Termination Determination: Molecules Matter
In 2008, the biosciences sector employed over 1.42 million people and is one of the few areas of growing employment during this economic downturn. The biosciences sector encompasses companies built on DNA-related technology. Inventors and companies protect their DNA related technology with over 40,000 DNA related patents. Recently the Association for Molecular Pathology (AMP), the ACLU and other parties filed a lawsuit against Myriad Genetics alleging that patents covering isolated DNA are invalid. The AMP and the ACLU appeared victorious when the U.S. District Court for the Southern District of New York ruled that the Myriad patents were invalid. Myriad Genetics, a company started by one of the inventors of the patents in question, appealed the district court’s decision. On July 29, 2011 the United States Court of Appeals for the Federal Circuit (CAFC) affirmed the patentability of DNA and salvaged an industry structured on over 2700 patents claiming “isolated DNA”.
Understanding the science was essential for the CAFC’s ultimate determination. Although the CAFC’s decision was a victory for Myriad and the bioscience sector, Myriad’s business model may be changing. Patent applications that teach the invention and the technology provide a value to the public for which the patentee is compensated. In exchange for teaching the public how to make and use the invention, the inventor receives a patent that provides a limited monopoly with which others may be prevented from using the invention for twenty years from the earliest filing date. According to the New York Times, Myriad now “plans to rely less on patents and more on trade secrets” (Pollack, A, “Despite Gene Victory, Myriad Genetics Faces Challenges”, 8/24/2011). Trade secrets remain with a company as long as the company successfully protects its trade secrets. Strong intellectual property protection occurs when the technology and the business model are understood.
In Ass’n for Molecular Pathology v U.S. Patent and Trademark Office (2011 WL3211513 (Fed. Cir.) July 29 2011) (herein referred to as Myriad), the patentability of isolated DNA was questioned under 35 U.S.C. §101. 35 U.S.C. §101 defines patentable subject matter as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof”. Patent ineligible subject matter includes products of nature. In other words, objects that occur in nature without intervention by “the hand of man” are not eligible for patent protection. Multiple bacterial types combined in a mixture would not be patentable as the bacterial types can be found in nature. Bacteria genetically engineered to produce a protein that the bacteria would not have produced without scientific intervention are patent-eligible subject matter.
During the lawsuit, the litigants and numerous amici parties taught molecular genetics to the appellate court judges. Indeed, the CAFC’s decision provides a concise, cogent summary of molecular genetics. The CAFC judges’ opinions rely heavily on the science to affirm the patentability of “isolated DNA”. The majority opinion, authored by Judge Lourie, concludes that isolated DNA molecules “have a distinctive chemical identity and nature from molecules that exist in nature” (Myriad at 17). The opinion distinguishes isolated DNA over purified DNA because isolated DNA either has been “cleaved (i.e. had covalent bonds in it’s backbone chemically severed) or synthesized to consist of just a fraction of a naturally occurring DNA molecule” (Id at 17). Judge Lourie’s opinion points out that some forms of synthetically manufactured isolated DNA require no purification to obtain pure DNA (Id. at 17). These distinctions lead to the conclusion that “a portion of a native DNA molecule- an isolated DNA- has a markedly different chemical nature from the native DNA. It is, therefore, patent eligible subject matter.” (Id. at 19)
While it is not surprising that the dissent evaluates the science differently from the majority opinion by Judge Lourie, CAFC Judge Moore’s concurrence-in-part also addresses the science differently. Judge Moore reiterates the structural and chemical difference between an isolated DNA and contrasts the termination of the isolated DNA molecule at the 3’ and 5’ ends with a native DNA segment that is part of a lengthy contiguous polymer. Interestingly, Judge Moore and Judge Bryson categorize isolated DNA in three groups: cDNA, short segments of isolated DNA suitable for probes and primers, and large segments of isolated DNA. Judge Moore then addresses patentability of cDNA, which while “derived from RNA, […] has a distinctly different sequence of nucleotides” that does not include molecules having nucleotide sequences corresponding to intron sequences. While recognizing that isolated cDNA is inspired by nature and the plaintiffs’ allegation that isolated cDNA should not be patentable as a product of nature, Judge Moore cannot reconcile the plaintiffs’ allegation “with the fact that the claimed cDNA structures do not exist in nature” (Id. at 28). Judge Moore “decline[s] to extend the laws of nature exception to reach entirely manmade sequences of isolated DNA, even if those sequences are inspired by a natural template” (Id. at 29).
