In Association for Molecular Pathology v. U.S. Patent & Trademark Office, No. 2010-1406 (Fed. Cir. July 29, 2011), the Federal Circuit overturned a district court decision that had unsettled the biotechnology industry when it invalidated Myriad's patent claims directed to "isolated DNA" involving the human genes for Breast Cancer Susceptibility Genes 1 and 2 ("BRCA 1/2"). The Federal Circuit also reversed the district court's holding that Myriad's method claims directed to screening potential cancer therapeutics via changes in cell growth rates were patent-ineligible. The Federal Circuit, however, upheld the district court's ruling that certain of Myriad's method claims directed to "comparing" or "analyzing" DNA sequences were invalid as unpatentable subject matter because "such claims include no transformative steps and cover only patent-ineligible abstract, mental steps." Id., slip op. at 8.  Judge Lourie wrote the majority opinion that was joined in part by the entire panel. 

Background

A group of plaintiffs, including the Association for Molecular Pathology ("AMP"), a number of medical organizations, and individual researchers affected by breast cancer testing, brought suit against Myriad, seeking declaratory judgment that 15 claims from seven patents[1] relating to BRCA 1/2 were invalid. The district court ruled against Myriad in April 2010, holding that all the challenged claims were drawn to non-patentable subject matter under 35 U.S.C. § 101. Ass'n for Molecular Pathology v. U.S. Patent & Trademark Office, 702 F. Supp. 2d 181 (S.D.N.Y. 2010) ("SJ Op.").[2]  Myriad appealed.

The Federal Circuit Decision

The central issues in this lawsuit were whether claims to isolated genes and diagnostic methods met the standard for patent-eligible subject matter articulated by the Supreme Court in In re Bilski [3]. With respect to the isolated genes claims, the district court held that isolated BRCA1/2 DNA did not possess "markedly different" structure and function compared with native BRCA 1/2 DNA and, thus, did not qualify as patentable subject matter under 35 U.S.C. §101. SJ Op. at 121-135.  This ruling had the potential to invalidate all patent claims directed to isolated forms of naturally occurring DNA molecules.

The Federal Circuit rejected the district court's analysis as well as the position advocated by the Department of Justice (in contrast to the USPTO's longstanding policy), holding that "the challenged claims to isolated DNAs, whether limited to cDNAs or not, are directed to patent-eligible subject matter of §101." Ass'n for Molecular Pathology , slip op. at 39.  In doing so, the Federal Circuit applied the analytic framework provided in Supreme Court cases Chakrabarty[4] and Funk Brothers.[5] The court explained that the distinction between a product of nature, which is unpatentable, and a human-made invention for purposes of §101 turns on whether "human intervention has given 'markedly different,' or 'distinctive,' characteristics." Id. at 41. 

The court then concluded that Myriad's composition claims cover isolated DNAs that "are markedly different—have a distinctive chemical identity and nature—from molecules that exist in nature," thus rendering them patentable. Id. at 41. The court reasoned that the isolated DNA had a "distinctive chemical identity from that possessed by native DNA" because the isolated DNA was cleaved or synthesized to contain only a portion of a naturally occurring DNA molecule and was no longer an integral part of a chromosome. Id. at 42.

The court rejected the DOJ's proposed "magic microscope" test. The government argued that if the claimed DNA molecule could be seen in the human body through an "imaginary microscope," the claim covered unpatentable subject matter.  Id. at 38. Applying this test, the government made a distinction between DNA molecules engineered by man, including cDNAs, which were considered patentable, and isolated and unmodified genomic DNAs, which were deemed as patent-ineligible products of nature. Id. at 38-39. The court dismissed the government's test because it "fails to take into account the existence of molecules as separate chemical entities" and explained that "[t]he ability to visualize a DNA molecule through a microscope, or by any other means, when it is bonded to other genetic material, is worlds apart from possessing an isolated DNA molecule that is in hand and usable." Id. at 45.

