A Myriad of Issues in Gene Patents

This June the Supreme Court issued it’s opinion in Myriad. In a Solomonish move, the Court split the baby of biotech. Here, all nine members of the Court chose to cleave at a point between isolated DNA being ineligible subject matter on the one hand, and complimentary DNA (cDNA) being eligible on the other.

Without belaboring the point too much, isolated DNA is just that: a portion of a DNA molecule isolated from its natural environment in a cell. Generally, this is a very specific portion of the genome encoding a particular gene or genes. DNA, however, includes long portions that don’t code for proteins. These segments may be removed to yield a modified DNA strand that only has the active, coding portions of molecule. This “refined” version is cDNA and exists nowhere in nature.

In effect, the Court put levels of human manipulation on a spectrum and drew a line, albeit a bit fuzzy, that separates patent eligible DNA based inventions from those that are not. According to the Court, isolating DNA is not enough of a transformation to be patentable, but removal of introns to yield cDNA is. The problem is that “isolated” DNA doesn’t exist in nature either. Further, the requirement of a specific utility for the DNA sequence claimed already limits the scope of inventions to those isolated sequences with a known usefulness.

An Alternative Approach

The line drawn between isolated DNA and cDNA is an arbitrary one that, while allowing more uses of the genes for basic research, arguably still protects the most valuable components of genetic tests. I believe Section 101 is a very broad declaration of patent eligibility and limiting it in an arbitrary way is not helpful. Stronger application of obviousness to prevent the patenting of known elements would improve things without creating an unpredictable regime with little basis in the statute.

Bowman v. Monsanto: Planting of Patented Seeds to Make a Second Generation of Seeds Infringes RoundUp Ready Patents

On Monday, the Supreme Court decided Bowman v. Monsanto and held that a farmer monsanto-logowho purchases patented seeds from a grain elevator and then plants those seeds and harvests the crop, infringes the patent. Previous cases had held farmers liable for holding over a portion of their crop for planting the next year, but those cases involved the violation of the license agreement the farmer must sign when purchasing the licensed seeds. In this case, the farmer purchased the seeds from a grain elevator with no contractual strings attached.

The result shouldn’t be a surprise, and some people even expected a unanimous opinion, which the Supreme Court issued. The issue in the case was “patent exhaustion” and it is the principle that once a patented article is the subject of an authorized sale, the owner of the article is free to use it as they see fit or resell it to another person. Patent exhaustion, however, doesn’t allow the purchaser to make copies of the patented article.

A patent doesn’t give the patent holder the right to do anything themselves (after all, there could be other patents that cover other aspects of the same product). What a patent does give is the right to exclude others from making, using, selling, offering for sale, or importing the patented article. This is much like the deed to real property that gives the owner the right to keep trespassers off, but doesn’t actually allow the owner to do any particular activity on the land (you have to look to zoning laws and permitting agencies for that).

Patent exhaustion applies to only some of that bundle of rights that the patent holder has, namely making, selling, and offering for sale the patented article that was previously bought. A person can’t make copies of the article they bought and claim that the copies don’t infringe because of patent exhaustion. In Monsanto, Bowman claimed that planting the soybeans was really just a normal use of them and their “self reproduction” was the natural result. The Court, however, saw this process of planting and harvesting as the natural way of “making” a second generation of seeds. The beans Bowman bought from the elevator could have been resold, used for animal or human food products, or even used as a feedstock for bio-fuel.

The question that then comes up is how does a farmer ever plant patented seeds without infringing the relevant patents? The answer is actually pretty simple and has been used by Monsanto and other seed companies for decades. When purchasing seeds (which of course comes with the right to resell or use them for feed) farmers must sign a license agreement granting them the right to “make” one descendent generation by planting. That descendent generation may then be sold or used but not planted.

This really is the same outcome that would be expected in other technology areas where a purchaser can freely use or resell the product, but not replicate it. The difference here is the self replicating nature of biological organisms.

SCOTUS Grants Cert in Myriad Gene Patenting Case

Last week, the Supreme Court granted a writ of certiorari in the Myriad case. I previously wrote about the status of this case and, to be honest, the case has gone back to the Supreme Court a bit faster than I had expected.

All we know is that four Justices voted to grant Certiorari, but there are some tea leaves that we can try to read. For example, the decision about which questions to grant Certiorari on is telling. Three questions had been posed to the Court:

  • Are human genes patentable?
  • Did the court of appeals err in upholding a method claim by Myriad that is irreconcilable with this Court’s ruling in Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)?
  • Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), that petitioners who have been indisputably deterred by Myriad’s “active enforcement” of its patent rights nonetheless lack standing to challenge those patents absent evidence that they have been personally and directly threatened with an infringement action?

Often, the Court rephrases the question when the writ is granted. However, question one was granted verbatim. The wording of the question may be troublesome for Myriad as the Court isn’t even asking if isolated and purified DNA is patentable, but only if human gene generally are.

Another interesting fact is that the Court did not grant cert on the second question. The Mayo decision had invalidated a DNA diagnostic test as not being statutory subject matter. However, in this case, the Federal Circuit has upheld Myriad’s own diagnostic claims, and now, the Supreme Court will leave that decision in place and not address it head on in the Myriad case. The Court could still invalidate the diagnostic claims with a broad holding related to question one, but I think that is unlikely.

This means the Court may be willing to let diagnostic tests to stand despite a potentially hostile position on patenting gene sequences and isolated genes. This would allow for exploitation of gene based diagnostics and other inventions, even if claims to the genes themselves are not patentable.

Myriad Case Sent back to the Federal Circuit after Mayo v. Prometheus

The Myriad case has been sent back to the Federal Circuit to review that court’s previous decision in view of last weeks Supreme Court decision in Mayo v. Prometheus.  I discussed the Mayo decision, which dealt with medical diagnostic claims.  The myriad claims are also diagnostic in nature in that they relate to testing patients for particular genetic mutations that can be contributing factors for ovarian cancer.

Here is the entirety of the order:

The petition for a writ of certiorari is granted. The
judgment is vacated, and the case is remanded to the United States Court of Appeals for the Federal Circuit for further consideration in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012).

Myriad’s stock took a beating after the Mayo decision as many suspect that a majority of the court would invalidate the claims in the Myriad case.  However, with the remand order today, Myriad’s stock is, oddly enough, benefiting from the uncertainty.  The new procedural posture means it will likely be at least a year, and more likely two, before the case is taken up by the Supreme Court again.  That gives Myriad another year or two where prospective competitors may not be willing to enter the market for these gene diagnostic tests.