Introduction - AIPLA · Web view2008:320:53-54. (The Centers for Medicare and Medicaid...

Intellectual Property Issues Impacting the Future of Personalized Medicine

Being Prepared for AIPLA’s MidWinter Institute for CLE Credits for a Panel Session Titled “IP Value for Personalized Medicine”

2:00 – 3:30 P.M., Thursday, January 31, 2013

Judith A. Roesler, Moderator

Judith A. RoeslerRoesler Law Offices, PLLC

1000 Centre Green Way, Suite 200Cary, NC 27513(919) 228-6321

[email protected]

Lynn C. Tyler, M.S.Barnes & Thornburg

11 South Meridian StreetIndianapolis, Indiana 46204-3535

(317) [email protected]

Karen S. Canady, Ph.D.canady & lortz LLP

3701 Wilshire Blvd., Suite 508Los Angeles, California 90010


Ling Zhong, Ph.DRatnerPrestia

1235 Westlakes Drive, Suite 301Berwyn, PA 19312


OutlineI. Introduction....................................................................................................................................................... 2

II. The “Safe Harbor” from Patent Infringement......................................................................................4

A. Scope of 35 U.S.C. §271(e)(1) Exemption............................................................................................4

1. Personalized Medicine......................................................................................................................5

2. Classen v. Biogen IDEC, et al...........................................................................................................5

3. Momenta Pharma v. Amphastar Pharma...................................................................................6

4. Current State of the Law.................................................................................................................. 7

B. Proposed Exemption for Confirmatory Genetic Testing...........................................................7

1. Personalized Medicine......................................................................................................................9

2. Mandated Study under ‘America Invents’ Act..........................................................................9

3. Current State of the Law................................................................................................................10

C. Conclusion................................................................................................................................................... 10

III. Gene Patents After Myriad & Mayo........................................................................................................10

A. The Patent Claims.................................................................................................................................... 11

B. The CAFC Decisions in Myriad............................................................................................................12

C. Standing........................................................................................................................................................ 12

D. Remand in View of Mayo v. Prometheus.........................................................................................13

1. Judge Lourie’s Majority Opinion................................................................................................14

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IP Issues Impacting the Future of Personalized Medicine

2. Judge Moore’s Concurrence.........................................................................................................14

3. Judge Bryson’s Dissent...................................................................................................................15

E. Implications for Gene Patents.............................................................................................................16

1. Would the Supreme Court Agree?.............................................................................................17

F. Implications for Diagnostic Methods...............................................................................................18

G. Conclusion................................................................................................................................................... 19

IV. Mayo v. Prometheus and Bioinformatics.............................................................................................20

A. Mayo v. Prometheus................................................................................................................................. 20

1. Two-Step Evaluation of Process Claim...................................................................................22

B. Case Law Development..........................................................................................................................23

1. Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada...................................................23

2. Association for Molecular Pathology v. U.S. Patent and Trademark Office................24

3. PerkinElmer, Inc. v. Intema Ltd....................................................................................................24

4. Case Law Summary..........................................................................................................................26

C. USPTO Guidance....................................................................................................................................... 26

D. Conclusion................................................................................................................................................... 27

V. Divided Infringement.................................................................................................................................. 28

A. Akamai Techs., Inc. v. Limelight Networks, Inc..............................................................................28

B. McKesson Techs., Inc. v. Epic Systems Corp.....................................................................................29

C. Federal Circuit En Banc Opinion........................................................................................................30

1. Majority................................................................................................................................................. 31

2. Dissent................................................................................................................................................... 32

D. Relevance to Diagnostic Companies................................................................................................33

E. Alternative Analysis................................................................................................................................ 34

F. Conclusion................................................................................................................................................... 36

VI. A Patent Practitioner’s Position on Gene Patents and the Public Good................................37

I. Introduction1

1 Chapter authored by Judith Roesler, Esq., Roesler Law Offices, PLLC, 1000 Centre Green Way, Suite 200, Cary, NC 27519, Phone: (919) 228-6321, E-mail: [email protected].

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Advanced tests based on genetics and molecular mechanisms have provided a pathway for personalized medicine.2 As a result, medical practitioners will become increasingly reliant on patient testing prior to making therapeutic decisions.3 Drug companies have already moved toward an increased use of genetic and molecular based testing in developing targeted therapeutics and identifying responders, or in some cases, identifying patients at a heightened risk for developing side effects.4 In addition to providing more precise information for selecting optimal therapy and appropriate dosages of therapeutics, personalized medicine introduces the ability to provide predictive information for patients before clinical symptoms appear.5

While no one can dispute the benefits provided by personalized medicine, the future of the related intellectual property rights has become progressively uncertain. Public opinion has fueled the controversy of whether patent protection should be available for genes, biomarkers, and diagnostic methods.6 As new technologies emerge, concerns have deepened regarding how patents may restrict the practice of personalized medicine. For example, next generation sequencing technologies that depend upon reference genetic information to identify sequence variants associated with a disease may be considered as infringing multiple gene patents if sections of the reference genetic information are patented.7 Similarly, there are concerns that patents may encumber the discovery of new treatment paradigms for complex diseases such as cancer. For example, studies of non-responders with sets of potential biomarkers may lead to a better understanding of the mechanism and efficacy of a therapeutic long after regulatory approval of the therapeutic.8 Post-market testing of the approved therapeutics with patented 2 See Hamburg, M.A. and Collins, F.S., “The pathway to personalized medicine,” N. Engl. J. Med., 363: 301-304, (2010).

3 See generally Ross, Jeffrey S., Ginsburg, Geoffrey, S., “The integration of molecular diagnostics with therapeutics: Implications for drug development and pathology practice,” Am. J. Clin. Pathol. 119:26-26 (2003).

4 See “Personalized medicine by the numbers,” Personalized Medicine Coalition, October 2011, Cross Reference: Tufts Center for the Study of Drug Development. “Personalized medicine is playing a growing role in development pipelines,” Impact Report, 12:6 (2010). (Facts and figures support that personalized medicine represents a significant segment of current pharmaceutical development efforts and spending, where investment has increased seventy-five percent during the past five years.).

5 See The Case for Personalized Medicine, 3rd Edition (2011), available at www.personalizedmedicinebulletin.com.

6 See Sonini, S., et al., “Patenting and licensing in genetic testing: ethical, legal and social issues,” European Journal of Human Genetics, 16:S10-S50 (2008). See also, Fore, Joe, Jr., et al., “The effects of business practices, licensing, and intellectual property on development and dissemination of the polymerase chain reaction: case study,” Journal of Biomedical Discovery and Collaboration, 1:7, (2006). See also, Cook-Deegan, R., et al. “Impact of Gene Patents and Licensing Practices on Access to Genetic Testing for Inherited Susceptibility to Cancer: Comparing Breast and Ovarian Cancers to Colon Cancers,” Genet Med, 12(4 Suppl.): S15-S38 (2010).

7 See e.g. Ray, Turna, “Whole-Genome Sequencing Poses ‘Serious Challenge’ to U.S. Patent System, HHS Finds.” www.genomeweb.com, December 10, 2008. (HHS Secretary’s Advisory Committee on Genetics, Health, and Society advised that full genome sequence analysis represents a serious challenge to the current system of patents on individual genes and exclusive licenses. Exclusive licenses may hamper the ability of personal genomics firms to conduct multiplex testing.), but see also, Holman, Christopher M. “Will gene patents derail the next generation of genetic technologies?: A reassessment of the evidence suggests not”, UMKC Law Review 80(3): 563, 2012. See generally, Metzker, Michael, “Sequencing technologies – the next generation,” Genetics, 11:31-46, (2010).

8 See generally, Gerlinger, M., Rowan AJ, Horswell, S., Larkin J., Endesfelder, D., et al. “Intratumor heterogeneity and branded evolution revealed by multi-region sequencing,” N. Engl. J. Med., 366:883-892 (2012).

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biomarkers, however, may be considered an infringing activity falling outside of the “safe harbor” as provided by current U.S. patent law.9

The following chapters will provide an analysis of the current state of patent law in the context of personalized medicine. Topics covered include the “safe harbor” from patent infringement; gene patents; bioinformatics; and divided infringement. A position chapter from a patent practitioner’s perspective on gene patents and the public good will conclude this paper.

II. The “Safe Harbor” from Patent Infringement10

Because the common law experimental use exemption to patent infringement has been limited to “activities performed for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry,” the statutorily created “safe harbor” provision through the Hatch Waxman Act provides the only immunity available for research and clinical study activities.11

In the enactment of the Hatch Waxman Act in 1984, public policy concerns played a role in creating the “safe harbor,” as codified under 35 U.S.C. §271(e)(1).12 The provisions of the Hatch Waxman Act were directed to balancing protection afforded by patents on drugs with the incentive to allow generic drugs on the market in a timely manner once the patents on the drugs expired. Otherwise infringing activities associated with testing of the generic drugs became immune from action under the law if the activities related to the pursuit of Federal approval of a drug product.13 Current public policy concerns have also prompted a study under the Leahy-Smith ‘America Invents’ Act that may result in extending a “safe harbor” of patent immunity to confirmatory genetic tests.14

A. Scope of 35 U.S.C. §271(e)(1) ExemptionThe language of 35 U.S.C. §271(e)(1) is directed to the “development and submission of

information under a Federal law which regulates drugs or veterinary biological products.” Since enactment, the scope of the “safe harbor” has continued to evolve with courts actively engaged in

9 See Classen Immunotherapies, Inc. v. Biogen Idec, et al., App. 2006-1643, 1649 (Fed. Cir. 2011).

10Chapter authored by Judith Roesler.

11 See Madey v. Duke University, 307 F.3d 1351, 1362-63 (Fed. Cir. 2002); See also, Hagelin, Ted, “The Experimental Use Exemption to Patent Infringement: Information on Ice, competition on hold,” Florida Law Review, Vol. 58, No. 3, pp. 483-560, July 2006.

12 See H.R. Rep. 98-857, pt. 2, at 2714 (Aug. 1, 1984)(The Hatch Waxman Act set up a statutory system to “balance the need to stimulate innovation against the goal of furthering the public interest.”).

13 See 35 U.S.C. § 271(e)(1) (It shall not be an act of infringement to make, use , offer to sell, or sell within the United States or import into the United States a patented invention…solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use or sale of drugs or veterinary biological products.).

14 See Section 27, Leahy-Smith America’s ‘Invents Act’ to amend Title 35, United States Code, 112th Congress, 1st Session, H.R. 1249 (September 16, 2011).

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defining what types of studies will be covered under the law.15 Although Hatch Waxman focused on pharmaceuticals, in 1990, the Supreme Court interpreted that the immunity provision extends to the testing of Class III medical devices.16 In 1997, the Federal Circuit further interpreted that the “safe harbor” provision applies to Class II medical devices as well.17 As the majority of diagnostic tests fall within the definition of either Class II or Class III medical devices, the “safe harbor” immunity also applies to studies concerning diagnostic tests.18

1. Personalized Medicine By identifying genes, proteins or pathways disrupted by disease, personalized medicine

technologies have the potential to enhance the safety and efficacy of drugs long after the drugs have been approved for marketing.19 FDA approvals may also include post-marketing commitments for further study.20 Staged development phases for biopharmaceuticals may involve subsequent clinical studies to identify biomarkers or assays to expand the label by testing the negative biomarker population following the initial FDA approval.21 Two recent decisions by the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) suggest that the availability of the “safe harbor” for post-market studies of drugs or post-marketing studies of combinations of drugs is somewhat uncertain, as discussed below.22

2. Classen v. Biogen IDEC, et al.In Classen v. Biogen IDEC, et al., the patent holder charged a number of vaccine

companies with infringement based on activities relating to post-market studies to determine possible side effects of the vaccines.23 The patent holder asserted that the defendants infringed his patents by conducting studies “to evaluate suggested associations between childhood 15 See generally Thomas, J.R., Pharmaceutical Patent Law, Second Edition, The Bureau of National Affairs, Inc., 669-687 (2010).

