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WASHINGTON D.C.—"A naturally occurring DNA segment is aproduct of nature and not patent-eligible merely because it has been isolated,"the U.S. Supreme Court has ruled in Associationfor Molecular Pathology (AMP) v. Myriad Genetics, a landmark casequestioning the practice of gene patenting.

But in delivering the opinion on June 13, Justice ClarenceThomas added: "cDNA (complementary DNA), which is synthesized from a messengerRNA (mRNA) template in a reaction catalyzed by the enzymes' reversetranscriptase and DNA polymerase] is patent-eligible because it is not naturallyoccurring."

Both sides claimed a victory in the mixed ruling, which mostlegal experts expected. Proponents of the validity of gene patents argued thatthey encourage investment in biotechnology and promote innovation in geneticresearch by keeping technology "out in the open." Opponents believe genepatents stifle innovation by disincentivizing companies from conducting cancerresearch, limit options for cancer patients who may be seeking genetic testingand are not valid because genetic information is not invented, but rather,produced by nature.

The case, originally heard in the Southern District Court ofNew York, challenged the validity of gene patents in the UnitedStates—specifically, whether Myriad, a company spun out of the University ofUtah in 1994 whose business model was to exclusively offer diagnostics testingservices for the BRCA breast cancer genes, could claim patents coveringisolated DNA sequences, methods to diagnose propensity to cancer by looking formutated DNA sequences and methods to identify drugs using isolated DNAsequences.

The AMP—which was joined by several patient advocacy groupsand individual patients, and represented by the American Civil Liberties Union(ACLU) and the Public Patent Foundation (PUBPAT)—argued that Myriad's patentclaims were invalid on the grounds that they are not patentable subject matterunder §101 of Title 35 of the U.S. Code, that the isolated genes areunpatentable products of nature, that the diagnostic method claims are merethought processes which won't yield any real-world transformations and that itsdrug-screening claims were just describing the basic processes of doingscience.

Myriad defended the validity of its patents because the U.S.Patent and Trademark Office (USPTO) issues patents for genes as "isolatedsequences" in the same way it issues patents for any other chemical compound,since the isolation of the DNA sequence renders it different in character fromthat present in the human body. The company also argued that its BRACAnalysis diagnostictest was patentable subject matter.

The Southern District Court of New York ruled that all thechallenged claims were not patent-eligible. Myriad then appealed to the FederalCircuit Appeals Court. The Circuit Court overturned the previous decision inpart, ruling that isolated DNA that does not exist alone in nature can bepatented and that the drug screening claims were valid and confirmed in part,finding the diagnostic claims unpatentable.

The AMP appealed to the Supreme Court, which granted certiorari and remanded the case to theFederal Circuit. When the Federal Circuit did not change its opinion, the ACLUand PUBPAT in September 2012 filed a petition for certiorari with the Supreme Court with respect to the secondFederal Circuit Decision. The high court agreed to hear the AMP's appeal inNovember 2012.

Not wishing to leave any of its decision up to creativeinterpretation, the court stressed, "It is important to note what is notimplicated by this decision."

"First, there are no method claims before this court. HadMyriad created an innovative method of manipulating genes while searching forthe BRCA1 and BRCA2 genes, it could possibly have sought a method patent. Butthe processes used by Myriad to isolate DNA at the time of Myriad's patents'were well understood, widely used and fairly uniform insofar as any scientistengaged in the search for a gene would likely have utilized a similarapproach,' and are not at issue in this case," the court ruled.

"Similarly, this case does not involve patents on newapplications of knowledge about the BRCA1 and BRCA2 genes," the courtcontinued. "Nor do we consider the patentability of DNA in which the order ofthe naturally occurring nucleotides has been altered. Scientific alteration ofthe genetic code presents a different inquiry, and we express no opinion aboutthe application of §101 to such endeavors."

Ultimately, "we merely hold that genes and the informationthey encode are not patent eligible under §101 simply because they have beenisolated from the surrounding genetic material," the court concluded.

