Defendants File Petition for Rehearing in AMP v. USPTO

By Kevin E. Noonan --

Yesterday, counsel for defendants/appellants filed a petition for rehearing before the Federal Circuit in Association for Molecular Pathology v. U.S. Patent and Trademark Office.  Defendants assert a single ground for rehearing, based on the standing issue and particularly related to their allegations that Dr. Harry Ostrer (the only plaintiff found to have standing) no longer has the capacity for "immediately begin[ning] to perform BRCA 1/2-related genetic testing" upon invalidation of the Myriad patents.  This allegation is based on Dr. Ostrer's move from his academic position at New York University to a position at Montefiore Hospital and the Albert Einstein School of Medicine of Yeshiva University.  In addition, defendants ask the Court to dismiss the appeal and the case for lack of standing while not vacating the panel decision on patent-eligibility of claims to isolated DNA.

The gist of defendants' argument is that the panel found Dr. Ostrer (at left) to have standing because "he remains in the same position with respect to his ability and desire to provide BRCA testing as in the late 1990's."  The change in Dr. Ostrer's academic position destroys this predicate for "no change in position" according to defendants.  The petition states that Dr. Ostrer's standing was not personal to him but was based on his relationship with NYU:  "[b]ecause the communication [offering a license] was directed at NYU, involved the testing that was being performed at NYU, and offered to grant a license to NYU," the only basis for Dr. Ostrer to have standing "derived solely from his position at NYU" (emphasis in original).  These assertions are based on Dr. Ostrer's declaration testimony that:

Through the Human Genetics Program and Molecular Genetics Laboratory at the NYU Langone Medical Center that I direct, my staff and I engage in both research and clinical practice relating to genetic relate susceptibility to disease.  . . .  My laboratory has all of the personnel, expertise, and facilities necessary to do various types of sequencing of the BRCA1 and BRCA2 genes and I have a strong desire for my lab to provide such sequencing services.  We could, and would . . . do full sequencing [and other procedures used for diagnostic genetic testing (emphasis in original)].

According to the petition, "[t]hese statements . . . make clear that [Dr. Ostrer's] claim to standing depended entirely on his employment at NYU."  The petition asserts that the panel recognized this, by stating that "his lab has the personnel, facilities and expertise" to perform the testing, and that this had not changed from the time that Myriad offered NYU a license in 1998.  Dr. Ostrer's academic move thus removes the basis for the panel's determination that nothing had changed and at the same time destroyed the basis for the panel's determination that Dr. Ostrer has standing, defendants contend.

Defendants made similar, albeit less extensive, arguments in a letter to the Court the day before the panel rendered its decision (see "Myriad Writes to Federal Circuit on Standing Issue"), and plaintiffs responded a day later with their own letter (see "Standing in AMP v. USPTO: The Plot Thickens"), stating that Dr. Ostrer's "change in circumstances" did not change his capacity to perform the testing but merely the situs where the testing would be performed.  Defendants assert three arguments for why plaintiffs' response is inadequate to preserve Dr. Ostrer's standing to sue.  First, defendants argue that the move eliminates any controversy between Myriad and NYU.  The panel's decision on standing, the petition maintains, was based on Myriad's offer of a license to NYU as an institution, and that was the circumstance that the panel considered not to have changed (because NYU's employee, Dr. Ostrer, asserted the unchanged capacity and intention to practice the claimed invention should Myriad's patents be invalidated).  The petition contains a highlighted portion of Myriad's letter to NYU, illustrating that the offer to license was to the institution and was not personal to Dr. Ostrer:

The petition also notes as significant that, had NYU agreed to the proffered license, the right to perform BRCA testing would not have migrated with Dr. Ostrer when he moved from NYU to Montefiore.  Thus:

If the mere offer of a collaborative license to an institution constitutes a threat sufficient to support declaratory-judgment jurisdiction, then declaratory-judgment jurisdiction must be rooted in the actions being taken at the institution offered the license.

Second, there is no current controversy between Myriad and Montefiore, an institution that has not offered BRCA testing services in the past and with which Myriad has not "communicated" either now or earlier.  Plaintiffs' assertions in their responsive letter that Montefiore has "the same immediate capability" of performing BRCA genetic testing is not evidence, say defendants, and even if true, make Montefiore no different than "hundreds of laboratories around the United States" that have similar capabilities.  That is not enough to provide standing for declaratory judgment, the defendants assert, citing the panel opinion that declaratory judgment jurisdiction requires "affirmative acts by patentee directed at specific Plaintiffs" (emphasis in original).

Finally, defendants' petition contends that plaintiffs' letter to the Court (in response to their own) is insufficient to establish an "immediate controversy," based at least on the fact that in plaintiffs' letter Dr. Ostrer was characterized as having a "wish to engage in [diagnostic BRCA] sequencing" (emphasis in original).  The petition notes that the panel found similar statements from other named plaintiffs to be inconclusive and that such "some day intentions" were insufficient to establish standing for other named plaintiffs, including Drs. Kazazian and Ganguly.  In addition, there is no evidence that Montefiore is willing to permit Dr. Ostrer to perform BRCA-directed genetic diagnostic testing.

