On Monday evening, November 1, 2010, David Kappos, Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, told the Dow Jones news service: “The USPTO at the present time is maintaining the status quo. We’re continuing with current procedures as they are.” This could set up a contentious and public policy battle between the United States Department of Commerce and the United States Department of Justice. This battle of agency titans — DOJ v. DOC — comes as a result of the Department of Justice filing an amicus brief in The Association of Molecular Pathology v. The United States Patent and Trademark Office, which actually does not take the side of the USPTO, but rather says that what the USPTO is doing is wrong. Thus, in an extremely odd twist the DOJ is supporting the plaintiffs’ against the United States Patent Office.
To be perfectly fair, it is true to say that the USPTO is just a nominal party, although named in the title of the complaint. The real dispute is between the American Civil Liberties Union (ACLU) and Myriad Genetics. The ACLU is forwarding the case on behalf of the plaintiffs and challenging certain patents owned by Myriad Genetics, which the ACLU claims were improperly granted by the USPTO. Therefore, while only a nominal party the practices and procedures of the Patent Office are on trial and are being challenged by the Department of Justice. Oddly, it is the DOJ that is supposed to defend the United States government, but rather has chosen to thrown the Patent Office and Department of Commerce under the proverbial bus.
Back on May 4, 2010, Director Kappos attended the Biotechnology Industry Organization’s (BIO) International Convention in Chicago, Illinois. Kappos spoke alongside of WIPO Director General Francis Gurry. During his remarks Kappos turned to the then recently issued district court decision in the ACLU challenge of the Myriad patents. Kappos said in part:
Starting with a patient blood sample, what Myriad does is they create hundreds of copies of the protein coding portion of the patient’s BRCA genes and then use these lab made copies of the DNA to determine whether the patient has any mutations associated with breast or ovarian cancer. The District Court held that the product claims were invalid under Section 101 of the Patent Act because according to the Court they covered a product of nature. This has a potentially very significant impact on the bio industry.
The USPTO has issued more than 20,000 patents claiming isolated DNA molecules, almost 4,000 of those which directly claim isolated human DNA encoding of protein. So there is a lot of intellectual property, probably much of it owned by companies represented in this room and probably most of it owned by companies represented at this conference that is already out there. The USPTO has also issued tens of thousands of patents on other types of isolated and purified chemicals all of which could be put at risk by the District Court’s decision.
We have for decades issued patents covering isolated and purified DNA on the scientific basis that an isolated snippet of DNA does not exist in nature in the way it is claimed in patents because naturally occurring DNA must be isolated, that is separated, from surrounding biological materials and purified. So your body simply does not contain isolated DNA; it’s not found in nature. By way of analogy, to say that an isolated, purified DNA sequence is a product of nature is like saying a silicon wafer of 99.9999% purity used in the microelectronics industry, which I am very familiar with, is a product of nature because, of course, silicon is found in the Earth’s crust. Of course, wafer grade silicon is not found in nature, we all know that. It requires an extremely intricate and extremely laborious purification process.
It has been the view of the USPTO and our reviewing courts that the purified version of a naturally occurring compound where the purified version does not exist in nature in a pure form is indeed eligible for patent protection. The USPTO’s guidelines in this area and the thousands of patents that we have issued in this area indeed foster a climate of great investment and innovation in the biotech industry for many years.
After the session ended some were disappointed Kappos did not go further, but how could he really? The USPTO is a party to the lawsuit, even if only a nominal party. Kappos’ remarks are extremely pro-innovation, pro-business and pro-patent. He eloquently explained the Myriad patent innovation, and correctly explained that many tens of thousands of patents, perhaps more, would be called into question if the district court decision were to be followed and become the law of the land. The loss of so many biotech and chemical patents would represent an enormous loss of asset value for a numerous companies, which would cripple or perhaps even kill some of those companies and shake the very foundation of the biotech and chemical industries. Furthermore, adoption of the district court rule would represent a 180-degree course change, which would infuse tremendous uncertainty into the most fundamental patent question that exists: what qualifies as patent eligible subject matter.
Uncertainty for business can be crippling, as evidenced by our current economic plight. The federal government, between the Treasury and Federal Reserve, is doing everything it can to pump money into the economy and still there is a real risk of deflation. Uncertainty causes businesses to think about survival long term and act cautiously in the short term, and causes individuals to do the same. There can be no more fundamental uncertainty to the innovation and patent community than calling into question what qualifies as patent eligible subject matter.
Unnecessary uncertainty is infused into this matter by the mere fact that the Department of Justice has officially taken a position that is directly opposite to the position of the Department of Commerce and which would, if followed, erase a tremendous amount of asset value from the books of many companies. This interstitial uncertainty is likely to make it difficult for some biotech and chemical companies to raise the funds they need over the short term to continue on as going concerns, which is critical given that some of these companies need to rely on investors for 10 to 12 years or more before they can stand on their own. That would lead to businesses scaling down, laying off workers and perhaps folding all together merely because of the chilling caused by the Department of Justice taking what appears to be an authorized Obama Administration opinion that is contrary to the policies advanced on a day-to-day basis at the USPTO.
Adoption of the DOJ approach and a ratification of the district court decision would not only spell doom for those companies innovating relative to isolated DNA and associated isolation/purification technologies, but would lead investors in the biotech and chemical fields to retreat from companies not directly engaging in such innovative research and development. The changing regulatory and legal climate, which would reverse 30 years of developed and well settled law, would almost certainly cause investors to look elsewhere to industries that are not experiencing the upheaval that would beset the biotech and chemical industries.
It is rare for the Department of Justice to take a position in a litigation that is contrary to well established law and articulate a preference for overruling controlling precedent and administrative interpretations of the operative statute. It is extraordinary when the positions urged by the DOJ supplant the views and interpretations of the regulating US agency, which itself is a party to the litigation. Astonishing.
The Department of Justice website explains the role of the Attorney General as follows:
The Attorney General represents the United States in legal matters generally and gives advice and opinions to the President and to the heads of the executive departments of the Government when so requested.
I am at a loss to see how the mission of the Office of the Attorney General can be satisfied by taking a position directly opposite to the position of the United States Department of Commerce. It would seem that there is extreme tension between two major agencies of the United States federal government. This type of tension, no doubt, exists behind closed doors in every administration, but when it comes out into the open and threatens one of our major US industries it is unbecoming and unacceptable. The United States should have a single, coherent position that results in a business friendly environment that fosters innovation and enables private investment to flourish. We shouldn’t need to worry about whether the policies and administrative agenda of an agency, such at the Department of Commerce by and through the USPTO, will be called into question by the Department of Justice. Aren’t the DOJ, the DOC and the USPTO all playing for the same team? Sadly, the answer seems no, and that is baffling to say the least.