The Biotechnology Industry Organization (BIO) filed an amicus brief in the U.S. Court of Appeals for the Federal Circuit on Friday, October 29th, in an appeal of a lawsuit brought by the American Civil Liberties Union on behalf of a number of plaintiffs against Myriad Genetics, the U.S. Patent and Trademark Office, and others. The brief, which was filed jointly with the Association of University Technology Managers (AUTM), supports the patentability of isolated DNA molecules, noting that invalidating the patentability of these molecules would discourage future biotechnological innovation.
DNA-based patents are a critical tool that help enable the fundamental research and development of new biotech products, therapies and technologies to fight deadly diseases, expand agricultural production, clean the environment, and reduce our dependence on foreign sources of oil. Patents are critical to innovation of products which benefit patients and other consumers. Biotech patents, like all other patents, offer exclusivity for a short term in exchange for the innovation to be freely used by the public forever once the patent expires. In exchange for the full and fair description of the innovation those that innovate are provided exclusive rights so that they can recoup research and development costs and achieve a profit suitable to reward investors for funding the creation of the innovation, which many times is a quite speculative endeavor, as in the biotechnology field.
Isolating a DNA molecule, in addition to creating a new chemical molecule that does not exist in nature, imparts new utilities and functions that are not available from native DNA. The utility of isolated DNA molecules derives from their chemical structure, which is developed by human ingenuity using complex scientific expertise and equipment. As a result, isolated DNA molecules are patentable subject matter based on decades of U.S. case law. The district court, and the Department of Justice who has filed a brief supporting the non-patentability of isolated DNA, are mistaken on the science and mistaken on the law. For the Federal Circuit to affirm the district court ruling or to follow the suggestion of the DOJ would require the Court to ignore well established Supreme Court precedent set forth in Diamond v. Chakrabarty. See DOJ Seeks to Cripple Biotech Industry.
“Unless reversed, the district court’s ruling will seriously harm the U.S. biotechnology industry, which consists largely of small firms that are engaged in foundational research and dependent on private investment to fund their work,” stated BIO President & CEO Jim Greenwood. “Patent protection is critical for the ability of biotechnology firms to secure the private investment necessary for the research and development of innovative diagnostic, therapeutic, environmental and agricultural products. This innovation will lead to domestic job creation and help sustain our country’s global competitiveness.”
If the Court of Appeals affirms the district court’s categorical rejection of the patentability of isolated DNA molecules, it would cast a cloud of uncertainty over thousands of similar patents and compromise the ability of biotechnology firms to pursue groundbreaking discoveries in human healthcare, renewable energy, and sustainable agriculture. Patents are the lifeblood of the biotechnology industry, and investors abhor uncertainty. Supplanting decades of regulatory treatment by a variety of federal agencies and altering the well established and directly on point law would create a 180-degree change in course, which is the very type of uncertainty that causes investors to run for the hills.
When I interviewed Jim Greenwood back in the Spring of 2010 he explained the need for patents in the biotechnology industry as follows:
For most [biotech] companies the only thing that they have is intellectual property. They may have a folder with their IP portfolio in it and not a place to file it. They start off with that and then they have to raise money to even begin to have microscopes and bricks and mortar and staff. It is on the strength of that intellectual property that they have to raise all of those dollars for a very long time.
How long a period of time must biotechnology companies rely on investor dollars? Greenwood said in my interview with him that it can be a decade or longer. He explained:
[M]any of these companies go on a very, very long and protracted journey that can be 10 or 12 years or longer in which they may have to attract hundreds of millions, if not as much as $1 billion dollars if they are fortunate enough to go public before they actually get to the point where the FDA has actually approved their product and they start generating their first dollar of revenue. So it is a long and risky process.
For universities the patentability of isolated DNA molecules is also extremely important, which is why AUTM jointly filed the brief with BIO. “Patentability of isolated DNA molecules is critical to the translation of university research discoveries for the public good. Without this, many promising discoveries would not make their way from the university research lab and into the hands of companies for development of products which improve the public health,” stated AUTM President Ashley J. Stevens.
To echo Stevens point, allow me to observe that there is an unrealistic and counter-factual understanding by many about the role of universities. Universities engage in basic research and then from the point in time that the basic and highly speculative research takes place to the time a product or service reaches a consumer there is a great deal of additional time, investment and translational research necessary to ever have something fit for consumption. Without protections for the fundamental level of innovation the secondary levels, which are far more time consuming and capital intensive, simply wouldn’t happen.
“From the mass production of life-saving medicines by cell cultures to the screening of our blood supply for life-threatening viruses, patented DNA molecules have been put to countless uses that have benefited society,” concluded BIO President and CEO Jim Greenwood. Those that believe that these innovations would have happened without the rights conferred by patents are naive in the extreme. They also choose to ignore the teachings of history.
There is no greater example of the manipulative power patents hold than passage of the Orphan Drug Act. After passage of the Orphan Drug Act there was a 1300% increase in the number of treatments for rare diseases, which generally speaking is defined by diseases affecting fewer than 200,000 people. Congress sought to manipulate by using a carrot. By offering exclusive rights for a limited time far more drugs and treatments were created to treat rare diseases that otherwise would have had to remain untreated.
Like it or not, the patent system is a great motivator, and used appropriately to incentivize the type of behavior we want to encourage it is a powerful tool in the government arsenal. To fundamentally alter what is considered patentable subject matter will not only negatively impact cutting edge biotechnology research, but it will also have a chilling effect. Uncertainty causes business paralysis and forces investors to the sidelines. The uncertainty that would be created by the curtailing of patentability would not be isolated to the biotechnology sector, and is exactly the opposite of what our economy presently needs.