All of the justices joined in the majority opinion, with theexception of Justice Antonin Scalia, who concurred only in part, particularlywith the portions of the opinion "going into fine details of molecularbiology."

"I am unable to affirm those details on my own knowledge oreven my own belief," Scalia wrote. "It suffices for me to affirm, havingstudied the opinions below and the expert briefs presented here, that theportion of DNA isolated from its natural state sought to be patented isidentical to that portion of the DNA in its natural state; and that cDNA is asynthetic creation not normally present in nature."

Reacting to the decision, Peter Meldrum, president and CEOof Myriad, issued this statement: "We believe the court appropriately upheldour claims on cDNA, and underscored the patent eligibility of our methodclaims, ensuring strong intellectual property protection for our BRACAnalysistest moving forward."

Myriad's stock rose more than 10 percent following the news,ending June 13 down $1.91 to close at $32.01. The decision is not expected tohave a significant impact on the company's business, as it holds more than 500valid and enforceable claims on 24 different patents for its test.

The ACLU also claimed a victory, calling the decision "avictory for civil liberties, scientific freedom, patients and the future ofpersonalized medicine."

"Today, the court struck down a major barrier to patientcare and medical innovation," stated Sandra Park, senior staff attorney withthe ACLU Women's Rights Project. "Myriad did not invent the BRCA genes andshould not control them. Because of this ruling, patients will have greateraccess to genetic testing and scientists can engage in research on these geneswithout fear of being sued."

Although the decision represents a major reversal inlongstanding patent policy in the United States—and most patent experts agreethat the court ruled as expected—there is little consensus on the implicationsthe decision will have for the biotechnology industry, according to BayArea-based venture capital firm Burrill & Co.

"Already, at least one competitor has seen an opening in thedecision. DNATraits, a division of Houston-based genomics and genetics testingcompany Gene By Gene, following the ruling said that it will offer testing forthe BRCA1 and BRCA2 genes in the United States for $995. That compares toaround $4,000 for the Myriad test," Burrill notes.

Speaking on behalf of the biotechnology industry, theBiotechnology Industry Organization (BIO) said the decision provides neededcertainty to research-driven companies that rely on cDNA patents, but otherparts of the court's decision could "unnecessarily create business uncertaintyfor a broader range of biotechnology inventions."

"The United States is now the only developed country to takesuch a restrictive view of patent eligibility, signaling an unjustifiedindifference towards our global economic and scientific leadership in the lifesciences," the organization said in a statement.

Dr. Lisa Haile, partner and co-chair of DLA Piper's GlobalLife Sciences sector, opines that the decision's implications may not be asfar-reaching in the biopharma industry as some have speculated.

"Our understanding of genomics and of genetic-based diseasehas come a long way since the BRCA genes were patented," Haile says. "Today,most diseases and accompanying therapies are based on much more than justfull-length gene sequences. That is, while the decision will impact certaingene-based diagnostics directly, the biopharma industry will not likely besignificantly altered. Synthetic DNA sequences made in the lab and notnaturally occurring are not only useful but commonly used in diagnostic tests,so such tests will be unaffected by this decision."

George Yu, an attorney at the law firm Schiff Hardin, notesthat many companies with therapeutic products don't necessarily use isolatedsequences, but many of the companies that do use isolated nucleic acid sequencesdon't want these sequences patentable.

"Myriad, because it is a diagnostics company, will probablybe affected more than a biotech company which makes actual drugs," Yu says."Despite the relatively limited commercial impact of this decision, it is stillan important decision philosophically as to the patentability of naturallyoccurring molecules. It is interesting to see how the court views this issue,specifically how it draws the line between cDNA and isolated DNA. The practicalresults of the decision are that companies like Myriad marketing geneticdiagnostics will seek other approaches to maintain exclusivity of theirdiagnostics, and the $3,000 BRCA test will likely be much less expensive."