Biotech Industry Fears Fallout From Supreme Court’s Myriad Ruling; PTO Offers Guidance

Supreme Court unanimously holds that DNA isolated from the human body cannot be patented but cDNA, which is created in a laboratory, can; Patent and Trademark Office tells examiners to reject product claims drawn solely to naturally occurring nucleic acids or their fragments.

The Supreme Court’s unanimous decision that isolated DNA is a product of nature and thus not patentable could undermine patents on biotechnology inventions that utilize DNA molecules, particularly those for new companies.

In its June 13 opinion in The Association of Molecular Pathology v. Myriad Genetics Inc. the court followed the advice of the Solicitor General and held that while DNA isolated from the body cannot be patented, complementary DNA is patentable since it is not naturally occurring. Justices had indicated during oral arguments that they were inclined to take this middle ground (Also see "Supreme Court Is Dubious About Gene Patents; May Require Something Be Added To Nature" - Pink Sheet, 15 Apr, 2013.).

At issue in the case were Myriad patents covering the composition of DNA isolated from BRCA1 and BRCA2 genes, mutations of which are the cause of most cases of hereditary breast and ovarian cancers.

Writing for the court, Justice Clarence Thomas said Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. But he said the company “did not create anything.”

“To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention,” Thomas wrote.

Thomas noted that the court’s 1980 decision in Diamond v. Chakrabarty, in which it held that a genetically engineered microorganism useful for digesting oil spills was patent-eligible because it had “markedly different characteristics from any found in nature,” is central to the Myriad case. In contrast to the invention in Chakrabarty, he said Myriad did not create or alter the genetic structure of DNA.

As for complementary DNA, “the lab technician unquestionably creates something new when cDNA is made,” the court stated. “cDNA retains the naturally occurring exons of DNA, but it is distinct from the DNA from which it was derived.”

“There is no doubt in my mind that somewhere somebody we haven’t thought of is going to be hurt by this. That is undisputable.” – BIO’s Hans Sauer

Some Antibiotic Development Could Be At Risk

The Biotechnology Industry Organization said big companies with products on the market will be protected by layers of intellectual property but new companies may have trouble getting investors to fund their research given the uncertainty created by the court’s ruling.

“For more established companies who work on drugs and human medicines, this decision probably doesn’t mean very much,” said Hans Sauer, BIO deputy general counsel for intellectual property. “The companies we need to worry about are the ones we will never hear from.”

Sauer said DNA encoding human gene sequences is yesterday’s technology and has long been commercialized, whereas new patents in more arcane areas, such as obscure plants and microbial genes, are the ones at risk.

While the Supreme Court’s allowance of cDNA patents is important, Sauer said there are situations where cDNA cannot be used. For example, he noted that bacterial genes cannot be reconfigured with cDNA. He also said the decision could be problematic for antibiotics extracted from cultures of unknown fungus.

“Claims in 8,000 currently existing patents are affected by this decision,” Sauer stated. “There is no doubt in my mind that somewhere somebody we haven’t thought of is going to be hurt by this. That is undisputable.”

In an amicus brief in support of Myriad, BIO had cited examples of established biotech products, including Amgen Inc.’s erythropoietin and Bristol-Myers Squibb Co./AstraZeneca PLC’s exenatide (Byetta and Bydureon), that have relied on patents on isolated natural molecules, including DNA (Also see "Gene Patents: Supreme Court Could Be Swayed By Impact On Research" - Pink Sheet, 15 Apr, 2013.).

The day the opinion was issued, the Patent and Trademark Office sent a memoto examiners advising them of the decision and offering preliminary guidance on how to handle nucleic acid-related technology.

“Examiners should now reject product claims drawn solely to naturally occurring nucleic acids or fragments thereof, whether isolated or not, as being ineligible subject matter,” the memo states. “Claims clearly limited to non-naturally-occurring nucleic acids, such as a cDNA or a nucleic acid in which the order of the naturally-occurring nucleotides has been altered (e.g., a man-made variant sequence), remain eligible.”

Asked how many applications might be affected by the court’s opinion, a PTO spokesperson said there was no way to know since many applications have not yet been opened and they are not flagged. Myriad noted in its brief to the court that the PTO has granted nearly 3,000 patents specifically directed to isolated DNA molecules over the last 30 years.

