Bay Area Genetic Diagnostics Company Files Declaratory Judgment Action against Myriad Genetics

By Kevin E. Noonan --

Whether relying on Carl von Clausewitz or Jack Dempsey for the sentiment, Counsyl, Inc., a genetic diagnostic testing company has decided that the best defense against Myriad Genetics is a good offense and, accordingly, has filed a declaratory judgment action in the Northern District of California (the venue having the added advantage of not being in Myriad's backyard in Utah).  Represented by legal academic Mark Lemley, Counsyl asks the District Court to find that Myriad "has no rights" against Counsyl with respect to Myriad's patents, U.S. Patent Nos. 5,709,999; 5,747,282; 5,753,441; 6,951,721; 7,250,497; 5,837,492; 6,033,857; and 6,051,379 (these are some, but not all of the patents asserted against Ambry Genetics and Gene-by-Gene).

Specifically, the complaint alleges that it has "developed and is prepared to launch" genetic diagnostic tests to detect mutations in the human BRCA1 and BRCA2 genes to predict a likelihood for a woman to develop breast or ovarian cancer.  According to Counsyl, "[p]rior to the priority dates" of the patents recited in the complaint it was known that mutations in the BRCA1 and BRCA2 genes were linked to an increased risk of breast and ovarian cancer, echoing allegations made by Ambry Genetics and Gene-by-Gene in their opposition to Myriad's preliminary injunction motion in the Utah cases.  Counsyl also alleges that Myriad contends that "one or more claims" of the recited patents encompass fragments of the human BRCA1 and BRCA2 genes and methods for detecting disease-related mutations of these genes, and methods for using the detection of these mutations to predict risk breast and ovarian cancer.  The complaint mentions Myriad's development of its proprietary (and undisclosed) database of disease-related mutations in the BRCA1 and BRCA2 genes and the purported harm the failure to disclose has had on public health (specifically that it has "effectively hindered the medical community from being able to use patient data to further medical research and impeded the ability of clinicians to interpret genomic data").

The complaint also reminds the District Court that "certain claims" in some of the recited patents were subject to prior litigation, and that some of those claims had been deemed by the Supreme Court to recite patent-ineligible subject matter.  Incredulously, Counsyl asserts that Myriad nonetheless has asserted other claims, not previously considered by any court against other defendants providing genetic diagnostic testing of human BRCA1 and BRCA2 genes.  "Numerous clinicians and entities performing research" on human BRCA1 and BRCA2 genes are alleged to have received cease-and-desist letters from Myriad (neither copies of these letters nor the timeframe is disclosed) and, of course, Myriad has sued two other genetic diagnostic testing providers, Ambry Genetics and Gene-by-Gene, for offering BRCA1 and BRCA2 genetic tests.  This behavior, Counsyl alleges, puts it at risk for a patent infringement lawsuit from Myriad since it is in the same position as these other testing laboratories.  The complaint then sets forth with specificity the claims of the recited patents that Counsyl contends it is at risk for Myriad to assert against them.

The complaint separates into Counts II through XV each of the recited patents, alleging invalidity for the '999 patent, the '282 patent, the '441 patent, the '721 patent, the '497 patent, the '492 patent, the '857 patent, and the '397 patent, and non-infringement for the '282 patent, the '441 patent, the '721 patent, the '497 patent, the '492 patent, the '857 patent, and the '397 patent.  These counts are nothing more than the bare recitation of the patent numbers and the claims for each Count, and that Counsyl either does not infringe these claims or they are invalid for failing to meet at least one of the statutory requirements for patentability.

Counsyl's prayer for relief includes a declaration of invalidity or non-infringement for the recited claims of each of the recited patents, and that (for no apparent reason) the case be declared exceptional and Counsyl be awarded attorneys fees under 35 U.S.C. § 285.

Comments

[Kevin]

Is the pleading that cease and desist letters have been sent to third parties and that third parties have been sued sufficient to create the necessary controversy to establish standing these days?

[Skeptical]

"and that (for no apparent reason) the case be declared exceptional"

That is an amazingly bald assertion.

[Aaron N. James]

It's very simple really. Counsyl is likely going to add BRCA 1 and 2 to their existing carrier screen panel. They can do this at virtually no additional cost the company. Unlike Myriad, Gene by Gene, Quest, and Ambry, Counsyl is the first true genomics company, with an extremely strong software engineering team (a lot of Stanford/ex-Google guys), who know how to utilize automation and robotics to build a proper genomics lab.

If Counsyl enters the BRAC space, Ambry and Gene by Gene will quickly leave (just like they did with carrier screening), and Myriad will likely be wiped out inside of 18 months. This lawsuit has Myriad more worried than any other suit they face. If Counsyl goes after them and wins, look out. Their stock will drop like a rock and their BRAC testing business will be finished.

Counsyl is now the largest clinical genome center in the world and many people in Silicon Valley view them as the Google of Genomics.

[Kevin E. Noonan]

Except, Aaron, that Myriad can predict more thoroughly and accurately due to their database of proprietary mutations. So I wouldn't count Myriad out yet.

And remember, Myriad has been planning for the day when their patents expire, and they appreciate that the technology has gotten much better.

Which is of course how it is supposed to work.

Thanks for the comment

[PaulGammond1]

"Myriad can predict more thoroughly and accurately due to their database of proprietary mutations."

How do you know this is true and, even if it is true, what makes you think it will remain true for long?

"Myriad has been planning for the day when their patents expire, and they appreciate that the technology has gotten much better. Which is of course how it is supposed to work."

How "what" is supposed to work? Myriad built their company on invalid patents and asserting those invalid patents in obnoxious aggressive ways. They continue to engage in this behavior. Why do you insist on cheerleading for them?

[PaulGammond1]

"These counts are nothing more than the bare recitation of the patent numbers and the claims for each Count, and that Counsyl either does not infringe these claims or they are invalid for failing to meet at least one of the statutory requirements for patentability."

Sounds like "nothing more" than all the information that you find in a typical cease and desist letter or even a complaint, and then some.

[Kevin E. Noonan]

Dear Paul:

My comments on the counts in the complaint were not meant to indicate any facial or other deficiency, just to explain to the reader why we weren't setting forth which claims in which patents were asserted by Counsyl to be invalid. We can't assume readers will actually read the complaint, so it is reasonable that they might wonder why we were not more comprehensive in discussing Counsyl's allegations. The statements you quoted answer that question.

My prediction about the continued viability of Myriad's business model is that they have performed several million tests on the BRCA gene, and that these tests include genological information that permit Myriad to understand the disease significance of variants that are otherwise "variants of unknown significance." Now, eventually a competitor may get the same or equivalent information but the accumulation of that information may be inhibited by Myriad's continued existence as a market leader due to its database-dependent superiority in identifying patients with disease-specific mutations.

What is troubling is that the cost aspect - which is a creature of how healthcare is allocated in the US - may result in people with "better" insurance getting the Myriad test, and others (Medicare/Medicaid or other less than premium insurance) will get the competitors' inferior tests. The consequence: poor people will get the inferior test and more will get sick and die. Not the optimum outcome.

As what "it" is can be illustrated by the Quest declaratory judgment complaint, which alleges that its tests do not infringe because they don't use any of the technology Myriad recites in its specific testing claims. So even if Myriad has a valid claim among the 214 remaining claims (which are remaining because the ACLU didn't challenge any of them) it doesn't matter is improvements in technology make Quest's fests non-infringing. Sounds like progress is getting promoted to me.

Thanks for the comment.