The decision means that drug companies could save millions in licensing costs when starting research on new compounds. It also means research that might have gone overseas, where patent rules are often less restrictive, will likely remain in the U.S.

Writing for the Court, Justice Antonin Scalia found that "safe-harbor" exemptions of existing law "extend to all uses of patented inventions that are reasonable to the development and submission of any information under the Federal Food, Drug & Cosmetic Act."

The ruling sets aside a lower court decision that ordered Germany's Merck to pay $6.4 million to Integra LifeSciences. Merck and its partner Scripps Research Institute used Integra's patented RGB peptide sequence to develop a drug that halts tumor growth.

The Supreme Court did not rule specifically on the issues between Merck and Integra and remanded the case to a lower court to allow Integra to argue its position under the Supreme Court's interpretation of the law.

Integra says the Court's exemption "does not globally embrace all experimental activity that at some point may lead to an FDA approval process" for specific new drug development. It contends that Merck started work with the RGB peptides as part of a basic research program for new drugs.

For its part, Merck declares the ruling a "victory" for itself, for patients waiting for better treatments, and for the whole biotech and pharmaceutical industry.