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Federal Court Invalidates Patent Underlying Sequenom's MaterniT21 Plus

NEW YORK (GenomeWeb News) – In a blow to Sequenom, a federal court has invalidated a patent held by the company covering the detection of cell-free DNA in the bloodstream of pregnant women.

On Wednesday, the US District Court for the Northern District of California granted Ariosa Diagnostics summary judgment and invalidated US Patent No. 6,258,540, saying the patent covers a phenomenon of nature, which is unpatentable.

Sequenom holds an exclusive license to the '540 patent, which underlies its MaterniT21 Plus non-invasive prenatal diagnostic test, from Isis Innovations.

Ariosa, formerly Aria Diagnostics, sued Sequenom in late 2011 seeking a declaratory judgment that its own test called the Harmony Prenatal Test, which was in development at the time, did not infringe the '540 patent. In its lawsuit, Ariosa claimed that Sequenom was overly aggressive in enforcing the patent and had "misrepresented" the scope of the patent, with the intent of "deterring potential competitors from entering the market and deterring doctors and healthcare providers from using anyone other than Sequenom," as Clinical Sequencing News reported at the time.

Today, in a statement, Ariosa called the decision "a complete victory" for the company, and added that it "validates Ariosa's long-standing view that it has freedom to develop new, innovative, and market-leading technologies to provide improved genetic testing for pregnant women."

Sequenom said in a document filed with the US Securities and Exchange Commission today that it "vigorously disagrees with the order and, following entry of judgment pursuant to the order, intends to appeal the decision to the Federal Circuit Court of Appeals."

In making its ruling, the court found that the '540 patent does not cover any novel methods or inventions, and instead covers a natural phenomenon, inherited cell-free fetal DNA, or cffDNA. It rejected Sequenom's argument that certain of the patent's claims are patentable "because they are novel uses of a natural phenomenon, rather than a patent on the natural phenomenon itself."

Sequenom had not claimed that the discovery of cffDNA in maternal plasma or serum can be patented, but instead, had said in certain claims that methods of detecting inherited cffDNA in maternal plasma or serum can be patented.

"Therefore, the issue before the court is whether the steps of the claimed methods in the '540 patent, applied to that natural phenomenon, are sufficient to render the claims patentable," Judge Susan Illston said in her ruling.

Ariosa had argued that steps claimed in the '540 patent "do not add enough to the natural phenomena of paternally inherited cffDNA to make" them patentable, and specifically said that "the additional limitations in the claims either apply well-understood, routine, and conventional activity to the natural phenomenon or limit the natural phenomenon to specific types of the natural phenomenon, which are also unpatentable."

The court agreed. As an example, it cited a method of detecting cffDNA contained in the patent by "amplifying a paternally inherited nucleic acid from the serum or plasma sample … and detecting the presence of a paternally inherited nucleic acid of fetal origin in the sample."

The amplification and detection of DNA sequences in plasma or serum, however, the court said, was "well known by 1997."

Further, the court said that the patent's inventors stated during the course of the lawsuit that "any of the well-known, routine techniques for detection of DNA could be used to detect fetal DNA in maternal serum or plasma," and an expert testifying on behalf of Sequenom had acknowledged that "traditional DNA diagnostics, prior to the inventions commonly involved sample preparation, amplification, and detection.

"Sequenom does not contest that these steps and other steps in the patent were well-understood, routine, and conventional activity by those in the field at the time of the invention," the court said in its 20-page ruling. "Indeed in its reply brief and at oral argument, Sequenom acknowledges that the claims of the '540 patent merely apply 'conventional techniques' to the newly discovered natural phenomenon of cffDNA."

In reaching its decision, the court relied on seven US Supreme Court decisions for guidance, including SCOTUS' decision in June that invalidated certain claims contained in patents licensed to Myriad Genetics covering BRCA1 and BRCA2 genes. SCOTUS ruled that human genes cannot be patented because they are products of nature, but that synthetic DNA, or cDNA, which are not found in nature, can be patented.

Applying the SCOTUS decisions, the California District Court found that the only "inventive concept" in the '540 patent was the discovery of cffDNA, but because it is a natural product, it cannot be patented.

Judge Illston also noted that in addition to determining whether a claim is patentable "a court should consider whether the claim poses a risk of preempting a law of nature, natural phenomenon, or abstract idea," and found that the '540 patent does.

Sequenom argued that the patent does not preempt all other uses of cffDNA and presented scientific articles that described alternative methods for detecting cffDNA. It, however, did not present any evidence that the alternative methods were practical or commercially viable.

Sequenom responded that what should be considered should only be whether the other methods can be practiced. But the court found that "[i]f the alternative methods are not commercially viable, then the effect of the patent in practice would be to preempt all uses of the natural phenomenon. It is important to note that the '540 patent does not merely claim uses or applications of cffDNA, it claims methods for detecting the natural phenomenon."

It further added that Sequenom has acknowledged the preemptive nature of the patent.

"We believe the court’s decision is wrong and misapplies or ignores the controlling law, including the holding in the Supreme Court’s recent decision in the Myriad Genetics case, to the ‘540 patent," Sequenom said in a statement to GenomeWeb Daily News today. "We believe that [the inventors behind the patent] invented a novel method for detecting paternally inherited fetal DNA in maternal plasma and that their invention is more than just the basic discovery of a natural phenomenon."

In addition to Ariosa, Natera and Illumina's Verinata Health have sued Sequenom seeking declarations they don't infringe the '540 patent — and Sequenom sued Natera in early 2012 over the patent.

Illston also presides over the Natera and Verinata litigation against Sequenom, which are ongoing. The lawsuit filed by Sequenom against Natera was dismissed in March 2012.

The '540 patent is just one patent over which companies operating in the non-invasive prenatal diagnostic space are wrangling. Additionally, Verinata and Stanford sued Sequenom claiming it infringed US Patent Nos. 7,888,017; 8,008,018; and 8,195,415, which are licensed to Verinata. Verinata and Stanford also sued Ariosa and Laboratory Corporation of America alleging that they infringe US Patent Nos. 8,296,076 and 8,318,430.

In a research note published today, Piper Jaffray analyst William Quirk said that as a result of yesterday's ruling, he expects Sequenom will no longer have any claims to royalties related to its MaterniT21 test, and instead will have to pay royalties to its competitors.

"Although the competitive dynamics do not change (no competitors will be taken off the market as a result of this), we do believe that Sequenom may ultimately have to pay royalties to Verinata (per their infringement suit against Sequenom)," Quirk said. "That said, the court ruled that cffDNA … is not patent-eligible … which does raise the question over how strong is Illumina's (Verinata) IP? The bottom line is that the competitive dynamics in play are unlikely to change in the near term."

Dan Leonard with Leerink Swann said in a research note that the decision is a positive for Illumina and PerkinElmer. He estimated NIPD testing will represent more than 5 percent of Illumina's total sales in 2014, while it is a growth accelerator for PerkinElmer, which is the exclusive US marketing partner for Verinata's Verifi test.

This week's ruling, he said, could potentially add 1 percent to revenues in 2014 for PerkinElmer.

In Thursday afternoon trade on the Nasdaq, shares of Sequenom tumbled 25 percent to $1.86. Earlier in the trading session, it hit a 52-week low of $1.70.