This is part 1 of our multiple part series examining Bolar and Bolar-like exemptions in U.S. as well as in a number of foreign jurisdictions.

U.S. Bolar Exemption

For most patented products in the U.S., on the day a “blocking” patent expires, a competitor can begin selling what was, up until that point, an otherwise infringing product.  However, for a long time, with respect to pharmaceuticals, this simply was not the case. Because the marketing of pharmaceuticals is strictly regulated by the U.S. Food and Drug Administration (FDA), a drug developer is required to comply with various statutes, regulations, guidelines and requirements before marketing approval is awarded.  It was well known that the marketing approval process is a long, arduous process that takes several years.

Additionally, U.S. law provides a very narrow research or experimental use exemption with respected to patented inventions.  The exemption is so narrow that it is limited to actions performed for “amusement, to satisfy idle curiosity or for strictly philosophical inquiry”.  Madey v. Duke University, 307 F.3d 1351 (Fed. Cir. 2002).  In addition, in 1984, the Federal Circuit decided Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir. 1984), holding that a manufacturer could not begin the testing needed to obtain regulatory approval of a drug without infringing blocking patents.  Unfortunately, the Roche decision further delayed the entry of generic drugs into the marketplace by delaying the availability of generic drugs by allowing a patentee to maintain market exclusivity for a period of time after its blocking patent(s) expired.

In response to the Roche decision, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. L. No. 98-417, 98 Stat. 1585 (codified as amended at 35 U.S.C. §§ 156 and 271(e)), which is often referred to as the “Hatch-Waxman Act”.  The Hatch-Waxman Act overruled Roche and created the Section 271(e)(1), which is often referred to as the “Safe Harbor” or “Bolar” exemption. The Safe Harbor insulates certain activities from patent infringement.  Specifically, Section 271(e)(1) reads:

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 (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) 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.

It is important to note that the Safe Harbor is not limited to generic only products.  It is applicable to branded pharmaceuticals, medical devices, biologics and biosimiliars.

The Safe Harbor has been interpreted broadly by U.S. courts and, as a result, exempts a wide variety of activities having an ultimate commercial benefit provided that the conduct is reasonably related to gaining information relevant to the FDA approval process.  The U.S. Supreme Court opined on the Safe Harbor in Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005).  In this decision, the Court held that the text of Section 271(e)(1) extended to all uses of patented inventions that are reasonably related to the submission of any information to the FDA.  As a result, the Safe Harbor includes preclinical studies of patented compounds that are appropriate for submission in the regulatory process. Moreover, the Court stated that under certain conditions, the exemption could include:  (1) experimentation on drugs that were not ultimately the subject of FDA submission; or (2) the use of patented compounds in experiments that were not ultimately submitted to the FDA.  Additionally, in a series of decisions subsequent to Merck, the Federal Circuit held that the Safe Harbor can exempt both pre- and post-approval activity.  However, in Momenta Pharms., Inc. v. Teva Pharms. USA Inc., 809 F.3d 610 (Fed. Cir. 2015), cert. denied sub nom. Amphastar Pharms., Inc. v. Momenta Pharms., Inc., 137 S. Ct. 68 (2016), the Court stressed that the Safe Harbor was directed to seeking FDA approval and would only cover limited types of post-approval conduct that are truly required by FDA:

The routine record retention requirements associated with testing and other aspects of the commercial production process contrast with non-routine submissions that may occur both pre- and post-approval, such as the submission of investigational new drug applications (“INDs”), new drug applications (“NDAs”), supplemental NDAs, or other post-approval research results….The routine quality control testing of each batch of generic enoxaparin as part of the post approval, commercial production process is therefore not “reasonably related to the development and submission of information” to the FDA, and it was clearly erroneous to conclude otherwise.

Under Momenta, any type of quality control testing that is a “habitual” or “regular” part of the production process and not related to obtaining FDA approval is not likely be exempt.

Examples of activities which may fall under the Safe Harbor (provided that there is clear link between such activities and efforts to obtain regulatory approval) include: supplying active ingredients, stockpiling drug inventory, preclinical studies, submitting regulatory data to a foreign agency where the data was submitted or is going to be submitted to the FDA, using research tools, using FDA data to prepare a patent application, using a patented product to develop an alternative FDA-approved manufacturing process, etc.  Examples of activities that have been found by U.S. courts not to fall under the Safe Harbor include:  manufacturing patented products in the U.S. for shipment to foreign regulatory authorities, use of product for foreign clinical trials where no indication that results would be submitted to the FDA and basic research.

Finally, under U.S. law, it should be understood that the Safe Harbor is an affirmative defense and the defendant has the burden of establishing and proving the defense during litigation.  As a result, a party seeking to rely on the Safe Harbor should keep detailed records regarding its “infringing” conduct to establish the Safe Harbor.