Nexell Therapeutics v. AmCell Corp.
(2002 US Dist. Lexis 7308, April 2002, 143 F. Supp. 2d 401, 2001)

Briefed by: Anna Longwell, Esq., June 2002

Summary

US District sustains a relatively broad interpretation of patent law allowing a person without patent rights to a to make, use and even sell patented articles into a licensee’s market if such use is “reasonably related” to obtaining market approval from FDA.

History

This is the second segment of a civil action begun in 2000. The brief combines both cases, in that the second simply provides clarification of the first.

In the ’80s Becton Dickinson (BD) acquired exclusive rights to patents held by Johns Hopkins for monoclonal antibodies (MAbs) specific to stem cells (later categorized as CD34 MAbs), and methods to make purified suspensions. BD began to develop a stem-cell separator based on flow cytometry and CD34 antibodies. In ’90, BD granted an exclusive license to Baxter Healthcare. After filing an application with FDA, Baxter conveyed its rights to a spin-off, Nexell Therapeutics, which obtained FDA approval for sale in the US in 1999.

In ’93, AmCell was founded with a collaboration between AmCell, Amgen and Miltenyi Biotec, to develop and commercialize magnetic bead separation technology. In ’96, Amgen began EU clinical trials, and sent FDA a pre-IDE. In ’97, the collaboration terminated, with AmCell retaining further development. A clinical product was approved in the EU in 1997, and is currently sold there. BD granted Miltenyi and affiliates a license for CD 34 MAbs “for in vitro research use only” in ’98. AmCell as an affiliate is selling a research product in the US. AmCell filed a master file with FDA in ’98, describing its use of CD34 MAbs in its cell separator. In ’99 AmCell and Miltenyi began to recruit physicians for clinical trials, with advertisements in clinical journals, at trade shows, and on the web. Of 80 protocols received from investigators, AmCell selected 35 to receive clinical supplies, once FDA approved the physician-sponsored IDEs. FDA approved 19, for studies at 15 US sites. AmCell installed separators gratis at these sites, and sold CD34-magnetic bead reagent at cost for the conduct of the protocols. AmCell has also placed 29 separators at other US institutions all labeled “in vitro research”. As of September 2000, AmCell had not sent FDA any company-sponsored IDEs, although it had submitted a plan calling for such IDEs before the end of 2000.

In March 2000, Nexell et.al. alleged that AmCell and Miltenyi were 1) infringing Ps patent rights by selling their separator for clinical use with CD34 MAbs; 2) these sales breached the “research only ‘ license agreement; and 3) Ds were engaging in unfair competition by these actions. Ps alleged that AmCell’s placements were preventing placement of their products in the same site, as no institution would want two cell separators. Ds claimed that their clinical activities were protected from infringement by virtue of 35 USC ¤271 (e)(1), which states that any person may make use or sell patented articles without liability for infringement as long as such use is “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…” Additionally, Ds claimed their sale of the “research” separator was within the scope of the BD license.

The trial concentrated on the 271 defense, and Ps tried to show Ds activity was not reasonably related to approval. Ps produced much evidence of FDAs involvement and monitoring of AmCell’s activities, including a March 2000 letter advising AmCell of FDAs concern that trials to date would not provide useful information, indicating that AmCell’s 1999 promise to file a sponsor IDE was well overdue, and requesting a clinical plan from AmCell. The letter indicated that FDA would not approve any more protocols without evidence that such a plan existed and was feasible, and that such protocols were part of the plan. Ps also produced evidence of an extremely aggressive recruitment campaign, and alleged that Ds practices went beyond recruitment into commercialization. Ds indicated that they had responded to all FDAs concerns by producing a plan, and by amending recruitment practices.

Between the first and the second action, Ps attempted to obtain an FDA opinion on what, if any of AmCell’s activities were “reasonably related” to approval, and FDA declined to provide an interpretation of the patent law.

Findings

  • AmCell is entitled to the protection of 37 USC 271(e)(1), because their clinical activities appear reasonably related to obtaining FDA approval. Although there is evidence of FDAs concern that the clinical process was taking too long, FDA has not found the company in violation of its regulations against commercializing investigational product (21 CFR 812.7). When it is possible, as it is in this case, to interpret Ds activities as reasonably related, until and unless FDA finds explicitly that the D has performed an activity that is not “reasonably related” to market approval, the court use the broadest possible interpretation in favor of the D.
  • The court did not reach the license issue, which remains to be litigated.

Results

AmCell continues to place product in AmCell sponsored trial sites, and the license issue has yet to be resolved. In the meantime, as of May 2002,the licensee, Nexell, is ceasing operations and considering bankruptcy.

Conclusions

This case is of interest to start-up companies using patented products or methods to develop information for FDA approval, as it shows how much otherwise commercial activity can be protected under 271(e)(1). The research use license issue is of interest, also, and should be followed.