Recent court cases and decisions affecting life sciences IP: impact and analysis

September 2013 | PROFESSIONAL INSIGHT | INTELLECTUAL PROPERTY

Financier Worldwide Magazine

The most notable recent decisions in intellectual property law in the United States have come from a traditionally unlikely source: the Justices of the United States Supreme Court. Over the past 18 months, the Court has been particularly activist in addressing IP issues, especially in the area of biotechnology and the human genome. This article will address some of those key decisions and their impact on businesses in the life sciences arena.

These recent opinions from the US Supreme Court found the Court struggling with the reality of genetics and gene manipulation and the patentability of work in the area of biotechnology. The Court’s wrestling with these concepts extended to all form of living organisms, including plants and humans alike.

It appears that, at the core of the Court’s concerns about recombinant genetics (the manipulation of DNA from and between different species of organisms) is the concept of exclusion. A valid and infringed US patent allows the patent holder the possibility of an injunction as a remedy, referred to as the right to exclude. 35 U.S.C. § 283. Such a powerful remedy in the realm of DNA (the basic genetic template for all living things) must be carefully analysed and cautiously applied. As the Court said in Diamond v. Chakrabarty, 447 U.S. 303 (1980), “Products of nature” are not created and “manifestations of… nature, [are] free to all men and reserved exclusively to none”. The Court has principally focused on the question of patentability under Section 101 of Title 35 U.S.C., the basic patentability section of the Patent Code. This section sets forth the threshold requirement for obtaining a patent, and generally reads: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter…may obtain a patent. 35 U.S.C. § 101. It appears that the Court was concerned with the situation where the first person who identifies a human gene seeks to exercise the right to control the exclusive use of that gene, which we all possess, and how that right can be regulated and controlled. The moral issues aside, the legal ramifications are extremely nettlesome.

From the time that the Court first held that recombinant organisms can be patented, the parameters of that holding have been less than precise. The tension arises from patenting what some have described as ‘products of nature’. In 1980, the Supreme Court decided Diamond v. Chakrabarty, 447 U.S. 303 (1980) holding that genetically modified organisms can be patented or are patent eligible under Section 101. This was still the nascent days of biotechnology. As research in biotechnology burgeoned, what followed were tens of thousands of patents covering all aspects of DNA, genes, and methods of finding, using and manipulating them in all species of organisms.

Now, 23 years later, the Supreme Court in Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013), is still wrestling with the basic question: ‘Are human genes patentable?’ The answer is still, ‘maybe’. The type of claim at issue in Myriad is the core of the dispute. Those claims are to ‘isolated’ DNA sequences, essentially a series of polynucleotides that were identified and removed from the chromosome on which they naturally reside. The Court repeated that Myriad patented isolated versions of the naturally occurring DNA sequences that code for the BRCA1 and BRCA2 genes, mutations of which are associated with breast and other forms of cancer. The Court held that Myriad’s DNA claim falls within the law of nature exception to patent eligibility under §101. According to the Court, Myriad’s contribution was discovering the location and genetic sequence of the BRCA1 and BRCA2 genes, not actually transforming them. Myriad, 133 S. Ct. at 2109-10. According to the Court, the identified DNA, and isolated DNA in general, is simply a product of nature identified by Myriad, not an invention. Thus, merely discovering and isolating naturally occurring DNA, even though isolated DNA (in the form removed from its natural state) does not occur in nature, is not sufficiently inventive to surmount §101. The Court was quick to add that “It is important to note what is not implicated by this decision.”Id. at 2119. “[T]he processes used by Myriad to isolated DNA...were well understood, widely used, and fairly uniform”(id.) suggesting more of an obviousness type objection (Section 103) rather than a section 101 ground for invalidity. The Court also emphasised that there were no method claims at issue on the appeal, so that method claims using the isolated DNA claims was perhaps still an open issue.