16 See Eli Lilly & Co. v. Medtronic Inc., 496 U.S. 661, 669, (1990). See also, Title 21 Code of Federal Regulations Part 800-1200 (21 CFR Parts 800-1299).

17 See Abtox v. Exitron, 122 F.Ed 1019, corrected on reh’g, 131 F.3d 1009 (Fed. Cir. 1997).

18 See 21 CFR Part 812; Medical Devices, Overview of Device Regulation (available on FDA website).

19 See e.g. Albain, K.S., et al. “Prognostic and predictive value of the 21-gene recurrence score assay in postmenopausal women with node-positive, oestrogen-receptor-positive breast cancer on chemotherapy: a retrospective analysis of a randomized trial,” The Lancet Oncology, 11:1, 55-65 (January 2010).

20 See e.g. Biologics license to Genentech for Trastuzumab (Herceptin), Department of Health & Human Services, Food and Drug Administration, FDA Reference No. 98-0369 (September 25, 1998) (Item 7. To assess the clinical outcome of patients selected for treatment on the basis of the DAKO test and other HER2 diagnostics in the context of Herceptin clinical trials.).

21 See Simon, R., “Clinical trial designs for evaluating the medical utility of prognostic and predictive biomarkers in oncology,” Per. Med., 7:485-496 (2012).

22 Compare Classen Immunotherapies, Inc. v. Biogen Idec, et al., App. 2006-1643, 1649 (Fed. Cir. 2011) (CAFC panel members were Judge Newman and Chief Judge Rader for the majority and Judge Moore dissenting.) with Momenta Pharmaceuticals, Inc., et al. v. Amphastar Pharmaceuticals, Inc., et al., Slip. Op. 2012-1062, -1103, -1104 (Fed. Cir. 2012)(CAFC panel members were Judge Moore and Judge Dyk for the majority and Chief Judge Rader for the dissent.).

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vaccinations…and the risk of developing Type 1 diabetes; and to determine whether timing of vaccination influences risk.”24 The district court granted a summary judgment based on the grounds that the activities by the vaccine companies fell within the “safe harbor” provision of §271(e)(1).25 The Federal Circuit reversed the summary judgment on August 31, 2011.26

In holding that the “safe harbor” exception did not apply in Classen, the Federal Circuit reasoned that “the statute does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained.”27 The Federal Circuit distinguished the Supreme Court’s broader interpretation of §271(e)(1) in Merck KGaA v. Integra Lifesciences I, Ltd. (“Merck KGgA”), 545 U.S. 193, 207 (2005), by contrasting that the research in Merck KGgA was preclinical research.28 In so reasoning, the Federal Circuit noted that the activities of the defendants in Classen were not related to producing data for an Investigational New Drug or a New Drug Application and not a “phase of research” possibly leading to marketing approval.29

3. Momenta Pharma v. Amphastar PharmaIn August 2012, the Federal Circuit distinguished the finding in Classen and found that

the infringement exemption under §271(e)(1) would extend to data collected post-market if the information was necessary for the continued approval of an Abbreviated New Drug Application.30 In Momenta Pharma v. Amphastar Pharma, No. 2012-1062 (Fed. Cir.), the patent holder asserted a patent that generally related to an analytical method used in the manufacturing of a generic version of Lovenox (enoxaparin), a low molecular weight version of heparin.31 The molecular diversity of the enoxaparin raised a potential problem in establishing that the generic equivalent was the bioequivalent to the reference drug.32 The defendant was accused of using the analytical method for post-market submissions to the FDA to show the

23 See Classen Immunotherapies, Inc. v. Biogen Idec, et al., App. 2006-1643, 1649 (Fed. Cir. 2011), 130 S. Ct. 3541 (2010) (Grant, Vacate, Remand of Federal Circuit Decision in 2008), No. WDQ-04-2607, 2006 WL 6161856 (D. Md. Aug. 16, 2006); 381 F. Supp. 2d 452 (D. Md. 2005).

24 See id. at slip. op. 26 (quoting Am Compl ¶7 in Classen, 381 F. Supp. 2d at 455).

25 See id. at slip op. 4. (District court granted summary judgment that the claims were not infringed based on Classen’s failure to allege facts sufficient to establish infringement by Merck, and based on the safe-harbor provision as to the other defendants.).

26 See id. at slip op. 4.

27 See id. at slip op. 27.

28 See id. at slip op. 29. (In Merck KGaA, the Supreme Court applied the limitation that the uses of the information must be “reasonably related to the development and submission of information” although “reasonably related” does not mean that the use of the patented invention must necessarily result in submission of the information to the FDA.)

29 See id.

30 See Momenta Pharmaceuticals, Inc., et al. v. Amphastar Pharmaceuticals, Inc., et al., Slip. Op. 2012-1062, -1103, -1104 (Fed. Cir. 2012).

31 See id.

32 See id. at slip. op. 4.

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identity and strength of the active ingredient for each batch of enoxaparin rather than for pre-market approval.33 Although each batch record was not submitted to the FDA, regulations require that the records be retained for at least one year.34 In the opinion, the Federal Circuit reasoned that the defendant’s activities in Momenta could be distinguished from those of the accused infringers in Classen because the information could be said to have “been gathered solely for submission to the FDA and not, as in Classen, primarily for non-FDA purposes.”35

The Federal Circuit went on to refuse the pre-/post- approval distinction used by the district court because “Classen did not turn on this artificial distinction, and the plain language of the statute is not restricted to pre-approval activities.”36

4. Current State of the LawThe Federal Circuit has reached seemingly contradictory holdings in assessing the

availability of the “safe harbor” for post-market studies of therapeutics. 37 While the opinion in Momenta went to some length in distinguishing the facts of the case from those in Classen, it is noteworthy that two different panels of appellant judges decided Classen and Momenta.38 Because two panels of judges appear to be on the opposite side of the issue, an en banc hearing before the full Federal Circuit or an appeal to the Supreme Court seems imminent. Given that the Solicitor General has been asked to advise the Supreme Court in the pending appeal of Classen, it would appear that the Supreme Court may provide further interpretation of the scope of “safe harbor” in the foreseeable future.39 Based on the holdings of Classen and Momenta, there is some question on whether the scope of the “safe harbor” would be available to post-market studies of marketed therapeutics. The importance of the issue could impact the strategies within the pharmaceutical industry, particularly on designing clinical studies.

B. Proposed Exemption for Confirmatory Genetic Testing Section 27 of the Leahy-Smith ‘America Invents’ Act (AIA) sets forth a provision

requiring the Patent Office to study genetic testing. Specifically, the AIA mandates that the Patent Office report to Congress the results of a study that entails ways to provide independent, confirming genetic diagnostic test activity where gene patents and exclusive licensing for the genetic diagnostic tests exist.40 The mandated study requires an examination of at least the following:33 See id. at slip. op. 18.

34 See id. at slip. op. 19.

35 Id.

36 See id. at slip. op. 19-20.

37 See supra note 22.

38 See id.

39 See Order List: 567 U.S. Order in Pending Case 11-1078 GlaxoSmithKline v. Classen Immunotherapies, Inc. (June 25, 2012).

40 See Leahy-Smith America’s Invents Act to amend Title 35, United States Code, 112th Congress, 1st Session, H.R. 1249 at 142-144 (September 16, 2011).

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(1) The impact that the current lack of independent second opinion testing has had on the ability to provide the highest level of medical care to patients and recipients of genetic diagnostic testing and on inhibiting innovation to existing testing and diagnosis;

(2) The effect that providing independent second opinion genetic diagnostic testing would have on the existing patent and license holders of an exclusive genetic test;

(3) The impact that current exclusive licensing and patents on genetic testing activity has on the practice of medicine, including the interpretation of testing results and performance of testing procedures; and

(4) The role that cost and insurance coverage have on access to and provision of genetic diagnostic tests.41

As provided by Section 27 of the AIA, the Patent Office will provide recommendations to Congress based on the findings of the study that address the availability of independent confirming genetic diagnostic test activity.42

Section 27 was sponsored by Representative Debbie Wasserman-Schultz (D-Florida) following her personal experience with BRCA genetic testing after a diagnosis of breast cancer.43 Upon discovering she was a carrier of the BRCA-2 gene mutation, she found that she had no access to an independent second opinion for the genetic test.44 The study mandated under Section 27 is expected to influence Congress on whether to take action to amend 35 U.S.C. Section 287 to include a “safe harbor” for otherwise infringing activities if the activities relate to independent confirmatory genetic testing. To date, Representative Wasserman-Schultz and Representative Lamar Smith (R-Texas) have both proposed statutory language to exempt genetic test providers from infringement for confirmatory testing.45

1. Personalized MedicineThe BRCA-1 and BRCA-2 genetic tests, as well as the majority of the genetic tests for

approximately 2,500 diseases listed on the NIH Genetic Testing Registry, represent a segment of diagnostic tests commonly sold under the designation of a laboratory developed test (LDT).46 The FDA regulatory status of genetic tests ties into the issue of access for second opinions 41 See id. at 142-144.

42 See id. See also “Genetic Testing,” AIA Studies and Reports, http://www.uspto.gov/aia implementation/aia studies reports.jsp. See also Testimony of Representative Debbie Wasserman Schultz, USPTO Transcript of Public Hearing, San Diego, CA Friday, March 9, 2012, http://www.uspto.gov/aia_implementation/120309-genetic_transcript.pdf.

43 See “Wasserman Schultz’s legislation ensuring access to second opinions for patients signed into law,” http://wassermanschultz.house.gov (September 21, 2011).

44 See id.

45 See Managers Amendment to H.R. 1249, Congressional Record, Vol. 157, No. 84 (June 13, 2011). 46 See Frequently Asked Questions, Genetic Testing Registry, National Institutes of Health, http://oba.od.nih.gov.

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because a LDT designated genetic test may only be conducted in the laboratory where the genetic test was developed.47 Developers of a LDT genetic test, such as the BRCA-1 and BRCA-2 tests offered by Myriad Genetics, must conduct testing of the LDT exclusively within the laboratory setting where the development of the test occurred because commercial distribution of a diagnostic test is not permitted absent full FDA approval.48 If the patent holder offering the LDT genetic tests determines that there is commercial advantage in holding the patents exclusively, then no other testing laboratory may repeat the test without infringing the patents under the current law.

2. Mandated Study under ‘America Invents’ Act The United States government has struggled with issues relating to genetic testing for

decades, and the study mandated by the AIA is not the first study to address the impact of gene patenting and licensing practices.49 Although the Patent Office was expected to deliver the AIA study and associated recommendations to Congress in June 2012, the finalization of the report has been delayed.50 The Patent Office recently indicated that an additional public hearing will occur in early 2013 before the study will be finalized.51 Comments filed in response to the first Notice earlier in 2012 illustrate the complexity of the issue and the diversity of opinions and suggestions on what, if any, changes should occur.52

3. Current State of the LawThe future of gene patents remains uncertain thus impacting the significance of the AIA

Study and the possibility of a legislative provision for a confirmatory genetic testing exemption. If gene patents are ultimately struck down as covering patent ineligible subject matter under 35 U.S.C. §101, then Congress may consider the issue of the confirmatory genetic testing exemption as less of a priority for legislative action. Although the Federal Circuit recently upheld the validity of the claims drawn to genes in Association for Molecular Pathology, et al. v.

