The Plaintiffs’ Petition. Two things are interesting about the plaintiffs’ petition from a procedural standpoint. First, the ACLU lawyers requested rehearing by the three-judge panel that decided the case earlier this summer, not en banc rehearing by all members of the court. (But a majority of the judges of the full court could still decide to rehear the case en banc; they could do so if they found that the case “involves a question of exceptional importance.”) Second, the plaintiffs have asked for rehearing on only two of the issues they lost: that isolated genes are proper subject matter for product patents, and that only one of the named plaintiffs—Dr. Harry Ostrer, formerly of NYU—has standing to bring the case. The plaintiffs did not challenge that portion of the panel’s decision that upheld—unanimously—Myriad’s patents on a method of screening potential cancer therapeutics.

On the product patent issue, the plaintiffs contend that the panel failed to give proper consideration to “whether the DNA fragments claimed in these patents are products of nature.” In support of this conclusion, they argue two points: First, they emphasize that the 2-1 majority’s focus on the chemical structure of isolated genes was misplaced, because the patent claims at issue talk about function. While isolated DNA might be literally different from naturally occurring DNA at a structural level, they argue, it is functionally identical, and thus properly characterized as products of nature. Their second point is that “DNA fragments identical to those claimed in the patents appear in the body.” Specifically, “nature breaks the covalent bonds that hold together the full chromosome” during meiotic recombination, cell replication, and double-stand breakage. Hence, Judge Lourie’s reliance on “cleavage” to distinguish isolated DNA fragments from products of nature was misplaced.

Standing and Myriad’s Petition. With respect to standing, the plaintiffs argue that at least two other named plaintiffs—the American College of Medical Genetics, of which Dr. Ostrer is a member, and Yale geneticist Ellen Matloff—are engaged in ongoing controversies with Myriad and thus have standing.

Adding these plaintiffs could prove critical, since the sole argument raised in Myriad’s petition is that Dr. Ostrer does not have standing. The original Federal Circuit opinion found that he had standing because of a controversy related to his work at NYU. As we reported, however, at the time that opinion was issued Ostrer was in the process of moving to Albert Einstein College of Medicine. Myriad now points out that the move is complete and argues, that since Ostrer’s controversy with Myriad was based entirely on his employment at NYU, the controversy is now moot. Since the standing requirement is ongoing, if the court agreed that Ostrer no longer had standing, and if it refused to find that the ACMG or Matloff or any other plaintiff had standing, then it would have to dismiss the case. (By the way, Myriad is trying to have it both ways: it asks the court to dismiss the case for lack of standing but not to withdraw its previous opinion as legal precedent.)

Tactically, the plaintiff’s petition is a little hard to understand. It makes sense to ask the court to revisit the product and method patents decisions—especially the product issue, since it was 2-1, with a strong dissent—but why not ask the whole Federal Circuit, instead of just the original panel? Perhaps their decision was to target Judge Moore, who agreed that isolated DNA is patentable, but took 31 additional pages to say why. The thinking may be that, since she didn’t sign on to Judge Lourie’s reasoning, she can be persuaded to change her mind entirely. It was also essential to raise the standing issue, since Ostrer, on whom the whole case currently depends, may be on thin ice. But again, why not raise this issue for the whole Federal Circuit?

Myriad’s approach makes more obvious sense. Having won most of the contested issues, why not stick with the original panel? Also, Myriad’s lawyers probably concluded that the substantive issue they lost—the patentability of a method of analyzing and comparing normal and mutant DNA sequences—was unwinnable. The standing issue was a closer call. If the panel rehears the case, Dr. Oster’s case might well be found to be moot. But Myriad would then risk having the generally favorable opinion withdrawn and the case simply dismissed. Why do anything to jeopardize what was, for the most part, a win?

What’s the next step? The Federal Circuit will rule, presumably fairly quickly, on the petitions for rehearing, and could also decide on its own to take the case en banc. “Cert” petitions seeking Supreme Court review would follow either a denial of rehearing or the Federal Circuit’s decision following rehearing.

For the most part, the Federal Circuit’s 2-1 decision returned the law to the state it was in before District Judge Sweet’s opinion turned things upside-down last March.  Although full of interesting rhetoric, the court’s three lengthy opinions (a total of 105 pages) are less remarkable for what they decide than for what they invite higher authorities—the Supreme Court and the Congress—to decide down the road.

First, the scorecard.  The court’s judgment—that is, the holding, or outcome—was joined by Judges Lourie and Moore.  A third member of the panel, Judge Bryson, dissented in part, meaning that he joined only a portion of the judgment (more on that below) and disagreed with another part.

The majority held as follows:

1. On the threshold procedural question of standing, the district court’s ruling was affirmed, with one plaintiff (Dr. Harry Ostrer) having sufficient standing to challenge Myriad’s patent claims.
2. Isolated genes, cDNAs and partial isolated gene sequences are patentable subject matter under § 101 of the Patent Act.  Consequently, the district court’s judgment invalidating all of Myriad’s product claims to BRCA genes and fragments was reversed in its entirety.
3. Myriad’s claims to methods of screening potential cancer therapeutics by analyzing growth rates of cells with altered BRCA genes in the presence or absence of the treatments were also held to be directed to patentable subject matter, so the district court’s judgment of invalidity was reversed here as well.
4. Myriad’s claims to methods of analyzing BRCA gene sequences and comparing those with cancer-predisposing mutations to normal or wild-type gene sequences were held not to be directed to patentable subject matter.  The district court’s decision was thus affirmed with respect to these claims.

Counting up the votes. Judge Lourie wrote the so-called “opinion of the court” that announces the judgment and gives the rationale.  Judge Moore wrote a concurring opinion, meaning that she joined all aspects of the judgment.  She also agreed with Judge Lourie’s reasoning with respect to the method claims and the patentability of isolated cDNA sequences.  However, she had a slightly different reason for upholding the patentability of DNA sequences, and decided to explain her thinking at some length (31 pages!).  Finally, Judge Bryson joined in the judgment with respect to the method claims and the patentability of longer sequences of cDNA.  However, he voted against the patentability of all isolated DNA sequences as well as very short cDNA sequences, and would thus have affirmed the district court on that specific point.  His somewhat more succinct opinion (19 pages) explains his thinking.  Since he was in the minority on this point, his opinion does not have the force of law.

So, for those keeping score at home, here is how the judges came down on each issue:

1. Standing: 3-0, since one plaintiff has standing to challenge Myriad’s patents, the case can proceed.
2. cDNA: 3-0, cDNA is patentable (although for smaller cDNA molecules, the vote was 2-1, with Bryson dissenting).
3. Method claims: 3-0, with therapeutic screening claims upheld and comparing or analyzing claims invalidated.
4. Isolated DNA: 2-1, isolated DNA is patentable.

The majority’s rationale. With the bookkeeping out of the way, let’s take a look at how the judges reasoned their way through Myriad.

The plaintiffs’ standing.  After opening with a genetics tutorial, the Lourie opinion addressed the very technical but nonetheless critical issue of standing.  As we discussed after the Myriad oral argument, standing is a constitutional question, and it boils down to whether the plaintiffs have a sufficiently direct and immediate interest in the outcome to be proper parties to file the case.  Had the court found no plaintiffs to satisfy the threshold standing requirement, it would have dismissed the case without ever reaching the patent issues.  The court found that there was standing, but it was very close.

Only one plaintiff—Dr. Harry Ostrer of (for the moment; more on that below) NYU Langone Medical Center—was held to have standing.  That was because he alleged that Myriad forced him to stop offering BRCA clinical testing more than ten years ago by threatening infringement litigation, and that he remained ready, willing, and able to resume testing if the patents were held invalid.  One plaintiff with standing was enough for the court to proceed to the merits.

It should be noted, however, that last Wednesday, just before the Federal Circuit released its opinion, counsel for Myriad submitted a letter to the court (pdf) alleging that Dr. Ostrer’s impending move from NYU to Albert Einstein College of Medicine deprives Dr. Ostrer, and thus the Myriad plaintiffs, of standing.  While the Federal Circuit apparently did not see enough in Myriad’s last-minute letter to alter its standing analysis, the letter points out, correctly, that the standing requirement is an ongoing one which must continue to be met at all points during the appellate process.  As Myriad heads through subsequent appeals (discussed below), the issue of the plaintiffs’ standing to maintain their challenge will continue to loom in the background.

