Sherry Knowles Addresses Real World Impact of Myriad-Mayo Guidance at BIO Symposium

By Donald Zuhn --

Last month, at the Biotechnology Industry Organization (BIO) IP & Diagnostics Symposium in Alexandria, VA, Sherry Knowles of Knowles IP Strategies addressed the impact of the U.S. Patent and Trademark Office's Myriad-Mayo Guidance.  The Guidance, which was issued on March 4, implements a new procedure for determining the subject matter eligibility of claims under 35 U.S.C. § 101 in view of the Supreme Court's decisions in Association for Molecular Pathology v. Myriad Genetics, Inc. (2013), and Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012).  Ms. Knowles, who as former Senior Vice President and Chief Patent Counsel at GlaxoSmithKline played a leading role in challenging the USPTO's continuation and claims rules in Tafas v. Dudas, appeared on a panel with June Cohan, Legal Advisor with the USPTO's Office of Patent Legal Administration, and Patent Docs author Kevin Noonan to discuss the Guidance.  A summary of Ms. Cohan's presentation can be found here.

Ms. Knowles' presentation focused on the implications of the Guidance.  She began by examining the Supreme Court's decisions in both Myriad and Mayo, on which the Guidance was based.  Ms. Knowles argued that it was not a coincidence that the 1952 Patent Act followed closely after the Supreme Court's 1948 decision in Funk Brothers Seed Co. v. Kalo Inoculant Co., and pointed to commentary that Congress' intent was to overrule Funk and remove the judicial subjectivity of a 101 analysis, substituting an objective test for patentability based on obviousness.  She pointed out that "[c]learly, Congress did not like Funk."  Ms. Knowles suggested, however, that the Supreme Court has repeatedly and consistently ignored both the statutory language of § 101 and the Congressional intent behind the 1952 Patent Act.  Instead, it has morphed patent law to its own liking with a subjective § 101 test, which now after Mayo and Alice incorporates a subjective inventiveness evaluation, and narrows statutory allowable patentable subject matter through improper doctrines of judicial exceptions.  According to Ms. Knowles, the Court's subjective test, which does not require a rigorous analysis of prior advances nor comprehensive consideration of the perspective of one of ordinary sill in the art, has now become the main gating item for patent validity, as opposed to the Congressionally mandated tests under §§ 102, 103, and 112.  Later, Ms. Knowles commented that the adopted subjective test has eviscerated the metes and bounds of what Congress has decided is patentable -- that being "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof," a decision which is the exclusive purview of Congress and not the Court.

Noting that the Mayo Court "decline[d] the Government's invitation to substitute §§102, 103, and 112 inquir­ies for, in the Court's view "the better established inquiry under §101," Ms. Knowles countered that compliance with the U.S. Constitution is "not an invitation" and is "not optional."  In Ms. Knowles' view, the Court is required to carry out a rigorous statutory construction and Congressional intent analysis, and must stop there.  For this reason, she called the Mayo decision "among the worst decided cases in the history of the Supreme Court" because the Court ignored its Constitutional duty and limitation.  Likewise, in the Myriad decision, Ms. Knowles stated that only Congress is authorized and equipped (with hearings, subpoenas, and evidence gathering authority) to make policy decisions on which patent law must be based.  The Court was not authorized by the Constitution to make economic decisions for the country.  Ms. Knowles suggested, however, that the Myriad Court did precisely that by stating that without the judicial exceptions to § 101 "there would be considerable danger that the grant of patents would 'tie up' the use of [basic] tools [of scientific and technological work] and thereby 'inhibit future innovation premised upon them.'"  As for the USPTO, she criticized the Office for implementing the Guidance and thereby "follow[ing] another co-equal branch of the government that [was] acting outside of the Constitution, which is superior to all three branches."

The remainder of Ms. Knowles' presentation addressed the real world impact of the Guidance on patent litigation, pharmaceutical and biotech industry decisions, and on everyone personally.  With respect to patent litigation, she noted that courts have begun to rule on cases involving § 101 issues via Fed. R. Civ. Proc. 12(b)(6) motions (i.e., on the pleadings).  As examples of such cases, Ms. Knowles reviewed the recent decision in Genetic Technologies, Ltd. v. Laboratory Corp. of America Holdings (D. Del. 2014), and Ariosa Diagnostics, Inc. v. Sequenom, Inc. (N.D. Cal. 2013).  Ms. Knowles pointed out that both patent eligibility and obviousness are questions of law based on factual underpinnings, however, it appears that Courts are more willing to dispose of patent eligibility without getting to a jury trial.  In Ms. Knowles view, this is another ramification of the Supreme Court implementing a § 101 "you know if when you see it" threshold inventiveness determination.  In Ariosa, Ms. Knowles suggested that the District Court "strained to decide facts in summary judgment instead of going to the jury," and that if the issue had been obviousness rather than patent eligibility, the case may well have gone to a jury.

