Patent eligibility: Are biomedical patents under threat?

There could be dire consequences for biomedicine and patent law as a whole—that’s one view of the latest ruling in Ariosa Diagnostics v Sequenom, which has sent shock waves through some sections of the US life sciences industry.

According to lawyers representing Sequenom, the molecular technology company whose patent was revoked in the case, the ruling creates an “existential threat” to patent protection for an array of meritorious inventions.

On June 12, a three-judge panel at the US Court of Appeals for the Federal Circuit affirmed that the patent, which protects a non-invasive method of testing a mother’s blood for genetic traits in her foetus, was invalid.

A procedure that can help to detect things such as gender or genetic disease, it investigates the paternally inherited cell-free foetal DNA (cffDNA) in maternal plasma. In 1996, researchers had discovered that cffDNA was circulating in the blood of pregnant mothers—a finding that Sequenom’s lawyers say was revolutionary.

In their unanimous decision, Circuit Judges Reyna, Linn and Wallach said the patent failed to meet the two-step eligibility test set by Mayo v Prometheus, the 2012 decision by the US Supreme Court. Under that test, courts must first determine whether the relevant claims are directed to a patent-ineligible concept, and then consider whether each claim’s components—both individually and combined—transform its nature into a patentable application.

The panel said the claims failed the first step because the method “begins and ends” with a natural phenomenon (cffDNA). Assessing the second step, the judges found that for process claims that encompass a natural phenomenon, the process steps must be new and useful. But, they added, because researchers already knew how to conduct tasks such as fractionating blood and detecting characteristics in amplified DNA, the method added only “well-understood, routine, and conventional activity” to the natural phenomenon that had been discovered.

Linn’s concurring opinion seemed anything but. There is “no reason, in policy or statute, why this breakthrough invention should be deemed patent-ineligible”, he exclaimed. According to Linn, he concurred only because he was bound by the sweeping language of the Mayo test, adding that: “This case represents the consequence—perhaps unintended—of that broad language in excluding a meritorious invention from the patent protection it deserves and should have been entitled to retain.”

The backlash

The decision prompted outrage from Sequenom’s representatives, namely Thomas Goldstein and Eric Citron of law firm Goldstein & Russell, and Michael Malecek and Robert Barnes of law firm Kaye Scholer. In August, they filed a petition asking the full federal circuit to rehear the case en banc, saying the three-judge panel got it totally wrong.

“The panel’s decision misinterprets Mayo both by failing to read that decision in light of the key Supreme Court precedent that Mayo endorses and by reaching a result the Supreme Court has twice disavowed in recent opinions.”

The lawyers claimed the panel ignored decisions such as Association for Molecular Pathology v Myriad Genetics (2013) to reach a consequence that Mayo quite clearly did not intend.

While the individual techniques protected by Sequenom’s patent were known before the patent was applied for, they said, this patent is “radically different” from those recently rejected under section 101 because it claims a combination of steps that no-one in the field was previously practising and does not purport to (and did not in fact) pre-empt all uses of the natural discovery that motivated it”.

The material the patent taught people how to test had even previously been discarded as waste, they added.

The lawyers claim that the federal circuit is in effect saying that a person who first discovers a natural phenomenon can never obtain a patent covering any practical application of that new knowledge, however surprising or revolutionary the results, unless the steps he or she teaches to use it are independently novel.

Assessing the decision, MaryAnne Armstrong, partner at law firm Birch Stewart Kolasch & Birch, says the panel misapplied the Mayo ruling.

“The Supreme Court (in Mayo) did consider the narrowness of the field of use and pre-emption to be a relevant consideration in determining whether a method is patent-eligible subject matter. However, based on the analysis of the federal circuit in the Ariosa decision, no diagnostic method will ever be patentable unless it involves the use of a novel and unobvious product which is itself patentable as a product.

“This seems to be an extreme holding and contrary to section 101,” she says.

Interpretation too broad

Although he expected the panel to find the claims ineligible, Kevin O’Connor, attorney-at-law at Neal, Gerber & Eisenberg, a law firm, says the broad interpretation of Mayo is undoubtedly concerning.

“Following Mayo, and especially Myriad, it seemed that the Supreme Court’s message was clear: while natural products or natural phenomena were ineligible, practical applications of such products and phenomena were eligible.”