Turning to the product claims (the so-called “gene patents”), Judge Lourie reviewed more than 100 years of cases dealing with all kinds of substances with natural precursors or analogs.  He identified—correctly, in our view—the two key authorities as the Supreme Court’s opinions in Chakrabarty (holding genetically engineered bacteria to be patentable subject matter) and Funk Brothers (holding unpatentable an inoculum that combined bacterial species not known to co-exist in nature).  He concluded that the test was whether the claimed substances were “markedly different—have a distinctive chemical identity and nature”—from the naturally-occurring version.

The patentability of DNA.  cDNA sequences presented the easiest question for the court.  Even Judge Bryson agreed that cDNA is generally patentable, since it is a human-made molecule and the body does not naturally contain DNA in exactly this form (with introns spliced out).  However, as discussed below, Judge Bryson would have ruled differently with respect to particularly short sequences (as few as 15 base pairs) of cDNA.

When it came to the product claims, the real controversy concerned isolated genes and sequences in DNA form.  The district court had focused on the similarity in function and information content between natural and isolated genes, downplaying the chemical and structural differences that patent lawyers and the USPTO had always relied on.  As Judge Sweet wrote last year (pdf):

DNA represents the physical embodiment of biological information, distinct in its essential characteristics from any other chemical found in nature. It is concluded that DNA’s existence in an ‘isolated’ form alters neither this fundamental quality as it exists in the body nor the information it encodes.

Sixteen months later, Judge Lourie came down on the other side, focusing on the “cleaving” of isolated DNA out of its chromosomal environment as conclusive evidence of its fundamentally different nature.  (Curiously, he claimed that “cleaving” DNA from its chemical environment is fundamentally different from “isolating” a substance from an impure environment, which has sometimes been held insufficient to support patentability.)

The arguments about whether isolated DNA is sufficiently distinct from its natural counterpart are well-known, and neither side has an absolutely compelling case.  It seems to come down to an economic value judgment, and the Lourie and Moore opinions both reflect this reality.  Both majority judges put great emphasis on the dangers of upsetting thirty years (and 2,654 isolated DNA patents, by Judge Lourie’s count) of what Judge Moore called “settled expectations and extensive property rights.”  Both counseled deference to Congress, while Judge Lourie was “particularly wary” about a lower court expanding on an exception to patentability (the product of nature doctrine) that comes out of Supreme Court case law, not the Patent Act itself.

The method claims.  The judgments from the court on both categories of method claims were unanimous, as noted above.  Recall from our previous articles that the state of the law (such as it is) on methods generally is reflected in the Supreme Court’s confused and confusing 2010 decision in Bilski v. Kappos.  That case focuses on whether a method patent claims abstract processes (unpatentable) or specific applications (patentable), and expresses particular concern about method patents that preempt all uses of an abstract process.  In addition, Bilski held that the Federal Circuit’s machine-or-transformation (MoT) test could not be used exclusively, but could be an “important clue” to patentability.

In Bilski, the Supreme Court declined to provide any guidance for the proper application of the MoT test in a biotechnology context.  However, earlier this summer the Supreme Court agreed to review the Federal Circuit’s decision in Prometheus v. Mayo, which has twice upheld the patentability of a method of administering a drug, determining the level of the drug in a patient’s bloodstream, and then adjusting the dosage accordingly to maximize therapeutic efficacy.

Myriad’s analysis and comparison claims failed the test completely, earning a solid “F” from the Federal Circuit.  Judge Lourie wrote that such claims lack any “necessarily transformative step” and, in the end, “recite nothing more than the abstract mental steps necessary to compare two different nucleotide sequences.”

Myriad’s claim on a method of screening potential cancer therapeutics, on the other hand, was “not so manifestly abstract as to claim only a scientific principle.”  It also passed the still-breathing MoT test, since it involves the “transformative” steps of growing host cells in the presence or absence of a cancer therapeutic and then determining and comparing their growth rates.”  This was viewed as fundamentally different from simply comparing two DNA sequences.

Returning to the unpatentable claims to the analysis and comparison of DNA sequences, it is striking how much Judge Lourie emphasized the semantics of patent claim-drafting.  With Prometheus undoubtedly on their minds, Myriad’s lawyers had argued that this method actually did involve transformation.  They pointed out, for example, that here, just as in Prometheus, there was a “determining” step—in this case, of “the sequence of BRCA genes by, e.g., isolating the genes from a blood sample and sequencing them.”  Judge Lourie noted, though, that this step, while described elsewhere in the patent, was not part of the claims, by which patentable subject matter must be exclusively judged.  In Prometheus, by contrast, the determining step was in the claims.

It is hard to read this as anything but an invitation to patent lawyers to bring methods as abstract as Myriad’s within the ambit of patentable subject matter simply by putting more (perfunctory?) technical detail in the claims themselves.  As we have written previously, if clever draftsmanship is all that is ultimately required to satisfy the MoT test in many instance, the courts will have created “a potentially enormous opening through which to push all manner of personalized medicine patents replete with diagnostic, measurement, correlation and other interpretive or mental steps.”

The isolated DNA dissent. Judge Bryson argued in the same terms as the majority about the isolated DNA clams, and then reached the opposite conclusion.  Taking on Judge Lourie’s cleaving argument, he wrote that “there is no magic to a chemical bond that requires us to recognize a new product when a chemical bond is altered or broken.”  Agreeing with the district court about the paramount importance of the information content of genes, he concluded that “what is claimed in the BRCA genes is the genetic coding material, and that material is the same, structurally and functionally, in both the native gene and the isolated form of the gene.”

Perhaps more significantly, Judge Bryson also reached the opposite conclusion with respect to the economic implications of invalidating Myriad’s patents.  The—to him—“breathtakingly broad” claims to cDNA and DNA sequences as short as 15 nucleotides led Judge Bryson to look beyond the possibility of overturning biotechnology’s “settled expectations” and to the future effect of “a thicket of patents.”  This patent thicket, at least to Judge Bryson, presents “a significant obstacle to the next generation of innovation in genetic medicine—multiplex tests and whole-genome sequencing.”  He made a further point that we can confirm on the basis of our own experience: that “the costs involved in determining the scope of all those patents [in the thicket] could be prohibitive.”

Judge Bryson also departed from his colleagues in declining to give any deference to the USPTO’s 30-year practice of allowing isolated gene patents, on the grounds that it had never done any serious analysis of the subject matter issue.  Judge Bryson’s argument was buttressed by the Department of Justice’s amicus brief last fall, which advocated a dramatic departure from the PTO’s prior gene patent practice, as well as by a citation to an article by one of us (John) detailing the PTO’s limited review of these issues.

What happens next in Myriad? Since both Myriad and the plaintiffs both won and lost, both parties are eligible to seek further review, and both probably will.  One possibility is to ask the Federal Circuit for en banc review by all of its active judges (currently ten) sitting together.  This is relatively rarely granted, but more often in the Federal Circuit than in other federal courts of appeals because of its judges’ penchant for split decisions and major disagreements about fundamental doctrine.  So it is a real possibility.

After review en banc, or sooner if that appeal is not granted, both parties could petition for certiorari (cert), or further review, by the Supreme Court.  The Court grants cert in fewer than 100 cases in most years, denying the vast majority of cert petitions.  However, the Court has taken more patent cases in recent years, and this is an important one, with obvious economic and scientific implications, so it is a promising candidate.

But—remember that the Court already has Prometheus on its docket, which could settle the methods questions present in Myriad.  Among the possibilities here (yes, that was a reference to Monty Python’s Spanish Inquisition skit) are: (1) the Court takes the whole Myriad case; (2) it takes only the product claims issues, assuming that the method issues will be settled—at least for future cases—by Prometheus; (3) it takes Myriad and consolidates it wholly or in part with Prometheus, which would likely delay both cases until the 2012 term; or (4) it denies cert in Myriad and lets the Federal Circuit’s ruling stand as is.  All we can know for sure is that Myriad, still, likely has quite a ways to go before a final resolution.