Turning to the impact of the Guidance on corporate decisions, Ms. Knowles pointed out that industry requires well-settled expectations of what the law will be long into the future.  Pharmaceutical and biotech companies make evaluations of the length of proprietary protection for a target product based on current patent law which are used to make long term financial projections.  Ms. Knowles wondered how IP attorneys could continue to provide information on which critical corporate decisions were being made "if you are working on a moving slate?"  She also contended that changes to the law resulting from court decisions were worse than those resulting from statutory changes, because the former are retroactive.

Finally, she noted that the Guidance also adversely impacted the corporate decisions of multinational pharmaceutical and biotech companies by moving further away from the harmonization of patent law.  Noting that the USPTO website describes the America Invents Act as "enable[ing] the USPTO to lead on a vision of an IP world in which national and regional patent systems are harmonized in pursuit of creating an optimal environment for technological innovation and diffusion," she asserted that the recent Court decisions and the Guidance do the opposite.  In particular, Ms. Knowles argued that because of the morphing § 101 law, the U.S. was now segregated from the European Union, China, Russia, Australia, South Korea, and Japan on the issue of subject matter eligibility.

Effect of Guidelines on Us Personally

Ms. Knowles saved the most passionate and persuasive portion of her presentation for last by addressing the impact of the Myriad and Mayo decisions and the Guidance on all of us.  She began by noting that she is working with Georgia Tech Professor Matthew J. Higgins through the IMS Heath and Pharmaprojects program to determine the number of natural product dosages that were sold in the United States between 2001 and 2011 for a range of drugs.  She shared for the first time data on eleven top-selling natural product therapeutics which indicated that patients have benefited by taking almost 31 billion doses of drugs that arguably would not be patentable under the Guidelines, and thus not commercialized, using the assumption that corporations act rationally and would not develop drugs without market protection.  She asked the attendees to raise their hands if friends or family members had been treated with these drugs, to a strong response.  Of course, this leads to the question of what drugs we will not get the benefit of in the future if commercialization is stalled by the new 101 interpretation.

Effect of Guidelines and Myriad/Mayo on Women with Breast Cancer

In the final portion of her talk, Ms. Knowles noted that as of January 1, 2012, 2.9 million women alive now have experienced breast cancer.  For the first time in a public forum, Ms. Knowles said that she is one of these 2.9 million women and a breast cancer survivor.  She said that if the Guidelines and Mayo/Myriad had been the law years ago, she would probably not be at the podium because she likely would have died.  Ms. Knowles told attendees that her life was saved by Adriamycin, an antibiotic fermentation product of bacteria (and cousin of daunorubicin) and "Amazonic Acid" (Taxol).

Pertinent to October as Breast Cancer Awareness Month, Ms. Knowles shared a chart from the Susan G. Komen for the Cure Foundation which indicates that of the six front line treatments for breast cancer, Adriamycin is a component of four.

Ms. Knowles also noted that in 2013, 232,340 women were diagnosed with invasive breast cancer and 39,620 deaths were attributed to breast cancer.  She then held up two patents that she had identified which were related to the natural product drugs administered to her:  U.S. Patent Nos. 3,590,028 and 5,641,803.  Ms. Knowles stated that without corporate support for those drugs based on an expectation of patent protection, she may not have become a breast cancer survivor.  After the conference, Ms. Knowles told me that she was motivated "to make this unusual personal statement to support all of the brave friends she met in infusion wards fighting for their lives with the only hope coming from news that their doctors will tell them there is a new clinical trial they can try or a new diagnostic that can tell them more about the monster growing inside them."  She also indicated that because of the Myriad and Mayo decisions and the Guidance, and the uncertainty introduced by the decisions and Guidance, pharmaceutical and biotech companies might not be driven to identify new natural product drugs that could be used to save lives in the future.  If her assessment turns out to be correct, this would be the worst impact of all.

