On April 4, 2011, the United States Court of Appeals for the Federal Circuit heard oral arguments in the case dubbed Association for Molecular Pathology v. United States Patent and Trademark Office. This case has been commonly referred to here and elsewhere as either the ACLU case or the Myriad Genetics case. Myriad Genetics is the patent holder on various innovations relating to isolated DNA comprising an altered BRCA1 DNA and various methods of screening for cancer built upon various observations of the altered BRCA1 DNA. The patents challenged are U.S. Patent Nos. 5,747,282, 5,837,492, 6,593,473, 5,709,999, 5,710,001, 5,753,441 and 6,033,857.
Essentially, the American Civil Liberties Union (ACLU), along with researchers, competitors of Myriad Genetics and consumers filed a lawsuit challenging the constitutionality of gene patents and argued that gene patents should not be granted because patenting a gene is the same as patenting something that exists in nature. While this argument did succeed at the District Court, it won’t succeed at the Federal Circuit. The District Court Judge fundamentally based his ruling on the fact that, as he understood it, Supreme Court precedent “establishes that purification of a product of nature, without more, cannot transform it into patentable subject matter.” First, this is truly an oversimplification of the purification issue and, second, it demonstrates an acute lack of understanding of the science involved.
The claims at issue in the challenge are for isolated DNA, which simply does not exist in nature. Myriad did not purify the DNA, they isolated the DNA, which required the breaking of bonds and resulted in a different structure with different properties than anything known to exist in nature. The fact that Judge Sweet was wrong on the law and wrong on the science doesn’t tell the whole story about what is at stake. On page 125 of his excruciatingly long decision he admits his “conclusion is driven by the overriding importance of DNA’s nucleotide sequence to both its natural biological function as well as the utility associated with DNA in its isolated form.” So in other words, these particular Myriad inventions are far too important and fundamentally innovative to have been patented. Thus, this case has appropriately been characterized as not only an assault on gene patents, not only an assault on the biotechnology industry, but as an assault on patents in general.
Returning to the oral argument, the three Judge panel of Judge Lourie, Judge Bryson and Judge Moore were assigned to the case. Since the Solicitor General’s office was granted argument time the Myriad representative was given double the time to argue the case. The arguments ran long, going approximately 1 hour and 8 minutes, and the panel was most definitely what we call a “hot court,” asking many questions.
Judge Moore was particularly interested in the issue of standing, questioning whether the plaintiffs even had the legal ability to challenge the Myriad patents in the first place. Procedurally, the plaintiffs filed a Declaratory Judgment Action. A federal court will have jurisdiction in cases where the patentee takes a position that puts the declaratory judgment plaintiff is in the position of either pursuing arguably illegal behavior or abandoning that which he claims a right to do. According to the Federal Circuit, jurisdiction is appropriate where the plaintiffs can demonstrate certain identified ongoing or planned activity where that party contends that it has the right to engage in the accused activity without a license. Thus, there are two prongs to the jurisdiction inquiry relating to a Declaratory Judgment Action. In its most basic formulation, first, the patentee must do something and, second, the the party bringing the Declaratory Judgment Action must be engaged in activity that would be arguably infringing, or at the very least be prepared to engage in such activity.
The two-prong Declaratory Judgment jurisdiction test came up over and over again. Myriad Genetics did send out letters to some of the plaintiffs, particularly the University of Pennsylvania, who did cease and desist. Judge Moore asked the attorney for Myriad, “The fact that Myriad said cease and desist 10 years ago, or 12 years ago; well they did. What reason do they have to think Myriad is not still feeling very much the same way?” Myriad’s attorney responded that the “last affirmative acts that Myriad took with regard to these patents were over 10 years before suit was filed and that is against Medimmune’s requirement of a real and immediate controversy.” Myriad’s attorney would later say that “the controversy has been brought to the courts many, many years after the fact.” He would go on to ask why wasn’t the case brought earlier if there was a real and immediate controversy.