The petition asks the Court to dismiss the current appeal, and the underlying declaratory judgment action, for failure of any of the plaintiffs to have standing, saying that the case is moot because Dr. Ostrer's move from NYU will not "make a difference to the legal interests of the parties (as distinct from their psyches, which might remain deeply engaged with the merits of the litigation)," citing Nasatka v. Delta Scientific Corp., 58 F.3d 1578, 1580 (Fed. Cir. 1995).  In addition, defendants argue that "[b]ecause the mootness was caused by plaintiff Ostrer's unilateral action," the panel decision should not be vacated.  This argument is based on the principle that vacating a panel opinion is only appropriate when "mootness arises through no fault of the parties (such as external causes or mere 'happenstance')," citing  United States v. Munsingwear, Inc., 340 U.S. 36, 40 (1950).  The policy behind this standard is that a party subject to an adverse panel decision could otherwise always "seek to eliminate the unfavorable precedent by manufacturing mootness during the course of the appellate process," defendants contend.  The petition cites Tafas v. Kappos, 586 F.3d 1369, 1371 (Fed. Cir. 2009), as an instance where the Court refused to vacate a panel decision unfavorable to a party (the USPTO) when the party's "voluntary act" caused the action to be moot.  Unless there is a countervailing public interest that would be served by vacatur (and defendants argue there is none in this case), the petition argues that the Court should maintain the  patency of the panel decision.

The defendants' petition does not address any other issue, suggesting that Myriad has decided not to contest invalidation of the method claims included in the lawsuit.  Perhaps this is because there are other claims remaining to be asserted against a future infringer that are more likely to withstand a patent-eligiblity challenge than the claims in this case, or perhaps it is because of the impending Supreme Court decision in Mayo Collaborative Svcs. v. Prometheus Labs., Inc., which is expected to shed additional light on the patent-eligibility of medical diagnostic method claims regardless of whether they encompass a transformation step.  In any case, defendants' petition provides the Federal Circuit with an opportunity to revisit the standing issue, both as it applies to Dr. Ostrer and to the American College of Medical Genetics and Ms. Ellen Matloff (as argued in plaintiffs' petition).  Reaching a decision of "no standing" in this case would go a long way towards putting the genie of the patent-eligibility of gene patents back in the bottle, perhaps long enough for Myriad's patents to expire and moot the entire controversy.  There are worse outcomes.

Comments

[EG]

Kevin,

Well, to be "fair and balanced" the defendants petitioning for rehearing in this case should also be careful of what they ask for. An en banc Federal Circuit could also potentially overturn the panel's ruling on the patent-eligible isolated DNA/method claims.

[Courtenay Brinckerhoff]

The plot thickens, eh?

As I wrote in two different posts on http://www.pharmapatentsblog yesterday, I think it is interesting that the ACLU Petition for Rehearing did not restate the points alleged about Dr. Ostrer in their August 29 letter to the court, but rather cited his membership in an organization concerned with "gene patenting."

[EG]

"The plot thickens, eh?"

"As thick as a trickle pudding" to use the words of Mr. Canfield from In Harm's Way, Courtenay. If this case makes it to an en banc hearing before the Federal Circuit, it will be one big judicial donnybrook.

[Kevin E. Noonan]

Well, EG, I think defendants have posed a very specific, threshold question that may make asking for rehearing worth the risk - does the court have the institutional competence to hear the case? Judge Moore was certainly concerned about this question, and so the panel could (in the first instance) revisit just this point (especially since the plaintiffs raised jurisdictional issues as well).

In some ways, the best outcome - it delays the cert petition so that the Supreme Court can decide Prometheus before considering cert in Myriad, and if Prometheus comes down a certain way it may answer at least the method claim part of the Myriad decision. And if the Federal Circuit decides no standing, it raises interesting questions about how the case is presented for cert.

As well as giving us all something to write and think about for a good while longer.

Thanks for the comment.

[6]

I have one question regarding the whole dr Ostrer standing issue. Who took over for him at NYU and why are they not involved in the suit?

[6]

Also I has a question for Kev, what do you think about idea no. 5?

http://news.yahoo.com/blogs/lookout/five-ideas-create-jobs-crazy-might-just-152228059.html

[Skeptical]

Dr. Noonan notes: And if the Federal Circuit decides no standing, it raises interesting questions about how the case is presented for cert.

If there is no standind, there is no cas e to present cert. for.

Or am I missing something?