47 See generally, “Transcript from Public Meeting on Oversight of Laboratory Developed Tests,” U.S. Department of Health and Human Services, Food and Drug Administration, July 19-20, 2010; See also, Katsanis, SH, Javitt G., Hudson K: A case study of personalized medicine, Science, 2008:320:53-54. (The Centers for Medicare and Medicaid Services (CMS) under the Clinical Laboratories Amendments of 1988 (CLIA) are the regulatory authority for LDT designated tests rather than the FDA. In contrast to the FDA approval process which requires a review of clinical data, the CMS regulation focuses on reviewing the quality of the laboratory performing the test and analytical data rather than clinical data review. For those companies and laboratories choosing the LDT designation, the compromise is that LDT test may not be commercially distributed.).

48 See Gold, E. Richard and Carbone, Julia, “Myriad Genetics: In the eye of the policy storm,” Genet Med. 2010 April: 12 (4ASuppl): S39-S70.

49 See 2010 Report by Secretary's Advisory Committee on Genetics, Health, and Society (SACGHS) at http://oba.od.nih.gov/oba/SACGHS/reports/SACGHS_patents_report_2010.pdf.

50 See AIA Studies and Reports at http://www.uspto.gov/aia_implementation/aia_studies_reports.jsp.

51See id.

52 See Federal Register, Vol. 71, No. 16, Wednesday, January 25, 2012, Notices, 3748-3750. See also, “Genetic Testing – Public Comments,” AIA Studies and Reports, http://www.uspto.gov/aia implementation/aia studies reports.jsp.

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United States Patent and Trademark Office and Myriad Genetics (“Myriad”), 53 the Supreme Court has granted a writ of certiorari to reconsider the issue of patent eligibility of genes.54 Until such time as the Court makes the final decision on gene patents, the AIA Study remains an important consideration as there appears to be bipartisan support for passing a bill providing for a patent exemption for confirmatory genetic testing. The AIA Study will likely influence the language and scope of any genetic testing bill.

C. ConclusionThe “safe harbor” for immunity against patent infringement in the area of pharmaceutical

research continues to be defined by courts. A new “safe harbor” to provide immunity for secondary confirmatory genetic testing is currently under study by the Patent Office and scheduled for delivery to Congress later this year. As a result, clinical study agreements, freedom to operate opinions, research and development collaborations and overall new product development strategies for therapeutics and genetic tests must provide for the contingency that the scope of immunity against patent infringement may change within the next several years.

III. Gene Patents After Myriad & Mayo55

The patentability of genes and DNA sequences, long considered a settled matter, has come back into the public spotlight and stirred up controversy. Some patient advocates and academics oppose patents that claim DNA sequences, regarding such patents as an impediment to ongoing research in genetic testing and as a hindrance to patient access to these tests. Many in the field of biotechnology and personalized medicine, however, view these patents as essential to the development of genetic testing. Patents protect the substantial financial investment required for the research, development and commercialization of biotechnology products and services. Thus, both those favoring gene patents and those opposing gene patents fear that an unfavorable decision by the courts could restrict the availability of needed diagnostic tests and medical treatments.

This most recent decision has been appealed again to the Supreme Court,56 which has granted certiorari. The appeal is from the August 16, 2012, decision by the Court of Appeals for the Federal Circuit (CAFC) in “the Myriad case.” In Myriad, a divided panel reversed once again the trial court holding that Myriad Genetics’ patent claims to isolated DNA are not drawn to

53 See Association for Molecular Pathology, et al. v. United States Patent and Trademark Office and Myriad Genetics,. 2012 WL 3518509, ---F.3d--- (2012).

54See Supreme Court Docket CA 12-298 (On November 30, 2012, Court granted cert.)

55 Chapter authored by Dr. Karen Canady, Esq., canady & lortz LLP, 3701 Wilshire Blvd., Suite 508, Los Angeles, California 90010, Phone: (310) 966-9400, E-Mail: [email protected]. An earlier version of this section, focusing primarily on DNA claims, was published in New Matter, Vol. 37, No. 4, pp. 14-18, 2012.

56 Plaintiffs filed a petition for certiorari on September 24, 2012, stating that the case raises three questions: (1) Are human genes patentable? (2) Did the court err in upholding a method claim “irreconcilable” with the ruling in Mayo? (3) Did the court err in holding that petitioners who are deterred by patents lack standing to challenge those patents absent evidence they have been personally threatened with an infringement suit?.

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patent-eligible subject matter under 35 USC § 101.57 The case had been appealed to the Supreme Court after the first CAFC decision.58 The Supreme Court granted certiorari, vacated the earlier judgment, and remanded the case back to the CAFC to reconsider the previous panel opinion in light of its decision in Mayo v. Prometheus.59 The Supreme Court, on its second look at this case, will only consider the question: “Are human genes patentable?” and leave the earlier appellate decisions on the method claims intact.60

A. The Patent ClaimsMyriad’s patents claim isolated genes, BRCA1 and BRCA2, containing mutations that

can be used to detect a woman’s predisposition to breast and ovarian cancer, as well as related methods of detecting such mutations and screening for relevant drugs.61 The plaintiffs, which included a number of clinicians, scientists and patients,62 sought a declaratory judgment that fifteen claims from seven patents assigned to Myriad Genetics were drawn to subject matter that is patent-ineligible under 35 U.S.C. § 101.63 The challenged claims were directed to isolated DNA molecules encoding human BRCA proteins and certain mutations associated with a predisposition to breast and ovarian cancers, and related methods. The claimed methods include a method of detecting a mutation associated with cancer via "analyzing" or "comparing" a patient's BRCA DNA sequence with the wild-type sequence, and a method of screening potential cancer drugs using a cell modified with the mutant DNA sequence.

B. The CAFC Decisions in MyriadThe CAFC’s earlier decision in this case found the claims directed to the isolated DNA

encoding the breast cancer markers, as well as the claims directed to a method of screening for cancer drugs using those genes, to be patent-eligible subject matter. The claims to methods of analyzing the gene sequences from a patient sample were not. While all three judges agreed on most issues, there was a striking difference of opinion on the patent-eligibility of isolated DNA

57 Association for Molecular Pathology v. Myriad Genetics, Inc., 689 F.3d 1303 (Fed. Cir. 2012). Judge Lourie wrote the opinion for the court. Judge Moore joined the opinion for the court with respect to most issues but concurred in part, namely with respect to the patent eligibility of the claims to isolated DNA sequences. Judge Bryson concurred with respect to the patent eligibility of the claims to cDNA and methods but dissented with respect to the patent eligibility of the claims to isolated genes and gene fragments.58 653 F.3d 1329 (Fed. Cir. 2011) (Lourie, J.).59 Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___, 132 S. Ct. 1289, 182 L. Ed. 2d 321 (2012) (reversing a panel decision authored by Judge Lourie).

60 See id., supra note 54.61 The BRCA1 and BRCA2 genes are referred to as the "breast cancer genes" (BReast CAncer) because mutations in these genes correlate with an increased risk of breast cancer and ovarian cancer in women.62 Plaintiffs include the Association For Molecular Pathology, The American College Of Medical Genetics, The American Society For Clinical Pathology, The College Of American Pathologists, Haig Kazazian, MD, Arupa Ganguly, PhD, Wendy Chung, MD, PhD, Harry Ostrer, MD, David Ledbetter, PhD, Stephen Warren, PhD, Ellen Matloff, M.S., Elsa Reich, M.S., Breast Cancer Action, Boston Women’s Health Book Collective, Lisbeth Ceriani, Runi Limary, Genae Girard, Patrice Fortune, Vicky Thomason, and Kathleen Raker.63 35 U.S.C. § 101 defines patentable subject matter: "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title."

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and DNA fragments. Judge Lourie wrote for the majority, Judge Moore’s concurrence offered a different basis for finding DNA sequences patent-eligible, while Judge Bryson dissented with respect to the patent eligibility of isolated DNA and shorter DNA fragments. Notably, all three judges agreed that cDNA (which encodes the protein but excludes naturally-occurring non-coding sequence) is patent-eligible subject matter.

The primary question before the court on remand was whether the panel should come to a different conclusion on the patent-eligibility of these gene patent claims. Upon reconsideration of the case after remand, all three judges came to the same conclusions they had reached in the earlier decision. Each addressed Mayo, but only Judge Moore indicated that Mayo led her to modify her reasoning.

C. StandingA threshold issue was whether any of the plaintiffs had standing to bring a declaratory

judgment suit challenging the validity of the patents. In finding that at least one plaintiff, Dr. Ostrer, had standing, the court rejected arguments raised by both sides. Myriad’s arguments that there was no immediacy or reality of any controversy because a number of years had passed since enforcement activity had taken place were rejected. The court explained that any notion of “laches” argued by Myriad was irrelevant to an action for prospective relief.64 The court also noted that it was affirming the district court decision on jurisdiction on narrower grounds, reversing the holding that plaintiffs other than Dr. Ostrer had standing. For example, the specific organizations named as plaintiffs had not been targets of enforcement action. The individual patients alleging an injury based on their inability to gain access to affordable genetic testing because of Myriad’s patent dominance of such services also did not have standing. The court noted that these plaintiffs had not raised denial of health services as an independent ground for standing, nor had they demonstrated how the inability to afford a patented invention could establish an invasion of a legally protected interest for purposes of standing.65 The standing of at least one plaintiff, however, was sufficient to allow the case to go forward.

The holding on standing clarifies the constraints on those who may seek to challenge patents that relate to diagnostic tests. The CAFC has foreclosed declaratory judgment action brought by patients claiming lack of access to patented tests (at least based on affordability), as well as by interest groups who have not been subject to enforcement action. The Federal Circuit did raise the possibility that a patient who had been denied health services because of a patent might have standing.

D. Remand in View of Mayo v. PrometheusThe fact that the Supreme Court sent the case back to the CAFC implies that the justices

believe a different outcome may be appropriate, or at least that the reasoning applied to the CAFC’s decision must be consistent with the Supreme Court’s decision in Mayo v. Prometheus. In Mayo v. Prometheus, the claims at issue were directed to methods of optimizing the dose of thiopurine drugs used in the treatment of certain conditions. The claims were held invalid because they impermissibly claim the natural relationship between an administered drug and its

64 Myriad, supra at 1321, note 57.65 Id. at 1323, note 57.

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metabolites.

The reasoning provided in the Mayo decision creates much uncertainty as to how that holding might apply to other cases. For example, the decision contains a suggestion that one might tease apart the claim elements that relate to a law of nature and examine whether the remainder of the claim involves anything more than well-known, conventional steps. On the other hand, some moorings are provided by the Court’s recognition that Diamond v. Diehr66 and Parker v. Flook67 remain good law. In Diehr, claims that included use of an algorithm (an unpatentable abstract idea) to guide the timing of the release of a press used in molding rubber, was held patent eligible because the claims were directed to an application of the abstract idea without preempting all uses of the algorithm. Flook, on the other hand, claimed a method for updating alarm limits in a catalytic conversion process using a smoothing algorithm, wherein the Court regarded the identification of a limited category of useful, though conventional, post-solution applications of the formula as “merely insignificant extra-solution activity.”68 The Court characterizes the claim at issue in Mayo v. Prometheus as presenting “a case for patentability that is weaker than Diehr’s patent-eligible claim and no stronger than Flook’s unpatentable one.”69 The message is at least this clear: method claims that look more like those of Flook or Prometheus are likely considered patent-ineligible. What is not clear is how the concept of significant extra-solution activity (using the language of Flook) or transformation of an unpatentable natural law into a patent-eligible application of the natural law (in the language of Mayo) applies to product claims.70

In response to the Supreme Court’s order, the CAFC requested the interested parties to submit briefs on the question: “[w]hat is the applicability of the Supreme Court’s decision in Mayo to Myriad’s isolated DNA claims and to the method [of screening for drugs]?” On this key question, at least with respect to the DNA claims, the three judges on the panel each arrived at a different answer. Judge Lourie concluded that the Mayo decision had no bearing on product claims. Judge Moore found the Mayo decision, while not controlling the outcome in this case, “nonetheless instructive regarding the scope of the law of nature exception.”71 She concurred in the finding that the DNA claims were patent eligible, but based her decision in part on her reluctance to upset settled expectations and substantial property rights. Judge Bryson, on the other hand, maintains his view that a “human gene is not an invention.”72

1. Judge Lourie’s Majority OpinionThe opinion for the court, authored by Judge Lourie, begins by clarifying that the issue

before the panel was patent eligibility, not patentability. It also stated that the case before the

66 450 U.S. 175 (1981).67 437 U.S. 584 (1978).68 Id. at 590.69 Mayo, supra note 57, at 1292.

