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  • Arti Rai: I will try to give you a relatively engaging

  • and short discussion so that we can have some time for questions. I will also, I'm afraid,

  • use a few more words in my slides than you may be accustomed to. Lawyers -- and I'm a

  • recovering lawyer -- do like words, and so there are more words than would be ideal.

  • But the words end up being kind of important.

  • So, as Eric has already indicated, the Supreme Court, on June 13th, having heard argument

  • on April 15th, decided that AMP versus Myriad Genetics, the challenge was brought by the

  • Association of Molecular Pathologists, represented by the ACLU and the Public Patent Foundation.

  • In its ruling, the court, the Supreme Court, that is, held that not all gene patents are

  • alike, and I'll spend some time talking about what specifically they meant by not all gene

  • patents being alike. As it happens, they got into the -- for them, I think, what was really

  • tough sledding with respect to molecular biology, they had to distinguish between cDNA and gDNA,

  • which I suspect for Justice Thomas was something of a struggle. But he did an interesting job.

  • So what I'm going to do today, for those of you that don't necessarily spend their time

  • thinking a lot about patent law, and that may be many of you, is provide a little bit

  • of basic background on patent law, and also on gene patents in particular, and how they

  • emerged and why they emerged. Then I'll discuss the history of the Myriad case very briefly,

  • and also, its ultimate resolution at the Supreme Court. And finally, I'll discuss what the

  • case might mean going forward. That's very much a work in progress in terms of what it

  • means, and there are subsequent lawsuits that I will mention briefly as well.

  • So, just in terms of background, this is Patents 101, and also, as it happens to be, Section

  • 101 of the Patent Statute. That section has typically been interpreted very broadly to

  • cover basically anything under the sun made by man. That's a statement from the Legislative

  • History of the 1952 Patent Act. And the provision in the statute suggests as much -- suggests

  • that it's pretty broad in its scope, so any new and useful process machine, manufacturer,

  • or composition of matter is supposed to be encompassed within Section 101, which means,

  • basically, any new process or product. That said, there have been these long-standing

  • common law exceptions that the Supreme Court has enunciated, starting in the 19th century,

  • and by "common law," I mean as contrasted with statutory law. Common law is the gloss

  • that courts put on the statutory law.

  • And this common law gloss encompasses exceptions in the form of abstract ideas, laws of nature,

  • and products of nature. The exception at issue, specifically in the Myriad case, was products

  • of nature. However, as we will see, all of these three exceptions kind of run together

  • a little bit, and that becomes important for what the case means going forward.

  • So the product of nature doctrine actually has an interesting history beyond the Supreme

  • Court, and in most ways, the most important expositor of the product of nature doctrine

  • was a judge by the name of Learned Hand -- that was really his name. Judge Hand, albeit only

  • a district court judge at the time, rendered what is one of the most important decisions

  • in the product of nature space in a case called Parke-Davis that was decided in 1911. In that

  • case, he determined that isolated or purified adrenaline represented patent-eligible subject

  • matter, and in his view, this was not a product of nature -- isolated adrenaline represented

  • one patent, purified adrenaline represented another -- this was not a product of nature

  • because it was, and this was a quote from the opinion, "For every practical purpose

  • a new thing commercially and therapeutically," unquote. Because this language resonated with

  • some of the commercial instincts that patent lawyers have, they really have seized upon

  • this language for more than a century as representing what they determine to be the narrow exception

  • that product of nature represents; in other words, anything that is a new thing, commercially

  • or therapeutically, for many in the patent lawyer community, is not a product of nature.

  • This view of the expansive realm of what is within patentable subject matter, and therefore

  • not a product of nature, was, to some extent, reaffirmed in the patent lawyer community

  • in the Supreme Court case of Diamond vs. Chakrabarty that some of you may have heard of. That case

  • involved a recombinant bacterium, a bacterium that had two or more stable energy-generating

  • plasmids put into it, each plasmid constituting a separate hydrocarbon degredative pathway.

