High Court Is Set to Hear Case of Research vs. Patents

Michael D. Pierschbacher remembers the moment in 1982 when he discovered a tiny peptide that guides human cell growth and migration. “I ran from the lab and down the hallway shouting, ‘Eureka!’ ” recalled the former Burnham Institute scientist.

Some time later, David Cheresh, a scientist at Scripps Research Institute -- right across the street from Burnham in San Diego -- became convinced that the peptide, a string of three amino acids, had promise as an anti-cancer drug. In 1994 Cheresh started collaborating with German drug maker Merck on a brain cancer medicine.

Then the company that owned rights to the Burnham discovery sued Merck for patent infringement -- and won a jury trial in 2000. Merck appealed, so far unsuccessfully.

Today, the U.S. Supreme Court will hear arguments in the case, which has taken on broad significance for drug development and left the biotechnology industry deeply divided.

Merck -- not related to U.S. pharmaceutical giant Merck & Co. -- argues its research was permitted under a “federal exemption” for all work aimed at getting Food and Drug Administration approval for drugs.

Some big pharmaceutical companies and the seniors organization AARP -- typically opponents -- are urging the court to side with Merck. They worry that unless the court acts, patents could be used to delay or completely block potentially life-saving medicines.

The Department of Health and Human Services also has gotten behind Merck. In a friend-of-the-court brief, the department asserted that federal law protected many of the experiments performed by Cheresh in collaboration with Merck. “There is no question that the [appeals] court’s holding would restrict significantly the development of new drugs,” the government’s brief said.

Integra Lifesciences Holdings Corp., the New Jersey company that owns the Burnham patents, said worries about research delays were nonsense. Integra offered to license the patents to Merck, but negotiations with the German firm were not successful, said Cathryn Campbell, a lawyer for Integra.

The case has split the biotechnology industry, which includes a handful of drug giants and hundreds of smaller, research-focused companies.

Siding with Integra are small biotech companies that produce and sell equipment and other products used in drug research, including Applera Corp. and Invitrogen Corp. They worry that big drug companies could run all over their patents if the lower court ruling is overturned.

Two of the largest biotechs, Genentech Inc. and Biogen Idec Inc., are aligned with Merck.

At the center of the dispute is a federal law known as Hatch-Waxman, which was passed in 1984 to foster drug development. The law granted a “federal exemption” from patent laws for research needed to obtain FDA approval of a drug. The law has been used to shield generic drug companies from patent infringement suits while they prepare to bring knock-off drugs to market.

Merck claims that the Hatch-Waxman exemption should also apply to its research, but a federal jury disagreed, awarding $15 million in damages to Integra, which an appeals court reduced to $6.4 million in 2003.

In upholding the verdict, the appeals court said that Merck and Scripps used the peptide in experiments that weren’t needed to obtain FDA approval of the brain-cancer drug. The court said the exemption applied only to drugs in clinical trials, while Merck was using the peptide in laboratory studies.

Merck said the appeals court decision was too narrow. “Our argument is there is a period of time that begins the moment it can be demonstrated that a drug candidate has the potential to cure disease in humans. From that point on, the research is protected,” said E. Joshua Rosenkranz, attorney for Merck.

The suit revolves around a 23-year-old discovery that is now a hot area of research. The peptide discovered by Pierschbacher passes information to cells by binding to receptors on cell membranes, called integrins.

“It is not an exaggeration to say that nothing works in cells without the [peptide] recognition system,” said Erkki Ruoslahti, who supervised Pierschbacher in the 1980s.

Back then, Ruoslahti had become convinced that a peptide controlled important cell functions and assigned Pierschbacher to find it.

Integra eventually acquired the patents, and Pierschbacher now is a senior vice president at the company.

Ruoslahti continued to study the peptide and how it interacted with cells, collaborating at times with Cheresh at Scripps.

In 1994, Cheresh published a paper showing that he could inhibit the growth of blood vessels to tumors by blocking a specific integrin. After that, Cheresh began collaborating with Merck on the brain-cancer drug.

Cheresh said he had no idea the peptides sent to him by Merck were covered by Burnham’s patents. After the lawsuit was filed in 1996, Scripps obtained an injunction to keep his lab open, Cheresh said, and he was ordered not to work on the peptides.

“My reaction was shock and disbelief,” Cheresh said. “A federal marshal served me with papers; I thought it was a gag.”

“Obviously, there are two sides to the issue,” said Cheresh, now a scientist at UC San Diego. “Hopefully, there will be some closure on it.”