The District Court concluded that Myriad’s claims were invalid because they covered products of nature. The Federal Circuit initially reversed, but on remand in light of Mayo v. Prometheus Labs, found both isolated DNA and cDNA patent eligible.

The Supreme Court looked at only one question:

Are human genes patentable?

Now, the Supreme Court has held that naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but cDNA is patent eligible because it is not naturally occurring.

Importantly, the Court noted:

(a) cDNA is not a “product of nature,” so it is patent eligible under§101. cDNA does not present the same obstacles to patentability as naturally occurring, isolated DNA segments.

(b) This case, it is important to note, does not involve method claims, patents on new applications of knowledge about the BRCA1 and BRCA2 genes, or the patentability of DNA in which the order of the naturally occurring nucleotides has been altered.

Under 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.

Myriad discovered the precise location and sequence of what are now known as the BRCA1 and BRCA2 genes. Mutations in these genes can dramatically increase an individual’s risk of developing breast and ovarian cancer.  Knowledge of the location of the BRCA1 and BRCA2 genes allowed Myriad to develop medical tests that are useful for detecting mutations in a patient’s BRCA1 and BRCA2 genes and thereby assessing whether the patient has an increased risk of cancer.

Myriad obtained patents on two “isolated” human genes, BRCA1 and BRCA2 and certain mutations in these genes associated with a predisposition to breast and ovarian cancers. Representative composition claims include claims 1, 2, and 5 of the ’282 patent:

1.  An isolated DNA coding for a BRCA1 polypeptide, said polypeptide having the amino acid sequence set forth in SEQ ID NO:2.

2.  The isolated DNA of claim 1, wherein said DNA has the nucleotide sequence set forth in SEQ ID NO:1.

5.  An isolated DNA having at least 15 nucleotides of the DNA of claim 1.

Myriad’s patents would, if valid, give it the exclusive right to isolate an individual’s BRCA1 and BRCA2 genes (or any strand of 15 or more nucleotides within the genes) by breaking the covalent bonds that connect the DNA to the rest of the individual’s genome. The patents would also give Myriad the exclusive right to synthetically create BRCA cDNA.

Below, the Court explains it’s decision:

It is undisputed that Myriad did not create or alter any of the genetic information encoded in the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed in nature before Myriad found them. Nor did Myriad create or alter the genetic structure of DNA. Instead, Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. The question is whether this renders the genes patentable.

Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the §101 inquiry. In Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U. S. 127 (1948),this Court considered a composition patent that claimed a mixture of naturally occurring strains of bacteria that helped leguminous plants take nitrogen from the air and fix it in the soil. Id., at 128–129. The ability of the bacteria to fix nitrogen was well known, and farmers commonly “inoculated” their crops with them to improve soil nitrogen 13 Cite as: 569 U. S. ____ (2013) levels. But farmers could not use the same inoculant for all crops, both because plants use different bacteria and because certain bacteria inhibit each other. Id., at 129–130. Upon learning that several nitrogen-fixing bacteria did not inhibit each other, however, the patent applicant combined them into a single inoculant and obtained a patent. Id., at 130. The Court held that the composition was not patent eligible because the patent holder did not alter the bacteria in any way. Id., at 132 (“There is no way in which we could call [the bacteria mixture a product of invention] unless we borrowed invention from the discovery of the natural principle itself ”). His patent claim thus fell squarely within the law of nature exception. So do Myriad’s. Myriad found the location of the BRCA1 andBRCA2 genes, but that discovery, by itself, does not render the BRCA genes “new . . . composition[s] of matter,” §101, that are patent eligible.

Indeed, Myriad’s patent descriptions highlight the problem with its claims.

The Court also spelled out what remains patent eligible:

cDNA does not present the same obstacles to patentability as naturally occurring, isolated DNA segments. As already explained, creation of a cDNA sequence from mRNA results in an exons-only molecule that is not naturally occurring.8 Petitioners concede that cDNA differs from natural DNA in that “the non-coding regions have been removed.” Brief for Petitioners 49. They nevertheless argue that cDNA is not patent eligible because “[t]he nucleotide sequence of cDNA is dictated by nature, not by the lab technician.” Id., at 51. That may be so, but the lab technician unquestionably creates something new when cDNA is made. cDNA retains the naturally occurring exons of DNA, but it is distinct from the DNA from which it was derived. As a result, cDNA is not a “product of nature” and is patent eligible under §101, except insofar as very short series of DNA may have no intervening introns to remove when creating cDNA. In that situation, a short strand of cDNA may be indistinguishable from natural DNA.9

