On the very same day that the U.S. jobs report shows unexpectedly weak growth, the Federal Court of Australia issued a ruling directly opposite to the ruling rendered by the United States Supreme Court relative to gene patents. In Yvonne D’Arcy v. Myriad Genetics, Inc., the Federal Court of Australia ruled that Myriad’s claims to isolated DNA are patentable under the laws of Australia. That is the correct ruling, and it is the ruling the U.S. Supreme Court should have reached in Association of Molecular Pathology v. Myriad Genetics. As the patent eligibility laws of the U.S. become increasingly inhospitable to high-tech innovative businesses we can expect more job losses and worse news for the U.S. economy on the horizon.
Biologic medicines are fundamentally different from traditional “small molecule” therapies, presenting a host of new challenges in the design and enforcement of the intellectual property (IP) architecture that will protect them. Protecting the intellectual property of biologics is complicated, difficult, and essential to the future of medicine. This new frontier is also one of the remaining hurdles in the Trans-Pacific Partnership (TPP) Trade Agreement negotiations. The debate over protecting biologics focuses on a proposed twelve years of data exclusivity and the consequences this will have for international trade, global public health, and access to medicines.
The nuances of producing biologics greatly complicate the logistics of protecting their intellectual property, making patents alone inadequate for safeguarding their IP. Data exclusivity protection allows for a period of time following marketing approval during which competing firms may not use the innovative firm’s safety and efficacy data, from proprietary preclinical and clinical trial results, to obtain marketing authorization for a generic version of the drug. From the moment when the compound first shows medicinal promise, data is generated and compiled, a process that is both expensive and time consuming. Data exclusivity provides the innovative firm with a period of protection for their investment in clinical trials and data collection, regardless of the length of time required to bring the drug to market.
When the Supreme Court hands down a decision bearing on a hotly contested area of law, it means the work has just begun for any agency tasked with administering its consequences. Last term, the Court rendered such a decision in Association for Molecular Pathology v. Myriad Genetics, adding a new wrinkle to the already confounding question of patentable subject matter under §101 of the Patent Act.
As companies consider current cases related to patents before the Supreme Court, they would be wise to learn from the challenges the USPTO faced in implementing the Myriad decision. And for the reasons set forth below, we believe that the USPTO and the entire business community are well served by engaging in rigorous public debate about the guidelines that should be established to implement the decision from the Supreme Court.
“It’s never good news when your area of the law is on 60 minutes,” says Courtenay Brinckerhoff, partner at Foley & Lardner LLP at the 2013 AIPLA Annual Meeting. It’s no secret that the Association for Molecular Pathology v. Myriad Genetics case had more than its fair share of media buzz. The decision, holding that isolated DNA was not patent eligible, left many of us wondering how to best address the needs of our biotech clients going forward.
The main claims at issue in this case are the isolated DNA claims. Claim one is broad enough to cover naturally occurring DNA, and claim two is specific to synthetic DNA. In 2010, the district court came out with a decision holding that DNA was not patent eligible subject matter, which was a bit of a shock to us. Most of the rationale was focused on the idea that DNA embodies information, and regardless of what the actual molecule looks like, Myriad’s claim is for that defining characteristic. The case went up to the Federal Circuit where former chemist Judge Lourie held that technically the isolated DNA is different than natural DNA, because you have to break the covalent bonds to isolate the methylated gene. There were, of course, also policy reasons to uphold the claim like the reliance of the biotech industry on the USPTO already having granted these sorts of patents for nearly 20 years.
Ten years ago if you said that patent eligibility would become one of the most important, hotly debated issues in the patent field most in the industry probably would have thought you simply didn’t know what you were talking about. Five years ago some saw the issues percolating, but still many in the trenches with their day-to-day practice life would likely still have raise a cautious eyebrow and questioned why you thought even the Supreme Court might turn its back on a solid generation of well established patent law. The tone was perhaps cautious, but most couldn’t imagine that the Supreme Court and the Federal Circuit would cease their expansive view of patent eligibility.
Oh how times change!
Today, after several years of substantial turmoil, patent eligibility in a variety of economically significant technologies is extremely uncertain, including software, natural products, medical diagnostics and personalized medicine. It is with great irony that one of the few things we know with any degree of certainty is that business methods are patent eligible. We likewise know that at least some cDNA is patent eligible, except that man-made cDNA that happens to be identical to what occurs in nature. Of course, that raises more questions than it answers.
Last month a coalition of farmers, seed sellers, and agricultural organizations (i.e., hereafter “farmers”), recently received an unfavorable but hardly shocking decision from the United States Court of Appeals for the Federal Circuit. See Organic Seed Growers v. Monsanto. These farmers filed a declaratory judgment action seeking a determination of non-infringement and invalidity with respect to twenty-three patents owned by Monsanto Co. and Monsanto Technology, LLC (collectively, “Monsanto”). The twenty-three patents-in-suit relate to technologies for genetically modifying seeds. The patented technologies are used to incorporate various traits into soybeans, corn, and other agricultural crops, including traits conferring resistance to the herbicide glyphosate (the active ingredient in Monsanto’s product Roundup).
The farmers do not want to use or sell transgenic seed incorporating Monsanto’s technologies. They also oppose the use of glyphosate and do not use it on their crops. So what is the problem then? If they don’t want to infringe and don’t plan on infringing Monsanto patents how could they possibly support a declaratory judgment action against Monsanto? They say they were concerned that if they do indeed become contaminated by transgenic seed Monsanto may come knocking and assert claims of infringement despite the fact that they have done nothing affirmative, unlike farmer Bowman, to infringe the Monsanto patents.
