Applying Mayo to Myriad: Latest Decision Brings No New News (Plus: Why the Final Myriad Decision Might Not Matter for Personalized Medicine)

The latest chapter in the Myriad gene patent litigation was written yesterday, with the Federal Circuit issuing its much anticipated opinion (pdf) after rehearing the case following the Supreme Court’s unanimous decision earlier this year in Prometheus v. Mayo.

Or perhaps we should say that the latest chapter was “rewritten” as, in a move that surprised approximately nobody, and as we predicted earlier this spring, the Federal Circuit reached precisely the same result in its opinion today as it did last July when it issued its first substantive ruling in the Myriad litigation. Below, we examine how the Federal Circuit applied Mayo to Myriad, what the next step in the Myriad litigation is likely to be (spoiler alert: it’s another appeal) and why we think the final opinion in this case, whenever it arrives and whatever it says, might not matter all that much.

Applying Mayo to Myriad. As mentioned, the only major change since the last time the Federal Circuit ruled in Myriad, and the reason for the re-hearing, was the Supreme Court’s decision earlier this spring in Mayo.

However, Mayo was about method patents and the boundary between a patent-eligible method and a law of nature. It was not about product patents or the product of nature doctrine. Since the Federal Circuit had already invalidated all but one of Myriad’s method patents even before the Supreme Court tightened the criteria for method patents in Mayo, it was hard to see much of substance changing the second time around.

The Federal Circuit did not disappoint.

Indeed, comparing the two Federal Circuit opinions reveals that, despite checking in at a hefty 106 pages, this week’s opinion varies little in form, and even less in substance, from the 105-pager penned last summer. Here, for example, is a comparison of the official holding of the case, with new text highlighted in blue and old text struck through in red (a complete comparison of the two opinions is also available here (pdf)):

On the threshold issue of jurisdiction, we affirm the district court’s decision to exercise declaratory judgment jurisdiction because we conclude that at least one plain-tiff, Dr. Harry Ostrer, has standing to challenge the validity of Myriad’s patents. On the merits, we reverse the district court’s decision that Myriad’s composition claims to “isolated” DNA molecules cover patent-ineligible products of nature under § 101 since because each of the claimed molecules as claimed do not exist in nature represents a nonnaturally occurring composition of matter. We also reverse the district court’s decision that Myriad’s method claim to screening potential cancer therapeutics via changes in cell growth rates of transformed cells is directed to a patent-ineligible scientific principle. We, however, affirm the court’s decision, however, that Myriad’s method claims directed to “comparing” or “analyzing” DNA sequences are patent ineligible; such claims include no transformative steps and cover only patent-ineligible abstract, mental steps.

Substantively, the Federal Circuit reached the exact same result as last time around: one plaintiff (Dr. Ostrer) continues to have standing in the eyes of the court, allowing it to reach the merits of the case and affirm its position that, Mayo notwithstanding, (1) Myriad’s gene patents (whether claiming cDNA or isolated DNA) are valid, (2) its diagnostic method patents are invalid and (3) its separate theareputic screening method patent is valid.

Mayo, Myriad and Gene Patents. From the public’s perspective, the most captivating aspect of the Myriad litigation from the very start has been the so-called “gene patents.” The issue is whether gene patents – or, more technically, compositions of matter comprising isolated DNA molecules – patent-eligible under §101 of the Patent Act or patent-ineligible under the longstanding “products of nature” doctrine.

Despite the fact that Mayo dealt with process or method patents, and not product patents, both the majority opinion and the dissent attempted to analyze whether and how Mayo might inform the court’s reasoning with respect to the patent-eligibility of isolated DNA sequences.

According to Judge Lourie’s majority opinion, Mayo was simply not applicable:

The principal claims of the patents before us on remand relate to isolated DNA molecules. Mayo does not control the question of patent-eligibility of such claims. They are claims to compositions of matter, expressly authorized as suitable patent-eligible subject matter in §101. As to those claims, the issue of patent-eligibility remains, as it was on the first appeal to this court, whether they claim patent-ineligible products of nature. (Lourie, 38)

Despite the “valuable insights” provided by Mayo, Judge Lourie’s opinion reached the same conclusion as last summer: isolated DNA molecules are not found in nature, do not represent products of nature and, therefore, are patent-eligible.

