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Supreme Court Tasks Lower Court with Determining Criteria for Dx Patentability

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By Turna Ray

A day after reaching a decision in the business methods patent case Bilski v. Kappos, the Supreme Court this week remanded the diagnostic patent case Prometheus Laboratories v. Mayo Collaborative Services et al., to the Federal Circuit Court of Appeals with an order to revisit the case in light of Bilski.

The lower court must now reconsider Prometheus with the understanding that the so-called "machine-or-transformation test" cannot be the sole determinant for patentability. While this presents an opportunity for the Federal Circuit to come up with new methods for determining patentability with regard to advanced technologies not grounded in a physical platform, nothing in the Supreme Court's recent actions sheds light on how the courts might deal with method patents related to genetic testing.

"I wouldn’t read too much" into the Supreme Court's decision to remand Prometheus to the Federal Circuit, Thomas Engellenner, partner and chair of the life sciences practice group at the law firm Nutter McClennen & Fish, told Pharmacogenomics Reporter this week. "The Supreme Court often does this if it feels that a better record can be built by having the lower court review its decision after [it] has issued a ruling that might impact the lower court’s reasoning."

In Bilski, the Supreme Court determined that new tests for patentability would be necessary to advance innovations in the Information Age, such as software and medical diagnostics. The machine-or-transformation test, which arose in the Industrial Age, determines whether an invention is patentable based on whether it is either tied to a particular apparatus or transforms an article into a different state. It has been used in many patent cases to determine patentability, including Prometheus.

However, while the Supreme Court made it clear in Bilski that alternatives to the machine-or-transformation test would be required, it provided no guidance as to what other tests courts should use to assess patent eligibility (PGx Reporter 06/28/10).

According to Craig Hemenway, a partner at the law firm Dorsey & Whitney specializing in IP, the narrow scope of the Bilski decision was the Supreme Court's way of "signaling the Federal Circuit to try and make some new law in this area.

"The remand of [the Prometheus case] for reconsideration in light of Bilski gives the Federal Circuit a good opportunity to refine the patentability of method and process patents," Hemenway added.

It's anyone's guess, however, how the appeals court's newfound flexibility in gauging patentability will impact future decisions surrounding genetic testing — specifically in the case of Association for Molecular Pathology et al. vs. the United States Patent and Trademark Office et al., involving the patentability of Myriad Genetics' BRCA patents, which Myriad is appealing to the Federal Circuit (PGx Reporter 03/31/10).

In March, the New York Southern District Court invalidated seven of Myriad's BRCA patents. In the case, Judge Robert Sweet held that isolated DNA containing BRCA1/2 gene sequences described in Myriad's patents are unpatentable under 35 USC Section 101, since they not markedly different from gene sequences naturally occurring in the body in function or in the information they contain. Additionally, the judge asserted that comparisons of DNA sequences are abstract mental processes and not patentable under Section 10.

Potential Impact

Prometheus v. Mayo involves two patents for which Prometheus Labs holds exclusive licenses. The patents claim methods of measuring a patient's metabolite level to calibrate doses of a thiopurine drug to treat stomach disorders.

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When Mayo announced in 2004 that it intended to sell its own tests that measured the same metabolites as Prometheus' test, Prometheus sued Mayo for infringement.

A federal district court in 2008 found Prometheus' method claims were not patentable subject matter under 35 USC 101. Prometheus appealed the district court's decision to the Federal Circuit, which last year reversed the lower court's decision and found in favor of Prometheus that its method claims for determining metabolite levels for drug dosing met the machine-or-transformation test, and were therefore patentable.

"We conclude that the methods of treatment claimed in the patents in suit squarely fall within the realm of patentable subject matter because they 'transform an article into a different state or thing,'" and this transformation is “central to the purpose of the claimed process," the Federal Circuit wrote in its decision.

After the Federal Circuit's decision, many industry observers and legal experts held that the court's application of the machine-or-transformation test maintained the status quo for diagnostic developers and supported Myriad's method patents comparing cDNA to DNA that were being challenged in Association for Molecular Pathology et al. vs. the United States Patent and Trademark Office et al.

The Federal Circuit's "decision allayed a lot of the fears of the biotech industry that assaying steps generally were going to be treated as mere 'data-gathering' under the machine-or-transformation test," said Engellenner.

