LILLY & CO. V. MEDTRONIC, INC., 496 U. S. 661 (1990)

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U.S. Supreme Court

Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990)

Eli Lilly and Company v. Medtronic, Inc.

No. 89-243

Argued Feb. 26, 1990

Decided June 18, 1990

496 U.S. 661


Claiming infringement of two of its patents, petitioner Eli Lilly's predecessor-in-interest filed suit to enjoin respondent Medtronic's testing and marketing of a medical device. Medtronic defended on the ground that its activities were undertaken to develop and submit to the Government information necessary to obtain premarketing approval for the device under § 515 of the Federal Food, Drug, and Cosmetic Act (FDCA), and were therefore exempt from a finding of infringement under 35 U.S.C. § 271(e)(1), which authorizes the manufacture, use, or sale of a patented device

"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."

The District Court concluded that § 271(e)(1) does not apply to medical devices and, after a jury trial, entered judgment on verdicts for Eli Lilly. The Court of Appeals reversed on the ground that, under § 271(e)(1), Medtronic's activities could not constitute infringement if they were related to obtaining regulatory approval under the FDCA, and remanded for the District Court to determine whether that condition had been met.

Held: Section 271(e)(1) exempts from infringement the use of patented inventions reasonably related to the development and submission of information needed to obtain marketing approval of medical devices under the FDCA. Pp. 496 U. S. 665-679.

(a) The statutory phrase of § 271(e)(1), "a Federal law which regulates the manufacture, use, or sale of drugs," is ambiguous. It is somewhat more naturally read (as Medtronic asserts) to refer to the entirety of any Act, including the FDCA, at least some of whose provisions regulate drugs, rather than (as Eli Lilly contends) to only those individual provisions of federal law that regulate drugs. However, the text, by itself, is imprecise, and not plainly comprehensible on either view. Pp. 496 U. S. 665-669.

(b) Taken as a whole, the structure of the 1984 Act that established § 271(e)(1) supports Medtronic's interpretation. The 1984 Act was designed to remedy two unintended distortions of the standard 17-year patent term produced by the requirement that certain products receive premarket regulatory approval: (1) the patentee would, as a practical matter, not be able to reap any financial rewards during the early years of the term while he was engaged in seeking approval; and (2) the end of

Page 496 U. S. 662

the term would be effectively extended until approval was obtained for competing inventions, since competitors could not initiate the regulatory process until the term's expiration. Section 202 of the Act addressed the latter distortion by creating § 271(e)(1), while § 201 of the Act sought to eliminate the former distortion by creating 35 U.S.C. § 156, which sets forth a patent-term extension for inventions subject to a lengthy regulatory approval process. Eli Lilly's interpretation of § 271(e)(1) would allow the patentee of a medical device or other FDCA-regulated nondrug product to obtain the advantage of § 201's patent-term extension without suffering the disadvantage of § 202's noninfringement provision. It is implausible that Congress, being demonstrably aware of the dual distorting effects of regulatory approval requirements, should choose to address both distortions only for drug products, and for other products named in § 201 should enact provisions which not only leave in place an anticompetitive restriction at the end of the monopoly term but simultaneously expand the term itself, thereby not only failing to eliminate but positively aggravating distortion of the 17-year patent protection. Moreover, the fact that § 202 expressly excepts from its infringement exemption "a new animal drug or veterinary biological product" -- each of which is subject to premarketing licensing and approval under, respectively, the FDCA and another "Federal law which regulates the manufacture, use, or sale of drugs," and neither of which was included in § 201's patent-term extension provision -- indicates that §§ 201 and 202 are meant generally to be complementary. Interpreting § 271(e)(1) as the Court of Appeals did appears to create a perfect "product" fit between the two sections. Pp. 496 U. S. 669-674.

(c) Sections 271(e)(2) and 271(e)(4), which establish and provide remedies for a certain type of patent infringement only with respect to drug products, do not suggest that section 271(e)(1) applies only to drug products as well. The former sections have a technical purpose relating to the new abbreviated regulatory approval procedures established by the 1984 Act, which happened to apply only to drug products. Pp. 496 U. S. 675-678.

872 F.2d 402 (Fed.Cir.1989), affirmed and remanded.

SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J.,and BRENNAN, MARSHALL, BLACKMUN, and STEVENS, JJ., Joined. KENNEDY, J., filed a dissenting opinion, in which WHITE, J., joined, post, p. 496 U. S. 679. O'CONNOR, J., took no part in the consideration or decision of the case.

Page 496 U. S. 663

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