The Federal Court of Australia issued a ruling recently that is directly opposite to the ruling rendered by the United States Supreme Court relative to gene patents. In Yvonne D’Arcy v. Myriad Genetics, Inc., the Federal Court of Australia ruled that Myriad’s claims to isolated DNA are patentable under the laws of Australia. That is the ruling the U.S. Supreme Court should have reached in Association of Molecular Pathology v. Myriad Genetics. As the patent eligibility laws of the U.S. become increasingly inhospitable to high-tech innovative businesses, we can expect more job losses and worse news for the U.S. economy on the horizon.
Particularly interesting is that the Federal Court of Australia went out of their way to question the reasoning of the United States Supreme Court, and say that it is exceptionally difficult to reconcile Diamond v. Chakrabarty with AMP v. Myriad Genetics. I have previously written that AMP v. Myriad Genetics overrules the fundamental holding in Chakrabarty, with many disagreeing. I feel certain that my reading is correct, and the Federal Court of Australia agreed.
On December 13, 2013, Genetic Veterinary Sciences, Inc. (d/b/a Paw Print Genetics) filed a declaratory judgment action against VetGen, LLC, in the United States District Court for the Eastern District of Washington (Spokane). The lawsuit sought a declaration that Paw Print Genetics was not infringing various claims of patents owned by VetGen. The complaint specifically sought a declaration of non-infringement with respect to U.S. Patent Nos. 6,040,143, 6,074,832, 6,767,707, 6,780,583, and 6,410,237. Each of these patents are titled DNA encoding canine von Willebrand factor and methods of use. In the alternative, Paw Print Genetics also sought a declaration that the claims of the patents are invalid. Both Paw Print Genetics and VetGen offer inherited disease testing to identify carriers and affected dogs for a variety of different canine genetic conditions.
In both dogs and humans, von Willebrand’s disease is a bleeding disorder of variable severity that results from a quantitative or qualitative defect in von Willebrand factor. This clotting factor has two known functions, stabilization of Factor VIII (hemophilic factor A) in the blood, and aiding the adhesion of platelets to the subendothelium, which allows them to provide hemostasis more effectively. If the factor is missing or defective, the patient, whether human or dog, may bleed severely. The disease is the most common hereditary bleeding disorder in both species, and is genetically and clinically heterogenous.
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.