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Inside Medical Devices

Updates on Developments for Medical Devices from Covington & Burling LLP

Recent Trends in Medical Device Patent Litigation at the ITC: Part 3

Posted in Intellectual Property

Our prior posts (here and here) described the basic contours of a section 337 investigation and how section 337 has been used to challenge alleged patent infringement by imported medical devices.  This final post in the series looks at the ITC’s treatment of remedy issues and an overall assessment of how medical device cases at the ITC have turned out.

Once the ITC finds a violation of section 337, it must consider whether to issue a remedy.  The principal remedy the ITC can provide is an exclusion order — an order to U.S. Customs and Border Protection to block future infringing imports at the border.  The ITC cannot award damages for past infringement. 

Before the ITC can issue a remedy in a section 337 investigation, however, it must decide whether exclusion of imported products found to be infringing would be consistent with the public interest.  While the majority of section 337 investigations do not present public interest issues, a few do.  In recent years, the ITC has endeavored to identify early in the process the cases that are likely to present serious public interest issues, so that the administrative law judge can take evidence and assemble a record for consideration by the Commissioners.  Since these early identification procedures were adopted, the assigned ALJ has been asked to take evidence on the public interest in about 20 percent of section 337 investigations. 

For cases involving medical devices, however, the referral rate is 50 percent — not surprising when one of the public interest factors the Commission must consider is whether exclusion of a product would be detrimental to the public health and welfare.  Indeed, one of the only three cases since the enactment of section 337 in which the ITC found a violation but denied a remedy based on public interest concerns involved medical devices — specialized beds for treating burn victims.  Because the ITC decides whether to refer public interest issues to the ALJ within 30 days of a new complaint being filed, medical device companies named as respondents in ITC complaints need to act quickly to evaluate the potential benefits of seeking such referral.

Even though section 337 investigations move quickly, with trials scheduled for 8-10 months after institution, fewer than a third of medical device cases go to trial.  The ITC reports that between 2006 and 2014, section 337 investigations had an overall settlement rate of approximately 46 percent (including investigations terminated based on a settlement agreement and those terminated based on a consent order).  Among the 18 medical device cases that have been completed since 1996 (2 are still active), 50 percent have concluded based on a settlement or consent order.  An additional 20 percent of cases ended with withdrawal of the complaint.  Only 3 cases went to trial, with one more pending.

 When it comes to outcomes, the ITC is an even playing field.  Overall, section 337 investigations involving medical devices ended with an outcome that can be characterized as favorable to complainant (finding of violation on the merits, default, or consent order) about a third of the time; another third can be characterized as favorable to respondent (finding of no violation, withdrawal of complaint); and the final third ended in settlement.  With no statistical advantage to either side, thorough preparation and careful attention to the unique features of ITC practice are the keys to success.

Section 337 presents both pitfalls and opportunities for medical device companies.  Careful planning by complainants and expeditious but informed strategic decisions by respondents are the best ways to take advantage of the opportunities and avoid the pitfalls.  Keeping up with the trends in medical device cases at the ITC is a key step in the right direction.



UK Data Protection Regulator Surveys Use of Smart Medical Devices

Posted in Device Regulation in Europe, Medical Information Technology, Privacy

The UK Information Commissioner’s Office (ICO) has launched an informal survey of current practices relating to the use of data-enabled medical devices and apps.

The short and anonymous survey explores whether organisations have put in place specific policies and procedures, asset registers, IT security requirements for medical device procurement policies, information governance and incident response processes, and an “end of life” policy for defunct/decommissioned devices.

It also asks high-level questions about the technology being used, such as whether the devices can connect to the Internet, and about the use of medical apps, mobile phones, tablets, and dictaphones.

Medical devices, which under EU law include both hardware and software being used for medical purposes, are becoming increasingly smart, and nowadays can generate or process significant quantities of very sensitive data about an individual’s health.

We’re increasingly seeing data protection and medical device regulators trying to get to grips with how to regulate e-Health.  Hot topics range from wearable devices and the Internet of Things, to “software as a medical device” (SaMD), a broad category of “medical device” that can includes mobile or desktop apps — or even spreadsheets.

As e-Health gets smarter, medical device and data protection regulators are increasingly going to find themselves having to regulate different and sometimes overlapping aspects of the same technology. Working together harmoniously will be an important challenge.

What’s more, the EU is currently hard at work revising the regulatory frameworks around both EU data protection and medical devices.  As a result, regulators, businesses and healthcare organisations across the EU are likely to face significant changes in the compliance environment in the not-so-distant future.

As new rules and technologies emerge, regulators will have to be well-informed and sensitive when it comes to regulating the healthcare sector, to avoid hindering patient care and medical progress with impractical, ill-informed attitudes and guidance.