It is important to note what is not implicated by this decision. First, there are no method claims before this Court. Had Myriad created an innovative method of manipulating genes while searching for the BRCA1 and BRCA2 genes, it could possibly have sought a method patent. But the processes used by Myriad to isolate DNA were well understood by geneticists at the time of Myriad’s patents “were well understood, widely used, and fairly uniform insofar as any scientist engaged in the search for a gene would likely have utilized a similar approach,” 702 F. Supp. 2d, at 202–203, and are not at issue in this case. Similarly, this case does not involve patents on new applications of knowledge about the BRCA1 and BRCA2 genes. Judge Bryson aptly noted that, “[a]s the first party with knowledge of the [BRCA1 and BRCA2] sequences,

Nor do we consider the patentability of DNA in which the order of the naturally occurring nucleotides has been altered. Scientific alteration of the genetic code presents a different inquiry, and we express no opinion about the application of §101 to such endeavors. We merely hold that genes and the information they encode are not patent eligible under §101 simply because they have been isolated from the surrounding genetic material.

Clearly, the market recognized that the decision does not eliminate the ability to patent diagnostic tests.  Shares of Myriad Genetics (MYGN) jumped nearly 11% to a four-year high in morning trading Thursday after the U.S. Supreme Court issued the mixed ruling on whether its genetic products could be patented and affirmed the right for Myriad to patent synthetic DNA (cDNA).

image credit: breast examination from bigstock

Monday, July 15 to Tuesday, July 16, 2013 at the Carlton Hotel, New York, NY

Representing companies in an array of industry sectors, expert faculty will address questions like:

• How do you select the right local counsel depending on your needs?
• What jurisdictions provide effective patent protection for your products and which ones do not and what are
  the specific costs involved?
• How to reconcile the issues that arise when coordinating with inventors in numerous countries simultaneously?
• What written description requirements meet the standards required by multiple jurisdictions including the EU
  and Asian countries?
• When do outcomes from opposition proceedings in one jurisdiction impact the ability to protect a product in others?
• Can evidence obtained in one country be used in litigation for other countries?
  And much more!

Enhance your conference experience by attending the post conference workshops:

• Mastering the Foreign Patent Law and Regulatory Requirements for Life Sciences Companies in a Global Context and the Post Conference Interactive Working Group Session
• Negotiating the Obstacles and Challenges Associated with Patenting a Product in Numerous Jurisdictions

Reserve your spot by calling 888-224-2480 or online here.

**Note:  Readers of Patent Baristas get a $200 discount by entering the discount code “PB200″ during registration.

[I]nnovators continue to face challenges from Patent Assertion Entities (PAEs), companies that, in the President’s words “don’t actually produce anything themselves,” and instead develop a business model “to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.” These entities are commonly known as “patent trolls.” Likewise, the so-called “Smartphone Patent Wars” have ballooned in recent years and today, several major companies spend more on patent litigation and defensive acquisition than on research and development.

To help deter some lawsuits, the administration plans to direct the U.S. Patent and Trademark Office to start a rule-making process aimed at requiring patent holders to disclose the owner of a patent.

LEGISLATIVE RECOMMENDATIONS

The Administration recommends that Congress pursue at least seven legislative measures:

1. Require patentees and applicants to disclose the “Real Party-in-Interest,” by requiring that any party sending demand letters, filing an infringement suit or seeking PTO review of a patent to file updated ownership information, and enabling the PTO or district courts to impose sanctions for non-compliance. [You should not be able to sell/transfer private property.]
2. Permit more discretion in awarding fees to prevailing parties in patent cases, providing district courts with more discretion to award attorney’s fees under 35 USC 285 as a sanction for abusive court filings (similar to the legal standard that applies in copyright infringement cases).  [You should be punished for losing to a well-financed opponent.]
3. Expand the PTO’s transitional program for covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board (PTAB).  [Because business methods are less worthy.]
4. Protect off-the-shelf use by consumers and businesses by providing them with better legal protection against liability for a product being used off-the-shelf and solely for its intended use. Also, stay judicial proceedings against such consumers when an infringement suit has also been brought against a vendor, retailer, or manufacturer. [Because, hey, if you can construct a patented device by buying the parts from someone else, go for it.]
5. Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied at the ITC and district courts. [Why should plaintiff's being harmed be able to avail themselves of a quicker venue?  It just makes our clogged court system look worse.]
6. Use demand letter transparency to help curb abusive suits, incentivizing public filing of demand letters in a way that makes them accessible and searchable to the public.  [We should always discourage private settlements of disputes.]
7. Ensure the ITC has adequate flexibility in hiring qualified Administrative Law Judges. [Qualified employees are always good.]

