Second: Section 202 also contravenes the

constitutional principle concerning the Separation of Powers. Section 202 would reverse the holding of the Court of Appeals for the Federal Circuit, the basic arbiter of patent rights, in a pending case, Roche Products v. Bolar Pharmaceutical Company, Inc. That case has been remanded to the district court for further proceedings to give the patentee relief to which this Court has ruled it is entitled. Section 202 would now deny such relief.

Nature of Preexisting

Property Rights that Will Be
Affected by the Proposed Legislation

The patent statute gives the owner of a patent

the exclusive right to make, use and sell the patented invention 35 U.S.C. §§ 154 and 271(a).

Section 202

of the proposed legislation would take away that right

retroactively.

It would allow a third party to make,

use or sell a patented invention for purposes "reasonably related" to the submission of information to obtain premarketing approval under the Food, Drug and Cosmetic Act in order to engage in the commercial manufacture, use or sale of the drug after patent expiration. Section 202 would directly contravene the substance of existing patent rights as they have been declared to exist by judicial authority.

In Roche Products, Inc. v. Bolar Pharmaceutical

Co., Inc.,

F.2d

(Slip op. April 23, 1984), the

Court of Appeals for the Federal Circuit held that Bolar,

a generic drug manufacturer, unlawfully infringed a patent owned by Roche when, during the patent term, Bolar used the patented substance to prepare submissions to the Food and Drug Administration for eventual marketing after the Roche patent expired. The Court of Appeals agreed with Roche that such "use" by Bolar of Roche's patented drug during the term of the patent grant for the purpose of engaging in federally mandated premarketing tests was part of the exclusive patent grant reserved to the patent owner.. Having determined that Bolar's unauthorized use infringed Roche's patent, the Court of Appeals then held that "Roche is entitled to a remedy," in the form of an injunction or damages. Bolar, supra, at 16. It ordered that specific relief was to be fashioned in the first instance by the District Court to which the case was then remanded and before which it is now pending. In directing that remand, the Court of Appeals recognized that although the infringement involved a small amount of material, "the economic injury

to Roche is, or is threatened to be, substantial

The Bolar decision is consistent with a long history of patent law cases that give effect to the exclusivity provisions of the patent statute.

See also

Pfizer Inc. v. International Rectifier Corp., 217 USPQ 157 (C.D. Cal. 1982). It is justified by the same considerations of public policy that are the foundation

of the patent system, to create an incentive to invention that will promote the progress of science and useful arts.

Constitution, Art. I, Sec. 8.

Section 202 of the proposed legislation would reverse the Bolar decision in its entirety, not just for the patent involved in that particular case, but ..

for all existing drug patents.

It would do so by making

it lawful for an infringer to make, use or sell the

patented substance during the period of the patent grant, if done for the purposes indicated. It would also reverse existing patent law by prohibiting courts from issuing an injunction against making, using or selling the substance for that purpose, and it would withdraw from the patentee his current right to collect damages for such infringement.

Section 202 Constitutes a Taking

of Property Without Just Compensation

Existing patent law declares that a patent is

a property right. Title 35 U.S.C. § 261 states in

~ attributes one normally associates with property; it can be bought, sold, licensed or pledged. In essence the concept of property is the equivalent of a bundle of rights, and ownership of a patent gives the owner the basic right one normally associates with property the right to exclude others from trespassing on the owner's rights.

Proposed Section 202 takes substantially from the value of that existing property right. The bill's retroactive impairment of rights is most apparent when viewed in light of the facts of the Bolar case itself although the effect of the bill goes far beyond Bolar and applies to every existing drug patent. In Bolar the Court of Appeals found that infringement had occurred, and that Roche was entitled to damages. Those issues have been decided. All that is now pending is the determination of adequate relief. By this legislation, however, the infringer would be exonerated and Roche's

entitlement to injunctive relief and damages would be utterly defeated. The patentee's right to an injunction against unauthorized infringement and his right to damages to compensate for past infringement are also property rights deserving of Fifth Amendment protection. Under Section 202, an act which was wrongful when done, and which gave rise to civil liability at the time, would be declared retroactively lawful, and the injured victim will be deprived of its present right to an injunction or damages.

If Section 202 applied only to patents granted after its enactment, Congress could address the serious issues of public policy with respect to the effect of such legislation on the patent system generally, but at least the present constitutional problems would not Under the present text, considerations of fundamental fairness are involved because the legislation purports to act retroactively to withdraw existing rights.'

exist.

1

Although retroactivity is not itself a bar to federal legislation, it does raise serious questions of constitutional policy that must be addressed by the Congress and not merely left to the courts to decide. In Pension Benefit Guaranty Corp. v. R. A. Gray & Co., 52 U.S.L.W. (June 18, 1984), the Supreme Court deferred to the Congress and upheld an amendment to the ERISA statute which created retroactive obligations on employers who terminated their pension plans within five months of the statute's enactment. The object of that short period of retroactivity was to prevent

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