If these issues are important to you, we strongly encourage you to follow both our InsidePrivacy and InsideMedicalDevices blogs for coverage of the latest developments in privacy, data protection, and medical device regulation in the EU, U.S., China, and elsewhere.

Steps toward More Harmonized Regulation of Software as a Medical Device: New IMDRF Policy Position

Posted in Medical Information Technology, mobile medical apps

On September 18, 2014, the International Medical Device Regulators Forum (IMDRF) approved a potentially significant policy position regarding Software as a Medical Device (SaMD), entitled Software as a Medical Device:  Possible Framework for Risk Categorization and Corresponding Considerations (IMDRF/SaMD WG/N12FINAL:2014).  The policy was put together by the IMDRF’s SaMD working group, led by an FDA official and composed of regulators from Australia, Brazil, Canada, China, France, Japan, and Sweden, plus industry groups (such as EUCOMED, AdvaMed, DITTA and the GMTA) and representatives from certain interested companies.

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Recent Trends in Medical Device Patent Litigation at the ITC: Part 2

Posted in Intellectual Property

Our previous post described the recent growth in section 337 patent disputes at the ITC involving medical devices.  This post explains the key issues involved in a section 337 case and how they get decided.

To prove a violation of section 337, a complainant must show three things:  (1) that articles are being imported into the United States; (2) that those articles infringe complainant’s patent(s); and (3) that the complaining company or its licensee has made sufficient economic investments in exploiting its patent in the United States to satisfy section 337’s definition of a “domestic industry.”

In the case of medical devices, importation is generally not difficult to prove.  There is no minimum dollar value of imports, and even a few units imported for testing or for demonstration at a trade show can suffice.  In section 337 litigation overall, the most common nationalities of respondent companies and/or their accused products are China and Korea.  For medical device products, in contrast, the vast majority of respondents are located and produce their accused products in Europe, Japan, Canada, and Israel.  Since 1996, only three investigations have involved medical device products made in China:  birthing simulators, adjustable height beds, and CPAP machines.

The legal standards for proving patent infringement at the ITC are virtually identical to those applied by judges in federal district court, and almost all the defenses a company accused of patent infringement can raise in district court can also be raised by a respondent at the ITC.  What is different is the process.  Discovery at the ITC moves very quickly, and cases go to trial in less than a year.  Instead of a judge and jury, patent cases at the ITC are heard by an ITC administrative law judge who is an expert in section 337 proceedings and then reviewed by the six Commissioners.  The procedural rules are different than those in district court, meaning even experienced patent trial counsel need help from an ITC litigation expert in trying a case under section 337.

Perhaps the most unique aspect of a section 337 case is the domestic industry requirement.  While a medical device company does not have to show that its product is 100 percent U.S. manufactured, it does have to show a significant U.S. investment in production, R&D and engineering, or licensing of a product that practices the patented invention.  Mere ownership of a U.S. patent is not enough.

While a lively debate continues over whether the ITC is a favorable forum for non-practicing entities (companies that own patents but do not use them to produce products), publicly available information suggests that non-practicing entities represent a much smaller share of complainants in investigations involving medical devices than in section 337 investigations generally.  The ITC estimates that about 20 percent of complaints since 2006 have been filed by NPEs, of which about half were filed by patent assertion entities (sometimes called “patent trolls”).  Among 20 medical device cases instituted since 1996, only one appears to involve a non-practicing entity.  In all the other cases, the complainant manufactured its product wholly or in part in the United States, by itself or through contractors, or relied upon domestic warranty and repair or other production-related activities recognized by the ITC.  This means early evaluation procedures developed by the ITC to quickly dismiss complaints based on non-meritorious domestic industry claims may be of limited use to medical device companies responding to section 337 complaints, if these trends continue.

After trial, the ALJ makes an initial determination of whether there is a violation of section 337 and, after review, the Commissioners make a final determination.  Our next post in this series will look at the ITC’s treatment of remedy issues and an overall assessment of how medical device cases at the ITC have turned out.


Custom Device Exemption Remains Narrow, but FDA’s Final Guidance Addresses Industry Concern About “Device Type” Definition

Posted in FDA Device Regulation

FDA announced the availability of its final guidance on the “custom device exemption” on September 24, 2014 and held a webinar on this topic on October 14, 2014 (the video for this webinar can be found here and the transcript here).  The final guidance contains several changes from the draft guidance (see our blog on the draft guidance and our Law360 article).  Most significantly, FDA has broadened its interpretation of “device type,” thereby reducing the severity of the statutory limit of five custom devices per “device type” per year.

