June 1, 2010 (Vol. 30, No. 11)
Brenda Herschbach Jarrell, Ph.D.
Fangli Chen, Ph.D.
ACLU v. Myriad Decision May Stimulate New Protection Strategies for Industry
On March 29, 2010, the American Civil Liberties Union (ACLU) scored a stunning victory in the battle over gene patenting. The District Court in the Southern District of New York held that genes are unpatentable products of nature. Diagnostic methods that involve analyzing and comparing gene sequences were also found to be unpatentable, as were methods for identifying cancer therapeutics by comparing growth rate of engineered cells.
Although it is certain to be appealed, this decision has already generated shock waves across the biotech and pharmaceutical industry. With many economists and big pharma CEOs declaring that the pharmaceutical industry’s future lies in biologic products and stratified patient populations (which require genetic testing), the potential implications of this decision are enormous. What happens to the industry if both of its primary economic drivers are simultaneously declared unprotectable?
The gene patentability question long predates this decision. Genes are the basic units of heredity in a living organism; each one contains instructions (in the form of its sequence) to build a machine (usually a protein) that does the work of living cells. Clearly, genes in their natural state are products of nature.
On the other hand, genes that have been isolated from their natural state or have been manipulated by scientists are not products of nature. For example, a rock is a product of nature; a rock carved into a statue is not.
The patent law has always held that, once a natural product has been manipulated by the hand of man, it is no longer a product of nature and is now available for patenting. The fundamental patent statute, 35 U.S.C. §101, states: “Whoever invents or discovers any new and useful . . . composition of matter . . . may obtain a patent therefore . . .”, and this statute has been broadly interpreted. The Supreme Court’s landmark decision Diamond v. Chakrabarty (1980) held that “Patentable subject matter includes . . . anything under the sun that is made by man.”
The U.S. Patent and Trademark Office (USPTO) has issued about 35,000 patents reciting a gene sequence in their claims. These gene patents protect isolated or purified DNA sequences (many of which encode to therapeutic proteins including biologic drugs), RNA sequences (many of which relate to therapeutic RNAs such as interfering RNAs, antisense RNAs, and ribozymes), vectors, nucleic acid-based vaccines, cells engineered with gene sequences, and various uses of gene sequences (e.g., methods of treatment, methods of diagnosis, or the use of genes as research tools).
Gene patenting has been controversial from the beginning. Civil liberties proponents find gene patenting offensive and view gene patents as unacceptable barriers to the free exchange of information and ideas. The biotech industry passionately defends gene patents as the foundation of the industry and necessary to protect risky R&D investments.
Last year, the ACLU and others brought the debate over gene patenting to court. On May 12, 2009, they filed a lawsuit against Myriad Genetics, the USPTO, and the University of Utah, challenging the USPTO’s authority to issue patents that relate to products of nature and the legitimacy of claims issued to Myriad Genetics that relate to isolated DNA encoding the breast cancer markers BRCA1 and BRCA2 and to methods of detecting alterations in BRCA1 gene sequence (i.e., to diagnose cancer).
The District Court has now declared that both genes and methods of detecting gene sequences are not patentable subject matter. Relying mostly on Supreme Court decisions that predate Diamond v. Chakrabarty, the court articulated a test that patentable subject matter must be “markedly different” from a product of nature and concluded that isolated DNA including cDNA is not “markedly different” from natural DNA.
Interestingly, the court made it clear that DNA’s unique qualities as a physical embodiment of information was critical in its decision. The court stated that its conclusion was “driven by the overriding importance of DNA’s nucleotide sequence to both its natural biological function, as well as the utility associated with DNA in its isolated form” and “[t]he preservation of this defining characteristic of DNA in its native and isolated forms mandates the conclusion that the challenged composition claims are directed to unpatentable products of nature.”
The court also held that diagnostic and screening methods that utilize gene sequence information are also not patentable, even though Mother Nature clearly did not design the steps of those methods. This part of the decision was ostensibly grounded in recent case law (Bilski) articulating technical requirements for writing patent claims to methods, but it is clear that the overriding problem with the patents was that they claimed the use of gene sequences.
Implications of ACLU Decision
The decision, as it stands, could have far-reaching implications in the world of biotech patenting. The expansive language and generalized analysis in the decision could be interpreted to invalidate thousands of biotech patents that currently protect biologic products or diagnostic methods. Moreover, since most biotech inventions rely to some extent on genetic information or its analysis, the decision casts a shadow of uncertainty over the entire industry.
However, panic is premature. Once appealed, the Federal Circuit is likely to reverse or limit the decision. Indeed, it would be difficult to reconcile some of the language of the ACLU decision with long-standing (and recently reaffirmed) decisions by the Federal Circuit and Supreme Court. Appellate courts are also typically cautious about taking action that goes directly against long-standing industry practice.
However, everyone in the biotech and pharmaceutical communities should take notice of the trend toward limiting patent scope in the industry. Various decisions, from Bilski to Ariad, all emphasize that patents should be awarded for precise, focused, and complete inventions. The days of sweeping patent coverage for fundamental inventions may well have passed. If the ACLU decision stands, even patents on specific biotech products may be unavailable.
Does this catastrophic scenario mean the industry will collapse? No. While biotech patents are being questioned, new forms of protection for biotech products are being developed. The recent healthcare reform legislation includes a 12-year exclusivity provision for innovator biologics. Such protection is very different from a patent but certainly provides significant commercial incentive and value. Congress clearly understands the importance of protecting biotech products. We believe that the courts understand this too.
At the end of the day, it is likely that the worst of the ACLU decision will be reversed or redirected. Some aspects of it, perhaps setting heightened standards for defining a product as “manipulated by the hand of man” and, therefore, distinguished from products of nature, may well survive.
However, more practical and product-orientated patent policies may very well promote development in biotechnology. And there’s nothing like a common enemy to stimulate collaboration within an industry. If this ACLU decision can act as the biotech industry bad guy and stimulate greater innovation, what seems like a doomsday ending might turn out to be a new beginning.
Brenda Herschbach Jarrell, Ph.D. ([email protected]), is co-chair of the life sciences and intellectual property groups at Choate, Hall & Stewart. Fangli Chen, Ph.D. ([email protected]), is an associate at the firm.