Frankly, I’m not sure that the Judges on the panel were buying that the 10 to 12 year delay would prevent so-called first prong evidence, although it does seem rather compelling to me. Nevertheless, Judge Moore and Judge Bryson picked up asking the attorney representing the ACLU about standing, probing much deeper. Judge Moore pointed out that those who have the strongest evidence on the second prong have little or no evidence of the first prong and vice-versa. In fact, Judge Bryson pointed out that those with the best first prong evidence, namely the University of Pennsylvania, “have a stronger letter and weaker affidavits.” What Bryson was getting at was the fact that the two parties with first prong evidence did not assert in their affidavits that they were engaged in infringing activity or that they would begin infringing activities even if the ACLU challenge was successful.
The following exchange between Judges Moore, Bryson and the attorney representing the ACLU is enlightening on the standing issue:
ACLU: Under Medimmune I don’t think they have to be at risk of being immediately sued, or for that matter immediately prepared to engage in the behavior. What is relevant here is they are able to immediately being doing this.
MOORE: But we don’t know if they are willing. That’s the problem. There’s a million people that might be ready to do something, but if they are not willing to that doesn’t mean they have been injured by not being able to.
ACLU: Nothing says they are not willing.
BRYSON: If the threat goes away they basically have said “we would seriously immediately consider.”
MOORE: We have an “earnest desire to consider.”
BRYSON: Yes, that’s very qualified.
ACLU: Is there any doubt Myriad wouldn’t sue if the plaintiff’s start tomorrow?
MOORE: Do you not recognize the profound impact that would have on our patent system if anyone who was ready, willing and able to compete tomorrow could bring a DJ action against the patentee in any forum of their choosing without any affirmative act directed at all toward them by the patentee?
ACLU: If all the clients I represent start infringing tomorrow Myriad has not choice but to abolish its business or to sue somebody and that is precisely why we have standing here.
Perhaps the ACLU attorney didn’t realize what he was saying, but by admitting that Myriad may sue or may not sue and choose to go out of business, he has conclusively demonstrated that the plaintiff’s do not have standing. The ACLU lead plaintiffs have a real predicament relative to standing. It does not sound as if the Federal Circuit believed any single plaintiff could satisfy both prongs required to bring a Declaratory Judgment Action, and rather were trying to say we have some plaintiffs with first prong evidence and some with second prong evidence. Simply put, that dog doesn’t hunt, at least not under current law relative to standing. Thus, there seems a real chance that the entire case could be thrown out because no plaintiff has standing.
My statement above about the entire case being thrown out because there is no standing seems a stretch, although I would give it at least a 50-50 chance. I have heard others say 40-60 or less, because it would seem given the thousands of plaintiffs at least someone has standing, but it certainly wasn’t apparent during oral argument. The attorney for the ACLU was not able to identify any party who cleanly satisfied both DJ prongs. Notwithstanding, what seems perfectly clear is that the Federal Circuit will find that the consumers who are plaintiffs lack standing. This seemed obvious when Judge Moore asked the Myriad attorney perhaps the most friendly question of the argument, this exchange followed:
MOORE: [T]o reach individual people who want cheaper access to products seems to me to be so broad as to allow any person who wants a cheaper product in any case to sue. Gosh. Apple and Microsoft and everybody else would be sued by every consumer other there.”
MYRIAD: … If I want a generic drug that is cheaper, then I guess we don’t need Hatch-Waxman anymore. I can just go in and file my own Declaratory Judgment Action.”
Hatch-Waxman is the law that allows generic drug manufacturers an easier route to challenging patents owned by the brand name innovators.
Standing was not the only issue brought up at the oral argument, although it did continue to dominate much of the discussion. Eventually the Court got around to asking about the substance of the dispute, namely whether gene patents are allowable. The Myriad attorney said “Isolated DNA does not exist in nature, it has never existed in nature and never would have existed in nature except for human ingenuity and research.” There is absolutely no disputing this scientific truth, but that did not end the discussion, although it may ultimately win the day.
