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In Wake of Myriad Decision, Some Debate Licensing Models for Gene Patents, While Some Question Value

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By Turna Ray

Since a US federal district court last month deemed seven of Myriad Genetics' BRCA patents invalid, certain industry players have taken small steps toward fostering more collaboration around gene patents while others have raised questions about the value of patenting genes altogether amid rapid advances in whole-genome sequencing.

One company, MPEG LA, earlier this month launched a gene patent "licensing supermarket" to allow test developers broader access to licenses with the aim of advancing the development of new diagnostics. Other ideas, short of invalidating gene patents, include instating a research exemption for patented genes in the US and creating patent pools.

However, whether these strategies will reduce the risk of gene patent challenges for participating companies remains to be seen, as does whether companies will even want to participate in such collaborative efforts. While industry may be quietly taking stock of various options on how to proceed with regard to gene patents, sequencing technology is advancing so quickly that today's gene patenting concerns may soon be obsolete, and new business and patenting strategies will be necessary, according to one genomics pioneer.

At a high-profile gathering of genomics leaders in Cambridge, Mass., this week, George Church noted that as the personalized medicine field makes greater use of whole-genome sequencing, "Myriad is losing the bigger battle." A leader of the Human Genome Project and a proponent of making individual genome sequences publicly available through the Personal Genome Project, Church suggested at the Genomes, Environments, and Traits Conference this week that companies providing raw genome sequence data cannot be sued by Myriad.

"The entire industry will be reformatted" and gene association patents as they exist today "won't really matter," Church said.

For the time being, industry players seem uncertain of how their patenting practices and business strategies will have to change with the advent of whole-genome sequencing. Myriad, which in the past has aggressively pursued certain laboratories conducting commercial research on BRCA genes or labs that have tried to report BRCA results to women, has made no moves to take on direct-to-consumer genomics companies or sequencing firms that might be providing data on BRCA genes that could lead people to learn of their risk of hereditary breast and ovarian cancer without Myriad's BRACAnalysis test.

Knome and Navigenics do not currently report on BRCA SNPs. However, 23andMe's SNP testing service does report on three BRCA mutations, and it is likely that customers of Illumina's whole-genome sequencing service that opt for 23andMe's analysis service can learn of their BRCA mutation status in even more detail.

According to industry insiders, 23andMe began reporting on BRCA SNPs without Myriad's permission and the move came as a surprise to Myriad. However, Myriad has not taken any legal action against 23andMe or Illumina to date.

Going to the Supermarket

In the aftermath of the Southern New York District Court's decision regarding Myriad's patents, one of the initiatives to emerge is MPEG LA's gene patent licensing "supermarket" that aims to lift barriers to basic research, allow patients greater access to tests, and advance the field of personalized medicine.

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In launching the diagnostics genetics patent licensing facility, MPEG LA, a packager of patent pools for the consumer electronics industry, plans to aggregate patent rights for existing and emerging tests and license them non-exclusively to labs, diagnostics firms, or researchers.

MPEG LA CEO Larry Horn feels that patent thickets and restrictive licensing agreements in the diagnostics industry are holding back companies from conducting research that could advance the field of personalized medicine. The Myriad case "suggests the need for a solution that balances social cost and open access with innovation incentive," Horn said in a statement announcing the gene patent supermarket initiative, inviting "all owners of relevant patents to join those who have expressed their support for this effort."

By joining the gene patent supermarket, patent owners would get a slice of royalties for every test developed using their patents. Additionally, MPEG LA would provide a level of oversight to make sure that patent owners' rights weren't being abused. "Under some circumstances, patent maintenance and prosecution costs also may be covered by MPEG LA," Horn said.

Additionally, participating in the supermarket would provide test developers a wider customer base for their technologies. "There may be greater value for both licensors and licensees when groups of these patents are licensed together than when they are licensed individually," Horn added. "Thus, the supermarket represents a new and financially attractive low risk opportunity, especially for universities."

Detractors of gene patenting have often derided university tech transfer offices' practice of granting exclusive licenses to industry partners and thereby creating patent thickets that restrict access to other technology developers. MPEG LA's licensing facility is currently in discussions with several research institutions and universities regarding participation in the supermarket.

However, as drug firms increasingly invest in the development of personalized drug/diagnostics combination products, they demand that biomarker patent rights belong either to them or to the diagnostic partner. In Horn's view, since the supermarket only involves granting non-exclusive rights to diagnostics patents, participation in the program won't necessarily harm companies' ability to attract drug/diagnostic partnerships.

"Rights having to do with drug development and ownership may continue to be exploited exclusively, and the market for their personalized application can be expected to grow from the broader testing that nonexclusive licensing of the diagnostic rights enables," Horn said.

MPEG LA's initiative will initially focus on garnering non-exclusive licenses to gene patents for hereditary hearing loss in infants, Lynch Syndrome, and cardiovascular diseases. Other patents of interest going forward will be in the area of breast cancer, ovarian cancer, and schizophrenia. "Eventually, the licensing can be extended to the entire human genome to provide access to a wide range of gene-related patents in the diagnostics field of use," Horn said.