  • In that case, the Supreme Court, in a divided opinion, determined that this was not a product

  • of nature because "It was markedly different," quote, unquote -- again, these are the words

  • that the court used -- from anything found in nature. Not quite as expansive as the Parke-Davis

  • opinion which suggested that if what one had done provided something commercially useful,

  • it represented patent-eligible subject manner. So Diamond vs. Chakrabarty was not quite as

  • expansive, but the combination was taken by patent lawyers and the nascent biotech industries

  • to mean that basically anything that was isolated or purified could be patent eligible, and

  • that included gene sequences.

  • So the first "gene patents," quote, unquote -- and that is, to some extent, now a term

  • of art because they mean different things to different people, that term means different

  • things to different people -- covered cDNA, in other words, DNA with introns excised that

  • was intended to be used to generate therapeutics and cover therapeutics. One of the reasons,

  • in part at least, these particular cDNA patents were not controversial was that they were

  • intended to cover a scope of genetic research and development, an area of genetic research

  • and development, i.e. therapeutics, that looked very much like what had been patent eligible

  • in the past in terms of small molecules. So these were just large molecules as opposed

  • to small molecules.

  • And so when, for example, when some of these patents began to issue in the early '80s,

  • and Amgen got one of these classic patents on DNA sequences encoding erythropoietin,

  • cDNA encoding erythropoietin in 1987, a patent that subsequently allowed it to make tens

  • of billions of dollars in revenue over the course of about 23 years, that wasn't considered

  • particularly controversial, at least certainly not in the patent bar community, and even

  • among the larger community, the idea of DNA sequences that would be patentable but would

  • correlate therapeutics wasn't particularly controversial. And this patent was a subject

  • of litigation; however, none of the litigation involved the issue of whether or not this

  • constituted patent-eligible subject matter, probably in part because everyone in the litigation

  • had their own gene patents. So Amgen sued Genetics Institute, and Transkaryotic, and

  • Roche, and, of course, all of those entities had their own gene patents to defend, and

  • so there was no incentive on the part of anyone to say that gene patents were not patent-eligible

  • subject matter.

  • Controversies began to emerge however when patents issued -- and some of these patents

  • issued relatively early on, including the Myriad patents -- that were later interpreted

  • to cover not just therapeutics but also diagnostics. Obviously, like all patents, patents that

  • covered diagnostics increase costs, or have the potential to increase costs, and restrict

  • access. The argument, or one of the reasons people were more concerned about patents covering

  • diagnostics was, in particular, with the respect to laboratory-developed testing of the sort

  • that Myriad does. That's not currently FDA regulated, so patents were seen as less necessary

  • for purposes of providing incentive to get a particular product to market. If one had

  • the relevant gene, it wasn't considered that expensive to then start doing testing on the

  • gene, and in point of fact, in a lot of the cases, testing started before the patents

  • emerged. And the patents ended up being used to shut down certain testing -- diagnostic

  • testing laboratories.

  • In addition there was a substantial amount of federal funding involved with some of these

  • patents, including in the Myriad case itself, and we'll talk about that a little bit more

  • -- I'll talk about that a little bit more towards the end.

  • So the access questions in particular, relative to the diminished need for an affirmative

  • incentive provided by patents, were the focus of this very prominent report issued by the

  • Secretary's Advisory Committee on Genetics, Health, and Society, and our own Jim Evans

  • was at the helm of that particular report. The focus there was not only on initial access

  • but also on problems for women who wanted to get second opinion testing, with the respect

  • to BRCA-1 and BRCA-2. The Secretary's Advisory Committee was -- relatedly was concerned about

  • whether sole providers of genetic diagnostic testing, such as Myriad, but also other providers,

  • like Athena, had the optimal incentive to work aggressively with all types of insurers,

  • in particular insurers that might cover less well off populations, such as state Medicaid

  • providers.

  • So the report discussed not only the BRCA-1 and BRCA-2 patents, but also patents on genes

  • implicated in certain types of colon cancer, Alzheimer's disease, spinocerebellar ataxia,

  • and long QT syndrome. This report was issued in 2010 after Myriad had been sued by the

  • Association of Molecular Pathologists, represented by the ACLU in district court. So it came

  • out as this debate was, for the first time, the Section 101 debate, was, for the first

  • time, unfolding in litigation. Again, never before had a Section 101 challenge been brought

  • to gene patents of any sort.

