By Kevin E. Noonan --
Sounding an appropriately alarmist note, Bloomberg BNA has issued the results of a study on how the U.S. Patent and Trademark Office is administering its March 4, 2014 Guidance on subject matter patent eligibility developed in view of the Supreme Court's decisions in Mayo v. Prometheus and AMP v. Myriad Genetics. Entitled "Stopped at the Threshold: The Practical Implications of the Supreme Court's Mayo and Myriad Decisions on Biotechnology Patent Practices" (an executive summary of this Report can be found here), and written by Matthew McFarlane, Tara Guffrey Sharp, and John T. Aquino, the byword of the report is that there will be continued uncertainty in subject matter eligibility under these guidances unless and until the Office corrects them (which while unlikely it may ultimately do; the deadline for providing comments on the guidance has been extended to July 31, 2014; see "USPTO Extends Deadline for Providing Feedback on Myriad-Mayo Guidance"). But with Legal Department member June Cohan calling these cases a "game changer" and the guidance a "course correction," it is not hyperbole for the report to state that the guidance has "rewritten the playbook," that "[t]he decisions and the guidance appear to have shaken the life sciences industry at its roots" and that "[the decisions and guidance] could affect the public's access to new and effective medicines and therapeutic approaches in the future."
Section I of the Report provides a brief introduction on the history of biotechnology and its relationship to patenting that should be familiar to anyone in the industry and provides a succinct synopsis for the newcomer. It also discusses relevant Supreme Court precedent related to the question of patent eligibility, up to and including the Mayo and Myriad decisions. This section also includes a Table of "Notable Biological Product Patents" spanning almost 100 years between 1903 (adrenaline) and 2001 (human embryonic stem cells) as well as a Table on Supreme Court and other opinions addressing the patent-eligibility question. Finally, the Section contains a discussion of Congressional actions related to biotechnology, including passage of 35 U.S.C. §§ 103(b), 287(c) and portions of the Leahy-Smith America Invents Act that preclude patenting of a human being. These actions amount to inaction with regard to forbidding "gene patents" and patenting of other naturally occurring compounds (the several failed attempts of Rep. Xavier Becerga to have Congress consider a bill banning human gene patenting; see "He's Baaack!", is relegated to a footnote). In this regard the Report states that:
Congress therefore would appear to have appreciated that it could have restricted patenting for isolated DNA molecules corresponding to human genes such as those claimed [in the Myriad case], yet specifically chose to permit such patents to preserve "economic viability of the biotechnology industry."
The final portion of this Section is a description of the Guidance document itself, with examples from the guidance and PTO materials (PowerPoint presentations, etc.) issued by the Office to help examiners and the public to understand the guidance; the Report notes that "some attorneys felt [that these slides] made the situation more confusing."
Section II shows the results of the survey of PTO actions with regard to "product of nature" claims. The authors reviewed 5,200 applications filed "on or after" April 1, 2011 from about 1,500 "unique [patent] families." Of these, about 1,000 prosecution file histories were reviewed and about 35% of these contained subject matter-eligibility rejections based on Mayo and 23% contained such rejections based on Myriad. The Mayo-based rejections generally involved claims to "measurement of biologically-relevant (sic) molecules in a biological sample" that "will correlate with a definable aspect of patient care." Examples provided in the Report include the existence of a cell-surface marker on a tumor cell that "could identify a patient who would benefit from [a particular] treatment" and other measurements relating to "susceptibility to disease, abnormal genetic sequences, [and] concentrations of relevant metabolites." The bases for rejection is that claims to such methods rely on a "law of nature," based on Mayo. In order to overcome such a rejection an applicant must establish that the claims recite "something more" than the law of nature that is not "conventional or obvious." In the survey, the authors found that making the required showing was not a typical outcome. Using a hypothetical claim directed to a method for detecting a genotype associated with susceptibility to a drug (one of the bases for so-called "personalized medicine"), the Report states that "claims of this type are almost always rejected" on the grounds that the applicant has not supplied that ineluctable "something more" the PTO discerns is mandated by the Mayo decision. Examples of limiting amendments found sufficient to overcome these rejections are provided in this Section of the Report but, as noted by the authors, these "cures" are often worse than the purported "disease," because they involve introducing limitations that can raise validity (under Section 103 or 112) and enforcement (divided infringement) concerns.