What does the Myriad decision mean for the real world? First and foremost, this opinion restores—at least for the time being—the gene product patent world to the state it was in before the district court’s bolt out of the blue last spring.  So one reaction is, move along, people, nothing to see here.  But we emphasize at least for the time being.

As we said, this case has miles to go before it sleeps.  And it was a 2-1 decision, so the anti-gene patent position is neither crazy nor hopeless.  Judge Lourie ended up making a very debatable call (on how different isolated genes are from their natural counterparts) on which reasonable minds can differ.  Judge Moore was sufficiently dissatisfied with Judge Lourie’s reasoning that she took 31 pages to explain her own, ultimately (in our view) adding very little.

So there remains a high probability that there will be more said about the patentability of (in particular) isolated DNA sequences, probably by the courts (either the Federal Circuit en banc) or the Supreme Court, and possibly by Congress (if they ever manage to fix their debt ceiling distractions).

That said, how much difference will the final product patent decision in this case really make?  Myriad’s own product patents will begin to expire in 2014.  By the time Myriad wends its way through all available appeals, the biotechnology industry and clinical geneticists may have, collectively, innovated their way around the patents held by companies like Myriad.

Recall Judge Bryson’s fears about the impact on whole-gene sequencing.  Are those fears justified?  Judge Lourie repeatedly stressed cleaving the claimed isolated gene out of its natural environment.  Whatever you think of that argument in the context of the isolation of single genes, do present and forthcoming whole-genome sequencing technologies require the same cleavage?  In other words, do/will those technologies infringe patents on isolated DNA sequences using the analysis presented in Myriad?  That question has yet to be fully and formally asked, and will almost assuredly not be addressed by the Myriad litigation.  Which means that, whatever the outcome in this case, patent litigators with Ph.D.s in genetics should remain gainfully employed for the foreseeable future.

We should also look beyond the threshold question of patentability under Section 101.  As we have written previously, the real action on gene product patents is occurring under other sections of the Patent Act that deal with novelty, non-obviousness, and the written description requirement.  These sections’ requirements have been repeatedly tightened, with an overall effect of “nibbling around the edges” of gene patents, as we have put it.  The Myriad court’s reference to all of these sections—none of which is in play here—underscores the point that passing the subject matter test barely gets you out of the batter’s box, let alone to first base.

We have also written (e.g., here) that the disposition of method claims, in Myriad but also in Prometheus and other cases, will ultimately prove more important to the personalized medicine industry.  This case—unanimously—invalidates some of the broadest diagnostic method claims.  But even that rejection comes across as relatively toothless, given that Judge Lourie offered a roadmap for the alert patent lawyer to reword such claims so that they might survive.  That’s good news for those who might profit from broad method claims, cause for concern for those who might be inhibited by them, and a clear reminder that plenty more work (and, likely, litigation) is yet to come.

Ultimately, as Myriad pushes into its third year, our advice remains the same as before: keep watching—not just Myriad, but Prometheus as well, which is running slightly ahead on a parallel track—and know that, while the debt ceiling may yet cave in around us, whether the pigs will ultimately rule the gene patent sky remains to be seen.

[Editor's Note: This post originally appeared as a

Last week, New York State assemblyman J. Gary Pretlow introduced the descriptively named “act to amend the insurance law, in relation to requiring coverage for genetic testing in accident and health insurance polices.”

While not accompanied by a press release, or widely covered by media outlets, the bill merits close attention. While the substance of the bill is striking, its greater import lies in what it reveals about the United States’ current framework for personalized medicine regulation and in what the bill portends for the future of personalized medicine innovation and investment in this country.

The Basics and Breadth of the Pretlow Proposal. Despite its broadly worded title, New York bill #A02325 has a specific goal: to require insurance companies to “provide coverage for genetic testing” for any individual who, “in the opinion of an attending physician, [is at] significant risk of contracting cancer.”

Though not discussed in the text of the bill of itself, the bill’s accompanying memorandum clarifies an intent to specifically require insurance companies to reimburse the cost of genetic tests for individuals deemed to be at significant risk of developing breast cancer (more on this below). With the new legislation, at risk patients “will be able to seek genetic screening and counseling that will be paid for by insurance.”

Whether the bill would require coverage for genetic tests aimed at any type of cancer (as the bill’s text implies), or only for breast cancer (as the explanatory memorandum indicates), its scope is significant. In addition to requiring insurance companies to provide coverage for these genetic tests, it would also require insurers to cover “any subsequent treatment resulting from the results of such test” (emphasis added).

Remember: It’s Only a Bill. Before we go any further, it is important to clarify that this is an introductory legislative proposal. Assemblyman Pretlow has attempted, unsuccessfully, to introduce similar insurance mandates in the past and his current attempt has only been read once and referred to the assembly’s Committee on Insurance. It is not the law of the State of New York. It is not even up for a vote.

Whatever the factors that prompted the bill’s introduction, it would seem to stand little chance of passing in its current form. A primary substantive objection is the exceedingly vague scope of the bill as presently drafted. Assemblyman Pretlow’s proposal does not specify the nature of the genetic tests for which insurance coverage would be required. For example, would it cover multiplex or whole-genome sequencing to identify all identified genetic markers of cancer susceptibility, or only more narrowly tailored susceptibility tests (e.g., Myriad Genetics’ BRACAnalysis)? Similarly, the bill fails to circumscribe the extent of “subsequent treatments” which must be covered by insurers. Would coverage extend to genetic counseling and/or other preventative measures, such as an elective mastectomy in the case of breast cancer, or would it be broad enough to encompass subsequent (and far more costly) therapeutic treatments in the event a cancer materializes?

These and other questions demand significant clarification. Meanwhile, preliminary reaction from the insurance industry has been strongly negative, suggesting that the likelihood of Assemblyman Pretlow’s proposal passing is slim, at least in its current form. But because of what it reveals about the state of personalized medicine regulation in this country, and what that implies about the future of personalized medicine globally, it is a bill that is noteworthy by virtue of its mere proposal.

A Local Solution; A National Problem. In 2008, the now-defunct Secretary’s Advisory Committee on Genetics, Health, and Society (SACGHS) published a comprehensive review of the “U.S. System of Oversight of Genetic Testing” (pdf). The 276-page report, which remains the most comprehensive analysis of its kind to-date, identified “significant gaps in the U.S. system of oversight of genetic testing that can lead to harms,” including incomplete, inconsistent and overlapping regulations at the state and federal level.

Nearly three years later, little has changed. As we wrote earlier this month, even as the number of genetic tests and other personalized medicine technologies and treatments proliferates, and despite significant talk about overhauling numerous aspects of this regulatory framework – from the NIH’s proposed Genetic Testing Registry to the FDA’s proposed oversight of Laboratory Developed Tests, among numerous other proposals yet to be implemented – the regulation of genetic tests, and of personalized medicine more broadly, continues to remain a messy, patchwork affair.

While regulators and regulated companies struggle to make sense of the current landscape, genetic testing has garnered increasingly high-profile media and political attention in several areas, including the viability of direct-to-consumer (DTC) genetic testing and the patentability of the DNA sequences and methods underlying certain genetic tests. As these issues remain unresolved – the Myriad litigation, for example, is now nearly two years old, and a resolution unlikely to arrive soon – the pressure on lawmakers to act continues to grow.

For example, one the key allegations raised by the Myriad plaintiffs in their initial complaint (pdf) was that Myriad Genetics’ patents on two key breast cancer genes (BRCA1 and BRCA2) mean that “many women at risk [of breast cancer] cannot even be tested because they are uninsured and/or cannot afford the test offered by Myriad.” It is hardly a stretch to view Assemblyman Pretlow’s proposal as a direct, legislative response to perhaps the most politically salient issue posed by the Myriad litigation.

A National Problem; A Global Shift? Taken purely from the perspective of women at risk of hereditary breast cancer who happen to live in New York state, Assemblyman Pretlow’s proposal to require insurance coverage of applicable genetic tests is a positive development. But viewed through a broader lens, the Pretlow proposal is symptomatic of a troubling and ongoing trend: the use of legislative band-aids (e.g., insurance coverage mandates) in an attempt to mitigate the effects of deeper and more serious problems in our personalized medicine regulatory framework.