However, Mayo petitioned the Supreme Court for a writ of certiorari, requesting the higher court to review the Federal Circuit's determination. The day after invalidating Bernard Bilski's business method patent claims for hedging risk in commodities trading, the Supreme Court granted Mayo the writ, but sent the case back to the Federal Circuit to reconsider its decision in light of its Bilski finding that the machine-or-transformation test is one method for patentability, but it cannot be the only test.

The machine-or-transformation test was also applied by Sweet in his invalidation of Myriad's method patents for comparing isolated BRCA sequences to gene sequences in the body. Before the Supreme Court's Bilski decision, Sweet applied the Federal Circuit's decision on Prometheus to Myriad's patents and disagreed with Myriad's claims that analyzing and comparing gene sequences are transformative processes in the same way as gauging metabolite levels in patient samples in Prometheus. Additionally, Sweet held that Myriad's method patents weren't patentable because they were abstract mental processes.

Ultimately, after Bilski, the implication for Prometheus and Myriad's method patents is that the Federal Circuit will likely have to come up with methods other than the machine-or-transformation test to make a determination on the patentability of these processes, or make a determination as to whether these methods constitute abstract processes.

"I suspect the [Federal Circuit] will re-affirm its decision that the Mayo clinic patents recite patent eligible subject because they involve a transformation and because determining a level of an analyte in a subject is also not an abstract idea, as well," Engellenner said.

Myriad's Optimism

The Bilski decision was largely hailed by the biotech industry as a positive turn of events. Myriad told Pharmacogenomics Reporter that the Supreme Court's decision in this case will "ensure that ingenuity receives liberal encouragement."

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Still, it may be too soon for Myriad and other life sciences players to celebrate, since the Supreme Court shed little light what other tests the Federal Circuit might apply — not just to Myriad's patents but other diagnostic method patents that are challenged in the future.

With respect to Prometheus, Myriad spokesperson Suzanne Barton said that the company "anticipates that the Federal Circuit will promptly issue a new decision upholding the patentability of the applicable diagnostic testing in light of the fact that the original Prometheus decision was decided under the machine-or-transformation test, which the Supreme Court affirmed was 'a useful and important test, just not the sole test.'"

Hemenway agreed that since the Supreme Court states in Bilski that the machine-or-transformation test is "a good clue to patentability," Prometheus' claims can presumably remain patentable post-Bilski.

"Given the loosening of the machine-or-transformation test, biotech companies should be pleased," he said. "For example, many diagnostic tests would fail the old test since they neither were linked to a particular machine to make the diagnosis nor do they transform anything. Now, there's at least a chance that these types of patent claims will be upheld."

Depending on the Federal Circuit's position in Prometheus v. Mayo, Hemenway believes that Myriad "could have a happy result," adding that "any ruling clarifying the patentability of these types of claims could work to Myriad's benefit."

In addition to Myriad's method claims, however, its patents on isolated BRCA sequences are also being challenged. In this regard, Sweet asserted that a process of isolating a gene, while it might require skill, is not a process of invention entitled to a patent. He also struck down Myriad's claims that cDNA was different from DNA, noting that questions of "novelty" were "irrelevant." According to legal experts, the question of whether isolated gene sequences are patentable is what the gene patenting case ultimately rests on. The outcomes of Prometheus and Bilski hold no bearing on this question.

In a presentation to investors at the Goldman Sachs annual healthcare conference earlier this month, Myriad CEO Peter Meldrum maintained the company's position that the gene patenting lawsuit will have no negative effect on its business. Furthermore, he opined that the company may have a better chance of a favorable decision with the more patent-savvy judges in the Federal Circuit Court of Appeals.

The federal circuit court judges in Meldrum's opinion are more experienced in patent law, and as such he said he was confident that they will overturn Sweet's federal district court decision.

"Judge Sweet has heard four patent cases in his career. All four patent cases were appealed and overturned when it came to the federal circuit court," he said. "So, [Sweet] doesn't have a great record when it comes to patent adjudication."

He added that the plaintiffs, represented by the ACLU and PUBPAT, must have "done their research" on the Southern New York District Court and felt that bringing their case against the company in that particular venue would be favorable to the plaintiff's case.

The Federal Circuit could hear Myriad's appeal with three judges or en banc with all 12 judges. "I believe with in less than a year we should hear an outcome of this legal case," Meldrum said.

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