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.

Since my last article here on IPWatchdog.com, the pharmaceutical industry has been simply overflowing with interesting developments, including the US Supreme Court hearing arguments concerning three significant cases.

The first case argued at the Supreme Court will determine whether generic drugmakers can be sued for alleged flaws in the design of their medications. At issue is whether federal law preempts such claims from proceeding in state court and if drugmakers can be held liable if they decline to withdraw their medicines from the marketplace.

Of course, the same concept could be applied to brand-name drugmakers, which is why the entire pharmaceutical industry is on edge. In fact, the Obama administration filed a brief in support of drugmakers over concerns the FDA regulatory review process could be undermine if medicines deemd safe and effective could later by considered ‘unreasonably dangerous.’

The court reviewed an appeal by Mutual Pharmaceutical to overturn a $21 million jury award to a New Hampshire woman who in 2004 had taken a generic painkiller called sulindac, but developed Stevens-Johnson Syndrome and toxic epidermal necrolysis. She’s nearly permnanetly blind and suffered burn-like lesions over most of her body, underwent numerous surgeries, and is now unable to read, drive or work, and must use a feeding tube, her lawsuit says.

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.

Atmosphere.

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.

Senator Ron Wyden (D- OR) is a man with an idea for lowering health care costs.  Unfortunately, it’s an idea which proved disastrous the last time it was forced on the National Institutes of Health. But that hasn’t dissuaded the Senator from trotting it out again.  He believes if a company commercializes a new drug whose development is in some way related to a cooperative R&D agreement (CRADA) it had at one time with NIH, that the government can then insure “a reasonable relationship between the pricing of a licensed product, the public investment in that product, and the health and safety needs of the public.”

Sen. Wyden seems sincere in his concern with the ever escalating costs of medicine.  Unfortunately, his proposed solution empowering the government bureaucracy to second guess industry drug pricing decisions simply because they worked with NIH would make things worse.  We could see fewer new drugs at any price.  We may see more research shifted to India and China as our public research institutions are viewed as unreliable partners. And we may throw away a key strategic advantage of the hard pressed U.S. life science industry—its ability to draw on the unparalleled resources and expertise in our federal laboratory and university research systems.

If this path is chosen, we have fair warning of the hazards.  We’ve been down it before.

In a recent article, I presented a taxonomy consisting of nineteen IP business models in the United States intellectual property marketplace.  Although, admittedly, the taxonomy presented was not perfect, it adequately described what I observed as the continuing rise of intermediary business models in the marketplace.  In that taxonomy, I included “IP middlemen” such as: Licensing Agents, IP Brokers, IP-Based M&A Advisors, IP Auction Houses, On-Line IP/Technology Exchanges, and University Technology Transfer Intermediaries.  Individual inventors and corporate IP owners are used to dealing with accountants, lawyers and investment advisors – all professionals who are governed by state and/or federal professional regulations, and/or national association guidelines.  Well, the question I pose is: What professional regulations govern the qualifications and conduct of all these IP middlemen?

The short answer to the above question is “none!”  After all, there is no IP brokerage or IP middlemen governing body.  Further, we should all realize that IP rights are not “securities” subject to state and federal (e.g., SEC) regulations.  Lastly, we all know that all states’ bar associations regulate attorney conduct regardless of whether the attorney is “practicing law.”  An informal survey I conducted, however, suggests the percentage of IP middlemen who are attorneys is less than 20%, with the remainder having business, financial and engineering backgrounds.  Has the USPTO stepped in?  No.  That is, individual inventors and corporate IP owners should not feel at ease because the invention promotion industry has been the focus of a USPTO anti-scam public awareness campaign.  This campaign, is simply not aimed at the numerous IP middlemen identified in my taxonomy.

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.

2013 is going to be an exciting year for patent law and the policies which govern it. From implementation of sections of the Leahy-Smith America Invents Act to anticipated decisions from the Supreme Court, we can expect changes to the patent system that will affect the high tech and biotechnology industries, start up companies and established businesses of all sizes. Just some of the developments we can expect to see include a determination of whether genes are patentable, proposed legislation addressing the litigation strategies of non practicing entities, and harmonization of the US with much of the world through the implementation of the first-to-file patent application system and the introduction of an international design patent application process.

The Patentability of Human Genes

Isolated genes and DNA sequences are claimed in numerous patents and patent applications and are extremely important to the biotechnology industry. Myriad Genetics was granted patents for BRCA1 and BRCA2, two genes linked to breast and ovarian cancer, and is the sole provider in the US of tests for cancers involving the BRCA genes.

Since we last met, there was yet another development in one of the more fascinating stories to grip the pharmaceutical world. The FDA decided not to pursue a re-hearing before a federal appeals court that recently ruled the federal government could not prosecute a sales rep who promoted off-label uses of a medicine because his speech was not false and misleading. The agency let a January 16 deadline pass without filing a motion.

At issue was a decision by the US Court of Appeals for the Second Circuit to overturn the 2008 conviction of a former sales rep for allegedly encouraging doctors to prescribe a drug on an off-label basis. A panel ruled 2-to-1 that his conviction violated his First Amendment rights and that the federal government did not attempt to prove that his remarks were false and misleading.

Since then, the decision has raised questions about a fundamental premise long asserted by the FDA and the US Department of Justice that off-label promotion is prohibited by law, which has been the basis for numerous settlements with drug makers over the past decade. Consequently, the court ruling prompted speculation about the strategic approach the FDA would take in response.

On January 23, 2013, CropLife International (CLI) filed an amicus brief in the U.S. Supreme Court in Bowman v. Monsanto (no. 11-796), supporting the view that the authorized sale of a patented seed does not extinguish the patentee’s right with regard to the use of next generation of seeds for planting.  Therefore persons who plant progeny seeds, without the consent of the patentee, and, in turn, produce a next-generation of seeds are liable for engaging in an unauthorized making under 35 U.S.C. §271(a).

