WASHINGTON – By June, the Supreme Court is expected to deliver an ultimate judgment in a lawsuit related to patent-exempted product research, and that decision is likely to reverberate throughout the biotechnology industry.

The big-picture issue is whether research into identifying new drugs, or evaluating their characteristics, is exempt from patent liability, or whether the exemption is limited strictly to research relevant to the FDA regulatory process.

A back story is the potential effect that the court’s decision may have on companies making tools for the biotech and drug discovery sectors.

The patents in question are related to a short tri-peptide segment of fibronectin called the RGD peptide. The sequence promotes cell adhesion to substrates in culture and in vivo. Medical device firm Integra LifeSciences Holdings (Plainsboro, New Jersey) holds the patents because better cell adhesion and growth are used in wound healing and biocompatibility of prosthetic devices.

The nine justices on Wednesday began hearing oral arguments from Integra LifeSciences Holdings and Merck (Darmstadt, Germany). Prior court rulings have favored Integra, which initially was awarded a $15 million judgment after a jury found that Merck’s research into the RGD peptide had violated some Integra patents.

Lee Bromberg, a Boston attorney whose firm is focused on intellectual property and, in part, medical research, call-ed the court’s decision critical “because it is aimed toward the question of how to provide an inventor with incentive,” while also allowing public disclosure.

Merck claims that its research was exempt from patent law and took its case to a federal appellate court, the U.S. Court of Appeals for the Federal Circuit in Washington, with that court upholding the lower court’s decision. Its interest stems from a discovery made at the Scripps Research Institute (La Jolla, California), which showed that the RGD peptide impacts angiogenesis. An agreement between those two parties focused on identifying drug candidates that might inhibit angiogenesis.

Merck has continued to fight under a portion of the Hatch-Waxman Act, which it has interpreted as allowing generic drug development to begin before patents expire.

Integra, on the other hand, claims that such research was not conducted for any eventual FDA review, in part because it was conducted in chicken eggs rather than under FDA-endorsed preclinical conditions for review.

Mauricio Flores, Integra’s attorney, therefore argued that the original jury judgment should be affirmed. But Joshua Rosenkranz, Merck’s lawyer, argued that the court should broadly interpret the exemption, since all of the company’s research efforts could eventually be used in FDA submissions. “There is no such thing as a pre-clinical study that has only one purpose,” he said.

Various interested companies have weighed in on the matter with amicus briefs, indicating how the case might affect broader industry concerns.

“There’s a concern that a ruling that would allow a research use exception could potentially hurt innovation in the tools industry, and ultimately we are concerned that that could hurt the scientific community,” said Alan Ham-mond, chief intellectual property counsel at Invitrogen (Carlsbad, California), which was one of several research tool companies that have backed Integra. “If there’s an exception to patent protection, [it] could hurt the incentive to innovate and create new tools that will ultimately be used by the research community,” he said.

Bromberg said the issue boils down to less money in the industry “if a much larger company that operates in the same space can help themselves to your patented crown jewel.” Primarily, investors will see less return, he said.

Opposing that view, Merck and its backers, such as Eli Lilly, Wyeth, Pfizer, Genentech and Biogen Idec, said their drug innovation would be stifled by a narrow ruling.

Daryl Joseffer, an assistant to the U.S. Solicitor General, said on behalf of Merck that the federal appellate court was incorrect in ruling that the exemption only applied to studies on a single compound destined for FDA review. “Companies can decide which compound to submit” for agency approval to move into the clinic based on previous preclinical studies on multiple related compounds, he said.

Rosenkranz, in his closing statements, said that no “rational drug innovator” would be able to move into the clinic without early stage research. Even if that young research isn’t eventually submitted, it is the impetus for many companies deciding to push forward.

In other legalities: ICU Medical (San Clemente, California) reported that it has settled the patent infringement suit that it filed against B. Braun (Bethlehem, Pennsylvania). The litigation was dismissed and terms were not disclosed.

Frank O’Brien, CFO of ICU, said the settlement serves to eliminate the future expenses posed by the litigation.

ICU makes medical connectors and custom intravenous systems, competing with B. Braun in that sector.