70 Mayo at 1297 (framing the question presented as whether “the patent claims add enough to their statements of the correlations to allow the processes they describe to qualify as patent-eligible processes that apply natural laws?”).71 Myriad, supra note 57, at 1340.72 Myriad, supra note 57, at 1348.

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panel was not about whether individuals suspected of having an increased risk of developing breast cancer are entitled to a second opinion, nor whether the patentees had acted improperly in their licensing or enforcement of the patents, nor whether is it desirable for one company to hold a patent covering a test that may save lives and exclude other companies from the market, noting that the basic right provided by a patent is to exclude others from practicing the patented invention. The majority then adds that “patents on life-saving material and processes, involving large amounts of risky investment, would seem to be precisely the types of subject matter that should be subject to the incentives of exclusive rights. But disapproving of patents on medical methods and novel biological molecules are policy questions best left to Congress.”73

The majority held that the composition claims and the method claim directed to screening drugs were patent eligible, while the method claims to detecting and screening via steps of "analyzing" and "comparing" were not. As for the claims to isolated DNA, the majority dismissed the recent Mayo decision as not controlling the patent eligibility of these claims. Judge Lourie stated that the claimed DNA molecules are products of human ingenuity made in the laboratory and not found in nature. He acknowledged that they are ultimately derived from natural materials, but they are different from them. In this regard, Judge Lourie draws on the distinction between the patent-eligibility of man-made inventions as set forth in Diamond v. Chakrabarty,74 a case involving engineered bacteria, and the ineligible products of nature found in Funk Brothers Seed Co. v. Kalo Inoculant Co,.75 a case that dealt with mixed bacterial cultures.

2. Judge Moore’s ConcurrenceThe opinion by Judge Moore offered a different basis for finding claims to isolated DNA

patent-eligible. Judge Moore agrees that Mayo is not controlling, but does find it instructive with regard to these claims. She sees no reason why discussion of laws of nature as applied to process claims would not apply equally to manifestations of nature applied to composition claims. She thus rejected Myriad’s argument that Mayo v. Prometheus is constrained to methods.

Judge Moore considered that the holdings of Funk Brothers and Chakrabarty, in conjunction with Mayo, lead to a conditional test. Under this test, laws of nature and manifestations of nature are not patent-eligible subject matter, unless a second condition is met. Under the second condition, a composition of matter with “markedly different characteristics” from that found in nature with the potential for significant utility is directed to patentable subject matter. Applying this “expanded utility” analysis, she found the genomic DNA sequences and shorter fragments to raise concerns because they manifest the same sequence as that found in nature. She found these two categories of DNA fared differently under the second condition. She rejected the reasoning offered by Judge Lourie, that the breaking of covalent bonds when DNA is isolated suffices to make these sequences patentable subject matter. The shorter fragments, useful as primers and probes, are patent eligible because they offer utilities not provided by the identical sequences as they exist in nature. She did not find the longer fragments and full genomic DNA sequence to qualify under this expanded utility analysis, because, in her

73 Id. at 1325.74 Diamond v. Chakrabarty, 444 U.S. 1028 (1980).75 Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948).

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view, these sequences perform the same utility as the same sequences in their natural form. Any literal chemical difference did not lead to a different, or enlarged, utility beyond the encoding of the same protein.

Judge Moore regards Mayo as having enlarged the scope of subject matter that is not eligible for patenting. She made it clear that she might conclude that the longer DNA sequences would not be patent eligible were it not for the decades-long practice of granting patents in this area, particularly in view of Congress’ authorization of an expansive scope of patent-eligible subject matter (which has lasted for “centuries”). In this context, she pointed out the large number of patents not just to isolated DNA sequences but also to purified natural products or fragments thereof. She also pointed out the significant litigation that has occurred over patents in this area, noting the example of the erythropoietin patent relating to a product responsible for billions of dollars in sales. In the context of this background, Judge Moore lays out the case for why only Congress, and not the courts, can revoke these substantial property rights and upset the settled expectations based on decades of established patent rights.

3. Judge Bryson’s DissentJudge Bryson concurred in part and dissented in part from the opinion for the court. He

began his dissent by cautioning that the majority’s decision “will likely have broad consequences, such as preempting methods for whole-genome sequencing, even though Myriad’s contribution to the field is not remotely consonant with such effects.”76 He views the case as addressing whether an individual can obtain patent rights to a human gene, and offers what he characterizes as the common sense observers’ answer that, of course not, as “a human gene is not an invention.”77 Despite his distaste for the patenting of human genes, Judge Bryson agrees with the majority when he states that Mayo v. Prometheus does not control the issue of patent-eligibility of the DNA claims.

Judge Bryson does not see the isolated DNA sequences as man-made inventions, despite any chemical differences between the isolated and natural forms; yet he does consider the cDNA sequences to be patent-eligible subject matter. The breaking of covalent bonds to create a distinct chemical entity in the form of isolated DNA is, to Judge Bryson, clearly insufficient to distinguish this man-made molecule from the gene found in nature. On the other hand, he has no problem deciding that a cDNA, which differs from the natural molecule only in the exclusion of the non-coding sequence, is a patent-eligible invention. In both cases, minor chemical changes are made by human intervention, but each carries the same genetic information as its natural counterpart. Both examples involve a human selection of which material to keep and which to discard when preparing the isolated form of the DNA sequence, and both retain the coding portion that is useful for making the protein in a non-natural setting.

Judge Bryson’s distinction between cDNA and other isolated DNA molecules is harder to reconcile when considering the case law cited in his dissent. He discusses precedent dealing with purified products, noting that such products are only patentable if the purification results in

76 Myriad, supra note 57, at 1348. See also Christopher M. Holman, “Will Gene Patents Derail the Next Generation of Genetic Technologies?: A Reassessment of the Evidence Suggests Not”, UMKC Law Review 80(3): 563, 2012, which disputes the notion that gene patents would pre-empt whole genome sequencing.

77 Id.

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a product with such distinct characteristics that it becomes “for every practical purpose a new thing commercially and therapeutically.”78 His distinction rests instead on his analogy comparing an isolated DNA sequence to snapping a leaf from a tree. Yet the analogy is a weak one, as it implies that a specific DNA sequence encoding a molecule of interest is as easy to identify, isolate and remove from its source, as a leaf on a tree. The analogy completely overlooks the importance of knowing which leaf to snap from the tree as well as knowing what use can be made of the particular leaf chosen. The DNA encoding a useful protein must first be identified and isolated before it is transformed into an entity useful for ex vivo production of protein.

In this sense, it is difficult to understand why Judge Moore does not consider isolated DNA that encodes a protein to meet the “expanded utility” standard she has added to the “markedly different characteristics” test for patent-eligible products derived from natural sources. The notion that a gene performs the same function in isolation as it does in its natural location is misguided. A gene that has not been isolated cannot be used to generate significant quantities of useful protein.

E. Implications for Gene PatentsTo be patent-eligible, claims that relate to products derived from natural sources or

methods making use of natural relationships must be more like Chakrabarty or Diehr than Funk Bros. or Flook. Claims must limit their scope to specific applications of natural phenomena. As to method claims, both Myriad and Mayo point toward a line that is drawn between method claims that recite only mental steps (“comparing” and “analyzing”) and method claims that recite “transformative steps” (“extracting” and “sequencing”). As to product claims, Myriad suggests that the line might be drawn between a product that is essentially unchanged when isolated from its natural source versus one that, as claimed, is made only through human intervention.79 The key to such an analysis, of course, would lie in whether any change, or some critical minimal change, created by the human intervention is required.

It may be as simple as requiring claim language that narrows the subject matter so that it cannot read on the product in its natural form or on a natural phenomenon in the absence of concrete actions performed using identified materials. Reciting active steps and the materials

78 Myriad, supra note 57, at 1328 (citing Parke-Davis & Co. v. H.K. Mulford Co., 189 F. 95, 103 (C.C.S.D.N.Y. 1911) (holding that adrenalin extracted from animal tissue is patentable although it differs from previous preparations only in its degree of purity from other portions of the tissue) and Merck & Co. v. Olin Mathieson Chem. Corp., 253 F.2d 156, 161-64 (4th Cir. 1958) (holding that a purified composition of vitamin B-12 was patentable because the purification process resulted in a product that was therapeutically effective, whereas the natural form was not)).79 Arguably, the combination of bacteria at issue in Funk Bros. may have been a combination that only occurred through human intervention in the form of selecting and combining particular elements, as noted by the dissent in that case. While the majority opinion emphasized the lack of inventiveness of claims to a composition of bacterial species that function exactly as nature provided, the concurrence by Justice Frankfurter cautions against suggesting that novel combinations that create useful inventions be excluded from patentability. For example, compare this statement from the majority: “[t]hey serve the ends nature originally provided and act quite independently of any effort of the patentee” with this from the concurrence: “[a]rguments drawn from such terms [“laws of nature” and “work of nature”] for ascertaining patentability could fairly be employed to challenge almost every patent.”

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involved may prevent method claims from involving nothing more than abstract ideas or mental steps. For example, rather than claiming the method steps of “determining the presence of a biomarker, wherein presence of the marker is indicative of cancer” one could claim “contacting a specimen with assay reagents that bind to the biomarker” (or emit a detectable signal upon contact with the marker). These steps could be construed as confining the reach of the patent claims to a particular application of any natural laws relating to the method. As discussed in the next chapter, however, the recent PerkinElmer case80 shows that diagnostic claims reciting “measuring” and “determining” presence of a biomarker, at least without specifying a particular assay and/or a particular biomarker, are not valid under §101.

1. Would the Supreme Court Agree?In Myriad, the CAFC appears to have followed the same reasoning the Supreme Court

applied in Mayo v. Prometheus, at least with respect to the method claims. Thus, the CAFC’s line between patent-ineligibility of “mental step” claims and patent eligibility of “active application” claims remains good law. These “mental steps” claims are those directed to “comparing” and “analyzing” material such as biological specimens used for diagnosis. The “active application” claims are like those that recite specific cells transformed with specific genes and grown in the presence or absence of a specific type of therapeutic. Other examples of “active application” claims might include those that recite “contacting” a specimen with specified reagents or instruments. It can be argued that these active steps apply the relevant natural relationship in a manner similar to the steps recited in the claims found patent-eligible in Diehr. Alternatively, it may be that the recitation of growing transformed cells was essential to the court finding that the one method claim was patent eligible, as this case did not directly parse the requisite features. The United States Patent and Trademark Office (PTO) appears to have adopted the latter view.81

Less certain is how the Court would regard claims to isolated DNA. This hinges on whether DNA that has been isolated from its natural source is considered a new product, or if it is considered identical to its naturally-occurring form. Judge Bryson has argued that any differences between natural and isolated DNA are inherently created by the isolation process, a line of reasoning that is circular and unhelpful. Judge Lourie considered the chemical identity of isolated DNA to be sufficiently different because it was a detached segment of the naturally-occurring DNA molecule, whereas Judge Moore focused on the different and valuable use of DNA in its isolated form.