Such a generalized fear, without any preparations to engage in potentially infringing activity, has never been enough to support declaratory judgment jurisdiction. Neither would it be found to support declaratory judgment jurisdiction in this case simply because Monsanto is one of the most hated corporations in the world. Thus, unrealistic hatred and irrational fear of a patent holder, as it turns out, is insufficient to support declaratory judgment jurisdiction.
UPDATED June 13, 8:24pm ET (see comment #15 & #19)
Earlier this morning the United States Supreme Court issued its much anticipated ruling in Association of Molecular Pathology v. Myriad Genetics. Justice Thomas wrote for a a nearly unanimous Court, only Justice Scalia wrote separately and he concurred in part and concurred in the judgment. The decision is not long, and approximately half of the decision is background, yet at the end of the day much damage has been done to the biotechnology industry, the medical industry and the patent system. Indeed, the assault on patents continues.
According to Todd Dickinson, Executive Director of the American Intellectual Property Law Association, the outcome was fairly predictable given the oral argument, although 9-0 was a bit surprising. Dickinson told me via telephone earlier today the the decision itself is disappointing because it “keeps framing an anti-patent narrative.” He went on: “Patents are terribly useful to incent innovation and necessary to provide funding. If we undermine the patent system further I think we will be shooting ourselves in the foot.” I couldn’t agree more!
Justice Kagan delivered the opinion for a unanimous Supreme Court.
Vernon Bowman is a 75-year-old, recently bankrupt small farmer in Indiana. Monsanto is a multinational corporation that is revered in the industry for its innovations in the field of genetically modified seed technologies, but equally reviled in the American heartland for its staunch protection and ruthless enforcement of its patent rights against small farmers. In a unanimous decision, the Supreme Court sided with Monsanto in finding that Bowman had infringed Monsanto’s patents on genetically altered soybean seeds. This would translate into tens of thousands of dollars in liability for the small farmer. Those reacting purely emotionally to the story will be inclined to sympathize with the small farmer. And recalling Steinbeck’s Grapes of Wrath, they would lament, “The small farmer was weary and frightened because he had gone against a system he did not understand and it had beaten him.” However, the Court’s decision is merely a classical application of basic patent principles.
For years, Vernon Bowman purchased Roundup Ready® soybean seeds from a Monsanto affiliate each year for his main crop of the season. The purchase required Bowman’s assent to a licensing agreement, which prohibited Bowman from saving any of the seeds for replanting. For his late-season second crop, however, Bowman would attempt to skirt Monsanto’s licensing agreement and instead purchase commodity soybean seeds from a grain elevator. The commodity soybean seeds are normally tagged for human or animal consumption only. Anticipating that a batch of commodity soybean seeds would surely contain some Roundup Ready® seeds, Bowman planted the seeds, applied Roundup herbicide to his fields, selectively recovered soybeans exhibiting the Roundup Ready® trait, and saved those seeds for further plantings. Bowman harvested eight late-season crops in this way.
Today the Supreme Court will hear oral arguments in Association for Molecular Pathology v. Myriad Genetics, Inc. Myriad Genetics was founded in 1991, and licensed, exclusively in the field of diagnostics, and also invented a group of patents associated with the five to ten percent of breast cancers known to have a strong hereditary component. The biomarkers disclosed, discussed, and claimed in these patents are also associated with an increased lifetime risk of ovarian and other cancers. See this U.S. Government website Genetics of Breast and Ovarian Cancer, updated 3/04/2013, and accessed April 14, 2013, for timely information on the significance of these biomarkers.
Social policy concerns have influenced the AMP v Myriad debate. This article is intended to address certain misstatements of fact and draw attention to other facts not generally considered.
Petitioners have cast the case as “patients versus patents”. Petitioners comprise primarily molecular pathologists and women who assert they had to provide, and receive, respectively, inferior medical care because of Respondent’s patents. In part, because the SACGHS found that so called “genetic” diagnostic tests which were covered by patents cost no more than such tests which were not covered by patents, alleged negative impacts on future medical research have been more forcefully added into the mix of policy concerns creating a biased context for the debate.
As the patent community waits to see whether the United States Supreme Court will deal a significant, perhaps fatal blow, to the patenting of many genetic related innovations in Association of Molecular Pathology v. Myriad Genetics, announcement came this morning of a newly issued U.S. patent. This patent — U.S. Patent No. 8,399,645 — was issued to St. Jude Children’s Research Hospital. The invention relates to compositions for genetically modifying human immune cells so they can destroy some of the most common forms of cancer in children and adults.
It seems unthinkable that the Supreme Court could issue a ruling that would call into question the patent eligibility of an innovation that has the potential for curing cancer, but that is what is at stake. The Supreme Court will hear oral arguments in AMP v. Myriad on April 15, 2013, and the issue they will consider only a single question: Are human genes patentable?
While this St. Jude invention is not likely to be directly impacted by any ruling the Supreme Court makes, if the Supreme Court says that human genes are not patentable then what is to stop the march toward a ruling that says genetic modifications are likewise not patentable? Additionally, the Myriad claims relate to isolated DNA sequences, not DNA as it exists in a person or in nature. Some of St. Jude claims to this cure for cancer would seem to fall if the Myriad claims fall because they cover isolated host cells. Indeed, there is a lot at stake.