Myriad Wins U.S. Appeal Over Ability to Patent Isolated DNA

Myriad Genetics Inc. (MYGN), owner of patents related to genes linked to hereditary cancer risks, won an appeals court ruling that it can receive patents on isolated DNA, a case that has split the medical community.

The U.S. Court of Appeals for the Federal Circuit today did say that some specific patent claims related to comparing the DNA sequences are abstract ideas not worthy of a patent, although a claim related to a method of screening potential cancer therapeutics is eligible for legal protection. The same three-judge panel made a similar decision a year ago, before it was ordered by the Supreme Court to reconsider its findings.

The dispute centered on whether isolated DNA -- genetic coding that has been removed from the body and separated from other material -- is a product of nature and thus ineligible for patent protection.

“The isolated DNA molecules before us are not found in nature,” Circuit Judge Alan Lourie wrote. “They are obtained in the laboratory and are man-made, the product of human ingenuity. While they are prepared from products of nature, so is every other composition of matter.”

Myriad owns patents for a test that can determine the hereditary risk of breast and ovarian cancers, and groups including the Association for Molecular Pathology and the American College of Medical Genetics argued Myriad was trying to get legal ownership of parts of the human body.

Allowing Research

Myriad, which said it was pleased with the ruling, said gene-related patents haven’t hindered research.

“Myriad has never denied, opposed or impeded any research studies on these, or any other, genes,” the company said in a statement. It said almost 1 million patients have received the test.

The Federal Circuit was ordered to reconsider its July 2011 decision after the U.S. Supreme Court issued a ruling in a separate case that limited the ability to get patents on certain types of medical diagnostic tests. Lourie said that ruling didn’t apply to the issue of isolated DNA and didn’t change policies created three decades ago by the high court.

“The biotech industry should take some comfort from this decision because the basic underpinning of the patent protection for the biotech industry for the past 30 years remains in place,” said Greg Castanias of Jones Day in Washington, who represented Myriad in the case.

Circuit Judge William Bryson said that some of the DNA claims that involve gene fragments shouldn’t be entitled to patent protection.

‘Broad Consequences’

“The court’s decision, if sustained, will likely have broad consequences, such as preempting methods for whole-genome sequencing, even though Myriad’s contribution to the field is not remotely consonant with such effects,” Bryson wrote.

The Supreme Court has issued two rulings since June 2010 seeking to determine what ideas can be eligible for patents. In the most recent case over diagnostic tests, the Supreme Court rejected the patents even after the Federal Circuit upheld them twice, said Daniel Ravicher, president of the Public Patent Foundation at Cardozo Law School in New York, who represented researchers suing Myriad.

“We’re saddened that two judges on the Court of Appeals still believe human genes are patentable,” Ravicher said. “We remain heartened to see that one of the Court of Appeals judges still strenuously dissents from that opinion.”

The Federal Circuit, which specializes in patent law, has been directed by the high court to consider another case involving patent eligibility. That case involves Internet business methods.

Natural Laws

In the Supreme Court’s March 20 decision, Justice Stephen Breyer wrote for a unanimous court in warning against “tying up the use of the underlying natural laws.”

The Federal Circuit said courts shouldn’t confuse the general issue of whether an idea is eligible for a patent with separate questions about whether a specific invention using that idea should get a patent.

The Myriad dispute has split the medical community. Some scientists argue they have been stymied in their quest for new medicines and treatments because they fear coming up against demands for royalties or letters demanding they stop using patented inventions.

The U.S. Patent and Trademark Office has issued more than 2,600 patents on genes. Many of those patents are nearing the end of their life, said Bill Gaede of McDermott Will & Emery in Menlo Park, California. The aspect of the ruling today concerning the diagnostic claims adds to the confusion of what types of tests can be patented, he said.

Attracting Investments

Companies such as Genomic Health Inc. (GHDX) and Alnylam Pharmaceuticals Inc. (ALNY) argue they can’t attract investment dollars if they can’t protect their research from competitors.

“If it starts getting applied that these DNA test kits are viewed as difficult to patent, it’s a dangerous thing,” said Pete Corless, a lawyer with Edwards Wildman Palmer LLP in Boston who has a client with a test for ovarian cancer. “People will be more reluctant to make the investment in developing those products.”

The genetics groups, backed by the American Civil Liberties Union and the Public Patent Foundation, sued to challenge aspects of seven Myriad patents, and won at the trial court.

Myriad reported $496 million in revenue last year and said Aug. 14 that its BRACAnalysis test accounted for 82 percent of total revenue in the fourth quarter.

Gene databases and technology to analyze them can be the key to new medical discoveries and more efficient ways of providing treatment. Annual U.S. spending on medical DNA testing will rise to $25 billion in the next decade from $5 billion in 2010, according to UnitedHealth Group Inc. (UNH), the biggest for- profit health insurer in the nation.

The case is Association for Molecular Pathology v. Myriad, 10-1406, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Association for Molecular Pathology v. U.S. Patent and Trademark Office, 09cv4515, U.S. District Court for the District of New York.

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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