"Lab Law Update"

Myriad Wins Federal Appeal In Important Gene Patent Suit

Clinical labs and pathology groups that hold licenses from Myriad will continue to pay

IN THE CLOSELY-WATCHED COURT CHALLENGE involving gene patents, Myriad Genetics, Inc., of Salt Lake City, Utah, recently won a favorable decision from the federal appeals court. However, legal experts believe that the plaintiffs are likely to ask the Supreme Court to review the case.

It was July 29 when the United States Court of Appeals, the appellate court which oversees patent issues, released its ruling. The decision is not directly favorable to clinical labs and pathologists.

“Many labs are licensees of patents that Myriad holds and those labs do not benefit from this decision because the patents were found to be valid,” explained David B. Cupar, an attorney with McDonald Hopkins who is Co-Chair of the firm’s patent law practice. “The appeals court decision means that labs must pay the Myriad royalties on those tests.”

However, Cupar says that this recent court decision lacks clarity. That’s because the three-judge panel split on how to resolve the issues involved in evaluating the patentability of genetic material.

“Given that the federal appeals court judges themselves did not agree to a standard, it means clinical and pathology labs will face the big issue about where to draw the line on what’s patentable and what’s not,” he commented.

“Fundamentally, the issue of patentability of genetic material will be difficult for everyone involved, including pathologists,” continued Cupar. “It will be necessary to determine whether they should pay a license on something that is patentable by definition.”

The federal circuit court sided with Myriad when the three-judge panel declared that Myriad’s “composition of matter” claims covering isolated DNA and cDNA of the BRCA1 and BRCA2 genes are patent-eligible under Section 101 of the United States Patent Act.

Also, the court ruled that five of the company’s six method claims in question did not satisfy Section 101. But Myriad has 237 method claims for its BRACAnalysis product that were unaffected by the court’s ruling. Therefore, these method claims remain in full force and company officials say this provides Myriad with strong patent protection.

Even the Judges Disagree

This federal appeals court ruling reverses the decision of March 29, 2010, by the United States District Court for the Southern District of New York. In that case, the court ruled that Myriad’s patents on the BRCA1 and BRCA2 genes are invalid.

Because the federal appeals court reversed the lower court’s ruling, this case, which is known as the The Association for Molecular Pathology, et al. v. U.S. Patent and Trademark Office, et al., may eventually end up at the U.S. Supreme Court. But there is uncertainty as to whether the nation’s highest court will decide to review this case, noted Cupar.

“What’s murky is the standard that should be used to judge the patentability of genetic materials and tests,” noted Cupar. “In the decision itself, there is a disagreement among the three appeals court judges about what the standard should be with regard to the patentability of genetic material.

“Specifically, the judges disagreed on where a line should be drawn in terms of what is considered actual manipulation or work on genetic material versus something that occurs naturally,” Cupar explained. “If it’s naturally occurring, it’s not patentable. But if something is done to purify it, for example, or if additional steps are taken to change it in some way, then there tends to be agreement about patentability. But where is that line exactly?

“Myriad argued that it worked on a gene outside the body to develop its BRACAnalysis test,” he continued. “Therefore, by purifying the gene, Myriad said it created a diagnostic test out of that purified form of the gene. In a nutshell, that is Myriad’s argument.”

Myriad’s BRACAnalysis product is a molecular diagnostic test that analyzes the BRCA1 and BRCA2 genes to assess a woman’s risk for hereditary breast and ovarian cancer. Seeking to invalidate these patents, several plaintiffs filed suit against the U.S. Patent and Trademark Office, Myriad Genetics, and the University of Utah Research Foundation, which hold the patents on the genes, BRCA1 and BRCA2.

The plaintiffs claimed that patents on human genes violate the First Amendment and patent law. In their lawsuit, the plaintiffs said that, as “products of nature,” genes cannot be patented.

Peter Meldrum, Myriad’s President and CEO, told The Wall Street Journal that Myriad discovered the genes through research it conducted with the National Institutes of Health (NIH) and the University of Utah. As the patent holder, the university licensed them to Myriad Genetics, he added.

“For clinical labs and pathologists, the decision of the federal appeals court means each patent will have to be tested based on unclear standards,” observed Cupar. “This promises to create ambiguity for both the patent owners and licensees.

“What happens next in this lawsuit is difficult to predict,” he added. “There are other cases involving gene patents that could impact this decision, such as the Prometheus case.”

It was in June when the U.S. Supreme Court said it would review the case of Mayo Collaborative Services v. Prometheus Laboratories Inc., and consider whether companies should be able to patent medical diagnostic tests. Mayo is challenging two Prometheus patents, saying Prometheus is claiming a monopoly right to observe a natural phenomenon.

Is Supreme Court Next?

As to the Myriad lawsuit, Cupar said it is unclear whether the Supreme Court will choose to hear this case. “The Supreme Court heard a case similar to the Myriad case, but it involved patents in the computer science field and the justices tend not to hear similar cases back-to-back in successive years,” Cupar explained. “But if some justices see the issue of patents on human genes as a big enough question, they could take it up in the next session.

“In the meantime, researchers that develop tests which utilize genes that are patented by others may need legal advice before bringing such clinical laboratory tests to market,” he said. “Each new genetic test will have to stand on its own.”

Swift advances in the use of genetic and molecular technologies are allowing biotech companies and medical laboratories to develop useful new diagnostic tests. As this happens, the need for test developers to obtain a license and pay royalties to use patented genes in these assays is now a growing problem.

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