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Federal Circuit Judges Considered USPTO Policy, Industry Impact in Ruling on Myriad's Gene Patents


Originally published Aug. 20.

In a lawsuit being closely watched by the drug and diagnostics sectors, the Court of Appeals for the Federal Circuit last week ruled two to one that DNA sequences extracted from the body are patentable.

The decision doesn't depart much from the CAFC's earlier ruling on the same case, but some details in the court's opinion could set the stage for how the decision is interpreted — and whether the case ultimately makes its way to the Supreme Court.

For example, each of the three circuit court judges considered current industry practices and the intellectual property policies of the US Patent and Trademark Office when deciding the case, and it was clear that their decisions were guided by the potential impact that invalidating gene patenting would have on the life sciences industry. The judges also suggested that it is up to Congress — and not the courts — to determine whether gene fragments should be treated differently from other isolated natural products with regard to patentability.

In the case, Association for Molecular Pathology et al. v. USPTO et al., patients, healthcare providers, and researchers represented by the American Civil Liberties Union and the Public Patent Foundation are challenging patents held by the University of Utah and exclusively licensed to Myriad Genetics. The patents include claims on diagnostic methods related to Myriad's BRACAnalysis test, as well as so-called "composition of matter" claims — covering portions of the BRCA gene itself, BRCA gene sequences isolated from the body, and complementary DNA that researchers have synthesized to use as probes in diagnostic testing (PGx Reporter 5/13/2009).

BRACAnalysis, a test that helps doctors assess whether patients are at heightened risk for hereditary breast and ovarian cancer, is Myriad's flagship product and comprised around 82 percent of the $472 million the company made from molecular diagnostics revenues last fiscal year.

Last week's ruling marked the second time federal circuit court judges Alan Lourie, Kimberly Moore, and William Bryson heard the case, which came back to the CAFC after the Supreme Court vacated the lower court's earlier decision and asked the federal circuit judges to review AMP v. USPTO in light of the Supreme Court's ruling in another patent case, Mayo Collaborative Services v. Prometheus Laboratories.

The plaintiffs in AMP v. USPTO first challenged Myriad's patents in the Federal District Court of Southern New York in 2009, claiming in particular that the company's composition of matter claims on BRCA genes don't meet the patentability threshold under 35 USC Section 101, which states that the inventor of "any new and useful process, machine, manufacture, or composition of matter" may patent it. Since the information of interest contained in gene sequences remains the same whether they are naturally occurring inside the body, extracted from the body, or synthesized into cDNA, the plaintiffs held that DNA fragments are "a law of nature," which, along with abstract ideas and natural phenomena, have been identified in past Supreme Court decisions to be exceptions to the Section 101 patentability test.

This latest decision from the CAFC partially overturns the 2010 federal district court ruling, in which Judge Robert Sweet invalidated all 15 claims in seven patents at issue in AMP v. USPTO, including claims on BRCA genes, cDNA, and diagnostic methods. When the case arrived at the CAFC on appeal for the first time last year, judges Lourie, Moore, and Bryson disagreed with the district court's ruling that cDNA patents were not patentable, but agreed that all but one of Myriad's challenged method claims were invalid. Lourie and Moore said back then that isolated DNA fragments were patent eligible, while Bryson disagreed (PGx Reporter 8/3/2011).

Meanwhile, in a March decision that unanimously invalidated method patents held by Prometheus Labs, the Supreme Court in Mayo v. Prometheus emphasized that "an application of a law of nature … to a known structure or process may [deserve] patent protection," but in order to transform a law of nature into something worthy of a patent, the applicant "must do more than simply state the law of nature while adding the words 'apply it.'"

Prometheus' invalidated method patents described ways of correlating naturally occurring biological processes to treatment decisions and some industry observers have opined that the outcome of this case stands to have a broader impact on the biotechnology industry than AMP v. USPTO (PGx Reporter 3/12/2012).

Despite the Supreme Court's stance in Mayo v. Prometheus, in their latest decision, Lourie, Moore, and Bryson have maintained their original positions in the case, with Lourie and Moore upholding the patentability of cDNA and gene molecules extracted from the body, and Bryson, while agreeing that cDNA is patentable, breaking with his colleagues with regard to isolated gene sequences. All three judges agreed as before that all of Myriad's challenged method patents on "analyzing" or "comparing" isolated gene sequences with naturally occurring DNA fragments are not patentable, with the exception of one claim in a patent that covers a method for screening potential cancer therapeutics by gauging changes in growth rates of "man-made, non-naturally occurring transformed" cells, which the judges still believe is valid.

