On September 20, 2013, Counsyl, Inc. filed a declaratory judgment complaint in the United States District Court for the Northern District of California against Myriad Genetics, Inc. Counsyl is represented by Daralyn Durie and Mark Lemley of Durie Tangri. Lemley is also a Professor of Law at Stanford University.
Counsyl seeks a declaration that claims from eight Myriad patents are invalid and not infringed. Further, Counsyl seeks their attorneys’ fees because they assert that this is an exceptional case because Myriad is enforcing its patent portfolio despite losing on “certain claims” in these patents in the Supreme Court decision in Association for Molecular Pathology v. Myriad Genetics.
The problem with Counsyl’s declaratory judgment action is that they do not seem to have any contact with Myriad, but they claim that “[t]here is a definite, concrete, real and substantial controversy between Counsyl and Myriad of sufficient immediacy to warrant the issuance of a declaratory judgment.…” However, there are no facts in the filing that show anything other than suspicion that Myriad may at some time sue Counsyl because Myriad has stated that they aggressively intend to assert rights to the patents they own. This type of nebulous, generalized fear is not usually sufficient to support declaratory judgment jurisdiction.
Over the past several days, the United States Supreme Court has issued several important decisions that will impact the patent system.
First, on June 13, 2013, the Supreme Court issued a decision in Association of Molecular Pathology v. Myriad Genetics, which has sometimes been referred to as “ACLU v. Myriad” in recognition of the fact that it was the American Civil Liberties Union that was responsible for bringing the challenge in the district court and pursuing the matter through the judicial system.
In Myriad, Justice Thomas wrote for a nearly unanimous Court. Only Justice Scalia wrote a brief separate opinion in which he concurred in part and concurred in the judgment.
The majority decision in Myriad is not long, and the first 10 pages are background. Despite not giving much detailed attention to the significant legal issues presented, the Supreme Court did manage to do real and serious harm to much of the biotechnology industry.
Justice Thomas summarized the Court’s decision by saying:
“[W]e hold that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but that cDNA is patent eligible because it is not naturally occurring.”
The decision has widely been reported as the Court recognizing that cDNA is patent eligible, but the ruling is far more nuanced. In fact, Justice Thomas specifically recognized that some cDNA is not patent eligible. He wrote:
“cDNA is not a ‘product of nature’ and is patent eligible under §101, except insofar as very short series of DNA may have no intervening introns to remove when creating cDNA. In that situation, a short strand of cDNA may be indistinguishable from natural DNA.”
I have spoken with a number of people who are in the biotech industry and they all seem to think this decision means that cDNA is patent eligible and I shouldn’t make too much out of Thomas specifically saying that at least some cDNA is not patent eligible. Personally, I think this is misplaced hope; we all know how the district courts will respond, and it won’t be to an expansive reading of patent eligibility. While the USPTO seems poised to say that cDNA is patent eligible, the fact that some has been determined not patent eligible will be used by challengers and likely successfully so. Further, it seems clear that Thomas is saying that if something is man-made but identical to what appears in nature, it is not patent eligible. This fundamentally undercuts the most important aspects of Chakrabarty and would effectively kill research into such important areas as artificially grown organs, which by their very nature must be identical to what is produced in nature to be transplanted into the human body, for example.
On Monday, May 13, 2013, the United States Supreme Court, in a unanimous decision, ruled that a farmer who buys Monsanto’s patented seeds cannot then propagate new seeds for future use without infringing the underlying patent.
The opening paragraph in the Court’s decision, which was delivered by Justice Kagan, succinctly captures the essence of the ruling. Justice Kagan wrote:
Under the doctrine of patent exhaustion, the authorized sale of a patented article gives the purchaser, or any subsequent owner, a right to use or resell that article. Such a sale, however, does not allow the purchaser to make new copies of the patented invention. The question in this case is whether a farmer who buys patented seeds may reproduce them through planting and harvesting without the patent holder’s permission. We hold that he may not.
Monsanto invented a genetic modification that enables soybean plants to survive exposure to glyphosate, the active ingredient in many herbicides (including Monsanto’s own Roundup). Monsanto markets soybean seed containing this altered genetic material as “Roundup Ready” seed. Farmers planting that seed can use a glyphosate-based herbicide to kill weeds without damaging their crops. Two patents issued to Monsanto cover various aspects of its Roundup Ready technology, including a seed incorporating the genetic alteration.
Scott Daniels, Partner at Westerman, Hattori, Daniels & Adrian and Practice Center Contributor, sent in this article discussing Tuesday’s CAFC decision in the Marine Polymer Techs. v. HemCon case. In a decision that seems to encourage reexamination, the Court held that “intervening rights” apply to unamended claims based on statements made during reexamination. Daniels discusses the history of the case and highlights the key points of the CAFC decision.
The CAFC panel decision [Tuesday] in Marine Polymer Techs. v. HemCon will do more to popularize reexamination than all the proselytizing by all the reexamination lawyers and bloggers ever could. The Court held that an argument made by the patentee traversing a rejection in reexamination constituted a disclaimer of patented subject matter; this disclaimer triggered absolute intervening rights for the accused infringer under 35 U.S.C. §§ 252 and 307(b), thereby eliminating all damages for the period before the issuance of the reexamination certificate. The Court also suggested that the accused infringer might also be protected by equitable intervening rights for the period after issuance of the reexamination certificate and sent the case back to the trial court for further fact-finding. (more…)
Ryan Chirnomas, Partner in the Biotechnology group at Westerman, Hattori, Daniels and Adrian, sent in this article discussing the latest developments in the AMP v. USPTO case and what the Plaintiffs next move may be.
After the CAFC issued a decision in AMP v. USPTO on July 29, 2011, there was much speculation as to what would be the next move in this compelling case. A petition for an en banc rehearing or a petition to the Supreme Court to grant a writ of certiorari seemed likely, but instead each party petitioned for a rehearing by the same three-judge panel. Last week, the CAFC denied both of these without providing any further comments. However, these petitions provide some insights as to how the parties’ positions on standing as well as the merits are evolving, and are summarized below.
Plaintiffs’ Petition for Panel Rehearing
On August 25, 2011, the Plaintiffs, represented by the ACLU and PubPat, filed a petition for a panel rehearing on both substantive issues and issues of standing. As to the substantive issues, the Plaintiffs took issue with the majority’s reasoning that isolated DNA does not occur in nature. (more…)