Tuesday, August 05, 2008

CAFC: Nonregulated Equipment Exempt From Hatch-Waxman "Safe Harbor"

Proveris Scientific Corp. v. Innovasystems Inc., (07-1428), August 5, 2008

Innova makes and sells a device known as the Optical Spray Analyzer ("OSA"), which measures the physical parameters of aerosol sprays used in nasal spray drug delivery devices. While the sprays are subject to FDA approval, the OSA is not. When Proveris sued for patent infringement, Innova countered that the device was covered under the safe harbor provision of the Hatch-Waxman Act, which states in 35 U.S.C. § 271(e)(1):

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 essence, Innova argued that, since the equipment was used in connection with a regulated product, the equipment was covered as well. Relying on the Supreme Court's Eli Lilly decision, the CAFC disagreed.

[I]nnova’s OSA device is not subject to FDA premarket approval. Rather, FDA premarket approval is required only in the case of the aerosol drug delivery product whose spray plume characteristics the OSA measures. In short, Innova is not a party seeking FDA approval for a product in order to enter the market to compete with patentees. Because the OSA device is not subject to FDA premarket approval, and therefore faces no regulatory barriers to market entry upon patent expiration, Innova is not a party who, prior to enactment of the Hatch-Waxman Act, could be said to have been adversely affected by the second distortion. For this reason, we do not think Congress could have intended that the safe harbor of section 271(e)(1) apply to it. Put another way, insofar as its OSA device is concerned, Innova is not within the category of entities for whom the safe harbor provision was designed to provide relief.


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