Background

Monsanto has developed and patented a genetically-modified soybean that bears the trait of resistance to the herbicidal compound glyphosate.  Seeds bearing such herbicide resistance are sold by Monsanto and its licensees under the trade name Roundup Ready®.  By virtue of that trait, a farmer can plant the patented soybean, and treat a resulting crop with a glyphosate-based herbicide, such as Roundup®, so as to selectively kill off any undesired weeds that have infested the crop, without damaging the crop itself.

You may have heard about the “breast cancer gene patent wars.”  Most likely, you have heard from various individuals and popular media asking “how can someone patent my genes?”  One can’t and never could patent your genes as they are in you.

One side in the “gene patent war” has nevertheless convinced the Supreme Court to weigh in on the issue of whether DNA sequences derived from the human genome are patentable, in Association for Molecular Pathology (AMP) v. Myriad Genetics, while disingenuously labeling the patents at issue as “human gene patents.”

Myriad (the “other” side) owns several patents with claims directed to “isolated” nucleic acid molecules (e.g., DNA) and fragments thereof which are referred to as either “probes” or “primers,” based on their function.  Probes anneal, i.e., bind, to a particular part of a DNA and are used to detect the presence of certain genes which indicate abnormalities or disease states.  Primers anneal to particular parts of a DNA and are used to make additional pieces of DNA, e.g., make multiple copies of a single abnormal sequence such that it is readily detectable and/or become capable of being utilized in other useful applications, e.g. forensic science.

Litigation always factors into the pharmaceutical world, but the US Supreme Court commanded a special place in recent days. The high court figured in no fewer than four contentious issues that, not surprisingly, play a vital role in how drug makers can and will operate.

Let’s start with a case that is not yet before the court, but many predict will be headed there thanks to one of its earlier rulings. Earlier this month, a three-judge panel of the US Court of Appeals for the Second Circuit overturned the conviction of a former sales representative, who argued that prosecuting him for remarks made about off-label use violated his free speech rights.

In their decision, the 2-to-1 majority cited a US Supreme Court ruling early last year that struck down a highly controversial Vermont law, which restricted the sale of prescription drug data identifying prescribers and patients for commercial marketing purposes. Specifically, the court ruled that “speech in aid of pharmaceutical marketing… is a form of expression protected by… the First Amendment.”

On Friday, July 20, the Federal Circuit heard oral arguments in the remand of the AMP et al. v. USPTO et al. appeal – the case better known as the Myriad Genetics “gene patent” case. The supplemental briefing in this case, and the oral argument itself, continue to reveal how those with diverse perspectives on DNA patents misunderstand each other. Scientists are making dubious assumptions about the operation of patent law. Patent lawyers are making inaccurate assumptions about how the science works. And those who are neither patent lawyers nor scientists just go by what they’ve been told. The Department of Justice’s (DOJ) supplemental amicus brief and oral argument in this case are a good example of the widening disconnect.

“Kitschy, Not Catchy”

Readers will recall that this is not the first time DOJ appears in this case. Two years ago when the Myriad case first reached the Federal Circuit, DOJ filed an unsolicited brief, replete with hypothetical examples of elemental lithium, cotton, coal, isolated electrons, and other things having nothing to do with molecular biology, siding in part with the American Civil Liberties Union (ACLU), and arguing that Myriad’s claims to BRCA-encoding DNA molecules are patent-ineligible under Section 101.

Washington, D.C. (June 21, 2012) – BIO commends the House of Representatives for its unanimous approval of S. 3187, the Food and Drug Administration Safety and Innovation Act (FDASIA), which includes a reauthorization of the Prescription Drug User Fee Act (PDUFA).

We appreciate the leadership of Senate Health, Education, Labor and Pensions Committee Chair Tom Harkin (D-IA) and Ranking Member Mike Enzi (R-WY) as well as of House Energy and Commerce Committee Chair Fred Upton (R-MI) and Ranking Member Henry Waxman (D-CA) in reconciling the differences between the user fee packages adopted by the two Chambers and for securing unanimous approval in the House.

Earlier today the Biotechnology Industry Organization (BIO) released a report on the significant economic impact of university and non-profit patent licensingon the U.S. economy.

“This report provides further evidence that America’s technology transfer system established by the Bayh-Dole Act of 1980 is a key underpinning of our innovation economy,” stated BIO President and CEO Jim Greenwood.

Bayh-Dole enables the patenting and commercialization of federally-funded university and non-profit institution research.  Bringing these discoveries from the lab to the marketplace creates new products, new jobs and new companies that expand the economy and improve the nation’s health and quality of life.  The BIO study documents the significant return on investment that U.S. taxpayers receive by funding basic scientific research in the academic and non-profit worlds through the Bayh-Dole Act, which The Economist has referred to as the most significant and successful piece of domestic legislation since the end of World War II.

Washington, D.C. (May 24, 2012) – BIO commends the bipartisan Senate approval of FDASIA, which includes a reauthorization of the Prescription Drug User Fee Act (PDUFA).

In particular, we appreciate the leadership shown by Chairman Tom Harkin (D-IA) and Ranking Member Mike Enzi (R-WY) to craft a bipartisan measure which will continue to ensure patient safety, access to the newest cures and therapies, and job growth in America. FDASIA reflects the enhancements to PDUFA agreed upon by industry and the U.S. Food and Drug Administration (FDA). It will enhance the development and review of innovative new therapies through increased transparency and scientific dialogue, advancements in regulatory science and strengthened post-market review.