Utah Judge Denies Myriad's Preliminary Injunction Motion

By Kevin E. Noonan --

In a 106-page opinion, U.S. District Court Judge Robert J. Shelby on Monday denied Myriad Genetics motion for preliminary injunction in Myriad Genetics v. Ambry Genetics.  Characteristic of its aggressive defense of its patent rights, the motion was, as the District Court noted, for "extraordinary" relief and thus not routine nor was the Court expected to grant the motion.  The Court's detailed explication of the history of the Myriad case and the contentions of the parties will be set forth in a later post.  This post is concerned with the outcome, and the grounds that the District Court relied upon in denying the motion.

The standards for a preliminary injunction are four:  the patentee has to establish a likelihood of success on the merits, that she will be irreparably harmed should the injunction not issue, that the balance of the hardships is in the patentee's favor, and that the public interest is not harmed if the court grants the injunction.  The District Court found in Myriad's favor on only one of these grounds, that of irreparable harm.  This finding was based on expert testimony from Myriad's damages expert, whose testimony the Court credited with regard to the effects on market entry by Ambry (and others) on determining the amount of damages owed should Myriad prevail, particularly with regard to the likelihood that Myriad would be undercompensated in view of the "complex pricing and sales factors in the case."  The Court also cited the unlikelihood that Myriad would be able to reverse the price erosion expected to occur with market entry of Ambry and other competitors.

The rest of the prongs of the test were in Ambry's favor according to the District Court's opinion.  With regard to the balance of the hardships, the Court was not persuaded by Ambry's argument that its loss of its "head start" offset any harm to Myriad's franchise, the Court stating that "[the fact t]hat Myriad is a large company and can survive an injunction does not compel the Court to conclude that Defendant's loss of a head start outweighs Plaintiffs' loss of return on its years of work and substantial investment commercializing BRCA testing."  The Court was persuaded the argument that Ambry might go out of business if the injunction should be imposed, rejecting as inapposite cases from the Federal Circuit discounting this risk to the defendant.  "Notwithstanding the court's conclusion that Plaintiffs will suffer irreparable harm without an injunction," the District Court found that the balance of the hardships tilted in favor of Ambry, which could lose its business against the harm to Myriad, which is merely economic for a company "has enjoyed an exclusive monopoly in the BRCA1 and BRCA2 testing market for nearly two decades, and its own financial forecasts show that it expects to see increased revenue growth this year."  The Court further stated that "[e]ven without an injunction, Plaintiffs will undoubtedly continue to benefit from Myriad's expertise, market strength, and brand name recognition" as reasons supporting its finding that the hardships balanced in Ambry's favor.

As for the public interest, the District Court stated that "both sides make compelling arguments that the public interest favors them."  Accordingly, the Court found that neither side "has shown that the public interest mandates either the imposition or denial of Plaintiffs' requested injunction."

The most significant portion of the opinion is the District Court's finding that Myriad had not only failed to show a likelihood of success on the merits but that Ambry had introduced sufficient evidence to convince the Court that Myriad was unlikely to prevail and that the claims were invalid for reciting patent-ineligible subject matter.  Portions of the Court's opinion should come as no surprise:  the Court found that the primer and probe claims asserted by Myriad and argued to be patent-eligible subject matter because they were synthetic were not patent-eligible because they had the same sequence found in genomic DNA (a truer reading of the Supreme Court's AMP v. Myriad Genetics opinion than Myriad's interpretation of that opinion).  More troubling is the District Court's determination that the asserted method claims are also patent-ineligible, relying in large part on the reasoning by Judge Illson of the Northern District of California in Ariosa Diagnostics v. Sequenom, Inc. (currently in the briefing stage before the Federal Circuit).  That exercise in patent illogic has been discussed earlier; that the Utah District Court finds this reasoning persuasive is unhappy news for Myriad (as well as many other genetic diagnostic companies).

There is one other interesting quotation from the District Court's opinion that deserves comment; according to the Court:

The practical result of Myriad's patents has been to hinder or halt follow-up research, data sharing, patient testing, and the creation of additional and more affordable technologies for BRCA1 and BRCA2 testing.  For example, since about 2005, Myriad has declined to publicly share critical information regarding its classification of variants, including with its own patients.  Instead, Myriad retains that information in a private database.