However, Myriad also created complementary DNA (‘cDNA’) that consists only of the sequence that codes for the protein (exons); the non-coding, intervening sequences (introns) which are present in naturally occurring eukaryotic (organisms with nuclei) DNA were removed. The cDNA created by Myriad, the Court held, does not occur in nature. Thus, the Court held that cDNA was not a natural product under §101. Nevertheless, the Court did not actually rule that cDNA is entitled to a patent. In a footnote, the Court explicitly reserved judgment on the issue of cDNA deserving patent protection under other provisions of the Patent Act and noted that the federal government raised objections (other than under §101) to the grant of a patent for cDNA. Id. at 2119, fn 9. The Court clearly endorsed research on DNA of all species, and invited even the smallest human modification to possibly permit patentability – yet, how much or how little still remains an open question. This case is perhaps driven by the fact that it covers human DNA. It also seems that the reasoning of the Myriad decision can be applied to other species of organism, or at least eukaryotic organisms, such as plants, yeast, etc. The genetic make up of those other organisms is also a product of nature, so an ‘isolated’ plant gene is not logically different from a human gene in that regard. Also how this ruling relates to other species, such as bacteria which are prokaryotes, is unclear as Prokaryotic genes have no introns, thus their RNA is not subject to the same cutting and splicing on translation to polypeptides.

The question about what patent protections are afforded other species was addressed somewhat by the Court in its decision Bowman v. Monsanto Co., 133 S.Ct. 1761 (2013). Decided just one month earlier than the Myriad case, Bowman addressed a slightly different aspect of the right to control recombinant organisms (here recombinant, herbicide resistant soybeans), this time after there had been a sale. It is interesting to note that one of the patents in issue in Bowman contained, among other claims, claims to ‘isolated’ plant DNAs; the Court did not comment on this fact. Under a concept known as patent exhaustion, a patentee is limited in its right to control what others can do with a patented article embodying or containing an invention after that patented item has been sold. Under the doctrine, the initial authorised sale terminates all patent rights in that item. Quanta Computer, Inc. v. LG Electronics Inc., 553 U.S. 617, 625, 128 S.Ct. 2109 (2008). Bowman argued that this patent exhaustion doctrine applied to the soybean plants he grew.133 S.Ct. at 1767. Monsanto claimed to have patented ‘Roundup Ready’ soybeans, which have been modified to allow them to survive exposure to glyphosate, an herbicide sprayed over fields of ‘Roundup Ready’ crops to kill weeds. Monsanto sells ‘Roundup Ready’ seeds only with restrictive licenses specifying that farmers may not save and plant harvested seeds. Bowman, a farmer, rather than paying for Monsanto’s claimed patented seeds, purchased seeds from a grain elevator, which contains seeds of all quality intended to be consumed by humans and animals, not for replanting. Bowman knew that some of the seeds he bought from the grain elevator incidentally contained Monsanto’s ‘Roundup Ready’ seeds. Bowman planted all the seeds purchased from the elevator, and then treated the crops with glyphosate, killing all plants except Monsanto’s ‘Roundup Ready’ soybeans. Rather than buying new seeds from Monsanto each year, Bowman replanted his own seeds, which contained Monsanto’s ‘Roundup Ready’ seeds and harvested and sold the products of those harvests.

Bowman also argued that patent exhaustion applies because seeds, whose purpose is to reproduce, should constitute an exception to the rule that exhaustion does not allow one to make copies of a patented item.Id. at 1768. The Court unanimously held that patent exhaustion does not permit a farmer to reproduce patented seeds without a licence. According to the Court, patent exhaustion extends only to the actual item purchased, in this case the first generation seed. Any copies of that seed made, even via natural reproduction, without a licence are not protected by the doctrine of patent exhaustion.

However, in a final nod to the ever-developing advances of biotechnology, the Court noted: “Our holding today is limited – addressing the situation before us, rather than every one involving a self-replicating product. We recognize that such inventions are becoming ever more prevalent, complex and diverse”. Id. at 1769. The Court’s struggles in fashioning boundaries for the interplay between patent law and biotechnology undoubtedly will continue.

Thomas F. Fleming is a partner at Kirkland & Ellis LLP. He can be contacted on +1 (212) 446 6463 or by email: thomas.fleming@kirkland.com.

Thomas F. Fleming

Kirkland & Ellis LLP