With regard to rejections based on Myriad, as is clear from the Guidance, the Office has expanded the scope of Section 101-based rejections far beyond the borders of the Court's decision related to human genomic DNA. Under current Office practice, all "naturally occurring" compounds are presumptively patent-ineligible (in contrast to earlier PTO practice; elsewhere in the Report the authors note that the Office just recently issue its 50,000th "DNA-related patent"). The Report further notes that while many of the claims of these patents were invalidated by the Court's Myriad decision, the timing of the decision (well after the time of "relatively old" biotech patenting involving cloning genes encoding known proteins having particular desirable functions, such as erythropoietin and tissue plasminogen activator) made its effects (if cabined to genomic DNA) minimal and the effect on non-DNA biotechnology patents would be "minor or non-existent." But that isn't how the Office has applied the Myriad decision, and this policy decision impacts (negatively) the protection available to "proteins, antibodies and polypeptides" (sic), as well as "plants, bacteria and many bacterial compounds [such as antibiotics], and chemical and metallic compounds." While the Report focuses on the biotechnology industry, in principle the Office would find a claim to a purified component of crude oil useful as a lubricant to be patent-ineligible under its interpretation of the Myriad decision.
The Report also notes that combinations of naturally occurring compounds may also not be patentable even if the combination does not occur in nature (based, no doubt, on Funk Bros. v. Kalo Inoculants and the Office's gunpowder example, where the combination of charcoal, sulfur and saltpeter is not patent eligible as a mere combination). This subject matter encompassed by the Office's interpretation of the proper standards for patent eligibility is "vast," according to the Report and puts many if not almost all composition of matter claims claiming a "product of nature" at risk. In a series of "horror stories," the Report outlines the type of mischief eminently predictable from the Court's decision; in one, the Examiner refused to acknowledge any difference between a claim that encompassed isolated genomic DNA versus one limited to cDNA (in clear contradiction to the Court's instructions provided that the genomic DNA comprised even one intron), while in other cases kits were deemed not patent-eligible. On the other hand, trivial modifications to natural products, such as attaching a detectable label have been deemed enough to pass Section 101 muster. This Section ends with a Table comprising "thumbnail" analyses of the grounds of rejection in the file histories of patents containing Section 101 rejections based on Myriad or Mayo; these sketches contained several examples of claims otherwise allowable were later rejected under Section 101.
Section III contains "comments" from selected patent practitioners, the comments reflecting varying levels of disdain, disgust, despair, and dread over the Supreme Court decisions and how the Office has decided to implement them. These practitioners note several instances where the Office has applied these decisions to subject matter (such as methods for manufacture and methods of treatment) far outside the scope of the judicial exceptions to patent eligibility. Several of them note the practical consequences of the Office's actions, including protracted prosecution and appeal to the Patent Trial and Appeal Board (and, it must be contemplated, eventually to the Federal Circuit). Some practitioners note that individual examiners have shown "greater openness" and more "flexibility" than the guidances would suggest. One practitioner recalled the tendency for companies to "vote with their feet" over the Bush Administration's stem cell restrictions and relocate to "other jurisdictions" (i.e., abroad), taking those jobs and that innovation with them. There is also some justified grumbling about the subjectivity the current guidance introduces into the law and that the guidance (as do the Court's decisions) impermissibly "read out" the word "discoveries" from the statute. But at least one practitioner thought the problem would resolve itself, because what is now "state of the art" in biotechnology is no longer monoclonal antibodies and isolated nucleic acids but compounds that have been sufficiently modified that they should qualify even under the guidance's rigid standard.
Section IV contains a synopsis of the comments elicited by the Office in its April 16th Biotechnology/Chemical/Pharmaceutical Customer Partnership Meeting and its May 9th forum on the guidance.
The Report ends with the following conclusions (entitled "What's Next"):
The PTO's guidance to examiners based on the Myriad and Mayo decisions confirms a shrinking scope of patent-eligible subject matter relating to life sciences and biotechnology concerns. It also establishes a disparity in substantive patent law that moves patent examination in the PTO away from the standards that are accepted under the patent laws of virtually all major U.S. trading partners. Life sciences companies, facing the possibility that U.S. patent law will not allow them to recoup the millions of dollars and years of research spent on getting a life-changing therapy from lab to market, may be less likely to pursue innovative technology or may take it to other countries where the technology more easily could find patent protection.
The Supreme Court decisions and PTO guidance have prompted a re-look at the issues of Chakrabarty, reflecting decades of case law, regulatory decisions and scientific advances.
The PTO has acknowledged that more clarity is needed. It also may be that this reconsideration is a natural progression towards a new standard that appropriately promotes further investment in innovation.
It remains to be seen how future action in the PTO and litigation in the courts will alter the situation, or whether, as the U.S. Constitution provides, Congress will step in to further ''promote the progress of science and useful arts'' relating to valuable innovation in biotechnology and life sciences.
The Report provides important information for anyone thinking of submitting comments to the PTO or trying to overcome a Section 101 ground of rejection (but in truth it is more a case of "misery loves company" than any practical advice). It also is solid evidence that the Office has fatally overreached with this guidance, and as with the infamous "claims and continuation" rules needs to be challenged until the Office realizes how complicit it is being with the Supreme Court in negating the Constitutional mandate that the patent laws "promote the progress . . . of the useful arts."
