Mayo yes, Myriad maybe

WASHINGTON, D.C.—In late March, the U.S. Supreme Court sentthe Myriad Genetics patent case back to the Federal Circuit Court of Appeals,instructing the lower court to reconsider its decision from July 2011 thatupheld the company's patents. The action comes hard on the heels of the court'sdecision in favor of Mayo Collaborative Services, denying PrometheusLaboratories' patent, which Mayo had disputed, on the relationship between drugmetabolites in a person's blood and the optimum dosage of the drug.

In the decision, delivered by Justice Stephen Breyer, thecourt unanimously found that Prometheus' process was not patent-eligible. Thecourt determined that because the laws of nature recited by Prometheus' patentclaims—the relationships between concentrations of certain metabolites in theblood and the likelihood that a thiopurine drug dosage will prove ineffectiveor cause harm—are not themselves patentable, the claimed processes are notpatentable.

Most observers agree that the Supreme Court clearly wantsthe appeals court to reconsider its earlier Myriad decision in light of thisnew precedent.

According to an analysis by GlobalData's head of medicaldevices, Derek Archila, and head of the healthcare industry dynamics team, Dr.Jerry Isaacson, at the center of the case is Myriad's licensing of two patentsregarding genes BRAC1 and BRAC2. Patients with inherited mutations in thesegenes have an increased likelihood of developing breast or ovarian cancer ascompared to the general population. Myriad developed a genetic test called theBRACAnalysis test that allowed physicians to identify patients at the highestrisk of developing cancer. Patients testing positive could then be monitored orundergo preventive medical treatment to minimize their risk.

Whatever the outcome of the "re-review" of Myriad by thefederal circuit court, the biotech community and their legal minions arecollectively asking, "What's next?" Archila and Isaacson think it's still tooearly to tell what the impact of the Prometheus decision and a potential denialof Myriad's patents will have on biotechnology innovation. But Jim Mullen, aSan Diego-based patent prosecutor (and molecular biologist) with Morrison &Foerster, who counsels clients in the diagnostics, therapeutics andclean-technology fields regarding patent procurement and IP due-diligenceactions, fears the ruling in favor of Mayo will put all companion diagnosticsin danger, with the resultant exodus of technology from the United States toless patent-restrictive nations.

Countering Mullen's viewpoint are opinions such as that ofJennifer Comacho, a patent attorney and shareholder at Greenberg Traurig, whonotes that over the past decade, the Supreme Court has taken a heightenedinterest in patent cases, deferring less to the federal circuit court (whichwas created by Congress with passage of the Federal Courts Improvement Act of1982 and merged the U.S. Court of Customs and Patent Appeals and the appellatedivision of the U.S. Court of Claims). She expects there to be some chillingeffect as patent seekers focus on drafting claims differently, i.e., to move beyond mere correlationbetween biomarkers and the resulting diagnosis. In addition, she notes thatacademic gene patent holders may find it more difficult to license such patentsto Big Pharma, which may want to see the patents upheld before loosening itspurse strings.

For example, the patents in dispute in the Myriad case werenot originally filed by the company. Instead, they were primarily licensed tothe company by the University of Utah Research Foundation. This distorts theissue, says the GlobalData analysis, because academic researchers, whilecertainly aware of commercial possibilities for their discoveries, havetraditionally been driven by science rather than profit. So, while thesedecisions may have a chilling effect on biotech companies, innovative researchwill likely continue, says Comacho.

Courtenay Brinckerhoff agrees with many of her legalcolleagues about the chilling effect the Supreme Court's actions will likelycreate but shapes her views from a slightly different perspective. Brinckerhoffis a partner with Foley & Lardner, vice chair of the firm's Chemical,Biotechnology & Pharmaceutical Practice and a member of the firm'sAppellate Practice and Life Sciences Industry team. She edits the Foley blog,PharmaPatentsBlog.com, and has written extensively on Mayo v. Prometheus.

"The Supreme Court didn't tell us what to do," she says,"and it will make things more difficult and uncertain for the next fewyears—probably at least two—until we get more guidance. Prometheus' claims werebased on optimizing the dose of a drug by measuring its metabolite, which wasknown. If you have an invention involving a new metabolite, that might make adifference. Or the innovator might take a multifaceted approach to its claim ordo more of a 'how-to' approach."

She says she sees the decision having a broader impact withextrapolation to other types of methods and with a trickle-down effect to thepatent office, which is likely to toughen its evaluation of claims.

Citing a"cloud of uncertainty," Brinckerhoff says that one outcome seems certain: higherlegal costs for claimants.

GlobalData figures indicate the market for genetic testinghas experienced double-digit, year-on-year growth in recent years, and isexpected to continue to grow at a CAGR of 10.3 percent through the end of thisdecade. The market for these tests, worth only $426 million in 2004, isexpected to approach $2 billion by 2018.

"One thing that we do expect to result from these patentdecisions is the shifting of diagnostic revenue from small biotech companies tolarger, more established diagnostic players. Large companies possessingplatform technologies will be able to devise their own tests, without the fearof patent infringement, to compete with more expensive proprietary tests. Thesecompanies can then offer their customers more comprehensive testing at a lowerprice at the expense of smaller companies who may have initially developed thetests with the promise of patent protection," states the Archila/Isaacsonanalysis.

As Mullen puts it, "Intellectual property is no longer abackwater of jurisprudence, but instead is now on the cutting edge."