There was discussion of minerals and rocks, which is typical because the panel was probing the logical extreme of both parties’ arguments. Judge Lourie asked Myriad’s attorney at one point, “Isn’t the distinction that the mineral is still the mineral when it is attached to the rock and it is physically compressed but if’s not chemically joined as a different molecular substance, whereas your gene is distinctly different in the isolated state from what it is in situ?” Judge Bryson followed up asking, “Are we distinguishing between a mineral that has to be subject to a process that breaks covalent bonds between the mineral and some impurity that is not desired versus a mineral that has to be treated with a solvent that has to wash away those surrounding elements that are not wanted where there are no covalent bonds that are actually broken?” This started much discussion about the breaking of covalent bonds and how when that is accomplished you are dealing with a different chemical structure, making the mineral comparison wholly inappropriate to isolated DNA. It certainly seemed that Judge Lourie and Judge Bryson were on board with Myriad here, and while not as active in this particular line of questioning it did seem that Judge Moore was buying the distinction as well.
What would an oral argument be without analogies, right? Both the Myriad attorney and the ACLU attorney came through indeed. The Myriad attorney said at one point, “Imagine a baseball bat… only God can make a tree…” He was cut off with questioning, with Judge Lourie saying “only God being able to hit a 1 iron,” to which the courtroom erupted in laughter. Eventually the Myriad attorney returned to the powerful analogy saying that while a tree is not patentable the baseball bat has always been within the tree. Man coaxed out the baseball bat from the tree, and baseball bats are patent eligible subject matter. Thus, because what Myriad does is break bonds to isolate a narrow portion of DNA even if that narrow strand has existed in nature as a part of the totality of the DNA sequence the coaxing out of the isolated sequence is akin to the baseball bat. I liked this analogy and seems perfect for the situation.
The ACLU attorney choose to talk about kidneys and removing a kidney from a body, calling it an “isolated kidney,” which is not patentable. The kidney talk prompted Judge Lourie to quip “We don’t want any kidney problems.” The gallery again erupted with laughter. Not deterred by the light moment, the ACLU attorney said, “The fact that the surgeon used a scalpel instead of a chemical is exactly irrelevant.” This lead to the following double team of the ACLU attorney by Judges Bryson and Lourie:
BRYSON: I’m not so sure about that, and I think this gets to a really important issue in the case, a least for me… There are lots of chemicals — this touches a bit perhaps on the bat and the tree… but in a chemical setting. There are lots of complex molecules, which can be changed by lopping off some portion of the complex molecule and creating another molecule, which was in a sense embedded in the first molecule. All you’ve done is broken one or two covalent bonds and you created a molecule which (a) does not appear in nature by hypothesis and (b) may have functionality that is very different from the original. So why isn’t that at least analogous to the setting, whereas Judge Lourie has pointed out you are not cutting in the sense of getting a pair of tweezers or scissors, or for that matter a scalpel, but you are cutting by a chemical process that alters the chemical identity of the object that is being extracted.
LOURIE: Even if the functionality is the same, it is a different material because, as Judge Bryson pointed out, you’ve broken covalent bonds. If you’ve got on the body a genetic material of a [thousand] nucleotiedes and you make certain cleavages and pull one out containing 500, that is a different material.
The best the ALCU attorney could do was say, “With respect your honor, I think not.” In any event, Judge Bryson’s question including tweezers was not by accident. Earlier the ACLU attorney continually tried to say “all Myriad does is isolate the gene.” Judge Lourie was having no part of that minimization of the innovation, saying “well that’s not so easy, you don’t just go in there, it’s not just sitting there.” This lead the ACLU attorney to make the outlandishly naive comment: “If I tomorrow invented a way to take a pair of tweezers and simply pull a gene out I would have infringed on this patent.” Judge Lourie responded: “You say ‘pull it out’ as if it is sitting there next to these other materials… but it’s not just sitting there. This isn’t just research by tweezers.”