In her concurrence, Judge Moore reiterated that isolated DNA represented a close call in the abstract, but was clearly patent-eligible in light of the historical context:

If I were deciding this case on a blank canvas, I might conclude that an isolated DNA sequence that includes most or all of a gene is not patentable subject matter. The scope of the law of nature/manifestation of nature exception was certainly enlarged in Prometheus. But we do not decide this case on a blank canvas…There are no thousands of patents with claims to isolated DNA, and some unknown (but certainly large) number of patents to purified natural products…we must be particularly wary of expanding the judicial exception to patentable subject matter where both settled expectations and extensive property rights are involved. (Moore, 13-14)

Then there was Judge Bryson, who agreed with the majority on the method claims and on the patentability of cDNA, but dissented on isolated DNA. Judge Bryson’s dissenting opinion provided a window into why some commentators – as well as the plaintiffs – speculated that Mayo might call for a different result with respect to Myriad’s gene patents. Here, quoted at some length, is Judge Bryson’s interpretation of how Mayo ought to have altered the court’s analysis of the patent-eligibility of isolated DNA sequences:

In Mayo, which involved method claims…the [Supreme] Court found that the method was not directed to patent-eligible subject matter because it contributed nothing “inventive” to the law of nature that lay at the heart of the claimed invention…In concluding that the claims did not add “enough” to the natural laws, the Court was particularly persuaded by the fact that “the steps of the claimed processes…involve well-understood, routine, conventional activity previously engaged in by researchers in the field.”

Just as a patent involving a law of nature must have an “inventive concept” that does “significantly more than simply describe…natural relations,”… a patent involving a product of nature should have an inventive concept that involves more than merely incidental changes to the naturally occurring product. In cases such as this one, in which the applicant claims a composition of matter that is nearly identical to a product of nature, it is appropriate to ask whether the applicant has done “enough” to distinguish his alleged invention from the similar product of nature. Has the applicant made an “inventive” contribution to the product of nature? Does the claimed composition involve more than “well-understood, routine, conventional” elements? Here, the answer to those questions is no.

Neither isolation of the naturally occurring material nor the resulting breaking of covalent bonds makes the claimed molecules patentable….The functional portion of the composition—the nucleotide sequence—remains identical to that of the naturally occurring gene.

The majority suggests that I have “focus[ed] not on the differences between isolated and native DNAs, but on one similarity: their informational content.” In light of Mayo, that approach seems appropriate. (Bryson, 14-16, internal citations omitted)

The other two Federal Circuit judges declined to follow Judge Bryson’s extension of the Supreme Court’s analysis in Mayo from laws of nature to products of nature. Still, the roadmap that Judge Bryson laid out – specifically that an isolated DNA sequence lacks an inventive product or process to distinguish it from its naturally-occurring counterpart, and that the two are identical in their informational content rendering the isolated DNA not patent-eligible – seems to be one that the Supreme Court might plausibly follow if it (a) agrees to hear Myriad following the inevitable appeal and (b) agrees that isolated DNA sequences representing human genes are not patent-eligible.

What Myriad Means Now. As for what the Federal Circuit’s most recent opinion means for the moment, we think the answer is an unequivocal “nothing new.” The Federal Circuit’s ruling remained substantively unchanged post-Mayo, a result which was entirely expected.

If that outcome represents a “win for Myriad,” as has been claimed, it is only because the status quo has been preserved for another year. For a company that is currently thriving – despite the ongoing litigation, Myriad recently reported that its BRACAnalysis revenues topped $400 million during the company’s most recent fiscal year, representing a 15% increase over the previous year – maintaining the status quo probably is a good thing, at least in the short term.

The near-certain next step in the Myriad litigation, as it always seems to be, is another appeal, either en banc to the entire Federal Circuit and/or to the Supreme Court. The Supreme Court already granted certiorari once, albeit briefly, and given that court’s recent interest in high-profile patent cases (e.g., Bilski and Mayo) and Myriad’s even higher profile, there’s certainly a strong possibility the Supremes will agree to hear the case. If so, a resolution on the merits would appear most likely in 2013, with 2014 as an outside possibility.

Myriad’s Long-Term Implications: Watching the Watchers. Looking ahead, it appears increasingly unlikely that Myriad’s denouement, when it finally arrives in 2013 or 2014, will produce a significant effect one way or the other on either Myriad or the personalized medicine industry. We think this is likely to be true regardless of the litigation’s substantive outcome.

For Myriad, win or lose in court, its challenged patents will expire by the end of 2015. But the company’s additional patents (the litigation involves only a small minority of Myriad’s overall BRCA portfolio), its decades of experience as the sole provider of clinical BRCA diagnostic testing and its proprietary database of BRCA mutation information should allow Myriad to comfortably maintain its advantage in the marketplace against would-be direct competitors of clinical BRCA diagnostic testing.

