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Leahy Calls for NIH March-In Against Myriad But Some Patents Not Subject to Bayh-Dole

Friday, July 19, 2013
By Tony Dutra

The National Institutes of Health should use its march-in rights under the Bayh-Dole Act to force Myriad Genetics Inc. to license its patents related to testing for genetic mutations associated with breast and ovarian cancer, according to a July 12 letter sent by Sen. Patrick J. Leahy (D-Vt.) to NIH Director Francis S. Collins.

“The health benefits of genetic testing for breast and ovarian cancer are clear,” Leahy wrote. “The healthcare cost savings are equally clear. I am concerned, however, that the health needs of the public are not reasonably satisfied by the patentee in this situation because testimony presented to the USPTO made clear that many women are not able to afford the testing provided by Myriad.”

However, NIH intervention is unlikely to succeed in meeting Leahy's goal, according to two professors contacted by BNA.

“A significant percentage of the Myriad patents (both those being asserted now and those at issue in the recently decided Supreme Court case) don't have an NIH role,” according to Arti K. Rai, Duke University Law School professor and a member of the Duke Institute for Genome Sciences and Policy, Durham, N.C. “And even those that do don't involve the usual sort of march-in under Bayh-Dole.”

Sean O'Connor, a law professor at the University of Washington, Seattle, agreed. Leahy “is barking up the wrong tree,” he said. But he offered an alternative that the senator may consider if the government were interested in becoming more involved in providing health services.


Bayh-Dole Authorizes Government Intervention
The government's march-in rights under the Bayh-Dole Act are codified in 35 U.S.C. §203(a):
With respect to any subject invention in which a small business firm or nonprofit organization has acquired title under this chapter, the Federal agency under whose funding agreement the subject invention was made shall have the right … to require the contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the contractor, assignee, or exclusive licensee refuses such request, to grant such a license itself, if the Federal agency determines that such … (2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees.

“The government can require the patent holder to grant a license to the patent on reasonable terms,” according to Leahy's summarization of the provision. “If the patent owner refuses, the government can directly license the patent in limited circumstances.”


Myriad Reacting to Post-Decision Competition
Myriad's patent claims on isolated DNA were declared ineligible for patenting in a June 13 decision by the U.S. Supreme Court. Association for Molecular Pathology v. Myriad Genetics Inc., No. 12-398, 106 U.S.P.Q.2d 1972 (U.S. June 13, 2013) (115 PTD, 6/14/13). The patents at issue there were based on work done by University of Utah researchers, who were partially funded by NIH.

Most of the patent portfolio giving licensee Myriad exclusivity on BRCA1 and BRCA2 genetic testing remained intact, however, in part because of the high court's decision but primarily because the declaratory judgment plaintiffs in the case did not challenge the test-specific claims.

Immediately after the ruling, competitors announced plans to offer BRCA1/2 testing. The university and Myriad quickly filed patent infringement lawsuits against both. University of Utah Research Foundation v. Ambry Genetics Corp., No. 2:13-cv-00640-RJS (D. Utah, filed July 9, 2013) (134 PTD, 7/12/13); and University of Utah Research Foundation v. Gene by Gene, No. 2:13-cv-00643-EJF (D. Utah, filed July 10, 2013). In its motions for preliminary injunctions in the cases, Myriad said its BRCAnalysis test is priced at $4,040, while "Ambry further indicated that it will offer its BRCAPlus test for $2,280" and "Gene by Gene further indicated that it will offer combined BRCA 1 and BRCA2 testing for $995.00."

Four of the patents asserted in the two cases, however, were not at issue in the Supreme Court case, and at least one (U.S. Patent No. 7,250,497) was granted on a 2003 Myriad application that appears to have no relationship to the 1990s NIH funding.


Rai Asks Whether Myriad Can Be 'Nudged.'
Leahy was a primary driver of patent reform legislation that led to enactment of the Leahy-Smith America Invents Act. Section 27 of the AIA asked the Patent and Trademark Office to submit a report on whether Congress should act to ease patient access to a second opinion as to a genetic diagnostic test when the test is covered by a patent. The agency has not yet issued that report.

Rai spoke at a Jan. 10 public roundtable held by the PTO on the topic, and she contended that march-in rights could be effective “as a nudge” to push exclusive licensees who are arguably not acting in the public interest. She said that the rights could be “surgically calibrated” and would be particularly effective if the test could be easily conducted by individual doctors.

Rai told BNA July 16, “ 'Classic' march-in (or even the threat thereof) would have been a more effective nudge in some of the other cases I mentioned at the hearing, such as long QT syndrome.” She was referring to the Duke Institute for Genome Sciences and Policy's analysis of the impact of patents and licensing practices on access to genetic testing for long QT syndrome. That analysis was published in “Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests,” a 2010 report by the Secretary's Advisory Committee on Genetics, Health, and Society that was cited throughout the Myriad litigation.

“Although the long QT issue was ultimately resolved, there was some intervening morbidity arguably traceable to failure to license,” Raid contended.

“That said, even an incomplete stake could create some nudging effect,” she said. “My guess is that what Senator Leahy may be trying to do is generate publicity and NIH interest, with the hope that will in turn pressure Myriad to drop its suits. This sort of weak nudge would not be effective in the usual case, but since the patents Myriad is currently asserting are also somewhat dubious on validity grounds, perhaps it will create some momentum.”

According to Rai, two of the 10 patents now being asserted by Myriad have NIH as a co-inventor, and "[the NIH's] residual rights are determined by the terms of a settlement agreement it reached on the inventorship issues."

"The settlement agreement that governs these patents has arguably been breached and, in any event, can be terminated by NIH for a variety of reasons that come into play in this case," she said. "With respect to those patents, NIH could, if it terminated the agreement, directly grant a license to the entities Myriad is suing. There would be no need to go through the procedural hurdles of march-in."

Rai questioned the tactical reason for including those two patents in the lawsuit, but she suggested the possibility that Myriad knew that "the claims in those patents are perhaps stronger."


O'Connor Suggests Alternative
O'Connor is coauthor of a report, “Legal Context of University Intellectual Property and Technology Transfer,” commissioned by the National Academy of Sciences, in which he addressed ownership issues under Bayh-Dole.

At a 2010 talk titled “Who Should Own Government-Funded Inventions? A Reconsideration of the Pre-Bayh-Dole Kennedy Policy for Technology Transfer,” at the George Washington University Law School in Washington, D.C., O'Connor argued that the government should retain title in ready-for-use “unmediated” inventions and make them available at low or no cost licensing.

Under his theory for a revision to the Bayh-Dole Act, he said at that session, Myriad's isolated DNA claims should be readily available to researchers through government licensing and thus without Myriad's approval. On the other hand, because Myriad's patented test for identifying the mutation would have been a mediated invention as a commercialization of the basic discovery, Myriad could continue to enforce those claims against infringers.

O'Connor told BNA July 16, Myriad's current lawsuits are not based on the isolated DNA claims and “they are suing on others that do not seem to have been funded by NIH.” But his “barking up the wrong tree” comment served as an introduction to an alternative that Leahy could consider.

“He could call for use of the totally separate 'Government Use Statute' (28 U.S.C. §1498) that gives the government a sort of eminent domain right to use privately held patents without authorization,” O'Connor said. “But the use must be for government purposes. A private contractor could be used, but the tests would have to be performed as a government service. And the government would be liable for reasonable compensation for such use to Myriad in the Court of Federal Claims.”

 


Text of Leahy's letter is available at /uploadedFiles/Content/News/Legal_and_Business/Bloomberg_Law/Legal_Reports/LeahyLtrToCollins13Jul12(2).pdf.

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