The memo notes that the agency will be issuing more comprehensive guidance on patent subject matter eligibility determinations, including the role isolation plays in those determinations.

BRACAnalysis Patent Protection Extends Beyond 2018, Myriad Says

Myriad used the genetic sequence of the BRCA1 and BRCA2 genes to determine their typical nucleotide sequence. This discovery enabled it to develop its BRACAnalysis test to detect mutations in the genes. The American Civil Liberties Union and the Public Patent Foundation filed suit against Myriad on behalf of medical organizations, researchers and breast cancer and women’s health groups claiming that isolated DNA was not eligible to be patented. They contended that Myriad held a monopoly on BRCA gene testing and was blocking others from using alternative tests.

In a media teleconference, the ACLU said the ruling was a victory and would enable others to use competing tests. Harry Ostrer, a plaintiff in the case and professor at the Albert Einstein College of Medicine of Yeshiva University, said the cost of genetic testing should come down significantly as other sources become available. Myriad’s BRACAnalysis test costs about $3,000 to $4,000.

However, a Myriad spokesperson noted that the company has 24 patents with 520 remaining patent claims that provide strong patent protection for its test. The first patents expire in 2015 but others extend through 2018 and as far as 2028 (see related story, (Also see "Myriad Sees No Impact On Its Business From Patent Ruling; Wall Street Cautious" - Pink Sheet, 13 Jun, 2013.)).

Gregory Castanias, who argued on behalf of Myriad before the court, also said the decision would have no impact on Myriad since its cDNA and remaining patent claims provide patent protection for its test. The ACLU challenged nine claims in three patents. The court struck down five of the nine claims and left four claims intact.

“The court was trying to strike a middle ground to preserve inventions of biotechnology and personalized medicine,” Castanias, a partner at Jones Day, stated. The opinion is “a win for the biotech industry and a win for our client.”

Companies May Decide To Keep Inventions Secret

Former PTO Director Q. Todd Dickinson said he was troubled that the opinion was not clear on the metes and bounds of Section 101 of the patent law, which describes patentable subject matter, to provide guidance going forward. “Is the Supreme Court anti-patent or trying to set bounds?” he asked.

Dickinson noted that the court’s Myriad decision, along with its rulings in Bilski v. Kappos and Mayo Collaborative Services Inc. v. Prometheus Laboratories Inc., have been the only cases in which the court has addressed patent eligibility since its Chakrabarty decision.

Last year the court ruled in Mayo that Prometheus’ diagnostic test for determining the proper dosage of a thiopurine drug does not add enough to natural laws to be eligible for a patent. And in its 2010 decision in Bilski it loosened the rules on what processes can be patented, finding that the U.S. Court of Appeals for the Federal Circuit’s machine-or-transformation test is not the only test to determine patentability.

“A little bit of worry I have is that anytime you say a category is not patentable you run the risk people will keep it as a trade secret,” Dickinson, executive director of the American Intellectual Property Law Association, added.

The ACLU asserted that the court’s decision overturns the PTO’s three-decade-old policy of issuing patents on isolated DNA. There had been a split in the government over the issue as the PTO declined to sign onto the Solicitor General’s brief.

Myriad had argued that the PTO’s past practice of awarding gene patents was entitled to deference. But the Supreme Court said that the Solicitor General’s argument that isolated DNA was not patent eligible undercut the patent office’s past practices.

Ruling Does Not Address Method Claims, Applications of Knowledge

The court concluded its 18-page ruling by pointing out that the decision does not address method claims, applications of knowledge about the BRCA1 and BRCA2 genes, or the patentability of DNA in which the order of the naturally occurring nucleotides has been altered.

“It is important to note what is not implicated by this decision,” Thomas wrote. “First, there are no method claims before this court. Had Myriad created an innovative method of manipulating genes while searching for the BRCA1 and BRCA2 genes, it could possibly have sought a method patent.”

However, the court noted that the processes used by Myriad to isolate DNA were well understood at the time of its patents.

Justice Antonin Scalia concurred with the opinion except for the opening – which described the human genome, nucleotides, the creation of proteins from DNA, and mutations in genetic sequence – and other portions of the opinion “going into fine details of molecular biology.”

“I am unable to affirm those details on my own knowledge or even my own belief,” Scalia said in a one-paragraph concurring opinion.