All three opinions, however, could be used to argue for patent eligibility of isolated DNA. It is difficult to reason that an entity that has a different and valuable use is chemically identical to its naturally-occurring counterpart. If isolated DNA were the same chemical entity as that found in nature, there would be no need to isolate it, and one could readily avoid infringement of claims to isolated DNA by skipping the isolation step. Just as this proposition makes no sense in the technical realm, so does the assertion that isolated DNA is no different and performs the same function as the product in its natural form. Moreover, the technical reality is

80 PerkinElmer, Inc. v. Intema Ltd., 2012 WL 5861658 (Fed. Cir. 2012).

81 See 2012 Interim Procedure for Subject Matter Eligibility Analysis of Process Claims Involving Laws of Nature, Memorandum issued July 3, 2012, by Andrew Hirshfeld, Deputy Commissioner for Patent Examination Policy at the USPTO (“Interim Guidance”, discussed in greater detail in next section).

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that, when working with isolated DNA, one does not use literally the same DNA sequence that came from the natural source. Instead, the literally isolated natural DNA is amplified into a large number of copies (“clones”). Thus, recombinant proteins are made from copies of the natural sequence, typically cDNA, and do not use the original source DNA.

Some purified products become patent eligible due to advantageous characteristics of the new product, and likewise isolated DNA sequences that open up new uses should be patent eligible. Even a human cell that makes a protein product does not make that product in a form and quantity that enables the uses of a protein made from isolated DNA using recombinant methods. On the other hand, the value of the recombinantly-produced protein is that it can be used for the same functions as its naturally-occurring counterpart. The question remains as to whether the Supreme Court would give more weight to the differences or the similarities between isolated DNA and natural DNA.

F. Implications for Diagnostic MethodsThe decision on the method claims, now that it has been allowed to stand by the Supreme

Court, settles the question of patent-eligibility for two categories of gene-related method claims. First, methods of detecting and screening for a medical condition via steps of "analyzing" and "comparing" (without more) are not patent eligible subject matter as they are regarded as directed to a natural relationship. Whether similar methods that are claimed using steps that arguably integrate the natural relationship into specified activities and/or recite specific assays can be patented, remains unresolved. Second, methods of screening for new drugs that incorporate use of a human-made product, such as a genetically modified cell, are patent eligible.

Whether use of a human-made product that otherwise meets the standard for novelty and nonobviousness is required for patent-eligibility of such a method is not yet clear. In other words, the line between patent-ineligible claims to natural relationships and patent-eligible claims that apply such relationships has not yet been clearly defined. One proposal for interpreting the case law in this area would draw this line between “observing” and “applying” natural relationships as turning on whether human-made elements are employed (e.g., recited in the claims) in order to apply the principle. This proposal allows one to exclude the possibility of infringing a method claim merely by thinking about the relevant natural relationship.

An example of an unpatentable natural relationship would be the rise in body temperature that occurs when one has an infection. A claim that read: “comparing the body temperature of a test subject to the body temperature of a normal, healthy subject, wherein an increase in the body temperature of the test subject relative to the normal subject is indicative of a fever” would be similar to the method claim found patent-ineligible in Mayo. On the other hand, a claim the required contacting the test subject with a thermometer and using the thermometer to measure the subject’s temperature to determine the presence or absence of infection might be patent-eligible (leaving novelty and nonobviousness aside for separate analysis). Under the current USPTO Interim Guidance82, the patent-eligibility of the latter example may hinge on whether the recited thermometer was a specific type of thermometer and did not read on all possible temperature-measuring devices. Another approach might be to evaluate whether it was routine and conventional to apply the recited thermometer in the recited context.

82 Ibid.

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For example, if the “comparing” and analyzing” steps were problematic because they were regarded as reciting the natural relationship at a high level of generality, further cases will need to resolve how much and what kind of specificity is sufficient. If a specific assay (e.g., immunoassay) is recited, one could argue that this assay is not performed in nature. On the other hand, one could argue that the assay is routinely performed by those skilled in the field. It may be that one can overcome the latter argument if an immunoassay directed to a specific biomarker was not routinely performed to diagnose the specific condition recited in the claim (which takes us back to a standard analysis under novelty and nonobviousness). Alternatively, this strategy could be viewed as impermissibly preempting all means of observing the natural relationship, and would only succeed if the claims recite a specific subset of possible means for detecting the relevant biomarkers. The panel deciding the PerkinElmer case found the “measuring” steps of the claims at issue insufficient because they read on any method of measuring the relevant biomarkers. The decision also noted that the specification taught that the measurements could be obtained through known methods, thereby "well-understood, routine, conventional activity previously engaged in by scientists who work in the field."83

G. ConclusionA prudent practice at this time of uncertainty would be to include a variety of method

claims that recite varying levels of specificity with respect to assay reagents and/or devices to be used in carrying out the claimed method. Where possible, the recitation of a novel, human-made component (analogous to the transformed cell used in the Myriad Genetics screening method) is helpful. Support in the specification and/or arguments presented during prosecution can be used to clarify the novelty of applying the recited method steps and/or components in the context relevant to the claimed method. This support could be important to distinguish between routine, conventional activity previously engaged in by those in the field, and activity that is being applied in a novel and inventive context. In other words, the method steps and the reagents may be routine and conventional, but may not have been previously applied to the problem addressed by the invention. It may also be important to establish that the methods recited in the claims do not pre-empt all possible means of measuring the relevant biological activity or marker.

IV. Mayo v. Prometheus and Bioinformatics84

Since biology and computer science started to converge more than a decade ago, bioinformatics, also known as computational biology, has developed into a discipline full of promise and hope. As hundreds of and thousands of biomarkers have been identified to be associated with various traits and full individual genomic sequencing is becoming affordable, bioinformatics is making it possible to personalize medical treatment to a patient’s genotype for maximum individual therapeutic effects with reduced adverse events. Many inventions in personalized medicine are made based on discovery of a natural correlation between a genetic profile of a person and an optimized treatment of that person using computational methods and 83 PerkinElmer, supra, note 80, at 11-12

84Chapter authored by Dr. Ling Zhong, Esq., RatnerPrestia, 1234 Westlakes Drive, Suite 301, Berwyn, PA 19312, Phone: (610) 993-4237, E-mail: [email protected].

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biological data. Two years after its Bilski decision on patent ineligibility of a business method claim as directed to an abstract idea,85 the U.S. Supreme Court (“the Court”) held unanimously in Mayo Collaborative Services v. Prometheus Laboratories, Inc.86 that process claims reciting a natural correlation were not patent eligible. As a result, patent protection of personalized medicine innovations, especially those involving a natural correlation, has now become more challenging than ever.

A. Mayo v. PrometheusIn Mayo, the Court invalidated the process claims of Prometheus’ two patents as not

patent eligible because the claimed processes have not transformed the unpatentable natural laws into patent-eligibility applications of those laws. In particular, the Court found that “the steps in the claimed processes (apart from the natural laws themselves) involve[d] well-understood, routine, conventional activity previously engaged in by researchers in the field.”87 The Court further found that “upholding the patents would risk disproportionately tying up the use of the underlying natural laws, inhibiting their use in the making of further discoveries.”88

The Court started its opinion by reciting the definition of patentable subject matter under section 101 of the Patent Act:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

35 U.S.C. § 101. “The term ‘process’ means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”89 The Court reiterated its long-held position that “‘laws of nature, natural phenomena, and abstract ideas’ [we]re not patentable.”90 Recognizing that “[f]or all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,” and that “a process is not unpatentable simply because it contains a law of nature or a mathematical algorithm,” the Court emphasized that the question was “whether the claimed processes ha[d] transformed these unpatentable natural laws into patent-eligible applications of those laws.”91

According to the Court, “Prometheus’ patents set forth laws of nature – namely, relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm.”92 The Court took claim 1 of

85 Bilski v. Kappos 130 S.Ct. 3218 (2010).

86 132 S.Ct. 1289 (2012).

87 132 S.Ct. at 1294.

88 Id.

89 35 U.S.C. § 100(b).

90 Mayo, 132 S.Ct. at 1293.

91 Id. at 1293-4 (internal quotation marks omitted).

92 Id. at 1296.

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Prometheus’ U.S. Patent No. 6,355,623 (“the ‘623 Patent”) as a representative claim, and examined its patent eligibility in light of its precedents on this issue. Claim 1 of the ‘623 Patent recites:

1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

wherein the level of 6-thioguanine less than about 230 pmol per 8x108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine greater than about 400 pmol per 8x108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

According to the Court, “[w]hile it takes a human action (the administration of a thiopurine drug) to trigger a manifestation of this relation in a particular person,” “the relation itself exists in principle apart from any human action,” and “[t]he relation is a consequence of the ways in which thiopurine compounds are metabolized by the body - entirely natural processes.”93 In reaching its conclusion, the Court focused on the steps in Prometheus’ method claims at issue, apart from what it considered a statement of a natural law (e.g., a natural relationship or correlation), and considered whether these additional steps involved an “inventive concept” or a “well-understood, routine, conventional activity.”

The Court reinforced its conclusion by going over in detail its precedents on patentable subject matter in connection with process claims involving abstract ideas, and an English case, in which the claimed processes involved laws of nature. Without differentiating process claims involving natural laws from those involving abstract ideas, the Court stated that “simply appending conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas [could not] make those laws, phenomena, and ideas patentable.”94

1. Two-Step Evaluation of Process Claim In essence, the Mayo test requires a two-step evaluation of a process claim for patent

eligibility. First, remove its recitation of a law of nature, a natural phenomenon or an abstract idea. And second, look for an “inventive concept” in what remains.

The Court provided little guidance as to what constituted an “inventive concept.” In response to the Government’s arguments other statutory provisions such as 35 U.S.C. §§ 102, 103 and 112 can screen for patentable application of an unpatentable law of nature, the Court conceded that “in evaluating the significance of additional steps, the § 101 patent-eligibility inquiry and, say, the § 102 novelty inquiry might sometimes overlap,” but insisted that “to shift

93 Id. at 1297.

94 Id. at 1301.

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the patent-eligibility inquiry entirely to these later sections [102, 103 and 112] risk[ed] creating significantly greater legal uncertainty, while assuming that those sections [could] do work that they [we]re not equipped to do.”95 It is unclear how the requirements of an “inventive concept” under the Mayo test differ from the well-established § 102 novelty requirements or § 103 nonobviousness requirements. Thus, there remains uncertainty as to how to determine whether additional steps in a process claim are sufficient to meet the “inventive concept” requirement under the Mayo test.

The Court expressed repeatedly concerns about preemption of the use of a natural law underlying a process claim. “The laws of nature at issue here are narrow laws that may have limited application,” and “[the process claims that embody these laws of nature will] tie up the doctor’s subsequent treatment decision whether that treatment does, or does not, change in light of the inference he has drawn using the correlations,” and “threaten to inhibit the development of more refined treatment recommendations (like that embodied in Mayo’s test), that combine Prometheus’ correlations with later discovered features of metabolites, human physiology or individual patient characteristics.” Such “refined treatment recommendations” indeed contribute to personalized medicine. Further, despite its admission that Prometheus’ process claims recite narrow laws having limited application, the Court nevertheless rejected these claims for failure to “confine their reach to particular applications of those laws.”96 It is puzzling to what extent a process claim embodying a natural law must to be confined to become patent eligible under the Mayo test.

Despite the detailed analysis of Prometheus’ representative process claim and comparison with its precedents, the Court provided not much guidance on a number of key issues involved in the Mayo test, for example, the “inventive concept” requirement and the preemption concern. The Mayo test appears to have created more uncertainty than clarity for patent protection of innovations made based on bioinformation in personalized medicine.

B. Case Law Development As bioinformation is often obtained using biotechnologies and computer technologies,

patent protection of personalized medicine inventions based on bioinformation faces challenges from both aspects. Since the Court’s unanimous Mayo decision, the Court of Appeals for the Federal Circuit (“the Federal Circuit”) has issued several opinions on patent ineligibility of process claims.97 These decisions provide insight as to how the Federal Circuit has and will follow the Mayo decision in determining patent eligibility of personalized medicine inventions involving a natural correlation and possibly computer implementation.