The $64,000 Question:  Is all this really going to change anything?  And, will individual inventors (who don’t make a product) be thrown under the bus?

EXECUTIVE ACTIONS

The Administration is also announcing a number of steps it is taking to help what it says will level the playing field for innovators. Those steps include:

1. Making “Real Party-in-Interest” the New Default. Patent trolls often set up shell companies to hide their activities and enable their abusive litigation and extraction of settlements. This tactic prevents those facing litigation from knowing the full extent of the patents that their adversaries hold when negotiating settlements, or even knowing connections between multiple trolls. Today, the PTO will begin a rulemaking process to require patent applicants and owners to regularly update ownership information when they are involved in proceedings before the PTO, specifically designating the “ultimate parent entity” in control of the patent or application.
2. Tightening Functional Claiming. The AIA made important improvements to the examination process and overall patent quality, but stakeholders remain concerned about patents with overly broad claims — particularly in the context of software. The PTO will provide new targeted training to its examiners on scrutiny of functional claims and will, over the next six months develop strategies to improve claim clarity, such as by use of glossaries in patent specifications to assist examiners in the software field.
3. Empowering Downstream Users. Patent trolls are increasingly targeting Main Street retailers, consumers and other end-users of products containing patented technology — for instance, for using point-of-sale software or a particular business method. End-users should not be subject to lawsuits for simply using a product as intended, and need an easier way to know their rights before entering into costly litigation or settlement. Today, the PTO is announcing new education and outreach materials, including an accessible, plain-English web site offering answers to common questions by those facing demands from a possible troll.
4. Expanding Dedicated Outreach and Study. Challenges to U.S. innovation using tools available in the patent space are particularly dynamic, and require both dedicated attention and meaningful data. Engagement with stakeholders — including patent holders, research institutions, consumer advocates, public interest groups, and the general public — is also an important part of our work moving forward. Roundtables and workshops that the PTO, DOJ, and FTC have held in 2012 have offered invaluable input to this process. Today, we are announcing an expansion of our outreach efforts, including six months of high-profile events across the country to develop new ideas and consensus around updates to patent policies and laws. We are also announcing an expansion of the PTO Edison Scholars Program, which will bring distinguished academic experts to the PTO to develop — and make available to the public — more robust data and research on the issues bearing on abusive litigation.
5. Strengthen Enforcement Process of Exclusion Orders. Once the U.S. International Trade Commission (ITC) finds a violation of Section 337 and issues an exclusion order barring the importation of infringing goods, Customs and Border Protection (CBP) and the ITC are responsible for determining whether imported articles fall within the scope of the exclusion order. Implementing these orders present unique challenges given these shared responsibilities and the complexity of making this determination, particularly in cases in which a technologically sophisticated product such as a smartphone has been successfully redesigned to not fall within the scope of the exclusion order. To address this concern, the U.S. Intellectual Property Enforcement Coordinator will launch an interagency review of existing procedures that CBP and the ITC use to evaluate the scope of exclusion orders and work to ensure the process and standards utilized during exclusion order enforcement activities are transparent, effective, and efficient.

See the entire memo here.

image credit: troll image from bigstock

Discussion topics for Seattle will include:

• Patent Practice Gone Wrong: Lessons from Recent Cases on Patent Malpractice and Rule 11 Sanctions
• CLS Bank v. Alice Corp.: Making Sense Out of Nonsense
• Blockbuster Supreme Court and en banc Federal Circuit cases: AMP v. Myriad Genetics (patent eligible subject matter–pending), Lighting Ballast Control v. Philips Elecs. (claim interpretation standard of review–pending)
• Giving Meaning to Means Clauses
• Drafting and Enforcing Method and System Claims: Active Inducement, Divided Infringement, and Territoriality Issues
• Design Patents and Injunctions: Apple v. Samsung as a Case Study
• AIA Review: Where Are We So Far?
• Recent Nonobviousness Developments
• Pleading Requirements for Patent Infringement Actions

Complete syllabi from the 2012, 2011, 2010, and 2009 seminars are available here.

The Academy will apply for 18 CLE credits per seminar. The registration fee for the three-day Seattle seminars is $2,000 per person, which includes extensive written materials plus daily breakfast and break refreshments. For location and registration details, please visit their website or emailinfo@chisum.com.

This is not the same as the Getty Images and iStockphoto fiasco where images were made available for free on Google Drive and contributors got huge $12 checks. We won’t be stripping out the metadata.

Let us know what you think.

Ed.

image credit: people image from bigstock