Refashioning IP Asset Protection Strategies For Biotechnology And BioPharma Clients In View Of The New Legal Realities Of Subject Matter Eligibility

Introduction

In the 1970s, the biotechnology industry was in its infancy. Many academic researchers were developing faster, more efficient ways to clone and characterize gene products of interest, and companies arose to provide practical applications of the new technology for pharmaceuticals, agriculture, and industry. Since then, the industry has experienced meteoric growth worldwide, but especially in the United States. The industry has produced scores of lifesaving products and methods, although development has been, and continues to be extremely expensive. The biotechnology industry has relied on the patent system to incentivize the discovery and development of groundbreaking innovations.

For the last thirty-five years, the legal framework behind the patent system (as provided by Congress) has supported biotechnological innovation through the patenting of isolated nucleic acid and proteins, new methods of treatment and diagnosis, and engineered microorganisms, plants, and animals. More recently, continuing developments in personalized medicine are literally transforming the way many serious diseases such as cancer are treated. Advances include the discovery and use of biomarkers (genetic or phenotypic characteristics of an individual or an individual's cells that predict whether the individual has a predilection to develop a certain disease or condition or is more or less likely to benefit from a particular treatment) companion diagnostics (assays to determine whether a given therapy will be effective in a given patient), and autologous cell therapies (engineering or stimulating a patient's own cells to fight a disease or condition, and then returning the cells to the patient). These advances will not only improve the efficacy and safety of patient treatment, but also will also reduce the costs associated with innovative new treatments, because only those patients who are likely to benefit from a given treatment will receive it. These advances, however, require enormous monetary investments by biotechnology and pharmaceutical companies, which the companies will make only if there is a possibility of a return on their investment—a possibility provided by patent protection.

Congress, through three major revisions of the patent statutes, has clearly intended that biotechnological subject matter should be eligible for patenting.

Likewise, the longstanding policies and practices of the United States Patent and Trademark Office (USPTO) have promoted patent protection for biotechnological innovation. However, in the last few years, the United States Supreme Court has set a new course, severely limiting the scope of patent-eligible subject matter in ways that have hit the biotechnology and biopharma industries hard. This chapter charts how we got to this point, and provides some ideas of how patent practitioners can continue to protect their biotech clients' innovations in the new regime.1

Recent Supreme Court Decisions Devalue Biotech Patents and Hamper New IP Asset Protection

My practice as a registered US patent attorney focuses on procuring, protecting, and defending intellectual property (IP) rights for innovators in the biotechnology industry, with an emphasis on pharmaceuticals. The impact of biotech innovation on health care is clear, but the cost of developing new drugs and targeting them to appropriate patients is enormous. The average cost of bringing a new drug to market has been estimated to be at least $1.2 billion.2 It does not take an advanced degree in economics to understand that a drug developer must recoup that cost and make a profit to stay in business.

Biopharmaceutical companies, from small startups to large multinational corporations, rely on intellectual property protection to provide the market exclusivity needed to drive research and development (R&D). Indeed, the birth of the biotechnology industry can be tied to a key Supreme Court decision in 1980, which held that a living organism developed through genetic engineering was eligible for a patent.3 For more than thirty years, biotechnology companies in the United States have brought lifesaving drugs, treatment methods, and diagnostic tests to consumers through R&D investment leveraged by intellectual property.4 Thousands of patents claiming isolated DNA, genetically engineered organisms, antibiotics, diagnostic tests, and methods of treatment have been granted by the USPTO, and upheld by the courts.

The duty to provide a system for patent protection in the United States was bestowed upon Congress in our Constitution,5 and during the past thirty years, lawmaker intent has clearly supported broad patent subject matter eligibility under 35 U.S.C. § 101.6 While certain subject matter has long been considered ineligible for patenting,7 as early as 1952 Congress noted that "anything under the sun that is made by man" was eligible for patenting.8 Up to and including major revisions under the America Invents Act in 2011,9 Congress has not provided any indication suggesting an intent to limit subject matter eligibility for biotechnological inventions. Moreover, in the nearly thirty-five years since the Chakrabarty holding, the USPTO has issued thousands of patents directed to biotechnological innovations that have driven the commercialization of many blockbuster pharmaceuticals. However, the federal courts have now decided that Congress and the USPTO had it all wrong.

In the past three years the United States Supreme Court has called the previous thirty-plus years of subject matter eligibility for biotechnological innovation into doubt. First, in 2012, the Court decided in Mayo Collaborative Services v. Prometheus Laboratories Incorporated that therapeutic methods relating to "natural laws" are not patent eligible without an amorphous and ill-defined "something more."10 The claims in Mayo involved a method for determining whether to adjust a patient's treatment based on a determination of the level of a metabolite in the patient's system:

A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder, wherein the level of 6-thioguanine less than about 230 pmol per 8x108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and wherein the level of 6- thioguanine greater than about 400 pmol per 8x108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.11 The unanimous Supreme Court decided that the correlation between 6- thioguanine levels and therapeutic efficacy or toxicity was a "natural law" ineligible for patenting. The Court concluded that the "administering" and "determining" steps amounted to mere routine "pre-solution" activity. The "wherein" clauses, according to the Court, served merely to inform the doctor of the natural law, and to suggest a course of action.12

What if the course of action was more than a suggestion? Such a claim might have subject matter eligibility, but in view of a 2014 Supreme Court opinion, might not be enforceable. A claim in a related patent assigned to Prometheus Laboratories, Inc., which required actual treatment as opposed to merely suggesting it, was not part of the case, and remains valid.13

However, such a claim might be difficult or impossible to enforce because the steps of the claim would likely be carried out by two unrelated parties (for example, a clinical laboratory and a physician). Thus, no single party would directly infringe the claim. The Supreme Court recently held induced infringement of a method claim requires an initial determination of direct infringement.14 In view of the Federal Circuit's precedent in Muniauction15 that direct infringement requires all steps of a claim to be carried out by a single party, or parties that are clearly in privity with each other, a "divided infringement" claim may be unenforceable.

Then, in 2014, the Court followed up with a decision holding that isolated DNA is a "product of nature," and is thus ineligible for patenting.16 In a case involving patents owned by Myriad Genetics, covering the BRCA1/2 genetic tests for susceptibility to breast and/or ovarian cancer, the unanimous Court held that claiming "isolated DNA" is not enough to confer patent eligibility,17 but claiming cDNA (a DNA molecule created in the laboratory from a messenger RNA) might confer eligibility if the original genomic DNA contained introns.18 The Court further pointed out that a claim reciting even small changes to the nucleotide sequence would likely confer eligibility.19 Justice Thomas, writing for the Court, emphasized the narrow scope of the holding: "[w]e merely hold that genes and the information they encode are not patent eligible under §101 simply because they have been isolated from the surrounding genetic material."20

The USPTO Response to Mayo and Myriad

After a patent application is originally filed, the USPTO examines the application and determines whether to initially reject or grant the application. In response to important changes in patent law, the USPTO often issues guidelines to help patent examiners navigate the changes and make appropriate changes to examination procedure. Examiners are generally expected to rely on examination guidelines provided by the USPTO when making patentability determinations, even though such guidelines do not have the force of law.21

Since USPTO examination is the first level of scrutiny for any patent claim, the USPTO's reaction to Mayo and Myriad is particularly important. Initially, the USPTO reacted (or, according to many stakeholders, overreacted) to these decisions by issuing examination guidelines that went far beyond...