1. Bancorp Services, L.L.C. v. Sun Life Assur. Co. of CanadaIn Bancorp, the Federal Circuit affirmed the district court’s holding of invalidity of

Bancorp’s asserted claims as directed to a patent-ineligible abstract idea of managing a stable

95 Id. at 1302-4.

96 Id.

97 See, e.g., Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266 (Fed. Cir. 2012); Association for Molecular Pathology v. U.S. Patent and Trademark Office, 689 F.3d 1303 (Fed. Cir. 2012) (hereinafter referred to as Myriad); PerkinElmer, Inc. v. Intema Ltd., 2012 WL 5861658 (Fed. Cir. 2012).

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value protected life insurance policy.98 While the asserted claims included system claims, computer-readable medium claims, and method claims, the Federal Circuit found that the district court correctly treated the asserted system and medium claims no different from the method claims for patent eligibility purposes.99 Citing Mayo, the Federal Circuit stated that “a recitation of ineligible subject matter [did] not become patent-eligible merely by adding the words ‘apply it.’”100 “To salvage an otherwise patent-ineligible process, a computer must be integral to the claimed invention, facilitating the process in a way that a person making calculations or computations could not.”101 “The computer required by some of Bancorp’s claims is employed only for its most basic function, the performance of repetitive calculations, and as such does not impose meaningful limits on the scope of those claims.”102 “The district court correctly held that without the computer limitations nothing remains in the claims but the abstract idea of managing a stable value protected life insurance policy by performing calculations and manipulating the results,” and “Bancorp’s claimed abstract idea impermissibly ‘preempt[s]’ the mathematical concept of managing a stable value protected life insurance policy.”103 In view of Bancorp, seeking patent protection of computer or medium claims as alternatives to process claims to avoid patent ineligibility might not be desirable any more while imposing significant computer limitations to a process claim might transform a patent ineligible abstract idea into a patent eligible application of the abstract idea.

2. Association for Molecular Pathology v. U.S. Patent and Trademark Office

In Association for Molecular Pathology v. U.S. Patent and Trademark Office, (hereinafter referred to as Myriad), the Federal Circuit affirmed “the district court’s grant of summary judgment [of invalidity under section 101] with regard to Myriad’s method claims directed to comparing or analyzing gene sequences” and reversed “the district court’s grant of summary judgment [of invalidity under section 101] with regard to Myriad’s method claim to screening potential cancer therapeutics via changes in cell growth rates of novel, man-made transformed cells.”104 “Myriad’s claimed methods of comparing or analyzing nucleotide sequences are only directed to the abstract mental process of comparing two nucleotide sequences” while Myriad’s screening method for cancer treatment “is tied to specific host cells transformed with specific genes and grown in the presence or absence of a specific type of therapeutic.”105 Detailed discussion of Myriad is set forth above in Chapter III.

98 See Bankcorp, 687 F.3d at 1280-1.

99 See id. at 1277.

100 Id. at 1276.

101 Id. at 1278.

102 Id.

103 Id. at 1280.

104 689 F.3d 1303, 1337 (Fed. Cir. 2012).

105 Id. at 1335, 1337.

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3. PerkinElmer, Inc. v. Intema Ltd.In PerkinElmer, the Federal Circuit affirmed summary judgment to PerkinElmer because

Intema’s asserted claims were ineligible under section 101 for reciting an ineligible mental step and natural law.106 The asserted claims were drawn to methods to determine the risk of fetal Down’s syndrome, requiring, for example, two “measuring steps” and a “determining” step. “No action beyond the comparison is required.”107 Representative claims 1 and 20 of U.S. Patent No. 6,573,103 read:

1. A method of determining whether a pregnant woman is at an increased risk of having a fetus with Down's syndrome, the method comprising the steps of:

measuring the level of at least one screening marker from a first trimester of pregnancy by:

(i) assaying a sample obtained from the pregnant woman at said first trimester of pregnancy for at least one first biochemical screening marker; and/or

(ii) measuring at least one first ultrasound screening marker from an ultrasound scan taken at said first trimester of pregnancy;

measuring the level of at least one second screening marker from a second trimester of pregnancy, the at least one second screening marker from the second trimester of pregnancy being different from the at least one first screening marker from the first trimester of pregnancy, by:

(i) assaying a sample obtained from the pregnant woman at said second trimester of pregnancy for at least one second biochemical screening marker; and/or

(ii) measuring at least one second ultrasound screening marker from an ultrasound scan taken at said second trimester of pregnancy; and

determining the risk of Down's syndrome by comparing the measured levels of both the at least one first screening marker from the first trimester of pregnancy and the at least one second screening marker from the second trimester of pregnancy with observed relative frequency distributions of marker levels in Down's syndrome pregnancies and in unaffected pregnancies.

20. A method of determining whether a pregnant woman is at an increased risk of having a fetus with Down's syndrome, the method comprising the steps of:

measuring the level of at least one first screening marker from a first trimester of pregnancy by:

106 2012 WL 5861658 at *6.

107 2012 WL 5861658 at *5.

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(i) assaying a sample obtained from the pregnant woman at said first trimester of pregnancy for at least one first biochemical screening marker; and/or

(ii) measuring at least one first ultrasound screening marker from an ultrasound scan taken at said first trimester of pregnancy;

determining a first risk estimate of Down's syndrome by comparing the measured level of the at least one first screening marker level from the first trimester of pregnancy with observed relative frequency distributions of marker levels in Down's syndrome pregnancies and in unaffected pregnancies;

comparing the first risk estimate with a predetermined cut-off level to initially classify the pregnant woman as screen-positive or screen-negative based on the comparison; and

if the pregnant woman is initially classified as screen-negative:

measuring the level of at least one second screening marker from a second trimester of pregnancy, the at least one second screening marker from the second trimester of pregnancy being different from the at least one first screening marker from the first trimester of pregnancy, by:

(i) assaying a sample obtained from the pregnant woman during said second trimester of pregnancy for at least one second biochemical screening marker; and/or

(ii) measuring at least one second ultrasound screening marker from an ultrasound scan taken during said second trimester of pregnancy; and

determining the risk of Down's syndrome by comparing the measured level of both the at least one first screening marker from the first trimester of pregnancy and the at least one second screening marker from second trimester of pregnancy with observed relative frequency distributions of marker levels in Down's syndrome pregnancies and in unaffected pregnancies.

Following the Mayo decision, the Federal Circuit found that “Intema [] claim[ed] a law of nature: the relationship between screening marker levels and the risk of fetal Down’s syndrome,” and “[t]hat an increased risk of fetal Down’s syndrome produce[d] certain analytical results [was] a natural process, an eternal truth that ‘exist[ed] in principle apart from any human action.’”108 “Looking to the claims as a whole, the steps in combination do not make the ineligible mental step and natural law patent-eligible.”109 The Federal Circuit further distinguished the asserted claim from the patent eligible claims in Myriad as follows:

… The claimed method [held patent eligible in Myriad] consisted of “comparing” the growth rates of two sets of host cells that had been altered with a cancer-

108 Id. at *5 (quoting Mayo, 132 S.Ct. at 1297).

109 Id. at *6.

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causing human gene – one set was treated with the potential therapeutic and the other was untreated … The comparison was an ineligible mental step. But the host cells did not occur naturally; they were man-made and, thus were themselves patent-eligible subject matter. So, according to the panel [in Myriad], their inclusion in the process made the claims patent-eligible despite the reference to an otherwise ineligible mental step. Here, the challenged claims include no patent-eligible subject matter along with the ineligible concepts. They include only “conventional steps, specified at a high level of generality,” which are insufficient.110

However, the Federal Circuit failed to indicate how a process claim apart from a recitation of a natural law, natural phenomenon or abstract idea could meet the “inventive concept” requirement to transform the claim patent eligible without reciting a novel patent eligible subject matter.

4. Case Law SummaryIn summary, following the Mayo decision, the Federal Circuit has so far held only one of

Myriad’s process claims patent eligible. As emphasized by the Federal Circuit in PerkinElmer, this patent eligible method claim in Myriad is directed to a method for screening potential cancer therapeutics via changes in cell growth rates of novel, man-made transformed cells. Without elaborating what constitutes an “inventive concept” under the Mayo test or addressing whether novelty is essential to meet the “inventive concept” requirement, the Federal Circuit has yet to bring back hope to patent protection of personalized medicine innovations based on bioinformation.

C. USPTO Guidance Three months after the Mayo decision, the United States Patent and Trademark Office

(the “USPTO”) issued a guidance memo titled 2012 Interim Procedure for Subject Matter Eligibility Analysis of Process Claims Involving Laws of Nature (“2012 Interim Mayo Guidance”) for use by the USPTO personnel in determining subject matter eligibility of process claims in which a law of nature, a natural phenomenon, or naturally occurring relation or correlation (collectively referred to as a “natural principle” in the guidance) is a limiting element or step, under 35 U.S.C. § 101 in view of the Mayo decision. While the Interim Guidance for Determining Subject Matter Eligibility for Process Claim in View of Bilski v. Kappos (“2010 Interim Bilski Guidance”) remains applicable to examination of patent eligibility of process claims directed to abstract ideas, the 2012 Interim Mayo Guidance provides:

In summary, process claims having a natural principle as a limiting element or step should be evaluated by determining whether the claim includes additional elements/steps or a combination of elements/steps that integrate the natural principle into the claimed invention such that the natural principle is practically applied, and are sufficient to ensure that the claim amounts to significantly more than natural principle itself. If the claim as a whole satisfies this inquiry, the claim is directed to patent-eligible subject matter. If the claim as a whole does not satisfy this inquiry, the claim should be rejected under 35 U.S.C. § 101 as being directed to non-statutory subject matter….

110 Id. at *6 (internal citations omitted).

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The 2012 Interim Mayo Guidance further provides a list of relevant factors for analysis in determining whether a process claim recites a patent-eligible practical application of a natural principle. Factors in favor of patent ineligibility include appending conventional steps to a natural principle; steps that amount to instructions that are well-understood, routine, conventional activity, previously engaged in by those in the field; uses of a natural principle that can be performed through an existing or future-devised machinery, or even without any apparatus; features that limit the application of a natural principle to a certain technology environment, which would cover every substantial practical application in that field; additional limitations necessary for all practical applications of a natural principle; a machine or transformation that is merely nominally, insignificantly, or tangentially related to the steps or elements, e.g., data gathering or data storage; complete absence of a machine-or-transformation in a claim; and a mere statement of a general concept (natural principle). Exemplary factors in favor of patent eligibility are a particular machine or transformation recited in more than general terms; a particular machine or transformation showing how a natural principle is integrated into a practical application or how the transformation relates to or implements the natural principle; and a tangible implementation with elements or steps recited with specificity such that all substantial applications are not covered.

Following the Mayo decision closely, the 2012 Interim Mayo Guidance reiterates the Mayo test and provides limited guidance to apply the Mayo test without fully addressing the uncertainties surrounding the Mayo test, including key issues such as an “inventive concept.” Future patent applicants on innovations based on bioinformation would be well advised to describe and define claim elements or steps that cannot or may not be characterized as a law of nature or an abstract concept so as to differentiate them from “well-understood, routine, conventional activity” and support a proposition that these elements or steps in a process claim (apart from what may be characterized as a statement of a natural law, a natural phenomenon or an abstract idea) provide an inventive, and patentable, concept.

D. ConclusionThe unanimous decision by the Court in Mayo has made patent protection of personalized

medicine innovations based on bioinformation more challenging than ever. Many personalized medicine innovations based on discovery of a natural correlation between a genetic profile of a person and an optimized treatment of the person are often made using “well-understood, routine, conventional activity previously engaged in by researchers in the field.” In view of the uncertainties surrounding the Mayo test, how to maximize patent protection of personalized medicine innovations remains to be developed.

