IP Update, Vol. 16, No. 6, June 2013

Edited by Paul Devinsky and Rita Weeks

PATENTS

Patents / Patent Eligible Subject Matter

Supreme Court to Myriad: Isolated DNA Sequences Are Not Patent-Eligible Subject Matter

AMP et al. v. Myriad Genetics, Inc.

by William (Bill) Gaede

In a 9-0 decision the Supreme Court of the United States held that "isolated DNA sequence" composition claims do not constitute patent-eligible subject matter under 35 U.S.C. § 101, but that composition claims directed to cDNA do constitute patent-eligible subject matter. AMP et al. v. Myriad Genetics, Inc., et al., Case No. 12-398, (Supr. Ct., June 13, 2013) (Thomas, J.). By way of background, the "human gene" claims at issue in this case involve BRCA1 and BRCA2 genes, which have been correlated with susceptibility to breast and ovarian cancer. Myriad Genetics successfully isolated the BRCA molecules in what has been described as a major breakthrough. Myriad claims that the isolation of these molecules was a result of significant scientific expertise and financial outlays.

The petitioners contended that the composition claims patented by Myriad cover sequences already existing in nature and therefore do not constitute patent-eligible subject matter. Myriad countered that it has not patented gene sequences per se (such as, for example, the sequence that naturally exists in a human being), but has instead patented sequences that are "isolated," for example, in a laboratory.

The petitioners, however, claimed that the inventive concept in Myriad's "isolated sequence" composition claims is the sequence information, not the isolation step. Thus, the petitioners argued that the fact that the claimed compositions cover "isolated" molecules is irrelevant because the claimed compositions in effect pre-empt all BRCA1 and BRCA2 molecules regardless of whether they are in a human body or created in a laboratory as long as the molecule encodes the claimed sequence. Petitioners argued that this was true for cDNA as well.

In a unanimous decision authored by Justice Thomas, the Supreme Court agreed that "isolated DNA sequences" do not constitute patent-eligible subject matter, characterizing the sequences as products of nature. The Supreme Court reasoned that Myriad's contribution was "uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes." The Supreme Court contrasted this act with the transformed bacterium in its Chakrabarty decision, which contained new and "markedly different characteristics from any found in nature." Myriad's act of "separating a gene from its surrounding genetic material" failed to meet this test.

Simply discovering the location of the BRCA1 and BRCA2 genes "does not render the BRCA genes 'new ... composition[s] of matter,' § 101, that are patent eligible." In making this determination, the Supreme Court rejected the Federal Circuit's reasoning that severing the chemical bonds by isolating the sequence from the genomic sequence was sufficient. The Supreme Court did so because the claims focused on the sequence information itself and did not speak in terms of "chemical changes that result from the isolation of a particular section of DNA."

Finally, the Supreme Court rejected the argument that the past practice of awarding gene patents by the U.S. Patent and Trademark Office (PTO) is entitled to deference, noting that the United States had argued in the case that isolated DNA was not patent-eligible.

As to the cDNA claims, the Supreme Court held that cDNA "results in an exons-only molecule that is not naturally occurring." The Supreme Court found that the lab technician "unquestionably creates something new when cDNA is made." As a result, Justice Thomas explained that cDNA is not a product of nature and is patent eligible.

Practice Note: This is the second time this case is before the Supreme Court. In its previous appearance, the Supreme Court remanded the case back to the Federal Circuit in light of the Supreme Court decision in Mayo Collaborative Services v. Prometheus Labs (for more information, see IP Update, Vol. 14, No. 6. The U.S. Court of Appeals for the Federal Circuit, however, retracted the decision it had previously reached before the remand, essentially rendering Prometheus irrelevant to composition claims.

However, the Federal Circuit struck down the gene correlation method claims. The panel unanimously found that Myriad's claims of comparing gene sequences did not constitute patent-eligible subject matter. Indeed, the court found the claims "indistinguishable" from the method claims struck down in Mayo v. Prometheus, stating that the Supreme Court "made clear that such diagnostic methods in that case essentially claim natural laws not eligible for patent." Importantly (and as noted by Justice Thomas), those claims were not before the Supreme Court in the current Myriad decision.