"Under the statutory rubric of Section 101, isolated DNA is a tangible, man-made composition of matter defined and distinguished by its objectively discernible chemical structure," Lourie stated in the majority opinion. "Whether its unusual status as a chemical entity that conveys genetic information warrants singular treatment under the patent laws as the district court did is a policy question that we are not entitled to address."

Although the ACLU and PUBPAT haven't formally announced whether they will appeal the CAFC ruling with the Supreme Court, most industry observers expect the case is headed there.

"We remain heartened to see that one of the Court of Appeals judges still strenuously dissents from the [majority] opinion," Daniel Ravicher, executive director of PUBPAT, told PGx Reporter. "We can petition for [certiorari] to the Supreme Court from this decision, but obviously haven't made any final decisions about what we'll do, as we have to consult with our clients."

Balancing Act

Although the federal circuit court judges have largely stuck with their original positions on gene patenting, there is greater tension in their latest opinions as to whether upholding such patents would strike the right balance between spurring innovation and thwarting competition. The patent system has a dual purpose: to encourage innovation by awarding patent holders a period of time during which they can solely profit from their invention and to restrict competitors from using that invention during that period of exclusivity.

Lourie and Moore held that even in light of the Supreme Court's ruling in Mayo v. Prometheus, the act of separating a DNA fragment from the surrounding material in the body makes the isolated sequence a composition of matter that is "markedly different" from the naturally occurring substance in the body. Furthermore, for Lourie and particularly Moore, the fact that the USPTO has long held isolated gene molecules patentable and has awarded numerous gene-related patents gives further credence to their legal position that DNA fragments removed from the body meet the Section 101 test as new compositions of matter.

Lourie noted that the USPTO has been granting gene patents for three decades, during which time the office issued more than 2,600 patents claiming isolated DNA and tens of thousands related to non-native DNA. Moore, meantime, placed great importance on preserving the USPTO's established practice of granting gene patents, asserting that any change to this policy would "destroy long-settled industry expectations for no reason other than a gut feeling that DNA is too close to nature to be patentable."

As an example of the potential impact such a decision would have on the industry, Moore cited Amgen's patent for its bestselling anemia drug Epogen, which claims a purified and isolated DNA sequence encoding the hormone erythropoietin. In 2009, a federal district court ruled that Roche's pegylated-erythropoietin product Mircera infringed Amgen's EPO patents. "Erythropoietin, also known as EPO, went on to become the biggest-selling biotechnology drug developed to that point, resulted in billions of dollars in sales, and accounted for over 50 percent of Amgen’s revenue in 1997," Moore wrote. "Isolated DNA claims, at least in the case of Amgen, represent crucial and exceedingly valuable property rights.

"We cannot, after decades of patents and judicial precedent, now call human DNA fruit from the poisonous tree, and punish those inquisitive enough to investigate, isolate, and patent it," she further stated. "I will not strip an entire industry of the property rights it has invested in, earned, and owned for decades unchallenged."

Bryson, in defending his minority view that patents on isolated gene sequences run afoul of Section 101 exceptions against tying up laws of nature, was not so concerned with invalidating thousands of previously granted patents, but with freeing up the path for innumerable future innovations in genomics. "The [CAFC's] decision, if sustained, will likely have broad consequences, such as preempting methods for whole-genome sequencing," he stated.

Throughout the course of this case, industry observers have wondered whether overly broad patent claims on long stretches of DNA, such as those held by Myriad, could be enforceable against whole-genome sequencing-based diagnostic applications. Myriad has argued that it hasn't enforced its BRCA patents to restrict research and the firm's legal counsel has asserted that whole-genome sequencing that doesn’t involve an isolation step enabling specific investigation of BRCA mutations would not infringe the company's patents underlying BRACAnalysis (PGx Reporter 4/6/2011).

Researchers from Duke University two years ago published a paper in the journal Genomics in which they analyzed the scope of a claim in Myriad's patent 5,747,282, describing a 15-mer oligonucleotide in the BRCA1 gene. They reported that 80 percent of cDNA and mRNA described in an NIH database of publicly available gene sequences contain at least one oligonucleotide covered by Myriad's patent claim.

The '282 patent claim "covers portions of the DNA of nearly all human genes," Bryson wrote in his opinion brief. "Accordingly, efforts to sequence almost any gene could infringe [the] claim, even though Myriad's specification has contributed nothing to human understanding of other genes. Myriad is not entitled to such broad protection."

Moore's expressed a level of discomfort with broad patents on isolated genes, but she still upheld them in light of current industry practices and the fact that many such patents already exist. "If I were deciding this case on a blank canvas, I might conclude that an isolated DNA sequence that includes most or all of a gene is not patentable subject matter," she wrote. "But we do not decide this case on a blank canvas."