V. Divided Infringement111

Another hot topic in patent law relevant to personalized medicine is the issue of divided infringement, that is, how to analyze infringement of a method claim when all the steps are performed, but not by a single party. The Federal Circuit addressed this question in its en banc decision in Akamai Techs., Inc. v. Limelight Networks, Inc., and McKesson Techs., Inc. v. Epic

111 Chapter authored by Lynn C. Tyler, Esq., Barnes & Thornburg, 11 South Meridian Street, Indianapolis, Indiana 46204-3535, Phone: (317) 231-7392; E-mail: [email protected].

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Systems Corp.112 The issue sharply divided the eleven judge en banc panel, which issued a per curiam opinion and two dissenting opinions, one by Judge Newman and one by Judge Linn, joined by Judges Dyk, Prost and O’Malley. The majority expressly declined to decide whether there is direct infringement under 35 U.S.C. § 271(a) in such a case and held that the defendants could be liable for inducing infringement under 35 U.S.C. § 271(b): “[W]e hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.”113 The majority overruled BMC Resources, Inc. v. Paymentech, L.P.,114 at least to the extent it held to the contrary. 115

A. Akamai Techs., Inc. v. Limelight Networks, Inc.Akamai’s patent, U.S. Patent No. 6,108,703, “covers a method for efficient delivery of

web content.”116 Under the method, some of the content of a website is placed on a set of replicated servers and web browsers are programmed to retrieve the content from those servers. Limelight provides a network of servers and allows customers to place some of their content on its servers, but Limelight does not modify its customers’ web pages itself. Rather, Limelight instructs its customers on the steps required to modify their pages.117

According to Judge Newman, claims 19 and 34 are representative of the claims asserted by Akamai at trial:

19. A content delivery service, comprising;

replicating a set of page objects across a wide area network of content servers managed by a domain other than a content provider domain;

for a given page normally served from the content provider domain, tagging the embedded objects of the page so that requests for the page objects resolve to the domain instead of the content provider domain;

responsive to a request for the given page received at the content provider domain, serving the given page from the content provider domain; and

serving at least one embedded object of the given page from a given content server in the domain instead of from the content provider domain.

34. A content delivery method, comprising:

112 692 F.3d 1301 (Fed. Cir. 2012).

113 692 F.3d at 1306.

114 498 F.3d 1373 (Fed. Cir. 2007).

115 Id.

116 Id.

117 Id.

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distributing a set of page objects across a network of content servers managed by a domain other than a content provider domain, wherein the network of content servers are organized into a set of regions;

for a given page normally served from the content provider domain, tagging at least some of the embedded objects of the page so that requests for the objects resolve to the domain instead of the content provider domain;

in response to a client request for an embedded object of the page:

resolving the client request as a function of a location of the client machine making the request and current Internet traffic conditions to identify a given region; and

returning to the client an IP address of a given one of the content servers with the given region that is likely to host the embedded object and that is not overloaded.118

Following a jury trial at which Akamai relied on a theory of direct infringement rather than inducement, the jury found infringement and the district court initially denied Limelight’s motion for judgment as a matter of law. After the Federal Circuit rendered its decision in Muniauction, Inc. v. Thomson Corp.119 the district court entered JMOL in favor of Limelight because it did not perform all the steps of the patented methods and did not direct or control the actions of its customers. A panel of the Federal Circuit affirmed.

B. McKesson Techs., Inc. v. Epic Systems Corp.McKesson’s patent, U.S. Patent No. 6,757,898, covers “a method of electronic

communication between healthcare providers and their patients.”120 Epic licenses its software to healthcare organizations which, among other things, allows healthcare providers to communicate electronically with patients. Epic does not perform any of the steps of McKesson’s claimed methods; rather, a patient performs the first step by initiating a communication with a healthcare provider, who performs the rest of the steps.121

McKesson asserted claim 1 of the ‘898 patent which reads as follows:

1. A method of automatically and electronically communicating between at least one health-care provider and a plurality of users serviced by the health-care provider, said method comprising the steps of:

initiating a communication by one of the plurality of users to the provider for information, wherein the provider has established a preexisting medical record for each user;

118 692 F.3d at 1333-34.

119 532 F.3d 1318 (Fed. Cir. 2008).

120 Id. at 1306.

121 Id.

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enabling communication by transporting the communication through a provider/patient interface over an electronic communication network to a Web site which is unique to the provider, whereupon the communication is automatically reformatted and processed or stored on a central server, said Web site supported by or in communication with the central server through a provider-patient interface service center;

electronically comparing the content of the communication with mapped content, which has been previously provided by the provider to the central server, to formulate a response as a static or dynamic object, or a combined static and dynamic object; and

returning the response to the communication automatically to the user’s computer, whereupon the response is read by the user or stored on the user’s computers

said provider/patient interface providing a fully automated mechanism for generating a personalized page or area within the provider’s Web site for each user serviced by the provider; and

said patient-provider interface service center for dynamically assembling and delivering custom content to said user.122

McKesson pursued an inducement theory against Epic, but the district court relied on Muniauction and BMC to enter summary judgment against McKesson. A panel of the Federal Circuit again affirmed, on the basis that no single actor performed all the steps of the patented method.

C. Federal Circuit En Banc OpinionThe Federal Circuit’s en banc opinion resolved both cases. The majority opinion notes

early on, somewhat anti-climactically, that “[i]t is not necessary for us to resolve” the issue to which “[m]uch of the briefing in these cases has been directed,” namely, “whether direct infringement can be found when no single entity performs all of the claimed steps of the patent.”123 The majority stated that prior cases have not found direct infringement where multiple actors combine to infringe a method claim because direct infringement is a strict liability tort and finding liability in those circumstances “would ensnare actors . . . who had no way of knowing that others were acting in a way that rendered their collective conduct infringing.”124 It was unnecessary to resolve that issue in this case, however, because “these cases and cases like them can be resolved through an application of the doctrine of induced infringement.”125

122 532 F.3d 1318, 1335-36 (Fed. Cir. 2008). 123 Id. at 1306.

124 Id at. 1307.

125 Id. at 1306.

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1. Majority The majority agreed with Judge Linn’s dissent that direct infringement requires one party

to perform all the steps of a method claim, either itself or vicariously, 126 and that liability for induced infringement requires at least one instance of actual infringement.127 The majority and the Linn dissent parted company, however, on whether a single party must be liable for direct infringement when serving as the predicate act for inducing infringement. The majority noted that, from the perspective of the patentee, it makes no difference if an inducer persuades one person to perform all the steps or induces more than one person to combine their efforts to perform all the steps.128 Similarly, if a defendant performs some steps itself and induces one or more others to perform the remaining steps, the impact on the patentee is the same as if one person performed all the steps.129

The majority supported its decision by relying on legislative history from the 1952 Patent Act--primarily testimony of Giles S. Rich, who co-authored the Act and later became a highly-respected federal judge on the Federal Circuit.130 The majority also relied on analogies to liability for inducement under criminal and tort law.131 The majority acknowledged the Supreme Court’s statement in Aro Mfg. Co. v. Convertible Top Replacement Co.132 that “if there is no infringement of a patent there can be no contributory infringer”133 but distinguished the case because it involved a product claim and the liability of a single defendant under the repair or replace doctrine.134 Finally, the majority relied on some pre-1952 Patent Act cases that it stated found liability for contributory infringement notwithstanding the absence of a single direct infringer.135

For both Akamai and McKesson, the majority remanded their cases to the district court and stated that the defendants could be liable if they knew of the asserted patent and either performed some steps themselves and induced another to perform the remaining steps (Akamai) or induced others to perform all the steps (McKesson).136

126 Id. at 1307.

127 Id. at 1308.

128 Id. at 1309.

129 Id.

130 Id. at 1309-11.

131 Id. at 1311-13.

132 365 U.S. 336 (1961).

133 Id. at 345.

134 Akamai, 692 F.3d at 1315-16.

135 Id. at 1317-18.

136 Id. at 1318-19.

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2. DissentJudge Newman rejected the premise that a method claim can only be infringed if one

party performs all the steps.137 She pointed to the word “whoever” in § 271(a) and noted that 1 U.S.C. § 1 states that “words importing the singular include and apply to several persons, parties, or things.”138 Thus, “when more than one party performs all of the steps [of a method claim], the claim is infringed” because “[i]nfringement is not a question of how many people it takes to perform a patented method.”139 Judge Newman agrees that induced infringement can only exist where there is also direct infringement and her approach solves this problem.140

Judge Newman would rely on traditional tort law to apportion liability among joint infringers.141 For example, she cited the Restatement of the Law Torts: Apportionment of Liability, § 8 (2000), as identifying factors such as “the nature of each person’s risk-creating conduct” and “the strength of the causal connection between the person’s risk-creating conduct and the harm.”142 Judge Newman also made the practical point that patentees typically sue competitors, not consumers such as patients or users of the Internet.143

On every major point, Judge Linn’s dissent engaged and disagreed with the majority. The Linn dissenters argued that § 271(a) defines infringement,144 so the meaning must be the same for §§ 271(b) and (c).145 The majority found that infringement had different definitions in different parts of the statute, such as §§ 271(e)(2) and 271(f), so that it did not have to have the same meaning in §§ 271(a) and (b).146 Judge Linn stated that the majority opinion ignored the Supreme Court’s decision in Aro,147 that there can be no indirect infringement without direct infringement,148 whereas the majority distinguished Aro on the grounds noted above. Judge Linn disagreed with the majority’s reading of Judge Rich’s Congressional testimony, and in any event noted that because he was not a member of Congress, his testimony was not entitled to any

137 692 F.3d at 1322.

138 Id. at 1322-23.

139 Id. at 1322-23.

140 Id. at 1328-29.

141 Id. at 1331-32.

142 Id. at 1331.

143 Id. at 1332.

144 Id. at 1338.

145 Id. at 1338-39.

146 Id. at 1314.

147 Supra.

148 Id. at 1340-41.

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weight.149 Judge Linn rejected the majority’s analogies to inducement liability under criminal and tort law.150

Judge Linn’s analysis can perhaps be summarized with the syllogism: (1) direct infringement requires that one actor performs each and every element or step of a claim; (2) there can be no induced infringement without direct infringement; therefore, (3) there can be no induced infringement unless one actor performs each and every element or step of a claim. Judge Linn recognized that two or more parties can be found liable though under traditional principles of vicarious liability, i.e., when one party directs or controls the other or when the parties are engaged in a joint enterprise.151

The Linn dissenters would have affirmed both of the judgments below that there was no liability for infringement because no single party performed all the steps of the method either by itself or vicariously. 152

D. Relevance to Diagnostic CompaniesThe Akamai/McKesson decision should be generally, but not unequivocally, good news

for diagnostic companies. Diagnostic patents often include method claims with steps that are performed by more than one person. It is not at all uncommon for a method claim to include a step of obtaining a sample (of blood or some other tissue) that may be performed by one person and other steps of processing and/or analyzing the sample to make a diagnosis which are performed by one or more other people. Under BMC Resources, Muniauction, and other cases, it was virtually impossible to prevail in an infringement case over such claims. Under Akamai and McKesson, the patentee has a chance to prevail on an inducement theory. Of course, the patentee must prove the other elements of inducement, including knowledge of the patent and intent to induce infringement.153 Although these elements are not always easy to prove, some chance is better than no chance. Also, the majority expressly left the issue of direct infringement unresolved, so it provides another opportunity for success in an appropriate case.