While significant for a subset of individuals, a bill which would create separate insurance coverage criteria for a subset of genetic tests and follow-on services in a single state would further complicate the existing personalized medicine landscape for national insurers, healthcare providers, genetic test developers and patient advocacy groups. Far from addressing the problems identified by SACGHS three years ago, it would make them worse.

Continued legal and regulatory development in this direction could be tragic for personalized medicine – both the industry and the patients it seeks to serve – in the United States over the long run.

Last week, the global consulting firm PwC published its Medical Technology Innovation Scorecard. The full report (pdf) evaluates the capacity and capability of nine key countries, including the U.S., for medical technology innovation. One of PwC’s key findings was that “the medical technology innovation ecosystem, long centered in the United States, is moving offshore.”

According to PwC there are a number of reasons why this is happening, including the increasingly labyrinthine United States regulatory system:

The citizens of countries with more efficient and less uncertain, capricious and complex regulatory approval processes will gain earlier access to innovative medical technology, and providers in those countries will benefit from more experience in using new devices…Countries with long, complex, arbitrary, nontransparent, costly approval pathways will discourage entrepreneurs and investors, causing them to launch new products elsewhere.

The PwC report made a splash when it was released last week, in part because it attempted to quantify what SACGHS and so many other advisory groups, executives and investors both before and since have noticed: bringing medical and healthcare innovation to market in the United States is an increasingly time-consuming, expensive and frustrating process.

As Luke Timmerman of Xconomy notes, although the United States may not be moving in the right direction, its fall from the top of the heap is hardly inevitable. Timmerman suggests that a few strategic “policy moves could be enough to keep the U.S. in the lead of med-tech innovation for a long time.” That’s probably correct, but it’s important that those moves are timely made.

It is becoming increasingly clear that the regulatory, reimbursement and intellectual property structures that both support and constrain personalized medicine innovation and commercialization in this country are all in need of a strategic and comprehensive overhaul.

The PwC report is a reminder that this overhaul must come relatively soon if it is to head off a significant and long-term shift in the geographic center of gravity for personalized medicine innovation and investment. And the Pretlow proposal, no matter how well-meaning, is a reminder of the “uncertain, capricious and complex” legal and regulatory framework that will continue to frustrate personalized medicine innovation in the meantime.

We also promised to take a closer look in today’s post at several substantive features of the EEOC’s new regulations.

Defining the Terms. The EEOC, the government agency generally responsible for enforcing federal employment nondiscrimination laws, was the logical choice to promulgate regulations under GINA’s Title II, which governs the use of genetic information by employers and similar entities. But not all of GINA’s statutory provisions were within the EEOC’s area of expertise.

For that reason, the EEOC solicited help from outside agencies, including the National Human Genome Research Institute (NHGRI), to aid in developing both the proposed and final regulations. Despite a few stumbles with the science (notably its description of the BRCA1 and BRCA2 genes), the EEOC’s final regulations—as well as its explanatory preamble—are laudably clear and informative. The preamble and the regulations themselves include numerous illustrative examples—something that was largely lacking in the draft regulations—and they should be particularly helpful to the predominantly non-scientific audience tasked with implementing GINA.

For example, public commenters requested additional clarification with respect to what does and does not constitute a “genetic test.” The EEOC responded in spades. According to the EEOC, genetic tests include (i) BRCA testing and other diagnostic cancer testing, as well as prognostic testing for Huntington’s Disease, (ii) carrier screenings of adults to determine the risk of conditions such as cystic fibrosis or sickle cell anemia, (iii) reproductive genetic testing and screening of all kinds, including amniocentesis, newborn screening and preimplantation genetic diagnosis, (iv) pharmacogenetics testing and (v) DNA testing for ancestry or familial/paternity relationships. In short, just about every technology on the personal genomics landscape appears to fall within the definition of genetic test.

Another important definition, clarified in the final regulations, is that of a “manifest” disease. The EEOC clarifies at several points in the preamble its position that genetic information alone is not equivalent to a disease or disorder: “other signs or symptoms must be present.” The EEOC uses the example of Huntington’s Disease which, despite its high degree of penetrance, is not considered to be a present disease even following a positive genetic test until actual symptoms arise.

This distinction is crucial because, under § 1635.12 of the final regulations, employers are not barred from using, acquiring or disclosing medical information about a “manifested disease, disorder, or pathological condition,” even when such disease or disorder has a genetic component. (However, employers may be barred from discriminating on the basis of such information by other federal law, including the ADA.)

The final regulations also provide greater clarity with respect to the definition of “family member,” which includes all dependents (including spouses, adopted children and other people who are not genetically related) and all other persons “related from the first to the fourth degree of an individual.” Other key terms, including “genetic information,” “genetic services,” and “family medical history” also receive helpful background discussion.

Deliberate vs. Inadvertent Acquisition. It is illegal under GINA for employers to “request, require, or purchase” genetic information. In considering what constitutes a “request” for purposes of GINA, the proposed rule was structured to prohibit the “deliberate acquisition” of genetic information. Some commenters, including the American Civil Liberties Union, criticized this proposed rule for suggesting that employers must have the “specific intent” to acquire genetic information to run afoul of the law. (Others suggested that requiring a “purposeful act” was, in fact, what Congress intended.)

In the final regulations, the EEOC sided with the ACLU in determining that “request” extends beyond a specific or deliberate intent to encompass a variety of actions that are “likely to result” in the acquisition of genetic information.

Despite this broad prohibition on the request of genetic information, GINA provides several exceptions, including with respect to “inadvertent requests” and “commercially and publicly available information.” The “inadvertent” request or disclosure scenario was originally inserted by Congress to address the so-called “water cooler problem,” in which employers inadvertently received genetic information, including family medical history, from employees in the course of routine conversations or interactions. Likewise, the “publicly available information” exception was intended to protect employers who acquired genetic information about their employees by, for instance, watching the evening news.

To aid in understanding the specific contours of these exceptions, the EEOC has provided significant clarifying guidance and examples. For instance, while an employer does not violate GINA by participating in “water cooler conversations”—whether those conversations happen around a conventional water cooler or in more modern settings, including on Facebook, LinkedIn or other social media platforms—that information is not an invitation to bypass GINA. The employer and its agents must “not then ask follow-up questions that are probing in nature.”

Similarly, the category of “commercially and publicly available materials” will generally not include materials made available to the public, or to some portion of the public, on a restricted basis (i.e., when more than simple registration is required for access). For example, research databases made available only to the scientific community or Facebook profile information shared only with “friends” (as opposed to information visible in a public database or on a public website) would not satisfy this exception.

Even genetic information that is available to the public on an unrestricted basis—as is true of genetic information provided by individuals, including one of us, who participate in public genomics projects—is not necessarily fair game for employers under GINA. If employers access such sources “with the intent of obtaining genetic information,” particularly if it comes from a source “that focuses on issues such as genetic testing of individuals” they will not be able to take advantage of GINA’s limited exception for publicly available materials.

As the EEOC explains, GINA’s limited exceptions are “intended to protect from liability a covered entity that inadvertently obtains genetic information and not a covered entity that is actively searching for genetic information.”

When it comes to applying GINA’s various exceptions, employers should remember that Title II of GINA serves three related but ultimately separate functions: (i) a general prohibition on the request for or acquisition of genetic information, (ii) an ever-more-complete prohibition on the discriminatory use of genetic information in employment-related decisions and (iii) strict confidentiality requirements pertaining to any sharing or disclosure of genetic information, however obtained, by employers. Thus, even genetic information that is requested or acquired lawfully under one of GINA’s exceptions is still subject to the remaining two prongs of GINA Title II, and it may not be used to discriminate in employment-related decisions or disclosed in violation of GINA’s confidentiality provisions.

No New Exemptions. In addition to clarifying the scope of existing exemptions, the EEOC specifically declined to introduce new exceptions under GINA relating to the use of genetic information in evaluating the ability of an employee (or prospective employee) to safely and effectively perform a particular job. Exemptions proposed by commenters would have permitted a covered entity to request genetic information (i) as part of “a medical examination conducted to assess an individual’s ability to perform a job” or (ii) “to determine whether an individual has a particular manifested disease, disorder, or pathological condition and where information about [that condition], as opposed to its signs and symptoms, is necessary to evaluate an individual’s ability to perform a particular job.”

