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In Association For Molecular Pathology v. Myriad Genetics, Inc., decided on June 13, 2013, the United States Supreme Court held that isolated natural genes (DNA) are not patentable. Thus, genes that exist in a living organism, such as the human breast cancer genes BRCA1 and BRCA2 at issue in this case, are not made patentable because the inventor isolates them from the other genomic DNA. The Court was careful to explain that other inventions related to genes, however, are patentable. In particular, the Court held that the synthetic copy of a gene known as “complimentary DNA” (cDNA) is patentable, as well as methods of isolating genes and methods of using cDNA.

The decision was not surprising. The law has long been that naturally occurring biological compositions are not patentable subject matter. The Court applied that rule logically to find that a gene as it exists in a living organism is not patentable just because someone discovers it. In contrast to natural DNA, cDNA is not found in the living organism. The Court found that cDNA is a copy of the natural gene, synthesized in the lab; it is different from the natural gene in that it does not include the non-coding portions of the DNA that are present in the natural gene. The Court concluded that the cDNA is therefore patentable as a man-made composition.

BRCA1 and BRCA2 genes are associated with an increased risk of breast and ovarian cancer. A woman with specific mutations in these genes has a 50% to 80% chance of having breast cancer, compared with 12% to 13% risk for women without these mutations, and a 20% to 50% chance of having ovarian cancer. Myriad discovered the location of these genes and sequenced the most common mutations. They used this information to develop a screening test to determine if a woman has a high risk of cancer due to the presence of the BRCA1 and BRCA2 gene mutations.

Myriadobtained patents on the natural genes and on the cDNA. Other companies developed genetic tests to determine the presence of the BRCA1 and BRCA2 mutations, and offered genetic services to the public. Myriad then threatened its competitors with patent infringement suits. In response, all of the other test providers ceased offering their tests, and Myriad became the sole provider of BRCA genetic testing.

After several years, a group of cancer patients, physicians, and patient advocacy groups sued Myriad for a declaratory judgment of invalidity under 35 USC § 101 on the grounds that the patents on the genes covered products of nature. The district court granted summary judgment for the plaintiffs, finding that the claims were not valid. On appeal, the Federal Circuit Court of Appeals reversed the district court. The Supreme Court granted the plaintiffs’ petition for certiorari, vacated the judgment, and remanded the case back to the Federal Circuit. The Federal Circuit then decided that both natural DNA and cDNA were patentable. Plaintiffs again appealed to the Supreme Court. In this decision, the Court affirmed in part and reversed in part.

The Court described Myriad’s discovery as follows:

“The location and order of the nucleotides existed in nature before Myriad found them. Nor did Myriad create or alter the genetic structure of DNA. Instead, Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. “

Myriad argued that the Supreme Court’s decision in Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980) was controlling. Chakrabarty was the Court’s leading case holding that phenomena of nature and products of nature are not patentable, but that a man-made bacterium was patentable. The Court correctly pointed out that the invention in Chakrabarty was man-made, as it was not a naturally occurring bacterium, while the genes that Myriad had patented were not man-made and exist in nature. The Court acknowledged the importance of Myriad’s discovery, stating that “groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the section 101 inquiry.” The Court held that the genes that Myriad had discovered are clearly products of nature, and therefore not patentable.

The Court reached the opposite conclusion with respect to Myriad’s claims directed to the cDNA it had synthesized. Because the cDNA is not naturally occurring, the Court held that it is patentable.

The Court emphasized the limitations of its holding, pointing out that it was not ruling on the patentability of methods of making genes, method of applying the discovered knowledge, or natural DNA whose sequences had been altered by the inventor.

Even though the Court’s decision was well reasoned, the reaction in the biotechnology community has been mixed. Some experts are concerned that biotechnology companies have lost significant value because their gene patents can and will be invalidated. Others believe that most biotechnology companies will not really be affected because they have also patented their cDNA compositions and methods of using those genes. What is certain is that the Court has made a clear rule, even if narrow: if you want to patent a gene, it had better not be the naturally occurring DNA.

The reaction of the public has been favorable. Many scientists view the decision positively because it confirms that genes (as they exist in nature) do not belong to anyone, but are in the public domain, giving them the freedom to conduct basic genetic research. Patients and doctors are happy because the BRCA genetic test should now be less costly and more accessible to patients.

The landscape of patent law has been rapidly changing over the last several years. President Obama recently signed into law the America Invents Act (the “AIA”) which offered the first identifiable attempt by the United States government to stem the tide of claims asserted by non-practicing entities, also known pejoratively as “patent trolls.” Among the many changes included in the AIA is the requirement for non-practicing entities to file individual lawsuits against accused infringers rather than multiple defendants, thereby creating a potentially significant increase in the cost of litigation. This provision of the AIA, and other proposals directed at non-practicing entities, are often premised on the assumption that every lawsuit filed by these so-called “trolls” is frivolous.

While it’s true that a significant number of lawsuits filed by non-practicing entities have no merit, and are settled by the accused parties merely to avoid the costs associated with defending a patent infringement lawsuit, it is inaccurate and potentially counterproductive to assume that all patent litigation initiated by a non-practicing entity is meritless. Yet, recent comments by President Obama grouped all non-practicing entities together and cast them all as a significant drain on U.S. businesses and an overall drag on technology companies. The White House stated that “stopping this drain on the American economy will require swift legislative action.”

Obviously there are a significant number of non-practicing entities who are appropriately categorized as “trolls.” However, we also must consider the notion that the non-practicing entity business model can serve the underlying function of the United States patent system—to promote the sciences and advance innovation. While the changes implemented by the AIA tend to undermine this goal by disadvantaging small inventors in their ability to acquire patent grants, the non-practicing entity business model can function to restore some strength to these disadvantaged inventors. Currently, when small companies or individual inventors acquire patent grants, those patent holders then face enormous costs in connection with patent litigation if they wish to enforce the patent. This often renders them unable to vindicate the rights granted to them under their patent. Obviously a patent that cannot be enforced through litigation is practically worthless.

The emergence of a non-practicing entity model addresses this problem. Non-practicing entities are not limited to the patent trolls who assert rights in worthless patents in order to shakedown businesses. Companies such as Intellectual Ventures and Eolas Technologies are non-practicing entities who partner with smaller companies and individuals, which generally could not afford to assert their patent rights against larger entities, to provide resources enabling these small entities and individuals to vindicate their interests. As a result, some non-practicing entities actually revive the incentive for smaller entities and individuals to create patentable inventions. Since the underlying purpose of the patent system is to promote invention, these legitimate non-practicing entities may actually benefit the patent system.

Obviously the existence of unscrupulous patent trolls can be a tremendous burden on companies specializing in high tech goods. A significant number of claims are filed each year based on patents which arguably should not have been issued by the United States Patent and Trademark Office. Yet, we must be cautious in the promulgation of new legislation directed at non-practicing entities so that we do not inadvertently create additional barriers making it more difficult for small entities to obtain patents on legitimate inventions.