1. Patenting Products of Nature: Assoc. Molecular Pathol. v. U.S. PTO Technology Transfer Tactics Webinar August 31, 2011 Kevin E. Noonan, Ph.D.

2. Outline of the Talk  Introduction  How did we get here?  Gene patenting myths  Patenting “products of nature”  19 th Century Supreme Court cases  Brogdex, Funk Bros.  Bergy and Chakrabarty

3. Outline of the Talk  AMP v. US PTO (“the Myriad case”)  Parties and interests  The claims: DNA and methods  The arguments  The court’s decision  CAFC opinion  Consequences and Recommendations  Alternatives to patent  Effects of non-disclosure  Policy and societal concerns

4. Introduction

5. 5 How did we get here?  Tremendous success of a technological age  Biotechnology the beneficiary of strong patent protection  Biotechnology developed in university setting – 1980 Bayh-Dole Act promotes patenting  But success breeds criticism – from variety of sources  These include political criticism from those opposed to university patenting

6. 6 Where is here?  Politically-motivated groups in the arena: ACLU and PubPat  PubPat challenges variety of patents (not just biotech); notable the WARF human ESC patents  General attitude that patents have become too powerful and retard innovation (little empirical support)  Time ripe for Myriad challenge: in addition, the “right” defendant, due to aggressive patent enforcement tactics

7. Gene Patenting Myths  The Ownership Myth  Michael Crichton, ACLU and “Who Owns You”  The Information Myth  “Physical Embodiment of Genetic Information”  Information not what’s patented; “DNA is a chemical compound, albeit a complex one”

8. Gene Patenting Myths  The “Natural Product” Myth  Isolated DNA not found in nature  cDNA not found in nature  Natural products not patent-ineligible per se  The “Inhibits Research” Myth  The Anti-commons are not tragic  Progress promoted by disclosure  No evidence of research inhibition

9. Patenting “Products of Nature”

10. Is it possible?  Widespread belief that “products of nature” cannot be patented  Little support in binding precedent  Some sporadic support for both sides of the argument in lower court cases

11. No binding precedent  19 th Century cases  Wood Paper Patent Cases (1874)  Cochrane v. Badische Anilin Soda Fabrik, (1874)  20 th century cases  American Fruit Growers v. Brogdex (1931)  Funk Bros. Seed Co. v. Kalo Inoculant Co. (1948)  In re Bergy (1979)  Diamond v. Chakrabarty (1980)  Bilski v. Kappos (2010)

12. What does the law say? 20 th century cases  Funk Bros. Seed Co. v. Kalo Inoculant Co. (1948):  Discovery of the fact that certain strains of each species of these bacteria can be mixed without harmful effect to the properties of either... is no more than the discovery of some of the handiwork of nature and hence is not patentable... The combination of species produces no new bacteria, no change in the six species of bacteria, and no enlargement of the range of their utility... does not improve in any way their natural functioning.

13. What does the law say? 20 th century cases  Diamond v. Chakrabarty (1980):  The laws of nature, physical phenomena, and abstract ideas have been held not patentable... Thus, a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc 2 ; nor could Newton have patented the law of gravity. Such discoveries are "manifestations of... nature, free to all men and reserved exclusively to none."

14. What does the law say?  Diamond v. Chakrabarty (1980)  [R]espondent's micro-organism plainly qualifies as patentable subject matter. His claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter - a product of human ingenuity "having a distinctive name, character [and] use. "  Better way to state the proposition: mere products of nature, unmodified by man, are not patent-eligible (predominantly because they are not novel )

15. What does the law say? 20 th century cases  In re Bergy (1979):  Therefore, in case there is doubt as to whether the examiner's product-of-nature rejection is still an issue in this case, in the interest of judicial economy we rule on it now... We hold that Bergy's claim 5 clearly does not define a product of nature.  We were thinking of something preexisting and merely plucked from the earth and claimed as such, a far cry from a biologically pure culture produced by great labor in a laboratory and so claimed.

16. AMP v. USPTO (“Myriad”)

17. 17 Myriad: The claims  Two broad types of claims at issue: claims to isolated DNA molecules, and diagnostic method claims  DNA claims recite “isolated” DNA encoding specific amino acid sequences (cDNA)  Also claims to oligonucleotide probes  Method claims: methods of detecting mutation or providing a diagnosis/risk assessment  Method claims involve “comparing” mutant sequence to normal sequence

18. 18 Myriad: The claims  Composition of matter claims covering “isolated DNA” covering the BRCA 1 and BRCA 2 genes. Claim 1 of US Patent 5,747,282 is representative of this class of claims: An isolated DNA coding for a BRCA1 polypeptide, said polypeptide having the amino acid sequence set forth in SEQ ID NO:2.