The EEOC declined to create such an exemption in each case, citing both a lack of authority under GINA and its belief that “there does not appear to be a case in which the diagnosis, as opposed to the signs and symptoms, is necessary to evaluate an individual’s ability to perform a particular job.”

Shortly after the EEOC released its draft regulations we addressed this particular issue, among others, with a pair of GINA-related posts (see here and here). We considered whether there might be situations in which an employer could have a legitimate interest in testing an employee for a genetically-mediated condition, particularly where the employee’s activities might increase the risk or the severity of such condition becoming manifest during the course of employment.

The primary example we considered was that of professional basketball player Eddy Curry, who was traded by the Chicago Bulls after refusing to undergo a genetic test for Hypertrophic Cardiomyopathy (HCM).

As we wrote then:

Curry’s case is a very good example of a more general scenario that I suspect might pose a real problem once GINA takes effect. How will employers and employees handle situations in which an employer suspects that an employee is either suffering from, or at risk of, developing a medical condition with an identifiable genetic component? (In Curry’s case, it was the irregular heartbeat that created suspicion of HCM.) It would seem that, in most such cases, the employer will be forced to take action without a confirmatory genetic test.

The final regulations decline to create an exemption for this scenario and, indeed, it appears that if this case arose today, the Chicago Bulls might be prohibited from even requesting an HCM test. Although Curry did exhibit some physical symptoms, including an irregular heartbeat, the HCM test would arguably have been necessary to evaluate his ability to perform this particular job (that of a professional basketball player), particularly because the irregular heartbeat and other physical symptoms, on their own, may not have been enough for a conclusive diagnosis.

While the EEOC failed to find sufficient reason to create such an exemption, this situation is likely to appear in other contexts in coming years. While genetic information is primarily used to diagnose or guide treatment for manifest diseases or conditions, it is likely to play an increasing role in determining behavioral and lifestyle decisions—potentially including choice of employment—for conditions not yet manifest. Under GINA, however, except where an employer is required to do so by law, it may not “limit, segregate, or classify an individual…because of genetic information with respect to that individual.” There is no exception for imposing a limitation designed solely to protect the well-being of the employee.

As genetic information becomes more prevalent and more useful, we expect to see a growing tension between an employer’s legitimate interest in ensuring the welfare of its employees (for both economic reasons and out of a legitimate desire to protect its employees from harm) and GINA’s broad prohibition on requesting genetic information.

Employee Wellness Programs. One area where employers are already actively attempting to use genetic information—typically in the form of family medical history—to safeguard the health of their employees (and, in turn, decrease employers’ own healthcare costs) is employee wellness programs.

Increasing numbers of employers have implemented wellness programs, which frequently operate by assessing employees’ personal risk factors (including medical, environmental and behavioral) and encouraging the adoption of healthier lifestyles and practices. Many wellness programs include financial incentives (often in the form of premium discounts) for participation and/or completion.

Following GINA’s passage, and particularly the EEOC’s proposed regulations, many employers were concerned that such wellness programs might violate GINA. The proposed regulations permitted wellness programs only if they were offered on a “voluntary” basis (and if certain other conditions were met). Many commenters worried financial incentives or inducements would be deemed incompatible with the requirement of voluntariness.

In its final regulations, the EEOC has addressed this concern by clarifying the circumstances under which an employer may offer wellness programs that include a request for genetic information (including family history). In order for the wellness program to comply with GINA:

• the employee must provide a prior, knowing, voluntary and written authorization to participate in the program (electronic or online authorizations are allowed);
• individually identifiable genetic information may only be provided to the licensed health care professionals or board certified genetic counselors involved with the program;
• any genetic information received from the wellness provider must be in aggregate terms that do not disclose the identity of specific individuals; and
• employee incentives or benefits related to the program must not be conditioned upon the provision of genetic information.

Most notably, the EEOC determined that financial inducements for wellness programs are allowed, but only where the employer makes it crystal clear that neither participation in the wellness program nor the receipt of any benefit resulting from participation is conditioned upon the provision of genetic information.

What’s Next. Although GINA is now two and a half years old, like all new laws it remains subject to a considerable degree of uncertainty. Thus far, we are aware of only one publicly discussed EEOC claim filed under GINA (although EEOC’s legal counsel estimates “around 200 charges have been filed with EEOC under GINA so far“) and no court decisions interpreting the law. The EEOC’s final regulations are well-written and helpful but, ultimately, it will take years before we understand how GINA operates in practice.

Judge Dyk’s comments were a bolt out of the blue, as he raised an issue that had not been addressed by the parties or the lower court. Because he is a member of the court that will decide Myriad in the next year or so, Judge Dyk’s comments might be more significant than the district court opinion itself. (The case is Intervet Inc. v. Merial Ltd., Fed. Cir. 8/4/2010.)

Porcine Patents. Merial had a patent (U.S. Patent No. 6,368,601, also known as the ‘601 patent) covering DNA molecules derived from a new type of porcine circovirus (PCV-2), the apparent culprit in a disease affecting livestock pigs called Postweaning Multisystemic Wasting Syndrome. Intervet makes a PCV-2 vaccine. Fearing that it would be sued for infringing Merial’s patent, Intervet brought its own preemptive suit for a declaratory judgment (a kind of advance ruling) that its vaccine doesn’t infringe.

Claims 9 and 32 of the ‘601 patent represent the two groups of DNA claims at issue in the case:

9. A vector comprising an isolated DNA molecule comprising a sequence selected from the group consisting of ORFs [open reading frames—sequences that may be translated into proteins] 1 to 13 of porcine circovirus type II.

32. An isolated DNA molecule comprising a nucleotide sequence encoding an epitope which is specific to PCV-2 and not specific to PCV-1 [a related but benign porcine circovirus].

An epitope, as defined in the opinion, is “an immunodominant region of a protein, meaning it is part of an antigen that is recognized by antibodies of the immune system.” (Dyk, p. 2) This makes a segment of viral DNA that encodes an epitope useful in diagnosing and vaccinating against the pathogen, because the epitope can be introduced to the host animal’s immune system in a controlled fashion (e.g., as part of a vaccine) to stimulate production of antibodies. The idea is that the animal’s immune system will later recognize the epitope (and thus the virus) in the event of exposure.

The Federal Circuit’s majority opinion addressed the district court’s construction of claims 9 and 32. The five PCV-2 strains in the patent share 96% nucleotide sequence homology with each other but only 76% homology with PCV-1. The potentially infringing Intervet PCV-2 vaccine contained a nucleotide sequence that was 99.7% homologous to one of the ‘601 patent’s PCV-2 sequences, but the district court construed the claims to cover only the exact sequences disclosed in the patent and ruled that Intervet’s vaccine was therefore noninfringing.

The Federal Circuit found the district court’s claim construction to be too narrow because the “representative” sequences that Merial disclosed “do not constitute the entire scope of the invention.” Under Federal Circuit case law, a claim to a genus (a group of inventions) may be supported if “a sufficient number of species [i.e., individual examples] is disclosed so as to properly identify the scope of the genus.” (Prost, p. 9) Here, the five newly disclosed PCV-2 strains share the defining properties of pathogenicity and 96% sequence homology, in contrast with the “counterexample” of PCV-1, which has only 76% sequence homology and no pathogenicity. The majority remanded the case for further proceedings based on the revised claim construction.

Dyk’s Unexpected Dissent. Judge Dyk dissented from the majority’s construction of claim 9, and agreed with their handling of claim 32. (Dyk, p. 2) So far, just routine patent law inside baseball. But then came the shocker: “At least claim 32 of the ‘601 patent raises substantial issues of patentable subject matter.” In other words, “an isolated DNA comprising a nucleotide sequence encoding” a specified epitope might not be within the very broad scope of the things that the patent law was intended to cover. This is almost exactly what the District Judge Sweet held in Myriad.

Judge Dyk framed the essential question this way:

…whether the isolated DNA molecule, separate from any applications associated with the isolated nucleotide sequence (for example, the production of a vaccine) is patentable subject matter. (Dyk, p. 3, our emphasis)

He then made a point that patent lawyers won’t like to hear but which is absolutely true: “Neither the Supreme Court nor this court has directly decided the issue of the patentability of isolated DNA molecules.” (Dyk, p. 3) He cited a series of cases going back to the early 1990s in which the patentability of isolated DNA sequences had been assumed, but never framed as an issue for decision. So, in his view—an accurate view—while patent practice may support the proposition that isolated genes are patentable subject matter, no appellate court has ever so held.