The types of patents that MPEG LA expects to include in the supermarket are patents containing claims to biomarkers, patents containing claims to methods, reagents, and other ancillaries that are commonly infringed by the commercial test protocol.

Robert Cook-Deegan, a genetics policy expert and an outspoken detractor of broad gene association patents like those held by Myriad, believes MPEG LA's licensing facility has "real potential to lower the transaction costs [associated with gene patenting], reduce litigation, improve outcomes, and avoid pitfalls [such as] gene-by-gene blocking problems, all at the same time."

According to Cook-Deegan, MPEG LA's licensing facility is different from patent pooling efforts ─ in which companies agree to cross-license patents relating to a particular technology ─ since "there is not a gatekeeper of patents that the collective has committed to defend." With regard to gene patent pools, he's uncertain how well they'll work.

"Sure would be nice" if patent pools worked, he told Pharmacogenomics Reporter this week, "but I simply don't know.

"It depends so much on how rights-holders decide to behave, and if you know the answer to that, you have deep insight into a system that seems to include many players that don't take long-term consequences into account," he added.

John Conley, a law professor at the University of North Carolina, Chapel Hill, is similarly doubtful that the genomic industry is ready for a patent pooling-type strategy.

"I'm not sure the genetics industry has this mutuality-of-interest characteristic right now," said Conley, who authored a paper arguing that isolated gene patents may be challenged as products of nature; that paper was cited by Judge Robert Sweet in his decision regarding Myriad's patents.

"Perhaps some congressional pressure — a credible threat of adopting the HHS Secretary's Advisory Committee on Genomics, Health, and Society's recommendations, for example — would motivate the private parties," Conley said. "But I'm not holding my breath on that."

The Secretary's Advisory Committee on Genetics, Health, and Society earlier this year sent a report to HHS Secretary Kathleen Sebelius recommending the HHS advocate a statutory exemption from infringement liability for genetic test developers who use genes patented by another party, and supporting exemptions for scientists who wish to use patent-protected genes for research.

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Cook-Deegan led a research team that gathered public comments and provided information that formed the basis of the SACGHS' recommendations. A few members within the committee, as well as industry stakeholders, disagreed with SACGHS' recommendations and felt that there wasn't enough evidence confirming that gene-association patents restrict research.

Future Directions

In addition to the background analysis provided to the SACGHS, Cook-Deegan has recently published several papers analyzing the impact of gene patents. In an analysis published in the March 9 issue of Genomics, Cook-Deegan and his research team analyzed the scope of a particularly broad claim for an oligonucleotide sequence in one of Myriad's challenged patents. In the paper, Cook-Deegan and his colleagues concluded that such broad claims are worrisome as whole-genome sequencing becomes more widespread, since any kind of genomic sequencing will likely infringe such broad patents (PGx Reporter 03-24-10).

According to the Genomics paper, these types of broad patents create an uncertain environment for most diagnostics firms, and leave them open to legal challenges. As sequencing technologies become cheaper, it will not only change how the diagnostics industry operates, but also create more uncertainty around intellectual property distinctions. This is another area in which MPEG LA's licensing facility promises to provide a solution.

"The supermarket would become even more important because licenses may be needed under hundreds or thousands of patents covering specific sequences and analytical tools used in these tests, and licensing on a non-exclusive mass market basis will create an efficient way to address that," Horn said.

However, at the GET Conference in Cambridge, participants during a breakout session on gene patenting agreed it would be strategically unwise for Myriad to take on companies that are providing raw sequencing data, such as Illumina, because they do not provide any analysis that would connect BRCA sequence to risk of breast and ovarian cancer and therefore would not infringe Myriad's method claims. Potential legal risk for 23andMe as a result of its BRCA SNP analysis was not addressed during the session.

Since Myriad plans to appeal the federal district court's decision regarding its BRCA patents, it is also unlikely that the company would want to get into another high-profile legal tussle at the moment.

Supporters of collaborative strategies, such as patent pools and licensing clearinghouses, also feel that the problem is not necessarily gene patents, but Myriad's practices specifically.

At the New York Biotech Association's Annual Meeting on April 19, Daniel Ravicher, executive director of the Public Patent Foundation and counsel representing the plaintiffs in the case against Myriad, acknowledged that the American Civil Liberties Union and PUBPAT were considering challenging patents held by Myriad and also patents held by Athena Diagnostics. In the end, the ACLU and PUBPAT decided to go after the company that had harmed patient access the most and been the most "obnoxious" in the handling of their patents. In their opinion, Myriad beat out Athena in this regard.

"It's a shame," Ravicher said, that because of one company's actions, the whole diagnostics industry will be impacted by this far-reaching court decision.

Even before this case was decided, Myriad held a bad reputation in the industry for its exclusive licensing practices. A few years before the US federal district court challenge, Myriad's BRCA patents were challenged with some success in European courts. With the invalidation of its patents in the US, researchers and other industry members who already derided the company's practices undoubtedly feel a sense of satisfaction.

Proclaiming his belief that genes should not be patented, James Watson, co-discoverer of the structure of DNA, said during the GET Conference that there is "nothing clever or novel about isolating a gene."

"I hate Myriad the way some people hate Goldman Sachs," Watson said. By patenting genes, "they made enormous profits," but "they are also raising the cost of medicine."

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