Judge Lourie saying that the Myriad innovation isn’t research by tweezers was easily the most memorable line of the oral argument, not to mention dead on accurate. It kind of makes you wonder whether the ACLU attorney really had a clue about what he was arguing. Sure, the isolated kidney argument was clever, but as Bryson and Lourie pointed out it is not on point due to the different chemical structure of the isolated DNA versus the same structure in an isolated kidney as in a non-isolated kidney. But pulling out a gene with tweezers? That has to make you scratch your head and wonder whether the ACLU attorney was really aware of what DNA actually is.
Last up, at least before rebuttal, was the Solicitor General’s representative, who was there not to take the side of the Patent Office but rather to advocate for the overturning over 3 decades of well settled case law, including one particularly old case by the nearly revered jurist Learned Hand. I got the distinct impression that the government attorney thought he was all that plus a bag of chips, clearly with an attitude that the DOJ knows best, the Patent Office is flat wrong and needs to be reigned in, and whether he wanted to send the message or not was really questioning the competence of the Federal Circuit. The government attorney tried to explain that Supreme Court precedent clearly proves his position correct, despite the fact that no panel of the Federal Circuit has come close to ruling that, despite dealing with these cases all the time. I sensed a healthy amount of unbecoming arrogance.
Indicative of the near hostility between the panel and government is this exchange between Judge Moore and the government attorney, with Judge Moore probing the logical extreme of the government argument that isolated DNA is not patentable because it exists in nature:
MOORE: Part of my concern is in the bigger picture. What about B-12, what about antibodies, what about, what about, what about. I mean there are a million things I could thrust out at you right now. Antibodies exist in nature. Your body will produce them, but when you inject a little bunny and you make them product the antibodies so you can inject them in a human being later on those antibodies [under your argument] are not patentable, but we have all these cases, granted very old cases, but cases saying those things are patentable.
* * * * * *
US: This is not a dramatic theory that undoes things.
MOORE: You say it is not a dramatic theory that undoes things, but the PTO has been allowing these patents for 35 years. I think this is a pretty dramatic theory that would undo a lot of existing patents.
US: The PTO… has granted patents for isolated DNA. Now the vast majority of those patents are for cDNAs, recombinant DNAs, process claims and the like.
MOORE: But they have guidelines and the guidelines clearly address this point and the PTO guidelines conclude that the very thing you are arguing now is not patentable subject matter are patentable subject matter…
Ultimately the government attorney would say that the PTO is wrong, and Judge Moore would go on to question whether the government position should be given much, if any, consideration given there is a split between agencies in the Executive Branch. The Department of Justice saying these things shouldn’t be patentable and the Department of Commerce, by and through the USPTO, saying that they should be patentable.
The argument was fascinating, and I see nothing that changes my mind in the outcome. Initially after Judge Sweet issued his decision I wrote Hakuna Matada, the ACLU Gene Patent Victory Will be Short Lived. I see absolutely nothing to change my mind after this oral argument. The only thing that remains to be seen is if the entire case is thrown out on standing issues. If that happens I look for the panel to nevertheless address the substance of the arguments in a belt and suspenders approach, thereby making it much more difficult for the Supreme Court to take the case and find a multiplicity of errors requiring reversal.
I will, however, say this. I wish that Myriad had made a bigger deal about the alleged research threat, both in the case and in the court of public opinion. When I was in Seattle at the BIO IP Counsels Meeting last week Richard Marsh, the Vice-President and General Counsel of Myriad said a number of things I was unaware of and I have been following the case quite closely. Myriad has been alleged to have shut off research and would sue everyone that did research. The facts tell a different story. There have been over 8,000 articles on the BRAC1 isolated gene, with some 18,000 researchers participating in writing those articles. In order to get the data for those articles the Myriad innovations had to be practiced, yet Myriad never took any action against those researchers who clearly engaged in activity covered by the claims. That inconvenient fact should have been used in the case and in the court of public opinion to demonstrate that this has never been about research, despite what the ACLU wants to pretend.