He continues: “Neither the Ariosa decision nor any other recent decision has given us much guidance on which claims pass the eligibility test, but we know a lot about the types of claims that fail.

“We are clearly in the middle of a long and, from the perspective of the applicant/patent owner, frustrating stretch of the pendulum moving away from patent eligibility. I am confident that the pendulum will eventually begin to swing back but right now the case law puts the applicant/patent owner at a distinct disadvantage.”

Without the en banc court’s intervention, Sequenom’s lawyers say, the panel’s ruling threatens to swallow many more meritorious inventions and life sciences researchers will have no confidence in the patentability of their new methods for diagnosing and treating medical conditions.

Armstrong says the federal circuit may rehear the case en banc, adding that for Sequenom to prevail it will have to convince the court that if the invention is tailored to a narrow application that does not pre-empt other uses of the law of nature, it should be patent-eligible.

However, O’Connor says he doesn’t think the federal circuit will grant Sequenom’s request for a re-hearing, although the company could still petition the Supreme Court to look at the case.

He adds that to get the decision overturned, Sequenom would need to show that “(a) the absence of pre-emption demonstrates that a claim is patent-eligible; and/or (b) traditional principles of anticipation/obviousness bear on eligibility matters”.

"The panel’s ruling threatens to swallow many more meritorious inventions and life sciences researchers will have no confidence in the patentability of their new methods."

Bennett Berson, partner at law firm Quarles & Brady, says the inevitable Supreme Court decision in this case will be the “most interesting case of the whole lot” from recent years.

“That decision will shape the next 25 years of biotech patent law ... We’ve been needing something like this to come along in the biotech world; at a very high level, it’s either going to kick the law in one way or the other.”

He says he expects “the tide will turn” on the very restrictive view of patent eligibility in the next five to ten years.

“I do not think that the Myriad limits on gene sequence patents will change, but I like to believe that the views articulated in the en banc petition and amicus briefs will ultimately carry the day.”

Section 101 in question

Sequenom certainly has plenty of support in its bid for a re-hearing, including from 23 law professors hailing from institutions including the New York University School of Law and University of San Diego School of Law. They say that while they may differ among themselves on other aspects of modern patent law and policy, the court must grant a rehearing en banc because the decision’s application of section 101 undermines the patent system’s function to promote and legally secure 21st century innovation.

Turning back the clock to the 18th century, they add that “perhaps most surprising is that the first US patent ever granted would be invalid under the panel’s application of the Mayo two-step test”.

“The first patent issued in 1790 to Samuel Hopkins for his method of making potash. This method involved well-known steps such as burning and dissolving ash, and Hopkins’ ‘inventive’ contribution was in the timing and specific order of the steps. Both of these aspects of Hopkins’ patent considered individually would be deemed basic facts or concepts of conventional human activity, and under the Ariosa panel’s application of the Mayo test they are arguably unpatentable subject matter,” they say.

In the meantime, says Berson, patentees should closely evaluate the merits of each patent before seeking to enforce it, and, “of course, should look for opportunities to freshen up their claim sets in continuing applications, if that option remains”.

He adds: “An approach that relies upon trade secret protection could squarely conflict with the transparency required of products needing Food and Drug Administration approval.”

According to Armstrong, there are two main ways to work around the decision.

“Include a novel (ie, unconventional) step/product in the claimed process or tie in an additional step which is not a law of nature, for example a method of treatment step.”

She adds that patent applicants and owners could include an active step in the method claim that “indisputably applies” the knowledge or information gleaned from an allegedly natural product or phenomenon.

One of Sequenom’s representatives, Goldstein, has implored the appeals court to act, arguing that the panel’s decision raises the following “precedent-setting question of exceptional importance”.

“Is a novel method patent-eligible under section 101 where: (1) a researcher is the first to discover a natural phenomenon; (2) that unique knowledge motivates her to apply a new combination of previously known techniques to the phenomenon; and (3) she thereby achieves a previously unknown and impossible result?”

Patent owners and IP lawyers will be made to wait for further clarity on patent eligibility in the biomedicine area, whether from the federal circuit or the Supreme Court. There are clearly major worries about the extent of patentability, while there appears to be a lack of credible alternatives to IP protection, particularly in the form of trade secrets.

Until there is further clarity, investment may dry up in what has traditionally been a highly lucrative industry. The final outcome in this case appears to be hugely important for so many reasons. We await the federal circuit’s next move.