Although Moore acknowledged the Supreme Court's emphasis in Mayo v. Prometheus that inventions must do more than just apply a law of nature in order to be patent eligible, she also recognized that Congress intended the scope of Section 101 to be broad and noted that, based on that, the USPTO has long been awarding patents on isolated DNA molecules and on purified natural products.

In a footnote, however, Moore clarified that she would draw the line at attempts to patent an isolated, full-length chromosome. "My analysis of the claims at issue assumes that they do not include an isolated, full-length chromosome," she stated. "I do not believe that a claim to an entire chromosome, for example chromosome 17, is patentable subject matter. First, there is no indication that the chromosome in isolation has markedly different characteristics compared to the chromosome in nature. Second, unlike claims to isolated genes, there is no indication of either settled expectations or extensive property rights for claims to isolated chromosomes."

The circuit court judges' consideration of current industry practices and policies in addition to the law and legal precedence is somewhat unusual in patent law. "In antitrust law, it is very common for judges to make economic arguments," based on the view that "antitrust statutes are so general that applying them requires the use of economic policy arguments," Arti Rai, professor of law at Duke Law School, told PGx Reporter. "The view seems to be that in patent law, judges, particularly on the Federal Circuit, have often been reluctant to make economic arguments. But I and others have argued that, in the context of patent law, Congress arguably did something similar to what it did in antitrust. It delegated to the courts some power to make economic policy."


The US Government, through the Department of Justice, has supported the plaintiffs' position in AMP v. USPTO that isolated gene sequences aren't patent eligible, but the USPTO doesn't espouse this view.

While Lourie and Moore placed more weight on the USPTO's past practices, Bryson gave greater importance to the fact that the Solicitor General of the DoJ, representing the opinion of the executive branch of the US Government, has twice submitted amicus briefs expressing opposition to patenting isolated DNA molecules. Moreover, unlike Lourie and Moore, Bryson doesn't have any qualms about challenging the office's policies.

"Whatever force the USPTO's views on the issue of patent eligibility may have had in the past, at the very least, has been substantially undermined by the position the government has taken in this case," Bryson wrote.

If AMP v. USPTO reaches the Supreme Court, it is unknown how the justices will weigh the DoJ's opinion in this matter in light of the USPTO's notable silence. The circuit court judges have divergent views about how the Supreme Court might react.

Bryson highlighted that the Supreme Court isn't afraid to break with the USPTO's patent positions. For example, before the Supreme Court in Diamond v. Chakrabarty deemed genetically modified microorganisms patentable, the USPTO had held the opposite view. "But the Supreme Court gave no indication [in Diamond v. Chakrabarty] that it regarded that view as entitled to deference," Bryson wrote, adding that giving special importance to USPTO's historical actions on gene patents gives the agency lawmaking authority that Congress hasn't granted it.

Other legal experts, most recently Justice Department lawyer Melissa Patterson, have argued that although doing away with patents on isolated DNA sequences would invalidate a number of previously awarded patents, that's no reason to uphold the validity of patents if they don't meet the Section 101 test. For example, although the Supreme Court's invalidation a method of hedging losses in the energy industry in Bilski v. Kappos resulted in canceling some similarly structure business method patents, that didn't give the court much pause.

However, the scale of impact a patent invalidation would have on an industry matters to the CAFC judges, according to Courtenay Brinckerhoff, a partner at Foley & Lardner and chair of the law firm's IP Law and Practice division. "Bilski was a matter of years," during which similar method patents might have been awarded, while in AMP v. USPTO "we're pushing decades" during which the USPTO has awarded gene patents, Brinckerhoff told PGx Reporter. "The DNA patents here are really supporting an entire industry, whereas the types of business method patents at issue in Bilski were really new."

Similarly, Moore recognized that patents are more important to the life sciences industry than to other fields, and, as such, if the courts went against the patent office's practices in AMP v. USPTO it would be particularly harmful to the biotechnology sector. The USPTO's "long term policy of protecting isolated DNA molecules has resulted in an explosion of innovation in the biotechnology industry, an industry which, unlike the financial services industry or even the software industry, depends on patents to survive," she wrote.

Duke's Rai has gathered data suggesting that the Solicitor General has quite a bit of influence in the cases Supreme Court takes up, and in many instances the court has agreed with the DoJ's position. From 1996 to 2011 the Supreme Court granted certiorari in 19 out of the 23 patent cases the Federal Circuit decided. "The data show that the executive branch participated either as a party or as an amicus in seventeen of the nineteen Supreme Court cases," Rai wrote in a paper published in the Duke Law Journal in February. "In 10 of those seventeen cases, the executive branch disagreed with the Federal Circuit. And in all but one of those ten cases, the Court sided with the Solicitor General over the Federal Circuit."

