Federal Circuit decision in AMP v. USPTO results in three-way split in reasoning; 2-1 decision finds isolated DNA patentable

It has been estimated that 1 out of every 8 women in the United States will develop invasive breast cancer during her lifetime. Although a diagnostic test exists to identify mutations on the BRCA1 and BRCA2 human genes, two genes associated with breast and ovarian cancer, many women are not afforded the opportunity to have testing done because Myriad Genetics holds exclusive rights over these genes. The tests are often not covered by insurance companies and Myriad's monopoly power allows it to price the test at $4,000 which is cost prohibitive for many women. Even if a woman does have the BRCA testing done, she cannot seek a second opinion because Myriad has prohibited other companies from testing for BRCA mutations. This lack of testing by competitors is especially harmful to women who are minorities; studies have shown that Myriad's test is flawed and has failed to identify all mutations, particularly for women of color. The results of the diagnostic testing is often critical in predicting a woman's susceptibility to breast cancer (women who have a mutation on one of these two genes are up to 80% more likely to develop breast cancer) and in determining the most appropriate course of treatment.

Although the USPTO has granted patents on human genes for the past thirty years, on March 29, 2010, federal district court judge, Robert Sweet, rejected the claim that one can patent isolated DNA or cDNA. Judge Sweet ruled that genes are a product of nature and therefore not patentable under 35 U.S.C. Section 101.

On Friday, July 29, 2011, the Federal Circuit issued its opinion determining the patentability of the BRCA 1/2 gene claims in American Molecular Pathology, et. al., v. U.S. Patent and Trademark Office, et. al., reversing the District Court's ruling (and rejecting the U.S. Department of Justice's position which argued against the patent eligibility of isolated DNA). Oral arguments for this case were previously heard in April.

With regard to the merits of the case, a three-way split in reasoning emerged as to the patentability of isolated DNA. Judge Lourie, appointed to the Federal Circuit by President George H.W. Bush, authored the majority opinion which found that isolated DNA and cDNA are patent eligible and also found patentable Myriad's method claim on screening potential cancer therapeutics by tracking changes in cell growth rates. It did, however, affirm the lower court ruling with respect to Myriad's method claims which involved comparing or analyzing DNA sequences. Judge Moore, a President George W. Bush appointee, concurred in the outcome, agreeing that isolated DNA is patentable, but came to this conclusion through a different reasoning (while Judge Lourie's opinion focused only on the structural differences between isolated DNA and that found in nature, Judge Moore suggested that the proper test also requires a difference in utility). Judge Bryson, appointed by President Clinton, dissented and argued against the patent eligibility of isolated DNA (Like Judge Moore, Judge Bryson's decision examined both the structural differences as well as utilitarian differences, but ultimately came to a different conclusion).

First, the Federal Circuit necessarily ruled on the threshold standing issue, affirming jurisdiction over the case because it determined that "at least one plaintiff, Dr. Harry Ostrer, had standing to challenge" Myriad's patent claims.

It should be noted that just two days prior to the release of this decision, the Defendants-Appellants in the case filed a notice with the Federal Circuit further challenging Dr. Ostrer's standing claim. Dr. Ostrer is leaving NYU Langone and will be employed by the Department of Genetics at Albert Einstein College of Medicine; Albert Einstein College of Medicine does not offer genetic testing and thus, the Defendants-Appellants argue that standing can no longer be based on a claim by Dr. Ostrer. Because of the short length in time between the filing of this notice and the publication of the Federal Circuit opinion, the Federal Circuit did not consider this claim. A few hours after the opinion was published, Plaintiffs-Appellees responded to the notice, alleging factual inaccuracies in Defendants-Appellants claim. The letter states that Dr. Ostrer will be employed at the Department of Genetics at Albert Einstein College of Medicine and Montefiore Medical Center. The Montefiore Medical Center, the letter notes, has the same immediate capacity to engage in genetic testing and that Dr. Ostrer's standing therefore is not affected.

In ruling on the isolated DNA issue, Judge Lourie--whose opinion was more broad and more of a blanket approval of patentability for isolated DNA than the concurring opinion--determined that these claims were patent eligible based on their "markedly different" characteristics from what exists in nature. Citing Supreme Court precedent in Chakrabarty, 477 U.S. 303 (1980), the majority opinion notes that

The distinction . . . between a product of nature and a human-made invention for purposes of § 101 turns on a change in the claimed composition's identity compared with what exists in nature.

Lourie begins his analysis in this regard by noting that DNA found in nature exists in the body as "one of forty-six large, contiguous DNA molecules" while isolated DNA is a "free-standing portion" that "has been cleaved (i.e., had covalent bonds in its backbone chemically severed) or synthesized to consist of just a fraction of a naturally occurring DNA molecule." He distinguishes the idea of "purified DNA" from "isolated DNA" noting that isolated DNA involves the breaking of covalent bonds, which, he claims, alters the makeup of the DNA. This focus on the break in covalent bonds is unsurprising given Judge Lourie's similar note during oral arguments.

While the district court rejected the patentability of isolated DNA molecules on the grounds that their genetic function is to transmit information, Judge Lourie reversed, finding instead that patent eligibility is "not negated because it has similar information properties to a different, more complex natural material that embodies it." Judge Lourie focused on the structure of the isolated molecules rather than their function.

Additionally, the majority opinion cites the "longstanding practice of the PTO" to grant patents on isolated DNA molecules as support for its decision. However, as the dissent notes, the PTO's position is undercut by the fact that the U.S. DOJ filed a brief in the matter arguing against the patentability of isolated DNA and the Solicitor General personally appeared at Oral Arguments. Judge Lourie (as well as Judge Moore's concurring opinion) suggested that it was more appropriate for Congress to address the matter and reverse this practice of the USPTO to grant patents on isolated DNA than for the courts. Both the majority opinion and concurring opinion seem to give considerable deference to the USPTO and weight to the fact DNA claims have historically been permitted.