Judge Dyk then discussed three Supreme Court cases that have reaffirmed the proposition that “‘laws of nature, physical phenomena, and abstract ideas’ are not patentable.” The most recent—the June 28 decision in Bislki v. Kappos—was a business method case concerned with laws of nature and abstract ideas. But the other two—Chakrabarty, from 1980, and Funk Bros. Seed, from 1948—represented claims on either side of the product of nature line. Chakrabarty held, famously, that a genetically engineered bacterium was a human-made invention and thus patentable subject matter. The long-forgotten invention in Funk Bros., a mixture of nitrogen-fixing bacteria that worked together without mutual inhibition, was merely the discovery of a product of nature and thus not patentable.

The standard that emerges from these cases, Judge Dyk concluded, is that “in order for a product of nature to satisfy section 101 [which determines patentable subject matter], it must be qualitatively different from the product occurring in nature, with ‘markedly different characteristics from any found in nature.’” (Dyk, p. 6, citing Charkabarty.) Turning—ominously, perhaps, for gene patent holders—to the issue at hand, he observed that “it is far from clear that an ‘isolated’ DNA sequence is qualitatively different from the product occurring in nature.” (Dyk, p. 6)

Anticipating Myriad. Judge Sweet, the Myriad district judge, expressed exactly the same doubt, and was unable to resolve it. He noted that patent lawyers had always—successfully, until now—contended that isolated genes were “markedly different” from their natural counterparts as chemicals. He held, however, that the proper focus was on genes as information, and from this perspective found no difference at all.

Judge Dyk did not get around to the chemical-information controversy, so we can only guess about his views. We now do know, however, that one member of the court that will decide the fate of gene patents is sympathetic to the general structure of Judge Sweet’s argument, and dubious about gene patents in general. Moreover, he went out of his way to say all this when he had no need to do so. To be fair, appellate courts have long taken the position that they can raise the issue of patentable subject matter on their own. But they rarely do so, which makes it an attention-getting strategy. And Judge Dyk has certainly gotten everyone’s attention.

A final point concerns the relationship between Judge Dyk’s opinion and the ACLU’s curious motion to force Federal Circuit Chief Judge Randall Rader to recuse himself from (refrain from participating in) the Myriad appeal because of some general comments he made at a patent law symposium. (We say “curious” because it has almost no chance of success and has the potential to irritate Judge Rader’s colleagues, if not Judge Rader himself.) While Judge Rader’s comments can hardly be construed as suggesting that he’s made up his mind on any issues relevant to the Myriad appeal, Judge Dyk’s gratuitous comments go pretty far in that direction. Will another recusal motion be forthcoming?

But once DNA samples are collected, when are they actually analyzed? As discussed by Christopher Heaney and Sara Huston Katsanis in The Contra Costra Times, many states currently have considerable backlogs in testing DNA samples, including those collected from convicts, arrestees and victims. Katie’s Law, by increasing the number of samples that require analysis, is likely to exacerbate these backlogs. Worse yet, Heaney and Katsanis point out that other federal funding awards are determined by the size of a state’s backlog—the larger the backlog, the more funds the state can receive. While the intent of Katie’s Law is to expedite the delivery of justice, there is concern that its practical effect may indeed be just the opposite.

A direct, Constitutional challenge to the practice of taking and retaining arrestee DNA samples, led by the ACLU, is currently wending its way through the Federal court system. The Ninth Circuit Court of Appeals is scheduled to hear oral arguments (pdf) in that case (Haskell v. Brown) next week and the Genomics Law Report will continue to provide updates as this issue develops.

The factual background in Australia seems a bit different. Myriad has granted an exclusive license to perform BRCA gene tests to a Melbourne company called Genetic Technologies Limited, which is a co-defendant in the case. But GTL has been reported to have “gifted” its patent rights to health care institutions, and not to charge royalties. Nonetheless, the plaintiffs’ lawyers have expressed concern about the possibility of GTL exploiting their monopoly as in the U.S., where the tests cost over $3,000. They note that on two earlier occasions GTL sent letters to hospitals telling them to stop testing. A number of Australian sources have also worried aloud about the implications of the patents for medical research.

In a technical sense, the case will have no direct effects outside of Australia. The general principle of international patent law is “non-extraterritoriality”—a jaw-breaker that means simply that a patent is enforceable only within the boundaries of the country that issues it. So even if the Australian courts ultimately invalidate the Myriad patents, that will not affect their status anywhere else. Plaintiffs who want to challenge the patents will have to do so country-by-country.

But as is so often the case with legal issues (fortunately for lawyers, and unfortunately for their clients), the situation is more complicated on a practical level. First, there is a partial exception to the country-by-country rule: the European Patent Office in Munich. There is still no such thing as a true “European patent” (the European Union has been working on it for years), but the EPO will examine applications under a single standard for patentability (established by a treaty called the European Patent Convention) and issue what it calls a “bundle” on national patents. That is, you can designate the countries in which you want your patent to be effective—say the U.K., France, and Germany—and the EPO can issue you a bundle containing a British, a French, and a German patent. Although you have to go to the individual countries to sue infringers, some challenges to the patent can be brought in the EPO. The Myriad patents have a long and complex history in the EPO, with the net result that they have a narrower scope than in the U.S.

A second point is that the Australian court system is well-regarded throughout the world, so a decision against the patents there could influence courts facing the same issue elsewhere—even though it wouldn’t bind them. Even the U.S. Supreme Court, which has long paid little or no attention to foreign precedent, has been citing foreign legal authorities more frequently in recent years.

The final point relates to the potential business strategy of competitors of companies like Myriad. Assume that a U.S. company wants to include genes patented by others (Myriad or someone else) in a broad-based diagnostic testing program. One approach would be to seek a license from the patent-holder. But there is an alternative: do the testing in a country that doesn’t recognize the patent. U.S. patent law (like that of almost every country) forbids making, using, or selling the patented invention within the U.S. There are some circumstances in which U.S. law can reach foreign activities (such as when the infringer sells parts of the invention from the U.S. to be assembled abroad), but under the present state of the law it would probably not be infringement to test patented genes abroad and send the results back to the U.S. The more countries that invalidate the patent, the more places there are to execute this strategy.

So the new Australian case will be, at a minimum, a chance for that country to engage in a public debate over the wisdom and legality of patenting genes—which is exactly what is happening in the United States as a result of the ACLU litigation. But in the long term it could serve to undercut the practical value of gene patents everywhere.

On May 18, the House of Representatives passed the Katie Sepich Enhanced DNA Collection Act of 2010, informally known as Katie’s Law.¹ Under the bill, those states that collect DNA from individuals arrested for certain serious crimes (murder, voluntary manslaughter, serious sexual offenses or serious kidnapping offenses) and compare the samples to those in the CODIS database at least once receive a 5% bonus on certain federal crime prevention grants.² States that also collect samples from individuals arrested for less serious crimes and submit all profiles collected from arrestees for inclusion in CODIS would instead receive a 10% bonus. The bill is now with the Senate Committee on the Judiciary.

Weighing the Constitutionality of Arrestee Collection. But is the practice of compulsory arrestee DNA collection constitutional? To date, most challenges to DNA collection have involved convicts, not arrestees. The few cases dealing with arrestees have not reached consistent results—the federal law has been both upheld and struck down, and state courts in Minnesota and Virginia have also reached opposite results.³ A brief look at the methodology accepted by four courts illustrates how these disparate results occur.

In these four cases, the courts employed a balancing test that weighs the government’s interests in collecting DNA from arrestees against the privacy interests of those arrestees. The different outcomes can be attributed to the weight that the courts give the individual factors. The courts that have upheld arrestee DNA collection have generally adhered to the position that DNA collection, at least in this context, is akin to the accepted practice of taking fingerprints.⁴ Because the government’s interests (e.g., ensuring that law enforcement has properly identified the arrestee, determining whether there are outstanding warrants for the arrestee and collecting evidence to facilitate re-capture in the event that the arrestee should escape or flee) are sufficient to justify fingerprinting the arrestee, these courts believe that DNA collection is similarly justified.