  • So we get to the Myriad gene patent litigation. Myriad, I think, was chosen by the ACLU for

  • a number of reasons, one of which was it was the provider that was most aggressive in terms

  • of asserting its patents against providers who considered themselves to be doing clinical

  • research in addition to providing patient care. In this particular case, the ACLU/AMP

  • challenged 15 claims in seven patents. Many of these patents, at it happens, were initially

  • owned and exclusively licensed by the University of Utah, which had received a fair amount

  • of NIH funding, particularly early on. NIH was actually the co-owner of one of the patents.

  • So this is -- the federal funding issue was intimately involved with this particular case.

  • The litigation, notably, however, the litigation strategy by the ACLU didn't focus on access

  • at all. And I think the ACLU determined that they were going to kind of talk the typical

  • patent lawyer's line of access -- not access, but innovation. And so the arguments that

  • were used very much were along the lines of these patents were diminishing innovation

  • in the area of genomic research and development.

  • In point of fact, at the federal circuit, Judge Lourie stated what I think all the judges

  • in this litigation agreed with, at least implicitly, by not saying anything about access. He's

  • stated explicitly, and he wrote the majority opinion, "This appeal is not about whether

  • individuals suspected of having an increase risk of developing breast cancer are entitled

  • to a second opinion." Similarly, even the dissent in the federal circuit case, before

  • it got to the Supreme Court, really focused on innovation, and the dissent drew a distinction

  • between cDNA and gDNA that had been alluded to in the Secretary's Advisory Committee report,

  • but for the purposes of saying that cDNA patents wouldn't impede research and development in

  • genome sequencing, whereas gDNA patents might. So, again, very much focused on innovation.

  • The Department of Justice's intervention in this case at the federal circuit level also

  • drew the cDNA/gDNA distinction with a focus on follow-on innovation, and Eric has mentioned

  • that NIH was influential in crafting the U.S. government's opinion. I think that's an understatement

  • in many ways; NIH was a critical player, and NIH, as it happens, has had a long history

  • in helping to shape genomic patent policy starting in the late -- the end of the 20th

  • century with the so-called utility and written description guidelines that were very significantly

  • shaped by NIH, and I think had a very positive influence in terms of making sure that genomic

  • innovation was not impeded by patents. All of this, by the way, is drawn out in exhaustive

  • detail in many more words in a Duke Law Journal article; the role of NIH over the last 15

  • years or so is drawn out in exhaustive detail in this Duke Law Journal that were published

  • last year, so if you're interested, you can go to that. But, again, the focus on innovation,

  • and the fact that cDNA patents are unlikely to impede innovation whereas gDNA patents

  • might well impede whole genome sequencing.

  • At the Supreme Court only claims at issue were the so-called product claims; the process

  • claims had been taken out of the litigation, so there were only nine composition of matter

  • or product claims at issue. The Supreme Court, like Judge Bryson in dissent below, like the

  • solicitor general, and like Eric Lander, who's also been previously mentioned, adopted a

  • cDNA versus gDNA distinction. Unfortunately, the court's opinion was not as clear as to

  • why it was adopting this distinction as it might have been. It did say that cDNA was

  • not naturally occurring, and thereby implicitly suggesting that gDNA could be naturally occurring,

  • but it didn't really specifically say that, and we can only infer based upon the fact

  • that Eric Lander's brief was mentioned about six times in oral argument, that they relied

  • upon Eric Lander's brief's argument about gDNA being found -- isolated gDNA being found

  • in fetal DNA and also upon cell death. So, unfortunately, though, the opinion doesn't

  • explicitly say that, so that a little bit hard to parse on the why gDNA is naturally

  • occurring versus cDNA is not.

