Manager's Amendment (and Others) to H.R. 1249 -- Second Opinions in Genetic Diagnostic Testing

By Kevin E. Noonan --

The question of when H.R. 1249 (formerly the "America Invents Act," now the "Leahy-Smith America Invents Act") will get to a floor vote in the House apparently depends on whether Rep. Lamar Smith (R-TX) can convince his brethren on the Appropriations Committee that the provisions that would put an end to patent fee diversion do not offend the Separation of Powers clause or the appropriators prerogatives.  In the meantime, Rep. Smith has released another Manager's Amendment to the bill; in addition, there are almost 40 other amendments to the bill that have been submitted for consideration.  This post focuses on one of two new provisions contained in the Manager's Amendment that have particular relevance to biotech and pharma patenting.

This provision relates to a statutory guarantee that recipients of a patented diagnostic method are entitled to a "second opinion."  These provisions are contained in new section 27 of the bill, which reads as follows:

Sec. 27.  PERMITTING SECOND OPINIONS IN CERTAIN GENETIC DIAGNOSTIC TESTING

(a)  IN GENERAL. – Section 287 of title 35, United States Code, is amended by adding at the end the following:

(d)(1)  With respect to a genetic diagnostic test provider's performance of, or offering to perform, a confirming genetic diagnostic test activity that constitutes infringement of a patent under section 271(a) or (b) of this title, the provisions of section 281, 283, 284 and 285 of this title shall not apply against the genetic diagnostic test provider with respect to such confirming genetic diagnostic test activity.

    (2)  For the purposes of this subsection:

(A)  The term "confirming genetic diagnostic test activity" –

(i)  means the performance of a patented genetic diagnostic test, by a genetic diagnostic test provider, on an individual solely for the purpose of providing the individual with an independent confirmation of results obtained from another test provider's prior performance of the test on the individual, where such prior test was performed by, or under license from, the owner of the patent that is infringed by the acts specified in paragraph (1), and where independent confirmation of the prior test is not available from another test provider under a license from the patent owner; but

(ii)  does not include –

(I)  the performance of a patented genetic diagnostic test on an individual for the purpose of monitoring or reconfirming the individual's medical or genetic status over time, for therapeutic treatment selection or determining responsiveness to treatment, and for other purposes that require repeated genetic diagnostic testing of the individual;

(II)  the use of a patented machine or article of manufacture in violation of such patent;

(III)  the use of a patented composition of matter that is commercially available to the genetic diagnostic test provider; and

(IV)  the practice of a patented process other than the process of testing claimed in the patent owner's patent referred to in paragraph (I).

(B)  The term "genetic diagnostic test provider" means any person or entity that performs a confirming genetic diagnostic test activity, and includes a clinical laboratory or other health care entity at which, on behalf of which, or in association with which the confirming genetic diagnostic test activity is conducted, such as a nursing home, hospital, university, medical school, health maintenance organization, group medical practice, or medical clinic.

(C)  The term "patented genetic diagnostic test" means a patented diagnostic method that is specific to the detection of a mutation or a pattern of mutations of one or more particular genes in an individual, as well as the use of a patented composition of matter, or the practice of a patented use of a composition of matter, where such composition of matter is specific to and necessary for the practice of the diagnostic method and is not commercially available to the genetic diagnostic test provider.  When performed in the course of a confirming genetic diagnostic test activity, such term is not limited to the particular embodiments of the patented diagnostic method or composition of matter that were practiced by or under the authority of the patent owner in providing the prior generic diagnostic test.

(D)  The term "independent confirmation" is not limited to the replication of the results of a prior genetic diagnostic test, and includes providing the individual with information that is not otherwise available from the provider of such prior test and that affirms, clarifies, disproves, corroborates, or otherwise aids the individual in interpreting the results of such prior test, including in instance where such results were inconclusive.

    (3)  The infringer shall have the burden of establishing the limitation on remedies under paragraph (1), including the production of contemporaneous documentary evidence proving, or tending to prove, that the diagnostic test activity meets the definition of a confirming diagnostic test activity under paragraph (2)(A) at the time the confirming diagnostic test activity was performed.

(b)  EFFECTIVE DATE. – The amendment made by subsection (a) shall take effect on the date of the enactment of this Act and shall apply to confirming diagnostic test activity performed on or after such date.

It will be recalled that Rep. Debbie Wasserman Schultz (D-FL) delivered an impassioned and emotional call for these provisions during debate in April in the Judiciary Committee when the bill was passed out of committee and readied for a vote of the entire House (see "House Judiciary Committee Approves H.R. 1249").  Then, Rep. Wasserman Schultz tearfully withdrew her amendment that would have exempted from infringement a "genetic diagnostic tester's performance of a confirming generic diagnostic test activity" that would otherwise constitute infringement under §§ 271(a) or (b).  Now the amendment is back, and it presents a host of interesting possibilities.

For example, amended § 287(d)(2)(A)(i) provides the exemption from patent infringement liability for confirming genetic diagnostic test activity where "independent confirmation of the prior test is not available from another test provider under a license from the patent owner."  Thus, this provision and the exemption provided can be defeated merely by the patent owner licensing at least one other laboratory to perform "confirming genetic diagnostic tests"; there is no provision that such a "second opinion" test must be at a cost less than the cost of the patentee's test.  Similarly, amended § 287(d)(2)(A)(ii)(II) and (III) provides that the exemption does not apply to "the use of a patented machine or article of manufacture in violation of such patent"; "the use of a patented composition of matter that is commercially available to the genetic diagnostic test provider"; or "the practice of a patented process other than the process of testing claimed in the patent owner's patent referred to in paragraph (I)."  It is not difficult to envision patented articles of manufacture used in diagnostic testing, or "commercially available" compositions that fall under a "label license" from the provider or other restriction, or that use an independently patented process.  The limitation of a "patented genetic diagnostic test" to "a patented diagnostic method that is specific to the detection of a mutation or a pattern of mutations of one or more particular genes in an individual" under amended § 287(d)(2)(C) does not encompass changes in gene expression, rather than mutation, that can be used for diagnostic purposes.  And inclusion of  results other than "the replication of the results of a prior genetic diagnostic test" in the definition of "independent confirmation" in amended § 287(d)(2)(D), and particularly "information that is not otherwise available from the provider of such prior test" suggests that performance of a second, independently developed (and perhaps patented) test might be exempted under these provisions.

In addition to the poor policy practice of picking out specific patents for preferential (mis)treatment, these provisions and their effective date raise takings issues, since they permit patent infringement to go uncompensated.  In view of the widespread predictions of the economic importance of genetic diagnostic testing over the next 20 years, compensation for this taking could be significant.

Analysis of additional portions of the Manager's Amendment, as well as other amendments, will be provided in future posts.

Comments

[EG]

Kevin,

Yet another misguided effort to permit compulsory licensing with no compensation to the patent owner. I simply hope all this nonsense sinks H.R. 1249 with no survivors.