A Job for Congress?

Ultimately, the majority CAFC opinion in AMP v. USPTO held that in their isolated form, gene fragments are not unlike other substances separated from nature, such as purified vitamin B-12, which US courts found to be different enough from the vitamin in the body to be patentable. "The explicit statement of the Patent Office’s position on isolated DNA … is simply a continuation of a longstanding and consistent policy of allowing patents for isolated natural products," Moore wrote, noting that it is for Congress to decide whether Myriad's patents on isolated gene sequences should be excluded from the patent system.

Congressional inaction on the topic of gene patents to date has signaled to the court that that its decision in AMP v. USPTO reflects the will of legislators. For example, Congress hasn't passed several bills that have been introduced to ban gene patenting or exempt doctors from infringement for performing genetic testing. Moreover, Moore also highlighted that as part of the Patent Office’s 2004 appropriations, Congress included language prohibiting patenting human organisms, but legislators explicitly stated at the time that the ban didn't extend to existing policies on genes, stem cells, or similar inventions.

"It is tempting to use our judicial power" to overturn gene patents, "especially when the patents in question raise substantial moral and ethical issues related to awarding a property right to isolated portions of human DNA – the very thing that makes us humans, and not chimpanzees," Moore reflected in her brief. "The invitation is tempting, but I decline the opportunity to act where Congress has chosen not to."

Lourie further hinted at legislative disinterest in doing away with gene patents since Congress passed an extensive patent reform bill while AMP v. USPTO was unfolding. Lawmakers are probably well "aware of the issue [of gene patents]," he wrote, suggesting that if Congress wanted to take action on this issue, they would have under the patent reform bill.

Under the America Invents Act, enacted last September, the USPTO is required to prepare a report on secondary genetic testing and submit it to Congress this year. The USPTO hosted two meetings this year to gather public input on whether gene patents and exclusive licenses have limited patients' access to confirmatory testing from independent diagnostic providers (PGx Reporter 2/22/2012).

Headed for the Supreme Court?

As in AMP v. USPTO, Lourie also wrote the majority opinion in the CAFC's decision in Mayo v. Prometheus, which upheld Prometheus' patents but was overturned unanimously by the Supreme Court (PGx Reporter 3/21/2012; 12/22/2010). Although the Supreme Court sent AMP v. USPTO back to the CAFC to review it in light of its ruling in Mayo v. Prometheus, Lourie asserted in his decision that "Mayo does not control the question of patent eligibility of [isolated DNA molecules]."

Duke's Rai observed that Lourie may be goading the Supreme Court with his decision in AMP v. USPTO, a move that may raise interest on the part of the court to accept the case if the ACLU and PUBPAT appeal. In his opinion, "Lourie basically says that … [Myriad's patents] involve a composition of matter and so Mayo is not relevant," Rai pointed out.

Furthermore, in Mayo v. Prometheus, the Supreme Court cautioned that the courts should be careful not to uphold patent claims for processes that "too broadly preempt the use of a natural law." While the plaintiffs argue in AMP v. USPTO that Myriad's broad patents on isolated DNA fragments preempt others from using the informational content in BRCA genes for research, Lourie maintained that because isolated gene sequences are compositions of matter, the preemption argument related to natural laws doesn't hold.

"[P]ermitting patents on isolated genes does not preempt a law of nature. A composition of matter is not a law of nature," Lourie wrote. "Moreover, as indicated earlier, a limited preemption is inherent in every patent: the right to exclude for a limited period of time." Rai believes that Lourie's position on the preemption issue may "raise a bit of a red flag" for members of the Supreme Court. "I think they did discuss preemption quite seriously in Mayo," she noted, adding that perhaps "Lourie is trying to thumb his nose a little bit" at the Supreme Court's decision in that case.

Overall, the tenor of the CAFC's latest ruling in AMP v. USPTO has left legal analysts with the impression that the judges are setting up the Supreme Court to review the case.

"If the Supreme Court does not agree with the current outcome, the opinions here seem to (tacitly) invite the Supreme Court to invalidate the claims that encompass genomic DNA but uphold the cDNA claims, which all judges (and the US Solicitor General) agree present an 'easy' case of patent-eligibility," Brinckerhoff said. "I think that would be an outcome the industry could live with, although it still might put some granted patents in jeopardy."