The decision means drug companies can do much of the laboratory, animal and human testing needed to win approval of a drug even if the drug would infringe on the patent on another product. However, the new drug could not be sold until the patent on the other drug expired.
Justice Antonin Scalia, writing for a unanimous court, said that an existing exemption from patent infringement "provides a wide berth for the use of patented drugs" in developing other pharmaceuticals.
The decision reversed a federal appeals court ruling that the exemption should be interpreted narrowly.
E. Joshua Rosenkranz, the lawyer who argued for the victorious side, said the ruling gave drug companies a head start on developing medicines to be ready to sell as soon as the patents on other drugs expired.
"It gave enormous latitude to conduct the testing necessary to bring therapies to needy patients," Mr. Rosenkranz, who is with the Heller Ehrman law firm in New York, said in an interview.
Sarah Lenz Lock, a lawyer for AARP, a consumer group representing older Americans, also praised the decision, saying it would "speed new drugs to market and lower costs of drugs to consumers."
The case pitted Integra LifeSci-ences, a New Jersey company that had patented a class of compounds, against Merck of Germany, which had paid for a scientist to test some of the compounds for potential use as drugs. Integra sued Merck in 1996.
A jury ruled in 2000 that Merck had infringed on Integra's patents and ordered Merck to pay $15 million, which was later reduced to $6.4 million. The appeals court also sided with Integra. But the Supreme Court ruled for Merck, which is not related to the American drug company of the same name.
The Supreme Court sent the case back to the appeals court for reconsideration in light of the new ruling.
Mauricio A. Flores, a lawyer representing Integra, said the Supreme Court decision mainly reversed an interpretation of the law by a lower court but did not deal with the specific evidence in this case. He said Integra was still confident that the jury verdict that Merck had infringed would still be upheld.
"This case isn't over," he said. "We live to fight another day."
Mr. Rosenkranz, representing Merck, said the company expected to prevail.
"The Supreme Court pulled every one of the props out from under Integra's position," he said.
The closely watched case had split the pharmaceutical and biotechnology industries. Many big pharmaceutical and biotechnology companies submitted briefs on the side of Merck, saying that a narrow interpretation of the exemption from patent infringement would slow drug development.
The drug companies were joined in their argument by the Justice Department and by some consumer groups that often find themselves on the opposite side of issues from the pharmaceutical industry.
Backing Integra were many biotechnology companies that make patented equipment and chemicals used in drug research, as well as some universities, which often invent new research techniques.
They argued that granting a broad exemption from patent infringement would basically put them out of business since their products, which include sophisticated chemical testing machines and enzymes that manipulate genes and proteins, have little use outside of drug research.
Some lawyers for these companies also said it was hypocritical of drug companies, which constantly assert the importance of strong patent protection in spurring innovation, to argue that they should be permitted to infringe upon patents held by others.
The Supreme Court said in a footnote that this case was about research using patented drugs themselves, not about tools used to study those drugs. Therefore, it did not address whether drug companies could use research tools without worrying about patents.
"Research tools were not at issue and this decision isn't a license for people to infringe research tool patents," said Edward R. Reines, who filed a brief on behalf of two tool makers, Applera and Isis Pharmaceuticals.
Robert W. Esmond, a Washington lawyer whose firm filed a brief on behalf of another research tool maker, Vaccinex, said the decision "leads to uncertainty over whether or not those patents are enforceable."
The case revolves around a clause in the Hatch-Waxman Act of 1984, which set the ground rules for generic drugs. To enable generic drugs to reach the market as soon as the patent on the branded drug expired, the act permitted generic companies to make and test their drugs while the patent was still in force.
The clause permits drug companies to infringe on patents "solely for uses reasonably related to the development and submission of information" to the Food and Drug Administration. But it is not specifically restricted to generic drugs, so there have been questions about how far it extends.
The appeals court that handles patent cases ruled in 2003 that the exemption should be very narrow, covering, in effect, clinical trials but not earlier work like test-tube experiments to determine which of several compounds might be the best drug candidate.
But the Supreme Court ruled that the exemption applied to more than clinical trials.
"There is simply no room in the statute for excluding certain information from the exemption on the basis of the phase of research in which it is developed," Justice Scalia wrote in the 15-page decision.
He also wrote that the law "leaves adequate space for experimentation and failure on the road to regulatory approval," so that work on compounds that do not move forward into clinical trials can still be protected from infringement.
Still, the court said that basic scientific research on a compound, performed without intent to develop a drug, would not be covered. Some lawyers said that questions of what is covered may still have to be decided case by case. Sometimes, the distinction between a research tool and a drug compound, for instance, cannot easily be made.
"They are saying that this exemption goes only so far upstream," said Stephen B. Maebius, a patent lawyer at Foley & Lardner in Washington who represents pharmaceutical and biotechnology companies but was not involved in this case.
In the 1980's, a class of peptides, or small proteins, was discovered by scientists at the Burnham Institute in San Diego. Integra later obtained the patent rights to the peptides.
In 1994, David Cheresh, a scientist at the Scripps Research Institute, across the street from Burnham, discovered that a particular protein was involved in building blood vessels. So a compound that blocks the protein might be useful in blocking the blood supply to tumors.
It turned out that peptides similar to those discovered at Burnham did that. Merck paid Dr. Cheresh to test some of them and one is now in clinical trials to treat cancer.
The patent on the peptides is expected to expire before that drug comes to market.