By contrast, courts that have struck down arrestee DNA collection emphasize the privacy interests of the arrestee. For these courts, cases permitting DNA collection from convicts are not persuasive because arrestees, unlike convicts, have not been through a judicial process and do not have diminished expectations of privacy.⁵ Indeed, under the Katie’s Law bill, for a state law to qualify for the federal incentives, it would be required to allow acquitted individuals to have their profiles removed from CODIS. Minnesota’s statute contained such a provision, which the Minnesota Court of Appeals addressed in striking down the law. The court reasoned that, by including the provision, the legislature signaled that the privacy rights of an individual who has not been convicted outweigh the government’s interests. This is a curious example of a court deriving a legislature’s policy position from the very statute that it finds to be in violation of that policy. In any event, under this line of analysis, if an arrestee has not suffered a diminished expectation of privacy, his privacy interests outweigh the government’s law enforcement interests.

A Direct Challenge to Katie’s Law. Each case described above has arisen in the context of an individual convicted of one offense based on DNA evidence obtained when the individual was arrested for a separate offense. Accordingly, it is the act of collecting the DNA sample upon arrest that serves as the critical point in the analysis. As such, the cases do not address the entry and retention of the DNA profile in CODIS.

In Haskell v. Brown, however, the ACLU has squarely addressed those issues in the context of its challenge to California’s version of Katie’s Law. This case, which is currently awaiting argument before the Ninth Circuit Court of Appeals, does not stem from a conviction achieved on the basis of DNA collected from an arrestee. Instead, the ACLU’s case challenges the very act of taking and retaining DNA samples in CODIS. In Haskell, the named plaintiffs were arrested and compelled to submit DNA samples for checks against CODIS. The searches did not result in any database hits. One of the plaintiffs was not charged with a crime. The ACLU has sought a declaratory judgment that the California version of Katie’s Law is unconstitutional, as well as preliminary injunction prohibiting California from collecting DNA samples from arrestees. The case has survived a motion to dismiss and obtained class certification. The District Court for the Northern District of California, however, denied the ACLU’s motion for a preliminary injunction, and the ACLU has appealed that denial to the Ninth Circuit.

As part of Ninth Circuit’s decision on the preliminary injunction, it will probably evaluate the likelihood of the ACLU succeeding on the merits of its claim for declaratory relief. Accordingly, while the panel’s decision likely will not dispose of the ACLU’s claims, the reasoning behind that decision should serve as a useful indicator of how a circuit court of appeals views the constitutionality of the procedures included in Katie’s Law. Further, because the case does not arise as a challenge to a criminal conviction, the court will be able to evaluate the legal arguments without the possibility of a conviction being overturned. In the coming months, we’ll follow this case and the legislative progress of the federal version of Katie’s Law, as well as providing a more in-depth look at the court cases that will serve as a backdrop to the national debate regarding arrestee DNA collection.

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¹ The bill passed under a suspension of the rules, meaning that it was subject to severely limited debate, but required a 2/3 majority to pass. After 25 minutes of debate, the measure passed the house by a vote of 357 to 32.

² The incentives are based on the Edward Byrne Memorial Justice Assistance Grant (“Byrne JAG”) that states receive. For reference, in 2009, California received about $135 million in Byrne JAG grants; New York received $67 million. A complete state-by-state list is available here (pdf).

³ Minnesota and Virginia have each reviewed their state laws: Minnesota found its law unconstitutional, while the Court of Appeals of Virginia upheld its law. Meanwhile, the Eastern District of Pennsylvania has found that the federal law is unconstitutional, while the Eastern District of California has upheld that same statute.

⁴ The Supreme Court of Virginia has stated: “A DNA sample of the accused taken upon arrest, while more revealing, is no different in character than acquiring fingerprints upon arrest.” Anderson v. Commonwealth, 650 S.E.2d 702, 705 (Va. 2007).

⁵ In response to the state relying on cases upholding DNA collection from convicts, the Court of Appeals of Minnesota has noted that “the reduced expectation of privacy that was present in the cases the state cites is not present here.” In re C.T.L., 722 N.W.2d 484, 491 (Ct. App. Minn. 2006).

Two months ago, the Myriad gene patent litigation generated a slew of national and international coverage. We said, “Pigs Fly: Federal Court Invalidates Myriad’s Patent Claims.”  “Is the DNA patent dead?” asked CNN. Wired (apparently answering CNN) declared the “End of Gene Patents Will Help Patients, Force Companies to Change.” Everyone, it seemed, either had an opinion on what the Myriad decision meant for the future of biotechnology or was looking for somebody who did.

It’s not surprising that the Myriad litigation has dominated the headlines. The ACLU’s challenge to Myriad Genetics was a first-of-its-kind frontal attack on gene patents. But with Myriad now on appeal to the Federal Circuit, and a final resolution to that particular piece of litigation likely several years away, a variety of other legal developments are slowly but surely reshaping the biotechnology patent landscape. In the next few years, while frontal attacks such as Myriad are likely to occupy the press and policymakers, those interested in forecasting the future of biotechnology patents will be paying equally close attention to the various collateral attacks on gene, protein, association, diagnostic, and other biotechnology patents and claims.

The WARF Reexamination. A perfect example of this is the recent decision to invalidate a Wisconsin Alumni Research Foundation (WARF) patent on stem cell cultures. On April 28, 2010, Board of Patent Appeals and Interferences (the Board) of the U.S. Patent and Trademark Office (USPTO) invalidated one of WARF’s patents on stem cell cultures. The decision is Foundation for Taxpayer and Consumer Rights v. WARF (B.P.A.I. No. 2010-001854, 4/28/10) (pdf), and in it the Board ruled that the WARF claims were anticipated by a 1992 patent and were obvious in light of “significant guideposts” in the prior art. After some additional USPTO proceedings, there may be an appeal to the Federal Circuit.

The ruling was made in an “inter partes reexamination” requested by public domain advocacy organizations, including one—the Public Patent Foundation—that is, so far, a successful plaintiff in the ongoing Myriad case. Pursuant to § 301 and § 302 of the Patent Act, anyone can initiate a reexamination by identifying to the USPTO “prior art consisting of patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent.” Pursuant to § 303, if the USPTO finds that the request raises “a substantial new question of patentability,” it conducts an adversarial proceeding in which both the requester and the patentee can state their positions.

If the reexamination proceeds to an adversarial proceeding, the case is then decided according to the usual standards of patentability—whether the invention comprises patentable subject matter and is new, useful, and non-obvious. Outsiders rarely request inter partes reexamination because, on the one hand, the requester has limited procedural rights, but on the other, a ruling upholding the patent will bind the requester in future patent litigation.

Last month, the USPTO Board invalidated patent number 7,029,913 (the ‘913 Patent), issued to James A. Thomson on April 26, 2006, assigned to WARF thereafter and currently licensed to Geron Corp. The broadest of the ‘913 Patent’s three short and straightforward claims covers:

A replicating in vitro cell culture of human embryonic stem cells comprising cells which (i) are capable of proliferation in in vitro culture for over one year without the application of exogenous leukemia inhibitory factor, (ii) maintain a karyotype in which the chromosomes are euploid through prolonged culture, (iii) maintain the potential to differentiate to derivatives of endoderm, mesoderm, and ectoderm tissues throughout the culture, and (iv) are inhibited from differentiation when cultured on a fibroblast feeder layer.

The claim is stunning in its breadth. With the exception of “without the application of exogenous leukemia inhibitory factor” (LIF) in item (i), the remainder of the limiting language in items (i)-(iv) of the ‘913 Patent is the patentee’s definition of a stable human embryonic cell line. Thus, any similar cell line maintained without applying LIF would infringe.

