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By Tony Dutra
Sept. 16 — The U.S. Court of Appeals for the Federal Circuit definitely hit a nerve in the life sciences community with its June 12 panel decision on the patent ineligibility of an invention on detecting paternity DNA in a prenatal sample.
San Diego-based Sequenom Inc., the exclusive licensee of the patent, filed on Aug. 13 a petition for rehearing by the full court, citing “an existential threat to patent protection for an array of meritorious inventions”.
Twelve amicus briefs were filed supporting Sequenom's position.
Stakeholders in the biotech and pharmaceutical industries decried the “dark cloud overshadowing thousands of issued and maintained biotechnology patents,” with future innovations subject to a “spiral of ineligibility” evolving as courts and the Patent and Trademark Office incrementally expand on the Supreme Court's rulings.
Two patent law associations and 25 law professors joined in asking the court to overturn a three-judge panel decision that Sequenom's patent on prenatal detection methods was improperly granted.
“The panel’s decision suffers from the same infirmity of missing the forest for the trees, which will likely proliferate if its decision stands,” the Intellectual Property Owners Association said.
Alleged infringer Ariosa Diagnostics Inc. has until Oct. 19 to file its response.
Sequenom's U.S. Patent No. 6,258,540 is based on the discovery that paternity-identifying DNA can be detected in a serum or plasma sample from a pregnant female.
The panel decision, Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 115 U.S.P.Q.2d 1152 (Fed. Cir. 2015)), acknowledged the scientific value of the discovery, but said, “even such valuable contributions can fall short of statutory subject matter, as it does here.”
Judge Richard Linn, in a concurring opinion, severely criticized the Supreme Court's latest standards for patent eligibility under 35 U.S.C. §101, but he conceded that the court was bound by the “sweeping language of the test set out” in Mayo Collaborative Servs. v. Prometheus Labs. Inc., 132 S. Ct. 1289, 2012 BL 66018, 101 U.S.P.Q.2d 1961 (2012).
Under the panel's logic, Sequenom said in its petition for rehearing, “the person who first discovers a natural phenomenon can never obtain a patent on any practical application of that new knowledge, however surprising or revolutionary the results, unless the steps she teaches to use it are independently novel. As the example of this case vividly shows, that cannot be correct.”
Sequenom acknowledged tension between Mayo and other high court decisions in saying that “the courts should not force Supreme Court cases to conclusions they know it did not intend, and it will not do for [the Federal Circuit]—which the legal system relies upon to guide the evolution of the patent law—to refuse the crucial task of reconciling the Supreme Court’s teachings in this difficult area by pretending that several of them do not exist.”
The panel's decision, unless overturned, is a “grave blow to the medical diagnostics and pharmaceutical industries and to patients whose health depends on medical innovations,” according to a brief filed by the Wisconsin Alumni Research Foundation, Marshfield Clinic and MCIS Inc.
Novartis AG cited a threat to “our own inventions related to personalized medicine, biomarkers and point-of-care testing, as well as the inventions of third parties upon which we now or may in the future depend to help meet our goal of providing the right medicine to the right patient at the right time.”
Briefs filed by Jyant Technologies Inc. and Amarantus Bioscience Holdings Inc., Personalis Inc. and Population Diagnostics Inc.—all biotechnology companies involved in medical testing—claimed in Jyant's words that the panel decision “threatens to abolish wide swaths of existing and future intellectual property.”
A brief filed by 23 law professors cited a study saying that 60-70 percent of all medical treatment decisions are based on the results of diagnostic tests. The professors argued that the patent system should certainly be supportive of innovations in that field.
“The economics of innovative diagnostic tests reflect exactly the economic justification for the patent system: the cost of applying a genetic diagnostic test is relatively low, but the ex ante R&D cost is enormous and is not reflected in the marginal cost of the medical test itself,” the professors said.
The Biotechnology Industry Organization and Pharmaceutical Research and Manufacturers of America filed a brief jointly, arguing that the Supreme Court's rulings were not “intended to single out whole classes of socially beneficial biotechnology for unfavorable treatment under the patent law.”
“We are reminded that the statute is inclusive and judicial exceptions to it are narrow, not the other way round,” the associations said in an unveiled criticism of the Federal Circuit's reasoning.
“The biotechnology industry has thus watched panels of this Court interpret narrow Supreme Court opinions too broadly,” according to the Coalition for 21st Century Medicine, claiming to represent “more than two dozen of the world’s most renowned molecular diagnostic companies, clinical laboratories, and patient advocacy groups, as well as researchers, physicians, and venture capitalists involved in the industry.”
“Taking its cue from this Court, the PTO has in turn interpreted those panel decisions expansively in its guidance for the examining corps,” the coalition's brief continued. “And the PTO’s guidance is again over-extended by individual examiners to arbitrarily reject claims to subject matter that would have been patent eligible under the original narrow Supreme Court holdings. The en banc Federal Circuit holds the pivotal position in this spiral of ineligibility.”
All three documents see the Federal Circuit returning to the approach of dissecting a patent claim into its constituent elements or steps, and then forgetting to look at the claim as a whole.
Mayo created a two-step test. First, the invention as a whole is reviewed to determine if the inventor is claiming an innovation in one of the three categories of patent-ineligible subject matter—laws of nature, natural phenomena and abstract ideas. The panel held that Sequenom's claims failed the first step because “[t]he method therefore begins and ends with a natural phenomenon.”
The second step is to look for an additional “inventive concept” that effectively overcomes confining the invention to the natural phenomenon.