Postscript:  Ms. Knowles asked me to add the following message to the above report:

If you have been touched by cancer personally or through a family member or friend, please post a message and tell your story.  It wasn't easy for me to make a public statement, but maybe it will make it a little easier for you.  Have you seen a natural product or it's derivative save a life?  Or have you lost a friend or relative to cancer and want to support innovation for additional drugs, including natural products?  Please make some noise.

Comments

[EG]

Don,

Ms Knowles comments are spot on. The Royal Nine on patent-eligibility under 35 USC 101 has acted ultra vires, by judicial fiat, contrary to Congress' intent, and has overreached their constitutional authority. And people wonder why patent law professionals are generally upset with the Royal Nine, and why patent law jurisprudence is such a mess now?

[Paul Cole]

Interesting and courageous post showing the continuing importance of patents in the area of natural products.

[Skeptical]

I am heartened by the insights offered here - among many other items, one fore example that I do hope continues to gain traction is that the heart of the argument used by the Supreme Court is steeped in forward looking conjecture of what MIGHT happen - that such conjecture begs the question of whether there is a PRESENT case or controversy for which the Court may even deign to act on that "legal principle" that they seek to tie into a constitutional question.

The Court has had it out for "scriviners" - let's see what happens when the Court's own scrivining is put in the spotlight.

[Paul Cole]

As I have said in a number of postings on this blog, to find the correct rule of law in these decisions it is necessary to read the patent(s) in issue and especially the claims. It is then necessary to read the statute and figure out which limb of section 101 the Court is talking about (composition and manufacture not always being equivalent).

Then you need to read the decision at first instance, the decision of the Federal Circuit, possibly some of the more pertinent briefs, what was said in oral argument (particularly the more significant questions from the Justices) and the opinion(s) handed down by the Supreme Court. You may need to read some of the more important cases cited in the opinion(s) and thoroughly understand their holdings: e.g. in Myriad you need to read American Fruit Growers, Chakrabarty and Hartranft (in increasing order of significance). When you have done that you might realise that manufacture, not composition of matter, is the key word in the section and why that is the case.

When you have that knowledge, and if you are also armed with the skill in legal analysis that should have been learned in law school you can work out what the holding is. In the case of Myriad that it not so difficult because Justice Thomas says what it is in very clear language at least twice (but the Federal Circuit opinions and the oral argument are also illuminating). You are then in a position to appreciate that the rule of law governing later cases might be different from what you get merely by considering the outcome in terms of the facts of the particular case e.g. full length gene vs cDNA. You will have an understanding of what the rule of law actually is, not just what it is reputed to be. A lay person can figure out the outcome from the facts: it takes a lawyer to correctly identify the governing rule of law relied on by the Court.

The Hitchhikers Guide to the Galaxy has the words DON'T PANIC inscribed on its cover in big freiendly letters. Unfortunately some people within the USPTO seem to have panicked, which is unfortunate when careful legal analysis reveals that the grounds for panic are illusory.

[A Rational Person]

Paul Cole: Why are American Fruit Growers or Hartranft relevant to the interpretation of 35 USC. 101?

The decisions in American Fruit Growers and Hartranft both pre-date 35 USC 101 and, therefore, 35 USC 101 could be considered to have been effectively overruled by 35 USC 101.

[Skeptical]

A Rational Person,

The case of Hartranft is an extremely poor case for patent law, as it is concerned with taxation matters. The case of American Fruit Growers comes from a similar era of Supreme Court anti-patent mindset (pre-1952, in the age of "the only valid patent is one that has not yet appeared before us") and is also an extremely poor case, as it ignores the fact that the surface treatment of the fruit did indeed change the surface of the fruit.

I find Mr. Cole's excessive optimism a form of Alfred E Neuman "What me Worry" mindset a bit out of touch with the reality of how the Court's decision is being played out. While his advice on the surface is technically accurate, he overlooks the historical and philosophical battles under way in the US.

Then again, I am...

[Skeptical]

...and to mirror what I think that you are saying, is that the law prior to 1952 - even as the section that became 101 with the Act of 1952 is nearly the same word for word - cannot track eligible subject matter cases given the intent of Congress to remove common law evolution of the definition of "invention" that the Congress had previously given to the courts. This is a thought expressed by Ms. Knowles (and others) that Mr. Cole simply ignores in totality.