E. Alternative AnalysisIt is respectfully submitted that there may be a better approach to these issues that leads

to a better result – a result that (1) is based on the text of §271(a) and precedent, (2) satisfies both the single actor rule and the requirement that direct infringement must exist for induced infringement to exist, yet (3) holds joint infringers liable for their conduct. Under 35 U.S.C. § 271(a), “whoever without authority makes, uses, offers to sell or sells any patent and invention, within the United States . . . infringes the patent.” Because § 271(a) uses the disjunctive “or,” a

149 Id. at 1341.

150 Id. at 1343-47.

151 Id. at 1348-49.

152 Id. at 1350-51.

153 See Global-Tech Appliances, Inc. v. SEB S.A., ___ U.S. ___, 131 S. Ct. 2060, 2068-69 (2011) (inducement requires knowledge that induced acts constitute patent infringement; knowledge means at least willful blindness).

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party that performs any one of the prohibited acts – “makes, uses, offers to sell or sells” – is guilty of infringement.154

None of the Court’s opinions considers the meaning of “uses” and “sells” in § 271(a) and how those meanings might impact the Akamai and McKesson cases. In the well-known case involving the Blackberry, NTP, Inc. v. Research in Motion, Ltd.,155 the Court (Linn, J.), wrote:

In terms of the infringing act of “use,” courts have interpreted the term “use” broadly. In Bauer & Cie v. O’Donnell, 229 U.S. 1 … (1913), the Supreme Court stated that “use,” as used in a predecessor to title 35, is a “comprehensive term and embraces within its meaning the right to put into service any given invention.”156 ... The few courts that address the meaning of “use” have consistently followed the Supreme Court’s lead in giving the term a broad construction.157

The statutory terms “uses” and “sells” “have an established judicial interpretation; that interpretation is a broad one.”158

As to the system claims at issue, in NTP, the Federal Circuit held that RIM “used” the claims within the U.S. (even though a relay station was located in Canada) because “[t]he use of a claimed system under section 271(a) is the place at which the system as a whole is put into service, i.e., the place where the control of the system is exercised and beneficial use of the system obtained.”159

For NTP’s method claims, the Federal Circuit reached a different conclusion:

Because a process is nothing more than the sequence of actions of which it is comprised, the use of a process necessarily involves doing or performing each of the steps recited. This is unlike use of a system as a whole, in which the components are used collectively, not individually. We therefore hold that a process cannot be used “within” the United States as required by section 271(a) unless each of the steps is performed within this country.”160

154 E.g., Roche Prod., Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858, 861 (Fed. Cir.) (“well-established . . . that the use of a patented invention, without either manufacture or sale, is actionable), cert. denied, 469 U.S. 856 (1984).

155 418 F.3d 1282 (Fed. Cir. 2005).

156 Id. at 10-11.

157 418 F.3d at 1316-17.

158 Hughes Aircraft Co. v. United States, 29 U.S.P.Q.2d 1974, 1995 (Ct. Cl. 1993) (holding that attitude control system on spacecraft was being “used” by Government upon launch, even though system was never activated). See also Olsson v. United States, 25 F. Supp. 495, 498 (Ct. Cl. 1938) (Government “used” howitzers for national defense even though they were disassembled and never fired), cert. denied, 307 U.S. 621 (1939).

159 Id. at 1317 (emphasis added).

160 Id. at 1318.

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Because RIM performed at least one step of NTP’s claimed method in Canada, there was no infringement as a matter of law.

So far this does not seem too promising for method claims and the owners of patents containing them, but one potential way for patentees to improve their position is already apparent. If prosecution remains open or reissue is still an option, patentees can consider adding system claims to their patents. For example, it is easy to imagine McKesson’s patent including claims to an electronic communications system between healthcare providers and patients and involving personal computers and software. Under NTP, infringement of the system claim is evaluated based on use of the system as a whole and should not require that one person operate every component of the system.

Further, under a broad definition of “use,” owners of patents on diagnostic methods may be able to establish direct infringement even when the steps of the method are performed by more than one person. For example, “use” specifically includes providing a patented invention to one’s customers, even when this is done without charge. In Trans-World Mfg. Corp. v. Al Nyman & Sons, Nyman provided customers eyeglass display cases that Trans-World claimed infringed its patents.161 The Federal Circuit affirmed the entry of injunctive relief:

Nyman argues that since only its customers use the eyeglass racks, an injunction against Nyman’s use was unnecessary and would be a meaningless act. Nyman, however, is using the racks by furnishing them to its customers to aid the latter in selling eyeglasses.162

Under this broad definition of “use,” in the Akamai case Limelight was using the patented method by providing its customers with access to its servers and with programming instructions that allowed its customers to use the method to efficiently deliver web content. In McKesson, Epic was using the method by furnishing its customers with software to allow them (healthcare providers) to make electronic communications with their patients.

Although less likely, the owner of a diagnostic method patent may also be able to establish direct infringement based on the “sells” prong of § 271(a). In NTP, the Court analyzed the meaning of “sells” and, while casting doubt on its application to method claims, concluded: “We need not and do not hold that method claims may not be infringed under the ‘sells’ and ‘offers to sell’ prongs of section 271(a).”163 Without specifying whether it qualified as a use or sale, courts have held that licensing an infringing device or method qualifies as infringing conduct. 164 The majority opinion in Akamai/McKesson expressly states that Epic “licenses” its

161 Trans-World Mfg. Corp. v. Al Nyman & Sons, 750 F.2d 1552, 1555 (Fed. Cir. 1984).

162 Id. at 1565 (emphasis added).163 Id. at 1320-21.

164 See, e.g., Moseley v. U.S. Appliance Corp., 155 F.2d 25, 27 (9th Cir.) (“act of licensing . . . was itself an act of infringement”), cert. denied, 329 U.S. 762 (1946); H.K. Porter Co. v. Gates Rubber Co., 187 U.S.P.Q. 692, 718 (D. Colo. 1975) (licensor of rights to make infringing products had “interest as an infringer”); Leesona Corp. v. Cotwool Mfg. Corp., 201 F. Supp. 472, 474 (W.D.S.C. 1962) (“licensing” included among matter “adjudged infringing conduct”).

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software to healthcare organizations.165 Although not stated in any of the en banc opinions, it is likely Limelight licenses access to its server network to its customers.

Under this approach to finding direct infringement based on a broad definition of “uses” or “sells,” a single entity commits all the acts necessary for direct infringement, i.e., using or selling the patented method, even though a single entity may not perform all the steps of the method. Because there is a direct infringer, there may also be a basis for finding induced infringement if the other elements are satisfied. The approach is based on the language of §271(a) and at least the cases discussed above. Further, it appears that this approach could reconcile the positions of the majority and the Linn dissenters in the Akamai and McKesson cases, although the Akamai/McKesson majority may distinguish these cases because they involved products, one of the grounds on which it distinguished the Supreme Court’s Aro decision. Of course, the Supreme Court may eventually decide whether that is a valid distinction of Aro too. In any event, as long as one entity can be found who has “used” or “sold” the patented method within the meaning of the definitions above, it is also consistent with Judge Newman’s view that the number of people it takes to perform the steps does not matter.

F. ConclusionIn sum, for now at least the issue of divided direct infringement was expressly left

unresolved by the majority. On the bright side, owners of method patents were given a viable theory of induced infringement to try to remedy instances of divided infringement if they can satisfy the other elements. Such owners no longer have to establish that one actor controls the others via an agency relationship or otherwise. As always, we will have to wait to see if one or more of the parties to the two cases seeks Supreme Court review and, if so, whether the Supreme Court takes the case and issues its own opinion addressing these issues. It seems likely at least one of the parties to the two cases will seek review and, given that the issue has come up several times now and the Federal Circuit is divided over the proper analysis, there is a better-than-average chance that the Supreme Court will take the case.

VI. A Patent Practitioner’s Position on Gene Patents and the Public Good166

The United States Supreme Court’s decision to review the breast cancer gene patent case (AMP v. Myriad Genetics) presents an opportunity to affirm the importance of patents as a tool to promote advances in technology and medicine. The patents before the Court claim isolated genes containing mutations that can be used to detect a patient’s predisposition to breast and ovarian cancer. The Court has agreed to consider the specific question of whether human genes are patentable.

165 Akamai slip op. at 11.

166 Chapter authored by Karen Canady.

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The simple answer to the question, as phrased by the petitioners, is “no”. Human genes are not, nor have they ever been, patentable. A key point, however, is what is meant by “human genes.”

The Patent Office has been issuing patents that relate to genes, human and otherwise, for about 30 years. The Patent Office has always limited such patent claims, however, to exclude genes as they occur in nature. This is true for any naturally occurring material, not just human genes.

The claims at issue in the AMP v. Myriad Genetics case are directed to isolated genes that contain certain mutations associated with breast cancer. These genes cannot be isolated merely by reaching into the body and simply plucking the gene out of its natural environment the way a leaf is plucked from a tree. Isolation of a gene involves a lengthy series of technical steps that begin with identifying where in the chromosome the gene of interest lies and includes sequencing, transcription, cleaving and splicing the key portions of DNA. Thus the patent claims are not directed to “human genes” per se, but rather to genetic material derived from human genes.

The relevant patents include claims to genomic DNA and claims to complementary DNA (referred to as “cDNA”), as well as other claims that relate to primers and probes, shorter DNA pieces useful for making copies of and identifying the presence of larger DNA molecules. Genomic DNA includes both the portions of DNA that encode a protein (known as “exons”) and intervening, non-coding portions (known as “introns”). Most patent claims directed to genes, however, claim cDNA, which omits the introns and includes only the portion needed to make the protein using recombinant techniques. In the breast cancer gene example, BRCA1 has 100,000 base pairs in its genomic sequence, and only 5,914 base pairs in its cDNA, exemplifying the substantial difference between genomic DNA and the corresponding cDNA.

A key point addressed by the gene patent case has been whether a gene as claimed in its isolated form is significantly different from that gene as it occurs in nature. Even the three judges on the appellate panel considering this question could not agree on this point, at least with respect to genomic DNA (all three appellate judges agreed that cDNA was patent eligible).

The dispute over whether isolated DNA is sufficiently different from what is found in nature begs the question: why would a patent claiming a gene have any value if it is essentially the same as the gene in its natural form?

Its value derives from the features it has in isolated form, allowing the DNA to be replicated and put to use. If it were the same chemical entity as that found in nature, there would be no need to isolate it, and one could readily avoid infringement of patent claims to isolated DNA by skipping the isolation step. The technical reality is that, when working with isolated DNA, one does not use literally the same DNA sequence that came from the natural source. Instead, the natural DNA is amplified into a large number of copies (“clones”). Thus, recombinant proteins are made from copies of the natural sequence and do not use the original source DNA derived from nature. The isolated DNA molecules are not produced in nature, but are the product of human effort and ingenuity.

Some purified products have been deemed patent eligible due to advantageous characteristics of the new product, and likewise isolated DNA sequences that open up new uses should be patent eligible. Even a human cell that makes a protein product does not make that

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product in a form and quantity that enables the uses of a protein made from isolated DNA using recombinant methods. On the other hand, the value of the recombinantly produced protein is that it can be used for the same functions as its naturally occurring counterpart, as with the recombinant production of insulin for treatment of diabetics.

There are many side issues that can distract us from whether material derived from natural genes should be eligible for patenting. Fears that gene patents impede research or patient access to needed tests are unfounded and, more importantly, can be more appropriately and effectively addressed by Congress. Legislative action can be taken to clarify the research exemption to patent infringement or to require insurance companies to cover patient testing. Alarmist cries that corporations can own the genes in our bodies mislead the public about the realities of existing restrictions on patentable subject matter.

The Supreme Court should direct its attention to the key differences between isolated DNA and natural DNA, and all of the benefits that isolated DNA brings to society. We should not remove the long-standing incentives to develop technologies and bring new medical advances to market. Patent claims properly directed to DNA in its isolated and useful form, as well as to methods that apply the use of biomedically important information, should be upheld so long as they meet the additional requirements for patentability such as novelty and nonobviousness. This method of encouraging technological advances has, and will continue, to serve us well.

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