Supreme Court Denies Petitions on Hatch-Waxman Safe Harbor, ITC Economic Prong Analysis and Stay of Federal Trade Secret Claims

On Monday, January 13, the U.S. Supreme Court issued an order list denying petitions for writ of certiorari in three cases involving intellectual property claims. Two appeals came from the Federal Circuit regarding the court’s application of Hatch-Waxman’s safe harbor against infringement liability and its review of the International Trade Commission’s (ITC) economic prong analysis. Another appeal from the Seventh Circuit challenged that court’s application of the Colorado River abstention doctrine in a trade secret case involving a complex ownership dispute.

Edwards Lifesciences v. Meril Life Sciences: Broad Reading of Hatch-Waxman Safe Harbor Stands

In October 2024, California-based heart valve developer Edwards Lifesciences filed a petition for writ asking the Supreme Court to overturn the Federal Circuit’s reading of the safe harbor for regulatory uses of a patented invention under the Hatch-Waxman Act, codified at 35 U.S.C. § 271(e)(1). In denying this petition, the Court leaves in place a split decision by the Federal Circuit, which included a dissent by Circuit Judge Alan Lourie who argued that the majority erred in their interpretation of Section 271(e)(1) in failing to consider Meril’s alternative commercial purposes in importing transcatheter heart valve systems into the United States for a medical conference.

Edwards Lifesciences filed suit in October 2019 in the Northern District of California against Meril, about a month after Meril appeared at the 2019 Transcatheter Cardiovascular Therapeutics Conference (TCTC) in San Francisco. While Meril attended TCTC in part to find potential researchers for clinical trials leading to market approval by the U.S. Food & Drug Administration (FDA), the company also instructed its employees that while they couldn’t offer its transcatheter system for sale in the U.S market, they could consider offers for other markets. Meril also imported two sample systems into the U.S. for the conference, but those demo samples, as they were marked, were never removed from their travel bag.

On summary judgment, the district court held that Meril’s importation of the transcatheter systems was covered under the Section 271(e)(1) safe harbor. On appeal, the Federal Circuit found that its case law following the Supreme Court’s interpretation of Section 271(e)(1) in Merck KGaA v. Integra Lifesciences (2005) supported the view that this safe harbor provision applies when the infringing act, here the importation of Meril’s transcatheter systems, is reasonably related to FDA approval purposes like recruiting investigators for a clinical trial.

Judge Lourie’s dissented from the Federal Circuit majority on the application of Section 271(e)(1)’s language regarding importations of patented inventions that are “solely for uses reasonably related” to FDA approval. According to Lourie, under the plain language of the statute, Meril’s importation of the transcatheter systems raised a genuine dispute as to whether that importation was “solely” for uses related to the development of information for FDA market approval. Although Merck “endorsed a broad reading of [Section] 271(e)(1)’s safe harbor,” Judge Lourie found that Federal Circuit case law created a tension with the statutory language by disregarding intent and alternative commercial uses.

In its petition, Edwards Lifesciences argued that the Federal Circuit’s decision vastly expanded safe harbor protections under Section 271(e)(1). Under Edwards’ reading, an importation of a patented device for any non-regulatory use means that the importation is not “solely” for regulatory purposes. Judicial revision of this statute reads “solely” out of the statute, arguably upsetting Congressional intent to support developers during the lengthy regulatory process without aiding commercialization. Meril’s brief in opposition contends that this reading removes “reasonably related” from the statute, underscoring the undisputed finding that Meril’s system was never offered for sale at TCTC. Edwards’ reply, filed late December, argued that it had identified several non-regulatory uses, including the intended use of the imported devices to use in a simulator for conference employees.

Roku v. International Trade Commission: Software Investments Satisfies Economic Prong for Hardware Patent

California-based streaming media company Roku filed a petition for writ with the Supreme Court last August challenging the Federal Circuit’s precedential ruling last January, which affirmed the ITC’s determination that Roku had imported TV products into the U.S. that infringe Universal Electronics’ patent claims covering devices for translating communication protocols used by TVs and streaming video devices. In that ruling, the Federal Circuit found no error in the ITC’s determination that Universal Electronics satisfied the economic prong required to show a Section 337 violation through substantial domestic R&D investments into QuickSet technologies incorporated into smart TVs as QuickSet practices the patent claims at issue.

Roku’s petition urged the Supreme Court to find that the ITC had exceeded its Section 337 authority by finding that the entirety of Universal Electronics’ investments into unpatented, multi-purpose software was “with respect to the articles protected by the patent,” or by failing to consider whether such investments were “substantial.” Roku highlighted the ITC’s finding that the protected articles were Samsung TVs including processing devices and other hardware recited by asserted patent claims. Both Universal Electronics and the U.S. Solicitor General filed briefs in opposition, largely focusing on statutory readings and Federal Circuit case law underscoring that the domestic industry analysis looks to investments in exploiting intellectual property, not investments into the whole article practicing the patent.

GeLab Cosmetics v. Zhuhai Aobo Cosmetics: Ownership Dispute in State Court Stays Federal Trade Secret Action

As the Seventh Circuit recognized in its GeLab Cosmetics ruling last April, the trade secrets at issue in the federal case filed by New Jersey-based GeLab are closely related to an ownership dispute between Chen, the Chinese citizen owning GeLab, and Zhuhai Aobo in New Jersey state court. The Seventh Circuit affirmed the Northern District of Illinois decision to stay the federal proceedings, which alleged that Zhuhai Aobo stole information related to nail polish manufacture, under the Supreme Court’s abstention doctrine outlined in Colorado River Water Conservation District v. United States (1976).

GeLab’s petition for writ argued that the Seventh Circuit improperly applied Colorado River in finding that the state court’s determination of the ownership dispute, in which Zhuhai Aobo claims to own a majority of GeLab, would affect the validity of GeLab’s federal trade secret claims against Zhuhai Aobo. The possibility that the state court might not fully resolve the ownership dispute creates substantial doubt militating against a stay, GeLab claimed. In December, Zhuhai Aobo filed a brief in opposition arguing that a stay under Colorado River is appropriate even if the state court ruling won’t necessarily resolve the federal proceeding.

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