In so doing, Myriad distorts rather than serves the patent system's goal of public disclosure in exchange for exclusive rights.  In this way, Myriad has chosen a commercial path that turns much of our patent system policy on its head.

Once again, Myriad's competitors have stolen the march in the public relations arena, even with a Utah judge, who makes these statements while acknowledging elsewhere in the brief Myriad's efforts to provide testing for women who cannot afford it and to arrange insurance reimbursement for those having health insurance.  Perhaps Myriad invited this outcome by asking for a preliminary injunction, which with its considerations of the public interest invite "expert" witness statements supporting this negative view.  But it does raise the question (stated somewhat differently by a prominent biotech patent attorney), "Since when does a patentee lose the right to assert her patent just because she acts like a jerk."  Appearances have been a motivating factor and a persuasive influence throughout the Myriad saga, and it is about time that Myriad acts to counter the perception that the company, and its patents, have been a hindrance rather than a help in bringing BRCA testing, and the accompanying health, social and economic benefits to U.S. women.

Hat tip to Joe Allen for pointing out the quoted portions of the brief.

Comments

[Skeptical]

Is it legal error to have the judge over-reach as to what must be shared? Does not the patent itself resolve the Quid Pro Quo? Why then does any private database created AFTER the grant of the patent figure into what the judge calls a distortion of the public disclosure exchange?

Choosing a commercial path - or not - AFTER a patent grant has nothing to do with the traditional understanding of Quid Pro Quo. There is evidence of distortion here, but whether the distortion is the one the judge identifies, well, I am...

[EG]

Kevin,

What I see here in this preliminary injunction decision doesn't bode well for Myriad. With all due respect, I question Myriad's strategy in requesting the preliminary injunction for, as you point out, they invited this early negative view of their case.

[Wavex]

Interesting that public opinion seems to be much more important these days, as with the Chimerix trial just approved this week by the FDA.

[TT]

I tend to think that had Myriad's behaviors not been so despicable, we wouldn’t have been stuck with the current mess in 101. If you read the stories leading up to the discovery of BRCA1/2, you have highly respected scientists (e.g., Mary King (credited as discoverer of BRCA1), Michael Stratton (credited as discoverer of BRCA2), Sir John Sulston (Nobel Prize winner)) all saying that the discovery of BRCA1/2 was the collective efforts from an international consortium, and Myriad basically took advantage of the consortium and other scientists in the field, and then started to send “stop it or I will sue you” letters even to universities! I think there was a strong feel of injustice in the NY district court litigation if Myriad could keep enforcing the patents. ACLU picked the perfect bad guy. Myriad’s behaviors left you with nearly no sympathy. (Of course, there is no law that says bad guy cannot get or enforce a patent).
So now, we got stuck with bad case law in 101. Heard rumors from USPTO internal guidelines that Examiners should reject purified proteins or polypeptide under 101, unless applicants can prove otherwise. Good job, Myriad, for being so greedy and got all of us in trouble!

[Moocow]

TT, there aren't many unbiased accounts of the discovery of the BRCA genes, or of Myriad's subsequent marketplace behavior. If Myriad can be faulted, at a minimum it's because they allowed hostile attitudes to arise and persist. However, the letters "to universities" you mention were not sent to researchers, but to academic labs that offered infringing diagnostic testing services for cold hard cash. It's just not a simple black and white story. As far as being stuck with bad 101 law, we can thank Myriad and the Federal courts for botching the case, but the biggest hat tip goes to the ACLU first and foremost. They could have challenged these claims on noninfringement, written description or other grounds that would equally have allowed courts to rule in their favor. But instead, the ACLU carefully avoided any theory that would have applied only to these particular patents or to their particular plaintiffs. They deliberately drove a strategy that was calculated to have the broadest possible impact on the largest possible number of patents. If, per the new guidelines, inventors can now no longer get patents on antibiotics or polypeptides or fermentation products or petroleum derivatives - well, we must assume that's just perfectly fine with both the ACLU and the Supreme Court.