Only one of Myriad's method claims (claim 20 of patent claim '282), that involving a method for screening of potential cancer therapeutics through changes in cell growth rate, survived the patent challenges. All three judges were in agreement, holding this one method claim to be patent eligible. However, all three judges rejected the rest of Myriad's method claims which all involved merely "comparing" or "analyzing" DNA sequences. The Federal Circuit held that such claims did not include any transformative steps (failing the machine-or-transformation test) and involved only abstract, mental steps which cannot receive patent protection.

Judge Moore joined in the majority opinion with respect to standing, the method claims, and cDNA, but only concurred in judgment on the isolated DNA claims. While she also found isolated DNA to be patent eligible, she rejected Judge Lourie's implications that because an invention does not exist in nature in the exact state as in its claimed state it is automatically subject matter eligible for patent protection. Citing the tests provided for by the Supreme Court in Chakrabarty and Funk Brothers, 333 U.S. 127 (1948), Judge Moore rejects the reasoning used in the majority opinion stating, "Although the different chemical structure does suggest that claimed DNA is not a product of nature, I do not think this difference is alone necessarily makes isolated DNA so 'markedly different.' from chromosomal DNA so as to be per se patentable subject matter." Instead, in finding the isolated DNA claims to be patent eligible, Judge Moore relies on "as precedent instructs . . . whether these differences impart a new utility which makes the molecules markedly different from nature." She determined that because the isolated sequences can be used as primers in diagnostic tests, they have a new utility in its isolated form that is distinct from its function in nature. Ultimately, Judge Moore determined that

Because the different chemical structure of the isolated DNA, which is a product of the intervention of man, leads to a different and beneficial utility, I believe small, isolated DNA fragments are patentable subject matter.

She does, however, caution that her decision may be different were she deciding the case "on a blank canvas" and might instead find that isolated DNA sequences "that includes most or all of a gene is not patentable subject matter" because it does not have a new utility.

Unlike Judges Lourie and Moore, Judge Bryson found that isolated DNA claims are not patent eligible. Concurring in judgment with respect to standing, cDNA (agreeing with the general acceptance of cDNA as patent eligible, but disagreeing with respect to two specific overly broad cDNA claims), and the method claims determinations, Judge Bryson concluded that Myriad's BRCA gene claims (the isolated DNA claims) were not eligible for patent protection.

In Judge Bryson's determination, the claims-at-issue are directed to facts which are not patentable. He notes the distinction between facts and application of facts, stating:

Of course, Myriad is free to patent applications of its discovery. As the first party with knowledge of the sequences, Myriad was in an excellent position to claim applications of that knowledge . . . Yet some of Myriad's challenged composition claims effectively preempt any attempts to sequence the BRCA genes, including whole-genome sequencing. In my view, those claims encompass unpatentable subject matter, and a contrary ruling is likely to have substantial adverse effects on research and treatment in this important field.

Like his colleagues, Judge Bryson also relies on the Chakrabarty case, but in his application of this precedence finds that the isolated DNA claims "clearly" are not patent eligible because these genes appear in nature and the "only material change . . . from their naturally state is the change that is necessarily incidental to the extraction from the genes from the environment in which they are found in nature." Acknowledging that the extraction process may be difficult, Judge Bryson argues that the level of difficulty cannot make a naturally occurring item an invention.

Judge Bryson rejects Judge Lourie's position stating that "there is no magic to a chemical bond that requires us to recognize a new product when a chemical bond is created or broken." He cites the fact that isolated DNA "have the same sequence, they code for the same proteins, and they represent the same units of heredity" and therefore concluded that isolated DNA is not markedly different from that which is naturally occurring.

Judge Bryson also disagreed with the deference his colleagues gave to the USPTO on three grounds. He first noted that the USPTO "lacks substantive rulemaking authority as to issues such as patentability" and that the court only owes deference commensurate with the thoroughness and validity of the USPTO's reasoning. Secondly, Judge Bryson suggested that USPTO's position was "substantially undermined by the position the government has taken in this case." Because the DOJ filed a brief advocating for the Federal Circuit to uphold the District Court's decision with respect to isolated DNA, the court is

left to guess about the status of any possible continuing interagency disagreement about the issue, the Department of Justice speaks for the Executive Branch, and the PTO is part of the Executive Branch, so it is fair to assume that the Executive Branch has modified its position from the one taken by the PTO.

Finally, Judge Bryson also pointed out that the Supreme Court in Chakrabarty did not appear to give deference to the USPTO's position in that case and instead cited a responsibility under the Constitution to interpret the language Congress used in defining patentable subject matter under Section 101. By deferring to the USPTO's past practice of granting patents on isolated DNA, in Judge Bryson's view, Judge Lourie and Judge Moore's positions gives the USPTO lawmaking power which was never granted to the agency by Congress. Judge Bryson concludes, "There is no collective right of adverse possession to intellectual property, and we should not create such a right."

This case will likely be appealed, either first to an en banc sitting of the Federal Circuit, or directly to the Supreme Court.

SCOTUS weighing in

Although a bit of trepidation is likely in order (no matter on what end of the spectrum you tend to fall), I look forward to reading what the SCOTUS has to say when the esteemed Justices opine on gene patents. Particularly since Myriad presents a bit of a chicken-and-egg question -- that is thus perhaps not scientifically, definitively solvable -- policy considerations will probably weigh heavily in their ultimate determination. Which also makes one wonder to what extent the Court's new political makeup will affect the case's outcome.