19. 19 Myriad: The claims  Methods of detecting mutations in the BRCA genes. Claim 1 of US Patent 5,709,999 is the only claim in this class: A method for detecting a germline alteration in a BRCA1 gene, said alteration selected from the group consisting of the alterations set forth in Tables 12A, 14, 18 or 19 in a human which comprises analyzing a sequence of a BRCA1 gene or BRCA1 RNA from a human sample or analyzing a sequence of BRCA1 cDNA made from mRNA from said human sample with the proviso that said germline alteration is not a deletion of 4 nucleotides corresponding to base numbers 4184-4187 of SEQ ID NO:1

20. 20 District Court Decision  Judge Sweet agrees that DNA an unpatentable “product of nature”  DNA is “the physical embodiment of genetic information”  Distinguishes other types of “natural products” (antibiotics, vitamins) on this basis  Method claim invalid under Bilski

21. Federal Circuit Decision  Oral argument April 4 th ; decision July 29 th  Three separate opinions, Judge Lourie wrote the majority opinion  Judge Moore concurred and Judge Bryson concurred in part and dissented in part  Overall consensus on outcome for most issues  Important differences in approach

22. Federal Circuit Decision  Consensus on:  Standing (but for just one plaintiff)  Patent-ineligibility of diagnostic method claims  Patent-eligibility of screening method claims  Patent-eligibility of composition of matter claims to cDNA

23. Federal Circuit Decision  Disagreement over patent-eligibility of “isolated DNA” claims encompassing genomic DNA and primers  Also fundamental differences in approach in “majority” opinion, but agreement on decision in this case  Judge Bryson dissenting indicates a different approach

24. Federal Circuit: Majority  Judge Lourie: “isolated DNA” patent- eligible because it satisfies the Supreme Court “test” from Funk Brothers and Chakrabarty that a natural product can be patented provided that there is “a change in the claimed composition's identity compared with what exists in nature” and “that human intervention has given ‘markedly different,’ or ‘distinctive, characteristics.  Chemical changes in isolated DNA enough

25. Isolated DNA claims  “Isolated DNA” comes in two forms: genomic DNA and cDNA  Significant differences in structure and how isolated/ prepared

26. Is DNA a “product of nature”?  Genomic DNA may be  But chemically modified from native state  cDNA certainly is not  Claims limited to specific sequence that does not exist prior to human intervention

27. Federal Circuit: Majority  19 th Century cases dismissed as being based on novelty issues  Many lower court decisions directed to “products of nature” also dismissed as precedent as not addressing fundamental issue before court  Funk Bros. and Chakrabarty primary precedent  In re Bergy also dismissed as being non-precedential

28. Federal Circuit: Concurrence  Judge Moore: DNA a polymer, like nylon  Isolated DNA not just purified from nature  Also reads precedent as requiring alteration of natural product  This rationale convincing for cDNA and oligonucleotide fragments because do not occur in nature – made by man

29. Federal Circuit: Concurrence  “Isolated DNA” claims are a “closer case”  Not entirely convinced that isolation effects sufficient change to satisfy precedent  But, not “drawing on a blank canvas” - c annot ignore 30 years of PTO practice and CAFC precedent (Amgen v. Chugai etc.)  Change in the law up to Congress

30. “Isolation” vs. “Purification”  Both the majority opinion and Judge Moore’s concurring opinion set up a dichotomy  “Isolated” DNA as claimed patent- eligible because it has been chemically transformed  Thus, DNA has not “merely” been isolated  Implications for other biological molecule-based inventions

31. Federal Circuit: Dissent  Judge Bryson: “common sense” conclusion that human DNA not patent- eligible (including oligonucleotide primers)  Applies the same Supreme Court precedent, comes to the opposite conclusion  Concern seems to be negative effects on whole genome sequencing  Discounts PTO practice and deference to Congress, citing DOJ position

32. DOJ amicus brief  On the one hand, the brief argues that manipulated DNA (cDNA, vectors, oligonucleotides, etc.) are patent-eligible because they show “the hand of man”  On the other, isolated genomic DNA not patent- eligible because it is not sufficiently changed  Tries to “split the baby” by arguing on both sides of the issue  Genetic diagnostic methods also patent- ineligible, since merely a “natural phenomena”  Not from the Department of Commerce or the PTO and seemingly with little or no PTO input

33. Federal Circuit Decision  Method claims: claims reciting merely “analyzing” or “comparing” fail the “machine-or-transformation” test  Claims to screening methods do not, since cell growth in presence of putative BRCA inhibitor is transformative