More broadly, competition for single-gene diagnostic providers like Myriad is expected to increase thanks to a growing cohort of companies deploying next-generation sequencing platforms to develop multiplex or whole-genome diagnostic and interpretive products. The price for these broad-based products is expected to rival what Myriad and other similar companies currently charge to analyze only one or two individual genes. And the technology employed by these companies – which include Genomic Health, Foundation Medicine, GenomeQuest, Ingenuity, Personalis, Silicon Valley Biosystems and many, many others – may very well invent around any Myriad-style gene patents on isolated DNA sequences that manage to survive both legal challenge and patent expiration, although that proposition has yet to be tested in court.

With gene patents unlikely to pose a threat, and diagnostic method patents seriously weakened post-Mayo (as affirmed by the latest Myriad decision), does the ultimate outcome in Myriad much matter at this point for the personalized medicine industry?

Not so much, in our view. While the case could still carry important and long-lasting ramifications for the patent-eligibility of certain products, particularly if the Supreme Court utilizes Myriad to clarify more than a century of convoluted “product of nature” jurisprudence, the greater impact – at least as far as the personalized medicine industry is concerned – is likely to come from the public and political reaction to the case.

One interesting change in the Federal Circuit’s opinion this time around, as compared to last summer, was the lengths to which the court went to clarify what Myriad is not about, at least as far as the court is concerned:

 It is not about whether individuals suspected of having an increased risk of developing breast cancer are entitled to a second opinion. Nor is it about whether the University of Utah, the owner of the instant patents, or Myriad, the exclusive licensee, has acted improperly in its licensing or enforcement policies with respect to the patents. The question is also not whether is it [sic] desirable for one company to hold a patent or license covering a test that may save people’s lives, or for other companies to be excluded from the market encompassed by such a patent – that is the basic right provided by a patent, i.e., to exclude others from practicing the patented subject matter. (Lourie, 37)

 And again:

Whether [isolated DNA’s] unusual status as a chemical entity that conveys genetic information warrants singular treatment under the patent laws as the district court did is a policy question that we are not entitled to address….Congress is presumed to have been aware of the issue, having enacted a comprehensive patent reform act during the pendency of this case, and it is ultimately for Congress if it wishes to overturn case law and the long practice of the PTO to determine that isolated DNA must be treated differently from other compositions of matter to account for its perceived special function. (Lourie, 49-50)

Even if the Federal Circuit is intent in remaining above the political fray, the fact of the matter remains that the special status of gene patents – and issues like second opinion testing and exclusive licensing regimes – are exactly why the Myriad litigation was brought in the first place, and what it is ultimately about.

Breast cancer remains, unfortunately, a widespread disease, affecting more than 1 out of every 10 women born today. Genetic tests can reliably indicate whether a woman is at such a greatly increased risk of developing breast cancer, for example due to deleterious genetic mutations in her BRCA-1 and/or BRCA-2 genes, that she should consider a serious medical intervention such as a prophylactic mastectomy. Patents awarded on the BRCA-1 and BRCA-2 genes, as well as on related diagnostic methods, allowed Myriad Genetics to develop a diagnostic test which generates more than $400 million dollars in annual revenue, and is widely accessible to women in this country and reimbursed by most insurers. At the same time, the exclusivity provided by those same patents means that the woman is unable to obtain a confirmatory genetic test before choosing to undergo serious surgery.

This leads to a debate that is easy to understand. These patents argue the plaintiffs, “restrict both scientific research and patients’ access to medical care.” On the other hand, argue patent proponents, the government’s “long-term policy of protecting isolated DNA molecules has resulted in an explosion of innovation in the biotechnology industry…Holding isolated DNA not patentable would destroy long settled industry expectations…” and do irreparable damage to that very same industry. (Lourie, 22)

At root, this is what Myriad is and always has been about – not arguments about whether isolated DNA sequences should be patent eligible because they are (or are not) akin to elemental lithium or a leaf on a tree or the fine distinctions of where and how chemical bonds are cleaved. Myriad is a touchstone for the public, the media, industry and policymakers not for its legal holding but for the manner in which it embodies our continuing struggle to balance the benefits and costs of personalized medicine.

The future of personalized medicine hinges upon the ability to strike the appropriate balance between the desire of patients, providers and payers for broad and affordable access to personalized medicine products against the demands of the corporations, investors and shareholders who require a return on the capital that must be invested to produce those very same personalized medicine products. And patents are only one piece of the puzzle. The same factors are also at play as we seek to overhaul reimbursement regimes and regulatory structures to accommodate personalized medicine.

Which is why, in the end, what really matters in Myriad is not whether any of the specific patents stand or fall. What matters at this point is how the public and policymakers respond to Myriad as they seek to update legal, regulatory and reimbursement regimes in 2013 and beyond. The final legal result, whenever it is handed down, is likely in the end to be little more than a footnote to that conversation.