammalian cells. Intracellular substances include (but are not limited to) genetic materials, such as DNA and RNA that is obtained from within the cell. Extracellular substances include (but are not limited to) proteins and other molecules that are secreted or excreted by cells. Acellular substances include (but are not limited to) viruses and other vectors for transmitting genetic material.
Ex vivo manipulation includes propagation, expansion, selection, purification, pharmaceutical treatment, or alteration of the biological characteristics of these substances outside of a human body.
This definition excluded medical procedures which do not involve ex vivo cellular or molecular manipulation of a biological material. For example, a patent on a method of performing heart transplantation surgery, including the use of a heart-lung machine, is excluded from this definition on two grounds: first, the method involves manipulation in vivo, not ex vivo, and second, the method does not manipulate the cellular or molecular characteristics of the heart.
The House bill included a provision which prohibited funds from being used by the Patent and Trademark Office to issue patents for surgical and medical procedures and diagnoses, with certain exceptions for medical and biomedical devices and processes.

First published in the Journal of the Patent and Trademark Office Society, volume 78 (1996), pages 789-801.

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Endnotes

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*.Visiting Professor of Intellectual Property Law, The George Washington University, and Senior Counsel to the Pharmaceutical Research and Manufacturers of America ("PhRMA") and to Oblon, Spivak, McClelland, Maier & Neustadt. A former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks, the author served for twelve years as President of PhRMA.

[1].Section 616 of P.L. 104-208. The procedural vehicle for P.L. 104-208 was H.R. 3610, 104th Congress, 2nd Session, the Department of Defense Appropriations bill.

[2].Pallin v. Singer, 36 USPQ 2d 1050 (District Court, District of Vermont, May 1, 1995).

[3].Substitute Resolution 2, adopted by the House of Delegates at the 1994 AMA Annual Meeting. The Resolution was followed in June 1995 by a detailed Report, "Patenting of Medical Procedures," AMA Council on Ethical and Judicial Affairs (CEJA Report 1-A-95).

[4].The "Medical Procedure Patents Coalition" included, in addition to the ASCRS as chair:

American Academy of Dermatology
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