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In Gene Patent Ruling, SCOTUS Draws Line Between Product of Nature and Invention

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Originally published June 14.

It may have taken enormous effort and investment to isolate specific gene mutations and discover their links to disease, and the US Patent and Trademark Office may have long granted IP protection for claims on such isolated DNA fragments, but neither of these facts convinced the US Supreme Court to uphold Myriad Genetics' patents on BRCA1 and BRCA2 genes.

In a landmark decision issued this week, Justice Clarence Thomas authored the unanimous ruling that Myriad's claims on isolated BRCA1 and BRCA2 gene sequences are not patent eligible. Under 35 USC Section 101 of the patent law, products of nature cannot be patented. But the court maintained complementary DNA, which is used as probes in diagnostic testing and in certain drug-development processes, as patent eligible because it is synthesized in a lab.

"A naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but cDNA is patent eligible because it is not naturally occurring," the court wrote.

The case, Association for Molecular Pathology v. Myriad, began in 2009 when healthcare providers, researchers, and cancer patients represented by the American Civil Liberties Union and the Public Patent Foundation challenged 15 claims in seven of Myriad's patents covering isolated BRCA gene sequences, cDNA, and diagnostic methods. The plaintiffs asserted that Myriad's patents were invalid under US law and charged that the company was restricting research and limiting patient access to tests by being the sole provider.

Indeed, helped by its patent position, Myriad enjoyed a monopoly in the BRCA testing market and for many years faced no competition for its $4,000 test, BRACAnalysis, for gauging hereditary breast and ovarian cancer risk. Several of the patent claims challenged in this case were slated to expire in 2015.

Sandra Park, staff attorney with the ACLU Women's Rights Project, said during a call to discuss the court ruling that Myriad had used its patents on isolated gene sequences to restrict researchers from performing BRCA testing, even if they were using novel diagnostic methods. Having patents on the gene sequences themselves allowed Myriad to have control over any application of that gene, Park said.

Myriad had argued that its patents on isolated DNA are patent eligible, since by isolating the fragment, the DNA segment is separated from the surrounding biological material inside the body. Neither this argument, nor the fact that the USPTO has for many years awarded patents on some 4,000 genes – many of which claim isolated DNA – swayed the Supreme Court.

"Myriad’s claims are not saved by the fact that isolating DNA from the human genome severs the chemical bonds that bind gene molecules together. The claims are not expressed in terms of chemical composition, nor do they rely on the chemical changes resulting from the isolation of a particular DNA section," the court found. "Finally, Myriad argues that the [USPTO's] past practice of awarding gene patents is entitled to deference, citing [a previous] case where Congress had endorsed a PTO practice in subsequent legislation. There has been no such endorsement here."

Before reaching the Supreme Court, AMP v. Myriad had been argued before a federal district court in New York, and twice at the Court of Appeals for the Federal Circuit. In these lower courts, several of Myriad's broad method claims on "comparing" and "analyzing" isolated DNA to the reference DNA had been invalidated.

By the time the case reached the Supreme Court, nine of the 15 claims were at issue – five on isolated gene sequences and four on cDNA. The four cDNA claims remain valid. In a statement following this week's decision, Myriad maintained that it still has a very strong patent position around BRACAnalysis and its other tests. The company said that it holds more than 500 valid and enforceable claims in 24 patents underlying BRACAnalysis.

In light of the Supreme Court decision, Myriad highlighted that the court emphasized that its ruling in AMP v. Myriad doesn't restrict patents on novel diagnostic method claims, new applications of knowledge about BRCA1/2 genes, or DNA that has had the order of the naturally occurring nucleotides altered. Justice Thomas acknowledged in the court's decision that Myriad holds many unchallenged patents that describe novel applications of the genes.

Citing this, Myriad's General Counsel Richard Marsh told PGx Reporter that the company's business remains in strong standing and the firm doesn't intend to change its business strategy or lower the price of its test.

"We are not planning on making any changes to the way we do business," Marsh said. "We said from day one, that win, lose, or draw, we do not anticipate that any outcome from this case would have any impact on our operations. So, we are just going to continue to do what we've been doing from day one: testing patients to provide them with critical information to save lives."

