In early-to-mid June, the Intellectual Property Subcommittee of the U.S. Senate Judiciary Committee held three days of hearings on proposed legislation to reform Section 101 of the U.S. Patent Act. The hearings are the latest step in a process that began late in 2017 as a series of roundtable discussions with legal experts, trade groups, biotechs, and other technology companies intended to examine whether Section 101 is hindering commercial investment due to uncertainty in its interpretations by the courts.
The draft legislation was released in late May by Senators Chris Coons (D-Del.) and Thom Tillis (R-N.C.), the ranking member and chair, respectively, of the Senate Judiciary Committee’s intellectual property subcommittee, along with Rep. Doug Collins (R-GA), the ranking member of the House Judiciary Committee, Sen. Hank Johnson (D-GA), and Sen. Steve Stivers (R-OH).
Proponents of the legislation argue that rulings by both the U.S. Supreme Court and lower courts have created significant uncertainty about patent enforcement which is stifling innovation, investment, and the development of potentially life-saving drugs and other technologies. Opponents of the draft legislation point to there being more innovation in the field than ever before, and further, that the patent laws as currently applied have promoted competition and innovation, and benefited healthcare consumers via lower prices.
Among the handful of decisions by the U.S. Supreme Court that proponents contend established precedent and prove the patent statute as currently written and interpreted is the 2013 ruling in The Association for Molecular Biology v. Myriad Genetics, which threw out Myriad’s patents for the BRCA1 and BRCA2 genes.
Kate Ruane, senior legislative counsel of the American Civil Liberties Union (ACLU), testified before the subcommittee that rewriting the patent statute would once again open the door for companies to patent specific genes. It was the ACLU that originally brought the lawsuit against Myriad on behalf of 20 other plaintiffs.
“We argued that human genes are products of nature and that genes and other naturally occurring matter and relationships should never be granted to anyone as intellectual property,” Ruane said in her testimony before the Subcommittee. “The Supreme Court unanimously ruled that human genes, when isolated from the genome, are not patent-eligible because they are products of nature.”
Also testifying during the three days of hearings was Hans Sauer, Ph.D., deputy general counsel and vice president for intellectual property of the Biotechnology Innovation Organization (BIO). In his view, judicial decisions over the past decade regarding patents have created significant uncertainty over what is patentable and not patentable—and has even created the doubt that a patent granted today could later be invalidated by the courts.
“If courts continue their current practice of construing judicial exceptions unmoored from the provisions of the Patent Act, without being able to genuinely explain the doctrinal origins of these exceptions, or even clearly articulating the policies that are to be achieved, it is no exaggeration to say that investment in biotech innovation will sooner or later be negatively affected,” Sauer testified.
Laws of nature
Proponents of a legislative remedy to clarify patent eligibility are based around precedents citing Section 101, set by the Supreme Court on patents directed toward “laws of nature, natural phenomena, and abstract ideas.”
According to Peter O’Neill, executive director of Cleveland Clinic Innovations, there exists a disconnect between the United States Patent and Trade Office (USPTO) and the courts regarding how to interpret what can be patentable in these cases. O’Neill cited a patent granted to Cleveland Clinic in 2007 for a test developed for Myeloperoxidase (MPO), an enzyme that can indicate a person’s risk of cardiovascular disease. The patent was twice challenged in the USPTO and both times found valid—most recently in 2011.
In 2015, Cleveland Clinic took legal action against the company True Health Diagnostics for infringing a number of its patents, including the patent issued for MPO testing. In its ruling, the U.S. District Court for the Northern District of Ohio found three of the four Cleveland Clinic patents invalid, citing Supreme Court cases Mayo Collaborative Services v. Prometheus Laboratories, Inc. and Alice Corp. v. CLS Bank International as precedent via their rulings of what constituted laws of nature, natural phenomena, and abstract ideas.
According to O’Neill’s testimony, Cleveland Clinic sought patent protection a second time in 2016 after USPTO patent examiners were provided updated guidance that clarified interpretation of Section 101 involving naturally occurring phenomena, noting that the methodology of detection of naturally occurring phenomena can be patent protected. Armed with this clarification, Cleveland Clinic again obtained patents for its testing methods, only to see them thrown out once again, this time in the U.S. District Court for the Eastern District of Virginia, which cited the earlier decision against Cleveland Clinic in Ohio as precedent.
“The courts’ decisions have created new questions about whether patents that apply (to) naturally occurring phenomena will stand in court,” O’Neill told the Subcommittee. “Regardless as to how innovative or unique a new product might be, the courts seem to suggest that a product that utilizes a naturally occurring phenomena—like diagnostic tests—could be subject to invalidation in court.”
While Cleveland Clinic and others struggle with what they view as confounding rulings by the courts in their interpretation of Section 101, Sean George, CEO of molecular diagnostics company Invitae, believes that the rulings have created a framework for his company to provide a broad swath of innovative products—at lower cost—that are advancing the practice of precision medicine.
“In 2012, the idea that we would be the company we are today was anything but obvious. We were turned down by hundreds of investors who said our goal to offer a comprehensive menu of the world’s medical genetic tests at lower prices would never work for one reason: the DNA patent thicket,” George noted in his Senate testimony. “Despite the availability of the necessary technology, sequencing handfuls of genes, much less hundreds as we do today, was impossible at that time due to patents on DNA.”
It was the belief of Invitae’s management that the genetic information derived from the U.S. government’s taxpayer-funded investment in the Human Genome Project should not be “locked away in a thicket of patents” that caused the company to file an amicus brief on behalf of the plaintiffs in the Myriad case.
“When the AMP v. Myriad decision was handed down in June 2013, our young start-up company celebrated,” George said. “We knew it opened a pathway for us and other innovators like us who had new ideas about how the diagnostics industry could be improved and a deep dedication to making it work better for patients and their clinicians.”