Judge Moore finds isolated DNA sequences that have the same sequence as a native sequence a more difficult question. Judge Moore acknowledges the chemical differences between isolated DNA and DNA within a chromosome but questions whether the chemical differences sufficiently distinguish the two. However, Judge Moore acknowledges that human intervention is necessary to produce the isolated DNA. Therefore Judge Moore then “consider[s] whether the differences impart a new utility which makes the molecules markedly different from nature” (Id. at 29). Judge Moore addresses short pieces of isolated DNA first. Short pieces of isolated DNA can be utilized as primers for a diagnostic assay. Diagnostic assays do not occur naturally. Further, chromosomal DNA would be unsuitable for use as a primer in a diagnostic assay. Clearly short isolated DNA which can be used in a diagnostic assay is markedly different from DNA found in nature which cannot be used in a diagnostic assay. Judge Moore concludes “the different chemical structure of the isolated DNA, which is a product of the intervention of man, leads to a different and beneficial utility” and thus finds “small, isolated DNA fragments are patentable subject matter” (Id. at 30). Regarding large pieces of isolated DNA, Judge Moore sees no significant difference in the utility of a large isolated DNA and a native DNA as generally they are both used to make a protein. However, Judge Moore defers to intellectual property owners, patent precedence and judicial precedence and finds isolated DNA of any size patentable subject matter. One recoils from the chaos that “small” and “large” limits for patentable subject matter would have brought to the field.
Although CAFC Judge Bryson concurs with the majority regarding the patentability of cDNA, he disagrees with the patentability of isolated DNA. In the dissent, Judge Bryson vehemently attacks the majority and concurring opinion that isolated DNA is a chemically different molecule than chromosomal DNA. Judge Bryson seeks support from Linus Pauling’s statement regarding chemical bonds as a force between atoms “strong enough ‘to make it convenient for a chemist to consider [the aggregate] as an independent molecular species.’ Linus Pauling, The Nature of the Chemical Bond 6 (3d ed. 1960)” (Id. at 39). The appeal to Pauling appears to contradict Judge Bryson’s point and was not persuasive to Judge Lourie or Judge Moore. Judge Bryson further objects to the “isolated DNA” claims in the suit as some of the claims include unspecified nucleotide sequence and because the claims to short isolated DNA may share a sequence with other regions of the genome. The Patent and Trademark Office routinely rejects DNA claims with insufficient sequence data under §112 and routinely rejects claims to isolated sequences that are anticipated by other sequences under §102. No §112 or §102 issues were raised in the suit. Bryson’s arguments appear to combine §112 and §102 patent requirements into the question of whether or not isolated DNA is patent eligible subject matter.
The biosciences sector depends on strong intellectual property protection because the cost and barriers to commercialization are so high. For instance the biosciences sector produces scores of compounds intended for use in humans which require FDA approval. FDA approval involves extensive pre-clinical trials in vitro and in animals followed by multi-stage clinical trials in humans. Phase I clinical trials involve 20-80 healthy individuals and include studies of drug metabolism and mechanism of action in humans. Phase II clinical trials are designed to evaluate short-term side effects and the efficacy of a compound and generally involve “no more than several hundred subjects” (C.F.R. 21 §312.21). Phase III clinical trials involve several hundred to several thousand subjects in an expanded study of safety and efficacy. According to Eli Lilly & Co., of every 5000 compounds that are tested pre-clinically, only five compounds move to clinical trials in humans. Of those five, only one compound will be approved. The pre-clinical to approval process spans 10-15 years and costs increase at each stage of testing. Compounds that are not approved return no revenue to the company. Therefore, large pharmaceutical companies depend on strong intellectual property protection to protect their investment. Small start-up companies leverage strong intellectual property positions into the capital to advance their compound further toward the approval goal.
Luckily for an industry where less than one in a thousand potential new products reaches the market, the biosciences sector approaches product development in a fluid manner. Nimble life-sciences entities reposition potential new products in a variety of ways to achieve commercial success. When a compound intended for one indication lacks sufficient efficacy during a Phase III clinical trial, the potential product may undergo a Phase III clinical trial for a different indication. Alternatively, a company founded with a goal of drug development may find its footing and employ more people because of a diagnostic tool or test that it develops. For example Myriad Genetics became a self-sufficient company employing over 500 people by providing diagnostic services while the drug-development division was spun-off to a new entity. Another variation might be repurposing a protease from a pharmacological compound into a detergent component. Clearly, the biosciences industry’s meandering path to successful commercialization depends on strong, flexible intellectual property protection.
Prudent inventors and intellectual property counsel recognize the importance of understanding both the business model and the technology when establishing intellectual property protection. Taft’s Intellectual Property Practice group teams expert understanding of diverse technologies (molecular biology, mechanical engineering, chemical engineering, software) with significant business experience. We assist clients with a wide range of intellectual property strategies and help our clients understand the risks and benefits of each strategy.
For more information, please contact Dr. Adelaide K. Leitzel or any member of Taft’s Intellectual Property Practice group.
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