  • Another piece of the opinion focuses -- and this important going forward for purposes

  • of what the opinion means for future patenting, and also existing patents outside the cDNA/gDNA

  • context -- focuses on the so-called information versus chemical distinction. This was a distinction

  • that was drawn by the district court judge in this case, and the Supreme Court picked

  • it up again. Again, however, it didn't completely connect the dots as to why cDNA versus gDNA

  • mapped onto that distinction. In point of fact, the court even suggested -- the Supreme

  • Court, that is -- that cDNA and gDNA both covered information suggesting that, however,

  • that, nonetheless, cDNA was less problematic in terms of the informational claims it made.

  • All we can assume, and this is what I would assume and have argued should be the interpretation

  • of the case, is that Justice Thomas had been impressed by Eric Lander and the solicitor

  • general, and their statements that cDNA, even though it claimed information or could be

  • seen as claiming information, didn't -- those sorts of things wouldn't impede future follow-on

  • innovation in the same way as gDNA. And Bob Cook-Deegan and I put that interpretation

  • on the case in a Science article that just came out a couple of months ago, and so we're

  • hoping that the lower courts will take that as a plausible interpretation that said the

  • Supreme Court unfortunately wasn't as clear as it could have been.

  • So in the immediate aftermath of the case, I suspect some of you know this already, on

  • the day of the case being decided itself, a whole bunch of providers, a whole array

  • of providers, announced that they would be testing for BRCA-1 and BRCA-2 mutations. Ambry

  • in particular announced a price that was about a 50 percent reduction from the Myriad price,

  • and perhaps not surprisingly, Ambry was the first provider that was sued. So Myriad, as

  • it happens, had been alleging that it had all these other patents it could use even

  • if they lost the case to the Supreme Court, and nobody necessarily took them that seriously,

  • but it turned out they were planning to sue on those other patents if they lost to the

  • Supreme Court, and they did, in fact, sue on 10 other patents involving dozens of claims.

  • None of these claims, with the exception on one that we can talk about, was at issue in

  • the Supreme Court case. Both these suits -- they also brought a suit against Gene-by-Gene -- both

  • these suits, for them, have a bit -- for Myriad, have a bit of a home-court advantage in that

  • they're being brought in Utah district court, and Myriad is obviously based in Utah.

  • So assessing the suits, I won't say too much here for fear of being proven wrong in the

  • next few months when the Supreme -- the district court decides the cases, but these claims

  • all cover basically either methods for sequence amplification, and then sequencing, and then

  • comparison with wild-type, a lot of method claims, and then a few primers plus PCR claims.

  • The determination of how these claims will be adjudicated, I think, is anyone's guess,

  • but I think that what the court will have to do -- the district court at the initial

  • level, and obviously, this case will go to the federal circuit which hears all appeals

  • in the patent cases, and then maybe even back to the Supreme Court -- the determination

  • of what the court -- district court will do, I think, will be based on a combination of

  • the Myriad case, and then also a case -- another Section 101 case the Supreme Court decided

  • last year, called Mayo versus Prometheus.

  • Some would say that the combination of those two cases means that these claims that Myriad

  • is bringing are likely invalid because they don't require any real inventive activity

  • -- that's the term of art that was used in the Mayo case -- beyond a law of nature or

  • a product of nature. That said, one could argue, and Bob and I make this point in our

  • Science article, that Myriad could be seen as walking back Mayo versus Prometheus a little

  • bit because cDNA, arguably, is nothing more than non-inventive routine activity applied

  • to a product of nature, i.e. DNA. So whether the lower courts will -- how they'll interpret

  • the combination of Myriad and Mayo versus Prometheus, I think, is going to be very interesting

  • to see. And the key question will be, is inventive activity beyond a law or product of nature

  • always required, and I think the Supreme Court has, frankly, left that question a little

  • bit open.

  • Ambry has counterclaimed. Frankly, I think that its counterclaims on validity are quite

  • plausible. It also argues a variety of anti-trust violations by Myriad. I think those allegations

  • are less clear to me, at least, or the basis for those allegations is less clear to me.

  • They use Section two of the Sherman Act and talk about monopolization, however, patents,

  • by definition in some cases, represent legitimate monopolies. So I'm not sure that the anti-trust

  • claims, based upon the patents themselves, are necessarily valid. Another piece of the

  • puzzle which is very interesting and important is all of this data that Myriad has, mostly