Under section 520(b) of the Federal Food, Drug, and Cosmetic Act (FDCA) (21 U.S.C. § 360j(b)), custom devices are exempted from FDA’s premarket approval and clearance requirements (but not other device requirements).  The custom device exemption was included in the 1976 Medical Device Amendments, but was significantly changed when Congress enacted the Food and Drug Administration Safety and Innovation Act (FDASIA) in 2012.  As discussed in our FDASIA client alert, FDCA § 520(b) currently provides that a custom device must meet the following criteria:

  • Be created or modified to comply with the order of a physician;
  • Deviate necessarily from a performance standard or requirement for cleared or approved devices;
  • Not be generally available in finished form in the United States;
  • Be designed to treat a unique pathology or condition that no other domestically available device can treat;
  • Meet the special needs of a physician/patient;
  • Be assembled from components or manufactured on a case-by-case basis to accommodate the unique needs of the physician or patient;
  • Be “for the purpose of treating a sufficiently rare condition, such that conducting clinical investigations on such device would be impractical.”
  • Production must be “limited to no more than 5 units per year of a particular device type.”

Uncertainty over the scope of these limitations has caused considerable anxiety among medical device firms.

Most critically, firms have wondered:  What is a “device type”?  Is it a narrow or a broad category?  Incorporating comments from industry, the final guidance creates a flexible standard for determining whether devices constitute different “device types.”

Like the draft guidance, the final guidance defines “device type” with reference to the definition of “generic type of device” in FDA regulations at 21 C.F.R. § 860.3(i).  In wording identical in the regulation and guidance, a generic device type is:

“a grouping of devices that do not differ significantly in purpose, design, materials, energy source, function, or any other feature related to safety and effectiveness, and for which similar regulatory controls are sufficient to provide reasonable assurance of safety and effectiveness.”

Unlike the final guidance, the draft guidance had further limited “device type” to devices with “common design characteristics and indication/intended use, such as those devices defined by an FDA classification regulation or product code” (emphasis added).  Industry reacted strongly to this supplemental language about FDA classification regulations and product codes.

For example, AdvaMed, the largest trade association of medical device companies, submitted a comment on the draft guidance in which they argued that this additional language would sweep too broadly and undercut the purpose of FDASIA.  As AdvaMed explained, a single FDA classification regulation or product code may encompass different device types with different compositions and functions.  AdvaMed argued that limiting manufacturers to five products within a single FDA classification regulation or product code would drastically reduce the ability of manufacturers to meet the needs of patients with unique conditions.  AdvaMed provided the example of FDA code KWP (registration number 888.3050), which includes a posterior cervical spine system, iliac screws for the lumbar spine, and pedicle screws for the lumber, thoracic, and sacral spine — different uses for different parts of the body.

Addressing this concern, the final guidance omits references to FDA classification regulations or product codes in its definition of “device type,” and instead adheres to the regulatory definition of generic device type.  This regulatory definition is flexible and allows for consideration of different materials and function and other features related to safety and effectiveness in deciding whether devices fall within the same “device type.”  Although much uncertainty remains, FDA has backed away from its proposal to use product codes as a criterion for defining device types.

During the webinar’s question-and-answer session, FDA explained that the five-per-device-type limit is also specific to the disease.  For example, a manufacturer could make five knee device systems per year to treat one disease of the knee and five to treat another knee disease, provided both knee diseases are sufficiently rare.

Additionally, the final guidance provides that an unused custom device is subtracted from the 5-device-per-year tally if it is destroyed by a physician, whereas only devices returned to the manufactured could be subtracted from the tally under the draft guidance.

Like the draft guidance, the final guidance encourages physicians to consider FDA’s guidance on “compassionate use,” suggesting that devices that fail a criterion for custom devices may still qualify for “compassionate use.”  This would be applicable to unapproved and uncleared devices when the use complies with the investigational device exemption regulations.

FDA’s final guidance also describes the content of the Custom Device Annual Report that must be submitted to FDA.  FDA is asking for detailed information on patients, physicians, and the justification for the custom device.  Physicians and manufacturers should note that FDA continues to interpret the custom device exemption narrowly and will be monitoring uses under the annual reporting requirement.

Recent Trends in Medical Device Patent Litigation at the ITC — Part 1

Posted in Intellectual Property

Over the past 20 years, the number of patent infringement disputes filed annually at the U.S. International Trade Commission (ITC) has more than tripled.  Although typically associated with smartphones and semiconductor chips, the ITC has also seen quite a few disputes involving medical devices.  Important trends are emerging in medical device patent litigation at the ITC.