[Kevin E. Noonan]

Dear 6:

To answer your second question first, the answer is simple: generic drug makers (generally) do not do discovery research. The cost of developing a drug is amortized over the cost of all the failures (that still cost money to pursue), and then there is the regulatory costs. Now, we could just let the market decide, but then we would have "the market" instead of the FDA vetting drugs. Not a good idea - even of the FDA makes mistakes they are good faith mistakes, and "the market" tends to be amoral - if it is cheaper for lots of poor people to die or be injured so "good" drugs can be developed for the rest of us, "the market" has no problem with that.

So no, I don't think this is an idea "so crazy it might work."

As for Dr. Ostrer, the court specifically found that he had standing based on his statements of being "ready, willing and able" to do the testing and his intent/commitment that he would do the testing if/when Myriad's patents were invalidated. I don't think NYU is a party to the suit (and I don't think you can force them to join), so if defendants are correct and Dr. Ostrer can no longer perform the tests in his new position his basis for standing is gone.

[EG]

"As well as giving us all something to write and think about for a good while longer."

Kevin,

Now that Classen came out today with a majority opinion (by Newman and Rader), an "additional views" opinion (by Newman and Rader) and a dissenting opinion (by Moore), how true. As Sherlock Holmes would say, "the game is truly afoot," and the judicial donnybrook at the Federal Circuit (and potentially at the Supreme Court) is about to begin in earnest.

[6]

"so if defendants are correct and Dr. Ostrer can no longer perform the tests in his new position his basis for standing is gone."

I see what you're saying, but one would presuem that NYU would want to join if they already let their head of dept. join up. So if they wanted to join, what would the situation be there? Too late for them to join? Too late for the new head of their dept to join? Because they're essentially saying that his standing went away when he left that place, there should then be an opportunity for the new person in that position to join I would think. They can't just drag out a lawsuit until standing goes away and not allow anyone to continue the case. Such would be absurd. One would think if he had standing back at day 1 then that would be sufficient.

I don't really see how you were responding to my second question. You seem to think they're advocating just letting the market handle everything and doing away with FDA approval. I don't think they are. They're talking about taking all the monopoly rent money that currently goes into the pockets of non-generic corporations and putting aside a chunk of that, approx equal to what corps spend on it now, for R&D (as well as FDA approval costs I would presume) and then take the rest and put it towards subsidized employement.

In other words, take the job, and huge profits, of coming up with new drugs away from big drug companies and give both to the gov and let the gov use the profits to create subsidized employment.

Or was your entire point that the drug companies don't actually make 300 billion, or even a good chunk of 300 billion, as profit, but instead they actually spend all 300 billion on research and FDA approval etc? Because the facts, at least as cited in the article don't seem to support that.

The wiki shows all the same numbers and some citations for the numbers that these guys showed and indicate that there is a ~17% return.

Still seems like an overall pretty decent idea to me. I mean sure, it's a move towards some limited communism (or at least a gov planned econ), and as much as I hate the communism, where else are we headed when machines take nearly all our jobs?

We have a lot to gain under that plan it seems like. The people who have the job of coming up with new treatments can focus on best helping the population rather than how best to make a dime.

And not only that, the people currently being employed won't have to be so worried about the risks involved or their company going under.

[Kevin E. Noonan]

Well, 6, I have a fairly large circle of friends/acquaintances who come from a country where the government handled these types of things and they would tell you it didn't work out too well. Frankly, I am in favor of a world based on the philosophy of "from each according to his abilities, to each according to his needs," but we as a species don't seem to be ready for this as a workable principle of our civilization.

I'm not willing to do the experiment again. It's said that madness is doing the same thing over and over and expecting a different outcome. By that standard, doing what the author suggests would be madness.

[Kevin E. Noonan]

As for the other question, NYU has had plenty of opportunities to join this lawsuit and has not. So I expect they don't want to. As for substituting them now, "you dance with them that brought you." I don't see the court permitting NYU to join at this late date.

[Kevin E. Noonan]

Dear Skeptical:

The standing decision would be reviewable, and the Supreme Court could grant cert on the entire case if it wanted to (with the idea that under principles of judicial economy if they decided the Federal Circuit was wrong on standing there would be no recourse for plaintiffs to appeal the substantive decision thereafter).

Thanks for the comment.

[Skeptical]

But Dr. Noonan, if the court grants cert on the standing question, they can only answer THAT question and cannot try to the case on the merits, can they?

One man's "judicial economy" is another's abrogation of standing TO TRY the case, no?

[6]

"Well, 6, I have a fairly large circle of friends/acquaintances who come from a country where the government handled these types of things and they would tell you it didn't work out too well"

All the best ideas get messed up by people.

[Kevin E. Noonan]

Dear Skeptical:

The Court could certainly decide standing as a threshold question, i.e., they could come to their conclusion on standing, and if their conclusion was that the CAFC got it right then they would themselves be precluded from writing a precedential opinion on the merits. BUT if they decided that even one of the named plaintiffs had standing, then I suppose they could reach the merits. Which is the scenario I had in mind; sorry if I was unclear.