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The Black Hole

The implication of the Hatch-Waxman Act for universities

Among the most interesting implications is the recognition that universities are not exempt from patent infringement for basic research.


“[It is] well-settled, that an experiment with a patented article for the sole purpose of gratifying a philosophical taste, or curiosity, or for mere amusement, is not an infringement of the rights of the patentee.”

Poppenhusen v. Falke, 19 F. Cas. 1048, 1049 (C.C.S.D.N.Y. 1861) (No. 11,279)

The Hatch-Waxman (Drug Price Competition and Patent Term Restoration) Act of 1984 was created in the United States to shield activities including supplying active ingredients, using research tools, and stockpiling drug inventory done to secure regulatory approval. Its key purpose is to expedite FDA approval and market translation of drugs immediately following the expiration of blocking patents. Its significance to start-ups, and its implication to universities cannot be overstated. To explore both points I’ve broken this article into two posts:

  1. How the Hatch-Waxman Act of 1984 protects startups
  2. The implication of the judicially created exemption (case law) to universities (below)

For a more in-depth review see: Research Use Exemptions to Patent Infringement for Drug Discovery and Development in the United States

The implication of the judicially created exemption (case law) to universities

The difference between an ‘act’ and ‘case law’ are that whereas ‘acts’ are a type of laws that are passed by the government and pertain to specific situations and circumstances, ‘case law’ are laws that become established by a set of past judicial rulings that create precedent.

Among the most interesting implications of the judicially created exemption (case law) is the recognition that universities are not exempt from patent infringement for basic research [eg. Madey (307 F.3d 1351), Federal Circuit]. The judicially-created experimental use exemption is similar to the safe harbour provision in that it allows the use of patented technologies; however, it is much more narrowly-defined by the purpose of the work. If the experimentation is for commercial or business purposes, it is not exempt. This is fair since the spirit of a patent is to provide an exclusionary right to holders from competitors making, using, offering for sale, selling, or importing the invention. In exchange the patent holder divulges the invention publicly, so that others to learn from their work thus enabling future advances or discoveries. The experimental use exemption was therefore created to protect those practicing a patented invention “merely for philosophical experiments, or for the purpose of ascertaining the sufficiency of the machine to produce the described effect” (Supreme Court ruling, 1813), and is meant to strike a balance between dissemination of knowledge and the patent holder’s federally protected commercial rights.

Where it becomes interesting is that whereas universities fund or allow research with arguably no commercial application, the courts have recognized that these activities nonetheless further the legitimate business objectives of the university by increasing the stature of the institution or helping attract grants, students, faculty, etc. Universities, even when they are non-profit institutions, have legitimate business objectives and are required to take out licenses to practice patented technology. This is significant, because unlike most early-stage biotech companies that have a clear translational focus and whose research is almost always “reasonably related to the development and submission of information under federal law” to meet regulatory approval, the opposite is generally true of academic institutions. The use of patented materials by academic labs, when practiced at a university, are deemed to be advancing the commercial interests of the university and thus not exempt.

While the judicially created experimental use exemption discussed is specific the United States, most countries have comparable interpretations of their own patent laws. Again, I am not a lawyer, and I am hard pressed to imagine companies are generally incentivized to practice these rights and would elect to sue universities for academic work done by their investigators – but patent violations like these at universities are very common, and the potential implications of this are worth appreciating.

Jonathan Thon
Dr. Thon is the Founder and CEO of STRM.BIO. Before STRM.BIO Dr. Thon Founded Platelet BioGenesis where he served as CEO and Chief Scientific Officer. Before Platelet BioGenesis Dr. Thon was an Assistant Professor at Harvard Medical School.
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