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Federal Jury Sides with J&J’s DePuy In First Pinnacle Hip Implant Trial

Posted in Products Liability

Johnson & Johnson secured a sweeping victory last week in the first bellwether trial in the multidistrict litigation relating to DePuy’s Pinnacle system metal-on-metal hip implant device.  The plaintiff argued that the components of the device could grind together causing pain, swelling, and the introduction of toxic metal fragments into the bloodstream, and that DePuy’s defective design of the device and/or failure to provide adequate warnings about the device caused her injury.  After a seven week trial and almost two days of deliberations, the jury rejected the plaintiff’s claims of negligence, defective design, failure to warn, and unfair and deceptive acts or practices under the Montana Consumer Protection Act.  Among other things, the jury concluded that the plaintiff’s injuries were not caused by a failure on DePuy’s part to act reasonably with respect to the design of and warnings about the Pinnacle metal-on-metal hip implant.

Last year, DePuy agreed to pay $2.5 billion to settle more than 7,000 lawsuits over a different hip implant device, the ASR device, which it recalled in 2010, but has chosen to take the Pinnacle lawsuits to trial.  DePuy ceased selling the Pinnacle device in 2013.  At trial, DePuy argued that the device was well designed and safe when implanted correctly.  According to DePuy, it was not the design of the implant, but the incorrect positioning of it by doctors that caused the metal to wear unnecessarily, and that a small number of surgeons implanting the device at the wrong angle had skewed the failure results for the device.  Furthermore, DePuy had warned doctors that positioning the implant incorrectly could damage tissue.

The bellwether case, Herlihy-Paoli v. DePuy Orthopeadics Inc., 3:12-cv-04975 (N.D. Tex.) was tried in the U.S. District Court for the Northern District of Texas before Judge Ed Kinkeade.  There are currently 6,500 pending cases relating to the Pinnacle device.  The next trial in the litigation is scheduled for January.

FDA Finalizes Guidance for Management of Cybersecurity in Medical Devices

Posted in FDA Device Regulation, Medical Information Technology

The U.S. Food and Drug Administration (“FDA”) has increasingly focused on promoting cybersecurity because compromised medical devices can pose a risk to patient health as well as the confidentiality of personal medical information.  On October 2, 2014, FDA issued final guidance on the content of premarket submissions for the management of cybersecurity in medical devices.  The final guidance sets forth recommendations for the design and development of medical devices, as well as the preparation of premarket submissions, that are intended to reduce the likelihood that medical devices will be compromised as a result of inadequate cybersecurity.

Although the final guidance is not binding, it is broadly applicable—the recommendations apply to all premarket submissions except investigational device exemption applications, as well as to requirements under the Quality System Regulation.  The guidance supplements other standards generally applicable to software included in medical devices, as well as specific standards addressing cybersecurity risks in medical devices containing off-the-shelf software.  The final guidance also adopts the National Institute of Standards and Technology’s core cybersecurity framework, which FDA recently agreed to promote in a Memorandum of Understanding with the National Health Information Sharing and Analysis Center.

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FDA Publishes Draft Guidances on Regulatory Framework for Laboratory Developed Tests for Public Comment

Posted in FDA Device Regulation

On October 3, 2014, FDA announced in the Federal Register the availability of a draft guidance titled “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)” and the availability of a companion draft guidance titled “FDA Notification and Medical Device Reporting for Laboratory Developed Tests (LDTs).”  The draft guidances, if finalized, would implement a new regulatory framework for oversight of LDTs.  Both draft guidances will be open for public comment for 120 days following the announcement.

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Recent Settlement Highlights Importance of Tracing Country of Origin When Selling Medical Devices to the U.S. Government

Posted in Government Contracts

Earlier this month, a medical device company settled allegations that it had violated the False Claims Act (FCA) by improperly certifying that it had complied with the Trade Agreements Act (TAA) when providing the U.S. Government with end products manufactured in Malaysia.  The TAA requires certain end products sold to the U.S. Government to be made in the United States or a country covered by a trade agreement with the United States.  End products manufactured in Malaysia, as well as India and the People’s Republic of China, are not compliant with the TAA.

The settlement resolved litigation that began in 2008 when a former employee alleged that the company sold orthopedic devices on a federal supply schedule administered by the U.S. Department of Veterans Affairs (VA) after purchasing the devices from a third-party manufacturer in Malaysia.  Although the TAA only applies to end products sold to the U.S. Government if the value of the end products meets a specific monetary threshold, the VA has taken the position that all end products sold on a federal supply schedule must comply with the TAA because the orders placed under a federal supply schedule are expected to meet the applicable threshold.  As a result, different country-of-origin requirements may apply to medical device manufacturers and suppliers depending on whether they sell their products to the U.S. Government on the open market, through a federal supply schedule, or under a separate federal contract.  The company at issue had used multiple sales mechanisms to provide end products to the U.S. Government.

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