34. Method claims  Methods that “compare” and “correlate” mutations in the BRCA genes with an increased risk of breast or ovarian cancer. A method for diagnosing a predisposition for breast cancer in a human subject which comprises comparing the germline sequence of the BRCA2 gene or the sequence of its mRNA in a tissue sample from said subject with the germline sequence of the wild-type BRCA2 gene or the sequence of its mRNA, wherein an alteration in the germline sequence of the BRCA2 gene or the sequence of its mRNA of the subject indicates a predisposition to said cancer. Claim 2 of US Patent 6,033,857

35. Federal Circuit Decision  Standing: rejects standing for most plaintiffs – no immediacy and reality  One plaintiff (Dr. Ostrer) on record that he will “immediately” provide testing  This is sufficient for standing  Recent controversy on whether the predicate condition – Dr. Ostrer’s capacity to begin immediate testing - still met

36. Federal Circuit Decision  Status: a few possibilities  Petition for panel rehearing  Petition for rehearing en banc  Petition for writ of certiorari  Both parties have grounds for filing  Plaintiffs filed petition for rehearing on August 25 th  Parties have 90 days to petition for certiorari

37. Consequences and Recommendations

38. Consequences of CAFC decision  For now, “gene patents” claim patent- eligible subject matter  Practically, consensus decision on gene patent-eligibility for cDNA covers most patents on genes  Isolated genomic DNA claims less certain, but less valuable  Oligonucleotide claims more certain as man-made manufactures

39. Consequences of PON ban  Not a good thing for DNA patents, but not the end of the world  BUT, the philosophy not limited to DNA claims  The best biologic drugs will be as close as possible to how they exist “in nature” – in the body  The better the drug, the less patent-eligible it will be  Can’t be the correct result

40. Proposition  Bad analogies make bad law  Isolated DNA is not a leaf (Judge Dyk), or a mineral (DOJ brief) or information (Judge Sweet) or an arm (Morley Safer)  Consider these examples:  Isolated chemical compound from crude oil useful as a lubricant  Isolated chemical compound from a plant useful as a drug  Isolated protein from an animal useful to cure/ameliorate human disease

41. Consequences of CAFC decision  Diagnostic method claims less certain  Claims at issue flawed by claim language  Interpreted to broadly encompass mere comparison of germline and patient BRCA gene sequences by inspection  Claims do not recite affirmative steps for obtaining sequence  Myriad has many other claims that do recite such steps

42. Consequences of CAFC decision  Diagnostic method claims generally less certain  Supreme Court will consider question this term in Mayo Labs v. Prometheus  Slightly different question, since the Prometheus case involves determination of effective dose of administered drug  Basis for Federal Circuit to find a “transformation”  Also implicates “practice of medicine”

43. Why should these claims be patent-eligible?  Only way to protect “correlation” discoveries – basis for molecular diagnostics  Promotes disclosure from academic/medical scientists, and translation of information into patentable technologies = innovation  Alternatives – such as trade secret – greater negative effects  Risk of upsetting balanced approach to innovation (academics do basic research, industry develops commercial embodiments)

44. Possible Solutions Machine or transformation test remains viable De-emphasize purely informational aspects of claims; recite claims containing more active steps (like “sequencing”) Recite method of treatment step relating to diagnosis  But this raises MuniAuction issues Will depend on Supreme Court decision in Prometheus

45. 45 Additional considerations  Potential for a patent “thicket”  Involves reagents for performing the assays – need to license dozens/thousands of genes correlated with disease  Some efforts around this (patent pooling, standard setting SNP consortium, Navigenics “ASCAP” solution)  Will get worse before it gets better, particularly regarding personalized medicine

46. Unintended (?) Consequences  No remedy for women  Myriad patents expire in ~4-6 years  Test availability depends on insurance companies, not patents  Financial impact on biotech industry  Burrill Report  http://www.patentdocs.org/2011/01/steve-burrill-makes- predictions-for-the-biotech-industry-in-25th-annual- report.html

47. Unintended (?) Consequences  Patent ineligibility promotes non- disclosure  Non-disclosure contrary to academic mission  Academia (U.S. taxpayer) as uncompensated corporate R&D department (foreign and domestic)

48. Unintended (?) Consequences  The future will be different from the past – much more complicated  Trade secret protection perpetual (and biotech hard to reverse engineer)  “Natural product” patent ineligibility extends to all medicinal chemistry and biologic drugs

49. Thank you! Kevin E. Noonan, Ph.D. Partner [ ] 300 South Wacker Drive [ ] Chicago, Illinois 60606-6709 312-913-2145 direct [ ] 312-913-0001 main [ ] 312-913-0002 fax noonan@mbhb.com [ ] www.mbhb.com [ ] www.patentdocs.org