However, the Federal Circuit upheld as patent-eligible subject matter claims directed to a method for screening potential cancer therapeutics via changes in cell growth rates of transformed cells. As for those claims, the Federal Circuit maintained its previous rejection of Mayo's argument that the method constituted an abstract idea that preempted the basic scientific principle that a slower growth rate in the presence of a potential therapeutic compound suggests that the compound is a cancer therapeutic. Instead, the Federal Circuit concluded that the cells were transformed, which reflected the "hand of man," and thus constituted patentable subject matter.

On the same day that the Supreme Court decision was handed down, the USPTO's Office of the Deputy Commission for Patent Examination Policy issued a memorandum to the examining corps advising the corps that "claims to isolated DNA are not patent eligible under 35 U.S.C. § 101." The memorandum notes that the Myriad decision "significantly changes the Office's examination policy regarding nucleic acid related technology."

Patents

Federal Circuit Has Appellate Jurisdiction Even Where Damages, Willfulness Have Not Been Determined

Robert Bosch, LLC v. Pylon Manufacturing Corp.

by Melissa Nott Davis

The U.S. Court of Appeals for the Federal Circuit in a sua sponte, en banc case, has now answered the following questions:

Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on the Federal Circuit to entertain appeals from infringement determinations when a trial on damages has not yet occurred? Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on the Federal Circuit to entertain appeals from infringement determinations when willfulness issues remain undecided? The Federal Circuit answered yes to both questions and returned the case to the panel for disposition. Robert Bosch, LLC v. Pylon Manufacturing Corp., Case Nos. 11-1363, -1364 (Prost, J.) (Moore, J., concurring-in-part, dissenting-in-part) (Reyna, J., concurring-in-part, dissenting-in-part) (O'Malley, J., dissenting).

In August 2008, Bosch sued Pylon for patent infringement, and Pylon asserted infringement counterclaims against Bosch. Pylon filed a motion asking to bifurcate liability from damages. The district court granted Pylon's request, noting that "bifurcation is appropriate, if not necessary, in all but exceptional patent cases" and that issues related to a damages trial are "a drain on scarce judicial resources." The district court went on to find that "willfulness is a damages issue, not a liability issue" and similarly bifurcated that issue. The district court stayed all discovery on damages and willfulness. Following a jury trial and post-trial motions, the district court entered judgment on infringement. Bosch appealed, and Pylon cross-appealed. Bosch filed a motion to dismiss both its appeal and Pylon's cross-appeal arguing that the Federal Circuit lacked jurisdiction. The Federal Circuit denied Bosch's motion and its motion for reconsideration. Following oral argument before a panel of the Federal Circuit, the court sua sponte granted a rehearing en banc to determine the jurisdiction issues.

Generally, the Federal Circuit's jurisdiction is governed by the final judgment rule granting it jurisdiction over any "appeal from a final decision of a district court of the United States." Section 1292(c)(2) is a patent-specific exception to the final judgment rule and allows Federal Circuit jurisdiction in a patent case that is final "except for an accounting." This case focused on the meaning of "accounting" and whether a trial on damages and determination of willfulness was an accounting for the purposes of § 1292(c)(2).

The Federal Circuit held that it was "clear from the case law and history of the statute that an accounting includes both the determination of an infringer's profits as well as a patentee's damages" and can include a trial on damages. The Court conducted a historical analysis of the term accounting to determine that the statute was intended to encompass in patent cases both the calculation of defendant's profits and the plaintiff's damages. The Court rejected Bosch's argument that an accounting was limited to a special master's determination of damages, finding Bosch's distinction "manifestly incorrect." The Federal Circuit noted that while an accounting was historically available in equity, a trial on damages was within the scope of § 1292(c)(2). The Court also noted that damages trials are "notoriously complex and expensive" and that "given the substantial reversal rate of liability determinations on appeal, the whole expense of a damages trial is often wasted." The Federal Circuit concluded that these exact policy concerns motivated the U.S. Congress to allow jurisdiction over cases that are final except for an accounting.

The Federal Circuit went on to hold that § 1292(c)(2) confers jurisdiction over appeals when willfulness issues remain outstanding and undecided and explained further that an "accounting" included the determination of willfulness.

The Court noted that the case "does not involve the question of...

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