When a method patent is at issue as here, Mayo held that adding steps of “well-understood, routine, conventional activity previously engaged in by scientists in the field” is insufficient. But it also held an “ordered combination” of the steps could contain the inventive concept, and it commented that the claims in Mayo did not contain the inventive concept “when viewed as a whole.”
The Federal Circuit panel failed to look at the claims properly, then, Sequenom said: “The '540 patent discloses a risk-free way of transforming a blood sample from a mother into genetic information about her fetus in a combination of steps no one was performing or would have performed absent its teaching.”
“To assist courts and the PTO in the proper analysis of patent eligibility, IPO urges this Court to emphasize how claimed methods must be evaluated as a whole when determining patent eligibility,” the IPO brief said in agreement.
The patent law associations also attacked the panel's cursory disposal of another aspect of patent eligibility: Does the specific application of the natural phenomenon (or abstract idea) merit patent eligibility because it does not pre-empt all commercially viable uses of the phenomenon?
“[Q]uestions on preemption are inherent in and resolved by the §101 analysis,” the panel said. “Where a patent’s claims are deemed only to disclose patent ineligible subject matter under the Mayo framework, as they are in this case, preemption concerns are fully addressed and made moot.”
The New York Intellectual Property Law Association brief said: “While Mayo and Alice presented a two-part ‘framework' to address when a particular claimed invention preempts a ‘fundamental principle,' neither case purported to have that framework replace a preemption inquiry nor authorize a court to ignore the ultimate question, i.e., does the claim preempt a fundamental principle instead of merely claim a practical application of such a principle?”
The second case reference was to Alice Corp. Pty Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347, 2014 BL 170103, 110 U.S.P.Q.2d 1976 (2014), which arguably has had an even more devastating effect on computer-related inventions than Mayo has had on diagnostic methods.
Finally, two briefs presented concerns about the panel decision from overseas.
“The panel’s interpretation of the Supreme Court’s precedent puts the US patentable subject matter eligibility standard at odds with those of other industrial nations,” according to the BioIndustry Association, a United Kingdom trade association of over 300 member organizations.
“It is a setback in long-standing efforts to harmonize patents laws,” the association claimed. “Moreover, foreign and multinational companies would be additionally disadvantaged because, as a practical matter, in the absence of patent protection in the US, their inventions would not be protectable as trade secrets. These companies would be forced to choose between patent protection in the rest of the world (except the US) or trade secret protection everywhere.”
Paul Gilbert Cole, a U.K. patent attorney, questioned whether the ruling violates the U.S.'s commitments under Article 27 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, directed to patentable subject matter.
“This case is an example of an internationally discordant, not harmonious, result, contrary to the eligibility requirements of TRIPS Article 27,” he said. “Eligibility of the corresponding European patent was never disputed and it was held unobvious for solving the technical problem of detecting fetal nucleic acid with higher sensitivity.”
“It is wrong that a patent that survived obviousness challenge in Europe should be held ineligible in the U.S.,” Cole said.
The full list of briefs filed by friends of the court:
• 23 law professors, led by Adam Mossoff of the George Mason School of Law, Arlington, Va., and submitted by Kevin E. Noonan of McDonnell Boehnen Hulbert & Berghoff LLP, Chicago.
• Amarantus Bioscience Holdings Inc., Personalis Inc. and Population Diagnostics, Inc., filed by Gideon A. Schor of Wilson Sonsini Goodrich & Rosati, New York.
• BioIndustry Association, filed by Konstantin M. Linnik of Nutter McClennen & Fish LLP, Boston.
• Biotechnology Industry Organization and Pharmaceutical Research and Manufacturers of America, filed by Christopher M. Holman of Hovey Williams LLP and a professor at the University of Missouri-Kansas City School of Law.
• Coalition for 21st Century Medicine, filed by Benjamin G. Jackson of Myriad Genetics Inc., Salt Lake City.
• Paul Gilbert Cole, filed by Donald L. Kuhn Jr. of McDonnell Boehnen Hulbert & Berghoff LLP, Chicago.
• Intellectual Property Owners Association, filed by Teige P. Sheehan of Heslin Rothenberg Farley & Mesiti P.C., Albany, N.Y.
• Jyant Technologies Inc., filed by Matthew J. Dowd of Andrews Kurth LLP, Washington.
• Jeffrey A. Lefstin and Peter S. Menell, professors at the University of California Hastings College of Law, San Francisco.
• New York Intellectual Property Law Association, filed by John D. Murnane of Fitzpatrick, Cella, Harper & Scinto, New York.
• Novartis AG, filed by the firm's counsel in Basel, Switzerland.
• Wisconsin Alumni Research Foundation, Marshfield Clinic and MCIS Inc., filed by Dan L. Bagatell of Perkins Coie LLP, Phoenix.
Thomas C. Goldstein of Goldstein & Russell PC, Bethesda, Md., filed Sequenom's rehearing petition. Kaye Scholer LLP, in Palo Alto and San Diego, Calif., also represents the patent owner.
Irell & Manella LLP and Russ August & Kabat, both in Los Angeles, represent Ariosa. Bartko, Zankel, Bunzel & Miller, San Francisco, and Gibson, Dunn & Crutcher LLP, in Washington and Dallas, represent Natera Inc., a co-appellee also potentially liable as an infringer of Sequenom's patent.
To contact the reporter on this story: Tony Dutra in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Mike Wilczek in Washington at email@example.com
Text of petition for rehearing at http://www.bloomberglaw.com/public/document/Ariosa_Diagnostics_Inc_v_Sequenom_Inc_Docket_No_1401139_Fed_Cir_D/6.
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