Eli Lilly and Company v. Medtronic Inc/Dissent Kennedy

Justice KENNEDY, with whom Justice WHITE joins, dissenting.

Petitioner contends that respondent infringed its patents by testing and marketing a medical device known as a cardiac defibrillator. The Court holds that 35 U.S.C. § 271(e)(1), a provision of the patent law, may give respondent a defense to this charge. It rules, in particular, that § 271(e)(1) will excuse respondent if it acted for the sole purpose of developing information necessary to obtain marketing approval for the device under § 515 of the Federal Food, Drug, and Cosmetic Act (FDCA), 90 Stat. 552, 21 U.S.C. § 360e. I dissent because I find the Court's decision contrary to the most plausible reading of the statutory language.

The applicable version of § 271(e)(1) states:

"It shall not be an act of infringement to make, use, or     sell 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)) 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." 35 U.S.C. § 271(e)(1) (1982 ed., Supp. II).

The Court says that Congress used the phrase "a Federal law which regulates the manufacture, use, or sale of drugs" to refer to the entirety of any Act, at least some portion of which regulates drugs. The FDCA fits this description. As a result, even though respondent sought marketing approval under the FDCA for a medical device instead of a drug, the Court concludes that § 271(e)(1) may serve as a defense to patent infringement. I disagree.

Section 271(e)(1), in my view, does not privilege the testing of medical devices such as the cardiac defibrillator. When § 271(e)(1) speaks of a law which regulates drugs, I think that it does not refer to particular enactments or implicate the regulation of anything other than drugs. It addresses the legal regulation of drugs as opposed to other products. Thus, while the section would permit a manufacturer to use a drug for the purpose of obtaining marketing approval under the FDCA, it does not authorize a manufacturer to use or sell other products that, by coincidence, the FDCA also happens to regulate. Respondent, in consequence, has no defense under § 271(e)(1).

The Court asserts that Congress could have specified this result in a clearer manner. See ante, at 667-668. That is all too true. But we do not tell Congress how to express its intent. Instead, we discern its intent by assuming that Congress employs words and phrases in accordance with their ordinary usage. In this case, even if Congress could have clarified § 271(e)(1), the Court ascribes a most unusual meaning to the existing language. Numerous statutory provisions and court decisions, from a variety of jurisdictions, use words almost identical to those of § 271(e)(1), and they never mean what the Court says they mean here.

For instance, in delineating the scope of pre-emption by the Employee Retirement Income Security Act of 1974 (ERISA), Congress stated that "nothing in this title shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities." 88 Stat. 897, 29 U.S.C. § 1144(b)(2)(A) (emphasis added). Interpreting this language as the Court interprets § 271(e)(1) would imply that Congress intended to give the States a free hand to enact any law that conflicts with ERISA so long as some portion of the state enactment regulates insurance, banking, or securities. No one would contend for this result. The Texas Legislature, in a like manner, has said that "a person shall pay $1 as a court cost on conviction of any criminal offense . . . except that a conviction arising under any law that regulates pedestrians or the parking of motor vehicles is not included." Tex.Govt.Code Ann. § 56.001(b) (Supp.1990) (emphasis added). I do not think that Texas intended by this language to exclude all convictions that might arise under an Act, such as a traffic code, that regulates speeding in addition to pedestrians and parking. And, when the Missouri Legislature specified that "[n]o governmental subdivision or agency may enact or enforce a law that regulates or makes any conduct in the area [of gambling] an offense," Mo.Rev.Stat. § 572.100 (1986) (emphasis added), I doubt that it meant to invalidate local enactments in their entirety whenever some portion of them regulates gambling. Countless other examples confound the Court's method of reading the operative language in this case. See, e.g., N.C.Gen.Stat. § 42-37.1 (1984) (prohibiting retaliatory eviction by landlords for complaints about violations of any "[s]tate or federal law that regulates premises used for dwelling purposes ") (emphasis added); Cochran v. Peeler, 209 Miss. 394, 408, 47 So.2d 806, 809 (1950) ("the violation of a law which regulates human conduct in the operation of vehicles on the roads becomes, by legislative fiat, negligence") (emphasis added); Local 456 Int'l Brotherhood of Teamsters v. Cort- landt, 68 Misc.2d 645, 653, 327 N.Y.S.2d 143, 153 (1971) ("[U]nder the home rule power to enact local laws, a town may enact a law which regulates the powers, duties, qualifications, [etc. ] of its officers and employees ") (emphasis added);  see also U.S.C.onst., Amdt. 14, § 1 ("No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States ") (emphasis added). Unless we assume that these examples do not reflect ordinary usage, which I see no basis for doing, we cannot hold that § 271(e)(1) refers to the entirety of the FDCA or any other Act which regulates drugs. Instead, I would conclude, the section refers only to the actual regulation of drugs and does not exempt the testing of a medical device from patent infringement.

Congress did not act in an irrational manner when it drew a distinction between drugs and medical devices. True, like medical devices, some drugs have a very high cost. See ante, at 673, n. 5. Testing a patented medical device, however, often will have greater effects on the patent holder's rights than comparable testing of a patented drug. As petitioner has asserted, manufacturers may test generic versions of patented drugs, but not devices, under abbreviated procedures. See 21 U.S.C. § 355(j). These procedures, in general, do not affect the market in a substantial manner because manufacturers may test the drugs on a small number of subjects, who may include healthy persons who otherwise would not buy the drug. See § 355(j)(7)(B) (stating the requirements of a showing of the "bioequivalence" of drugs). By contrast, as in this case, manufacturers test and market medical devices in clinical trials on patients who would have purchased the device from the patent holder. See App. 39-42; see also 21 CFR § 812.7(b) (1989) (permitting manufacturers to recover their costs in clinical trials). Although the Court gives examples of high cost drug dosages, it does not demonstrate that the testing of these drugs detracts from a patent holder's sales. Congress could have determined that the differences in testing or some other difference between drugs and devices justified excluding the latter from the ambit of § 271(e)(1). See 879 F.2d 849, 850, n. 4 (CA Fed.1989) (Newman, J., dissenting from the denial of rehearing en banc). For these reasons, I dissent.