Meanwhile, several companies announced plans to offer BRCA testing for hereditary breast and ovarian cancer. Mary-Claire King, who first described the link between BRCA1 mutations and heightened risk of breast cancer in 1990, told PGx Reporter that her lab at the University of Washington will immediately begin testing for alterations in BRCA1 and BRCA2 as part of a next-generation sequencing hereditary cancer panel, called BROCA. Before the Supreme Court's decision, BROCA gauged a panel of genes associated with the risk of hereditary breast and ovarian cancer, but did not include analysis of BRCA1 and BRCA2 because of Myriad's patents.

Houston-based DNATraits, a subsidiary of Gene By Gene, announced it will offer testing for BRCA1/2 genes for around $1,000, a significant discount to Myriad's test. GeneDx and Ambry Genetics, two companies offering testing for genetic diseases using next-generation sequencing, said they would launch comprehensive genetic tests for inherited cancers including BRCA1/2 genes, following the Supreme Court's decision.

Wall Street Analysts closely following this lawsuit felt that these entrants offering BRCA testing will likely put pressure on Myriad to lower the price of BRACAnalysis, which still brings in more than 80 percent of the company's product revenues. "If [Myriad] does not bring down its prices we assume payors will shift to lower-priced options, especially as these options become more validated and established," wrote Credit Suisse analyst Vamil Divan in a note.

For the time being, however, Myriad has the most market experience with BRCA testing. Myriad spokesperson Ronald Rogers told PGx Reporter that the company would compete with these new players by providing the most accurate service, better turn-around of test results, and better customer service to help patients garner reimbursement for testing (see related story, in this issue).

Highlighting the hereditary colorectal cancer genetic testing market, Rogers noted there are 15 test providers in that space and Myriad holds 70 percent market share with its Colaris hereditary colorectal cancer risk test. "That speaks to our ability to provide quality, turn-around time, and customer service," Rogers said. "And we think we do that better than anyone else in the industry." Myriad officials have previously noted that the company doesn't have patents on isolated gene sequences for its Colaris test in the way that it had for BRACAnalysis (PGx Reporter 2/6/2013).

Ultimately, the Supreme Court's decision will force researchers, labs, and test developers seeking patents around genetic tests to make more specific claims on how the knowledge of a gene-disease association is applied. "Probably, diagnostics based on DNA are going to have to be patented in more specific ways, which will narrow claims," said Robert Cook-Deegan, director for the Duke Center for Genome Ethics, Law and Policy . "There is now a mess of mainly university-owned patents that have invalid claims." Deegan noted that these claims will have to be re-examined, or many owners of such patents may just stop enforcing them

Maintaining 'basic tools'

In invalidating Myriad's patents on isolated gene sequences, the Supreme Court warned that the patent system should not be used to tie up the "basic tools of scientific and technical work." The court reiterated the point that the patent system must strike "a delicate balance" by incentivizing innovation and not hindering the flow of information that might lead to invention.

"It is undisputed that Myriad did not create or alter any of the genetic information encoded in the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed in nature before Myriad found them," wrote Justice Thomas. "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."

Ultimately, in the Justices' view, Myriad's challenged patents didn't describe a transformation of the gene sequences into a new and useful product after isolating them from their natural state. Drawing the line that patentees must cross in order to transform a product of nature into a patentable invention, the court cited its 1980 decision in the case Diamond v. Chakrabarty, in which it ruled that genetically modified bacterium was patentable because, unlike naturally occurring bacteria, it could break down crude oil.

In contrast, in another case, called Funk Brothers Seed Co. v. Kalo Inoculant Co., the Supreme Court struck down Kalo Inoculant's patent claims on mixing strains of bacteria that scientists found didn't have a mutually inhibitive effect and could be used together in a mixture to inoculate plants. The court in that case found that although the patentee had discovered a phenomenon of nature that certain strains of bacteria had mutually non-inhibiting properties, this discovery did not deserve a patent.

"Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the Section 101" requirement for patent eligibility, Justice Thomas wrote. Under Section 101, any invention or new and useful process, machine, manufacture, or composition of matter can be patented. But through subsequent court cases, the court has further clarified that laws of nature, natural phenomenon, and abstract ideas are not patentable.