The Federal Circuit next addressed a subset of Myriad's method claims directed to "comparing" or "analyzing" the BRCA 1/2 genes. Applying the "machine-or-transformation" test[6], the Federal Circuit affirmed the district court's decision that "Myriad's claims to 'comparing' or 'analyzing' two gene sequences fall outside the scope of § 101 because they claim only abstract mental processes." Id. at 50. The "comparing" step, the court reasoned, involved "nothing more than the abstract mental steps necessary to compare two different nucleotide sequences . . . ."  Id.  The court found that the claim's limitation of comparing just the BRCA genes amounted to an improper limitation of an abstract idea "to a particular technological environment." Id. (internal citations omitted). According to the court, the comparison was not a permissible application of an abstract idea in a process; instead, it was "the entire process claimed." Id. at 50-51. The court distinguished Myriad's steps from the "administering" and "determining" stepsthe court found patent-eligible in Prometheus.[7] Id. at 52. Unlike the "determining" required in Prometheus, the court found Myriad's steps "do not include the step of 'determining' the sequence of BRCA genes by, e.g., isolating the genes from a blood sample and sequencing them, or any other necessarily transformative step." Id. at 52.[8]    

In contrast, the Federal Circuit reversed the district court's holding that Myriad's claims directed to screening potential cancer therapeutics via changes in cell growth rates were invalid. The Federal Circuit held that the claimed steps of "growing" transformed cells and "determining" the cells' growth rates were beyond mere abstract mental step of comparing two host cells' growth rates and necessarily involved physical manipulation of the cells. Id. at 53. They were also "central to the purpose of the claimed process" because "[t]he goal of the claim is to assess a compound's potential as a cancer therapeutic, and growing the cells and determining their growth rate is what achieves that goal." Id. at 53-54. 

Judge Moore's Concurrence

Judge Moore drafted a concurring opinion that agrees with the majority's judgment that claims to isolated DNA are patentable but is based on a different line of reasoning. Judge Moore disagreed with Judge Lourie's use of "markedly different chemical structure" to determine whether the isolated DNA is a product of nature. Instead, Judge Moore advocated that the analysis should focus on whether the differences between the isolated and natural DNA "impart a new utility which makes the molecules markedly different from nature." Ass'n for Molecular Pathology, No. 2010-1406, slip op. at 15 (Moore, J. concurring).

Judge Bryson's Concurrence and Dissent

Judge Bryson concurred in portions of the majority's judgment that are directed to the patentability of the cDNA claims and the method claims, but dissented on the issue of whether an isolated human DNA molecule should be patentable. Judge Bryson stated that "[w]hat is claimed in the BRCA genes is the genetic coding material, and that material is the same, structurally and functionally, in both the native gene and the isolated form of the gene." Ass'n for Molecular Pathology, No. 2010-1406, slip op. at 13 (Bryson, J. dissenting). 

Standing Affirmed on Narrow Ground 

The Federal Circuit also affirmed that the district court properly exercised declaratory judgment jurisdiction over this suit.  Applying MedImmune's all-the-circumstances test[9], the court concluded that one plaintiff, Dr. Ostrer, had established standing to maintain the declaratory judgment suit based on the "absolute barrier" Myriad's patent claims had to his ability to perform BRCA diagnostic testing activities.  Ass'n for Molecular Pathology, No. 2010-1406, slip op. at 34-35. This was despite the fact that the Federal Circuit was informed within the week prior to its decision that this plaintiff was moving to a different institution that would not offer the test.[10] The court rejected the argument that declaratory judgment jurisdiction could be predicated on "the widespread understanding that one may engage in BRCA 1/2 testing at the risk of being sued for infringement liability by Myriad[.]"  Id. at 35 (internal citation omitted). The court explained that "[s]imply disagreeing with the existence of a patent or even suffering an attenuated, non-proximate, effect from the existence of a patent does not meet the Supreme Court's requirement for an adverse legal controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Id.

Looking Forward

The Federal Circuit's reversal of the lower court's ruling will be welcomed by many sectors of the biotechnology industry, particularly with respect to reaffirming the patentability of isolated nucleic acid claims. However, certain challenges remain surrounding the patent-eligibility of medical diagnostic patent claims. While the addition of a Prometheus-type "determining" step would have probably cured the invalidity problem of the current Myriad claims, with whole genome sequencing likely around the corner, the challenge for diagnostic companies will be to draft claims that are patent-eligible (particularly in view of the uncertain Supreme Court decision in Prometheus), novel, and that are commercially-relevant, taking into consideration the requirements of proving direct infringement.

Moreover, critics of the industry have argued against Myriad's diagnostic claims, citing the imposition of significant financial burdens on patients and medical laboratories that wish to perform genetic testing that are covered by patents. Consequently, there is a reasonable chance the Plaintiffs will request an en banc rehearing or immediately file a petition for a writ of certiorari with the Supreme Court.