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Originally published in outs & ins, vol. 3, no. 4, 2003.

In Bayer AG v. Housey Pharmaceuticals, Inc., No. 02-1598 (Fed. Cir. Aug. 22, 2003), the Court of Appeals for the Federal Circuit addressed the question of possible infringement under 35 U.S.C. § 271(g) by research not protected by the "safe harbor" of 35 U.S.C. § 271(e)(1). The Federal Circuit concluded that “infringement under 35 U.S.C. § 271(g) is limited to physical goods that were manufactured and does not include information generated by a patented process."

Housey owns patents on methods that enable screening of substances for active compounds that indicate a potential for development as pharmaceuticals. Housey claimed that Bayer infringed those patents under Section 271(g) when Bayer sold in the U.S. a drug that was determined to be an inhibitor or activator of a target protein using the patented methods.

To facilitate entry of generic drugs into the pharmaceutical market, the "safe harbor" provision, or "Bolar exemption", created a narrow exception in the law governing infringement, in essence permitting generic drug companies to use an invention protected by a patent to gather data solely to obtain approval from the FDA. (See What's Out in the previous issue of outs & ins.) For pharmaceutical research not protected by Section 271(e)(1), it was thought acceptable to conduct the research overseas and then import the resulting data into the U.S., although there remained a doubt whether importation of the data might violate Section 271(g).

Section 271(g) arose from the Process Patent Amendments Act of 1988 ("PPAA"), which was enacted to close a perceived loophole in the statutory scheme for protecting owners of U.S. patents. Before the PPAA, an owner of a U.S. process patent could sue for patent infringement if others used the process in the U.S., but the owner had no cause of action if such persons used the patented process abroad to manufacture products, and then imported, used, or sold the products in the U.S. By enacting the PPAA, the principal portion of which is codified as Section 271(g), Congress made it an act of patent infringement to import, sell, or use in the U.S., without authorization, a product made by a process patented in the U.S. The Uruguay Round Agreements Act added a provision concerning offers to sell, and now Section 271(g) provides, in part, that, "Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer."

Referring to Section 271(g), the Federal Circuit held that "in order for a product to have been 'made by a process patented in the United States' it must have been a physical article that was 'manufactured' and that the production of information is not covered." Thus, the Federal Circuit has declared Section 271(g) to be of limited scope, not covering processes resulting in the generation of information or data.

Addressing the view that there is no apparent reason why the perceived loophole that Section 271(g) sought to close should not affect processes resulting in the generation of information or data, the Federal Circuit explained,

Even if the legislative history did not affirmatively suggest an intent to limit coverage to manufactured 'articles' . . . , we have been directed to nothing in the legislative history suggesting that Congress was concerned that the preexisting statutory scheme failed to reach intangible information, or that the substantive coverage of the [Process Patent Amendments] Act, as opposed to the available remedies, was to be expanded. Each and every reference to the provision that became section 271(g) describes it as directed to manufacturing.

As a result, the Court concluded, "The legislative history's silence thus suggests that Congress did not intend to expand coverage beyond manufactured articles."

Even so, the Court recognized that its reading of Section 271(g), limiting its scope, might not be the reading that Congress intended. Thus, the Court explained that Congress could expand Section 271(g) "if we are wrong in our interpretation. Congress is in a far better position to draw the lines that must be drawn if the products of intellectual processes rather than manufacturing processes are to be included within the statute." Until then, the Court's decision appears not limited to pharmaceuticals. It is now seemingly not an infringement under Section 271(g) to import into the U.S. any data obtained overseas from processes patented in the U.S.