Anticipation and Obviousness. The Board held that the WARF patent was anticipated by a 1992 patent issued to an Australian named Williams. To be anticipated, the claimed invention must be fully disclosed by a reference in the prior art—here, the Williams patent. (There is an old saying in patent law: “That which infringes, if later, anticipates, if earlier.”) The Williams patent disclosed “animal” embryonic stem cell cultures, giving the single example of mouse cells as a source. But the Williams patent did include human embryos on a list of possible animal sources, which led to the Board’s finding of anticipation. Williams’ abstract also described “the use of . . . LIF in the maintenance and derivation of embryonic stem (ES) cells in culture,” which might have distinguished it from the WARF claim. The Board found, however, that Williams’ mention of LIF-aided derivation of ES cells was irrelevant to WARF’s claim to LIF-free proliferation of the same cells.

In analyzing the ‘913 Patent, the Board did not seem to acknowledge the distinction between primary ES cells and a stable ES cell line. The opinion repeatedly discussed support in the prior art for “the derivation of human ES cells.” Primary cultures of human ES cells were indeed known in the art, but earlier attempts to create stable cell lines from ES cells had been unsuccessful. Thomson’s invention was, by his account, the first stable primate/human ES cell line. The administration of LIF had kept mouse ES cells from differentiating, but attempts to use LIF on primates had failed. According to the specification, which is the (often lengthy) written description that describes the patented invention, “There are no reports of the derivation of any primate ES cell line.” The most important contribution of the ‘913 Patent, and Thomson’s invention, was thus the maintenance of primate ES cells in prolonged stable cultures without LIF.

The Board also found the WARF patent obvious. The standard here is a fairly subjective one. Section 103 of the Patent Act explains that a proposed invention is obvious if at the time of invention

…the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious . . . to a person having ordinary skill in the art to which said subject matter pertains.

Although anticipation usually requires full disclosure by a single item of prior art, multiple such items can be combined to find an invention obvious. Moreover, under the Supreme Court’s 2007 decision in KSR International Co. v. Teleflex, and the Federal Circuit’s 2009 decision in In re Kubin, an invention can be held obvious if the prior art made it “obvious to try” to invent it.

Applying these standards to the WARF patent, the Board found that “the path to deriving human ES cells had a definite starting point with explicit landmarks along the way.” That is, it was obvious to try to derive human ES cells, and the person of ordinary skill in the art would have had “significant guideposts” as to how to do it. Accordingly, the invention was obvious.

This WARF Patent is Not Like the Others? As a practical matter, it would have been difficult to assert infringement of the now-invalidated ‘913 Patent. Proof of infringement would take a year of continuous culture before the difficult karyotyping and pluripotentiality tests could begin.

It is also interesting to note that two related WARF patents have previously survived reexamination at the patent examiner level: patent number 5,843,780 (1998) and patent number 6,200,806 (2001). While there are some specific differences in the wording of the claims in the three WARF patents—for example, primate versus human and the presence or absence of the LIF limitation—the three are very close in their structure and scope. It is not immediately clear why only one them has failed thus far.

WARF’s Reexamination is Obviously Significant. So what, exactly, is the significance of the WARF reexamination ruling for biotechnology patent law? First, we would not read too much into the anticipation ruling. Such rulings are case-by-case and very fact-specific. Nonetheless, the Board did tilt against patentability in resolving some close questions about just what the prior art of the Williams patent disclosed.

However, the obviousness finding is probably of much greater general significance. This is the type of collateral attack on biotechnology patents that may have a lasting effect. Myriad is the exception that proves the rule: a rare and, for the moment, anyway, successful frontal attack on gene patents. Even if Myriad ultimately impairs the patentability of identified DNA sequences (genes), a higher threshold for overcoming obviousness—one of the fundamental requirements for patentability—could have a much more lasting impact on the biotechnology patent landscape.

Nor does WARF stand alone in its challenge to obviousness. Last year there was In re Kubin (pdf), in which the Federal Circuit held that it would have been “obvious to try” to isolate polynucleotides that encode natural killer cell activation proteins. Also an important part of this trend was the Federal Circuit’s en banc (all of the judges on the entire Federal Circuit sitting together, instead of the typical three judge panel) ruling on March 22nd of this year in Ariad v. Eli Lilly (pdf), which invalidated a Harvard patent on a method to treat disease by reducing activity of a messenger protein that regulates gene expression in cells. The court got to that result by a very demanding reading of the Patent Act’s § 112 “written description” requirement, holding that a patent applicant must both demonstrate possession of the specific claimed invention (as opposed to the broad category of things into which it falls) and teach others how to make it. The Ariad court expressed special concern about the “vast scope of generic claims” and saw the written description requirement as a way to limit them. Finally, depending on what it says about the allowable scope of method claims, the Supreme Court’s imminent decision in the Bilski commodities hedging case could well take another significant bite out of biotech claims.

At any rate, the finding of obviousness for WARF’s ‘913 Patent carries negative implications across the biotechnology patent landscape and represents another important piece in the shifting patent landscape puzzle. So the next time you are reading about Myriad and the death of gene patents, remember that, over time, the more significant developments for biotechnology patent law are more likely to be the collateral attacks represented by WARF and other similar examples of patent litigation, even if they do not lead to special features on 60 Minutes.

All of this may seem to have little direct relevance to companies outside of biotechnology. However, the development of genetic knowledge and technology already has spawned new laws, regulations and patent uncertainties that impact almost all businesses in some way.

Privacy and Nondiscrimination. The federal Genetic Information Nondiscrimination Act of 2008 (GINA) represents the most comprehensive effort to date to regulate the use of genetic information. GINA initially only prohibited health insurers and group health plans from using genetic information to deny coverage or set payment rates. Another section, which just became effective in November 2009, affects all private and public employers with more than 15 employees.

GINA now prohibits discrimination against all employees and job applicants based on genetic information, prohibits the use of genetic information in making employment decisions, and strictly limits employer disclosure of genetic information. The EEOC anti-discrimination poster that is required to be displayed by all employers has been updated to include GINA.

A potential compliance trap in GINA is that it also restricts the collection of genetic information by employers. Genetic information includes not only actual genetic test results, but also family medical history that might show links to inheritable diseases. This has raised particular concern around wellness programs, and there is a limited regulatory exception for such employer programs if offered on a voluntary basis and if other specific requirements are met. The regulations are new and there is not yet any substantial enforcement history, so employers should exercise great caution in this area.

Health Care and Research. Health care providers are already very familiar with the Health Insurance Portability and Accountability Act (HIPAA) requirements of strict privacy protections for “individually identifiable health information,” which includes genetic information.

Medical researchers who work with genetic information are often subject to HIPAA and must also comply with the federal “Common Rule” which regulates human subject research. Genetic information has presented some unique regulatory issues for researchers because it can be more difficult to “de-identify” than other health information and it raises complex issues around obtaining the required informed consent of subjects.

Intellectual Property. Fundamental questions are currently unresolved concerning the protection of genetic-related intellectual property – especially patents. The legal and policy arguments about gene patents can be quickly summarized. On one hand, human genes can be considered “products of nature” which by law cannot be patented, and there also may be a basic moral objection to any individual or firm obtaining a patent (which is a legal monopoly) on a human gene. On the other hand, the Patent Office and courts have long allowed patents on genes that are isolated from their natural environment in the body. Gene patent advocates argue that no company will have the necessary economic incentive to develop lifesaving tests and treatments if the intellectual property the company creates—including isolated genes–cannot be protected.

The issue of whether isolated genes are patentable is before the federal courts in the Myriad case, which was organized by the ACLU to challenge Myriad Pharmaceutical’s patents on certain breast cancer susceptibility genes. On March 29, 2010 a US District Court granted summary judgment in favor of the ACLU side and invalidated the Myriad patents. This ruling will be appealed to the federal appeals court and the legal battle will continue, perhaps to the Supreme Court. A final ruling is still years away.

Meanwhile, there are other patent cases in the federal courts that may affect a number of businesses, including biotechnology. The Bilski case is at the Supreme Court and deals with the patentability of business methods – specifically, a method of hedging commodities risks. The decision in Bilski may have far-reaching consequences for patents on methods of analysis, data interpretation, and performing certain tasks.

On the regulatory side, an advisory committee to the Department of Health and Human Services has approved recommendations on gene patenting and licensing that have generated heated debate. Stay tuned to see if Congress can long avoid jumping in with new laws that will affect genetics-related intellectual property rights.

Editor’s Note: A slightly modified version of this column appeared last Friday in the Charlotte Business Journal.