Myriad has said that it has spent 17 years and more than $500 million to not only discover the location and sequence of the BRCA1/2 genes, but to also develop and improve upon BRACAnalysis, and provide a high-quality testing service. Since launching the test in 1996, the company has used the assay to test more than one million patients, has invested in identifying rare BRCA1/2 alterations associated with cancer, and has created a large, proprietary database of disease-linked variants that will likely give the firm a significant edge over competitors in terms of test accuracy (see related story, in this issue).

Throughout the case, Myriad had argued that since the USPTO has for more than three decades granted patents on isolated gene sequences, the patent office's practice deserves deference. However, in deciding the case, the Supreme Court placed more weight on the US Department of Justice's opinion.

"Undercutting the PTO’s practice, the United States argued in the Federal Circuit and in this court that isolated DNA was not patent eligible under Section101 …and that the PTO’s practice was not a sufficient reason to hold that isolated DNA is patent eligible," Justice Thomas asserted in the ruling. "These concessions weigh against deferring to the PTO’s determination."

The DOJ, in an unprecedented move, issued a friend of the court brief in AMP v. Myriad in 2010, as the case was about to be heard by the Court of Appeals for the Federal Circuit, taking the view that "isolated but otherwise unaltered genomic DNA is not patent-eligible subject matter." The DOJ's position represented the view of the executive branch, and several government agencies had signed this brief, but not the USPTO.

Additionally, Myriad had raised the point during the course of the case that invalidating gene patents would impact other labs and companies that hold similar patents. "Concerns about reliance interests arising from PTO determinations, insofar as they are relevant, are better directed to Congress," Justice Thomas wrote.

BIO, the interest group representing the biotechnology industry, issued a statement criticizing the Supreme Court's decision. "The Supreme Court's decision today represents a troubling departure from decades of judicial and USPTO precedent supporting the patentability of DNA molecules that mimic naturally-occurring sequences," BIO said in a statement. "In addition, the court’s decision could unnecessarily create business uncertainty for a broader range of biotechnology inventions."

Caveat on cDNA

The other half of the Supreme Court's decision in AMP v. USPTO is its view that cDNA – a synthetic strand of nucleotides that contain only exons— is patent eligible. cDNA is commonly used as probes in diagnostic testing and has applications in drug development.

"cDNA does not present the same obstacles to patentability as naturally occurring, isolated DNA segments," the court noted. "Creation of a cDNA sequence from mRNA results in an exons-only molecule that is not naturally occurring."

The plaintiffs had argued that cDNA should not be patent eligible because it contains the same information as the naturally occurring gene sequence. "But the lab technician unquestionably creates something new when cDNA is made," the court held.

The court, however, noted that cDNA may not be patent eligible when it is such a short segment that it has the same sequence as natural DNA. "cDNA … is patent eligible under Section 101, except insofar as very short series of DNA may have no intervening introns to remove when creating cDNA," Justice Thomas reasoned. "In that situation, a short strand of cDNA may be indistinguishable from natural DNA."

However, as the diagnostics field moves toward more advanced technologies, cDNA may not be as critical to the industry. "cDNA is not relevant to genetic testing," UW's King told PGx Reporter. "The cDNA caveat will have no impact scientifically or medically."

Other experts in the genomics field have similar views about the importance of cDNA in their work. Industry observers have held that cDNA may be more important to the biotech industry, however.

For example, inserting a specific strand of cDNA into a cell is often employed in order to make that cell express a protein that it normally doesn't. This technique is useful in drug research and development. cDNA is also necessary for recombinant DNA, which researchers create by combining genetic material from different sources. Recombinant DNA, industry observers believe, will be critical to the development of novel drugs.

In reaction to the Supreme Court's decision, Myriad didn't focus too much on the court's ruling on cDNA. The company's diagnostics don't rely on cDNA. BRACAnalysis combines PCR amplification and Sanger sequencing, and the company had previously announced that it intends to transition all its hereditary cancer tests to a next-generation sequencing panel by 2015.

Myriad's Rogers noted that while cDNA may be important for the larger biotech industry, "it's really not appropriate for us to comment … because we're just not involved in that industry."

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