Medical Immunity Shield Withering for Doctors Skirting Patents

In this article for Bloomberg Law, Patricia Carson discusses the medical practitioner immunity clause in the patent act and what circumstances could allow a doctor or medical practice to have immunity from patent claims.

Biotech firm VetStem Inc. accused Regen Labs of infringing patents related to stem cell treatments. The clinic invoked immunity from patent infringement under the US Patent Act, but a California federal judge denied the effort.

It was one of two federal courts that rejected physician immunity claims in July, casting doubt over the breadth of medical clinics’ immunity and underscoring growing tensions between healthcare providers and medical research companies over practitioner’s protections from patent liability claims.

The decades-old immunity clause is designed to protect providers and clinics from patent infringement while they pursue innovative treatments. That status quo is facing challenges across the country: VetStem and other patent owners like Wave Neuroscience Inc. have fought providers’ use of the provision in five federal district courts in the last five years. Many of the suits filed prior to 2023 were dismissed voluntarily or by agreement, according to court records.

But Regen Labs appealed their immunity loss, placing the issue before the US Court of Appeals for the Federal Circuit. VetStem sought to dismiss the appeal, arguing the protection isn’t actually immunity, but a limitation on damages. Regen argued in September that its immunity was an issue of importance to the company, and doctors and inventors nationwide.

“This appeal presents the rare case where” the law’s immunity section is “squarely teed up for this court,” Regen argued.

Few medical providers and clinics have invoked the defense since the provision’s enactment in 1997, said Patricia Carson, a partner at Kirkland & Ellis LLP. Carson noted case law surrounding the defense is “pretty sparse.”

But this year VetStem employed the act in a trio of lawsuits accusing providers of acting outside the safeguard’s boundaries for treatment. The provision doesn’t cover providers if they use certain patented machines, chemical formulas or biotechnologies that lead to infringement.

Recent rulings endorsing VetStem’s argument against defendants’ immunity now span district courts. In his July ruling against Regen Labs, Judge Andre Birotte Jr. of the US District Court of the Central District of California noted a Texas judge’s order made a few days earlier which also rejected another medical clinic’s defense.

Medical practitioner-immunity is “distinct because it is not ‘an immunity from suit’ but rather a ‘defense to liability,’” Judge Mark Pitman of the US District Court for the Northern District of Texas said in an order denying Innovations Medspa PA’s argument in its dispute with VetStem.

The immunity provision is narrowly tailored to avoid abuse and those working in the medical industry can still be sued, said Carson.

In a hypothetical scenario, a doctor would have immunity for using a heart transplant method under the provision unless they used a patented device, said Lippes Mathias LLP partner Tod Melgar.

“If there is a best way to treat somebody who has a wound and it’s an emergency, you don’t want that doctor exposed to liability just for treating the condition,” Melgar said.

Immunity At Play

The provision was born, in part, out of a 1995 bill in the US House of Representatives which proposed excluding surgical and medical procedure methods from a statutory definition of patent eligibility, unless the treatment was performed by a machine or consisted of a combination of natural elements, according to Innovations Medspa’s April motion to dismiss.

While the medical community emphasized the need to shield providers from litigation, the pharmaceutical industry pushed back over concern that an outright prohibition would scuttle innovation. The conflict ultimately led to a compromise, now known as the immunity provision.

The US District Court for the Western District of Texas is also considering a medical clinic’s immunity defense in Wave Neuroscience’s May 2023 lawsuit alleging Brain Frequency LLC infringed its patents covering treatment for neurological disorders. The health care entity argued in May that its status gave it patent protections and the case is pending.

One of the earliest challengers to the exemption was inventor Ralph Lamson’s claim in June 2011 against the Department of Defense and other agencies that the federal government infringed virtual reality immersion therapy by assessing soldiers’ sensitivity to post-traumatic stress disorder at hospitals and clinics before their deployment.

The US Court of Federal Claims sided with the agencies in July 2014, stating the protection was only a defense to liability.

Eliminating Litigation Risks

Providers and inventors can each take steps to avoid litigation, according to Gregory P. Webb, a partner at Haynes and Boone LLP.

Inventors can draft their patent applications to preemptively defend against health care manufacturers, and not the providers treating patients with disputed tools.

The “gold standard” for patent applications includes covering claim limitations that apply to the product or device, and not its use, Webb said.

“We don’t even need to involve the medical practitioner,” Webb said. “Just the manufacture of it by a competitive company is the infringement.”

Webb said clinics can get ahead of potential lawsuits by having an agreement with their suppliers to cover any future legal costs associated with infringement allegations.

The Johns Hopkins University didn’t go after doctors in its June 2015 lawsuit in Delaware federal court, but instead accused medical supplier Alcon Laboratories Inc. of infringing a method for an ocular surgical technique and instruments.

Alcon argued the immunity provision protects it when shielding doctors from liability, but the court rejected the argument and adopted a magistrate judge’s April 2018 report, which stated Alcon may be liable for encouraging or contributing to a surgeon’s direct infringement.

The court’s ruling drove home what the provision represents. Manufacturers may still face infringement claims even if a doctor isn’t party to the suit, according to Carson.

“There’s still infringement and it can still be a component of indirect infringement just because the doctors wouldn’t be liable,” Carson said.