[Paul Cole]

@ A rational person and Skeptical

If you read Chakrabarty you will see that the standard is set by Hartranft. Nor is that case anti-patent - what you can get from it is that novelty (including novelty of form) + new utility = eligibility. You will find that this maps rather well into the new and useful language of Section 101. From my European standpoint I have no problem with that, and it is OK under TRIPS as well (see the note to Section 27 of TRIPS.

However, we should not forget Ms Knowles and acknowledge once again her efforts and useful information.

[Skeptical]

Paul,

I suggest that you apply your own advice and re-read Hartranft directly, and then understand the historical context of the Court that cited that case for its rather poor legal position in American Fruit Growers.

And yes - you SHOULD worry - the "What me Worry" line is just way too pollyanna for the reality that the US jurisprudence is in.

If you do so - and if you understnad the context of In re Bergy subsumed into Chakrabarty (paying attention to the players involved in Chakrabarty - who says what [i.e., the dissent], you would not be so "glib" in your advise not be worried.

One cannot be in your "camp" and be in the "camp" that Ms. Knowles and I represent - these are mutually exclusive camps.

Do not be lukewarm, less I spit you out - be hot or cold, but choose a side.

[A Rational Person]

Skeptical,

Thanks for your analysis with which I agree. Another issue not addressed by Paul's 35 USC 101 analysis is the issue of what the term "new" means in light of the fact that term "discovers" is used in this section.

The term "new" can be interpreted in a number of ways. For example, "new" could be interpreted to refer to only something that had never existed before. However, "new" can also refer to not having been previously known.

I would further argue that given the use of the phrase "whoever invents or discovers" that both meanings of the term "new" provided above apply with respect to 35 USC 101, because the term "discovers" normally refers to someone who "discovers" something that had existed before but was not previously known.

Therefore, I think the Myriad decision improperly requires ignoring the term “discovers” in 35 USC 101.

[Paul Cole]

@ Skeptical

The side I am on is trying to make things as tolerable as possible in the situation that we find ourselves. I think that reason applied to the Supreme Court decisions can narrow them usefully, with great benefit e.g for the patenting of natural products. That is a lot easier than either (a) bringing fresh cases before the Supreme Court or (b) promoting legislative change. Furthermore, the Courts may subvert purported legislative change by paying attention to the older authorities.

And yes, I have read Hartranft very carefully more than once and maintain my position that it is a helpful, not a harmful, opinion.

As a lawyer I decline to be in any "camp" because my objective is to arrive at a true but favorable view of the law. I am working towards the same ends but perhaps by different means, and believe that care and subtlety are also useful weapons.

[Skeptical]

Paul,

I am going to politely - and firmly - disagree with you - in this particular situation (yes, often care and subtlety can be useful - but their place is not here).

You are aiming for a Chamberlain solution when it is clear that a Churchill one is needed.

While I admire your personal desire to apply narrow reasoning - such is simply not happening in the US world of jurisprudence. You are not in touch with the reality that such careful, thoughtful and restrained reasoning that you personally would apply is NOT in fact being applied.

One legislative change that I have proposed is to eliminate patent cases from the review power of the Supreme Court - this is within the constitutional power of our Congress and would resolve - in a Churchill manner - the repeating history we see of a Court who harbors animus to patents.

As I have also noted, my view on our practically worthless Congress being up to the task: well, I remain...

[Skeptical]

A Rational Person,

I have not entertained deeply the notion you put forth as to "discovery," but would note that 35 USC 100(a) can be read in your favor:

(a) The term “invention” means invention or discovery.

Had this definition been written differently, for example:

(a) The term “discovery” or "invention" means invention.

then one may argue that "discovery" is being used in a special manner and discount your view. However, the fact that Congress acted to write the law in this manner does seem to indicate that the term discovery is one that retains a different meaning from the word invention (on its face) but that Congress is taking a shortcut throughout the rest of the statute and not writing "invention and discovery" wherever "invention" is later used.

Further, your view is in fact strengthened with the passage of the AIA and the recalibration of section 102. Now, trade secrets which may still be new to everyone else in the world count as being "new." In other words, "new to you" is still "new" and the personal block of "not new to me, the inventor" is gone.

[A Rational Person]

Skeptical,

Thanks for your analysis. One of the many problems with the Supreme Court's legislating from the bench with respect to 35 USC 101 is that the justices don't even understand how 35 USC 102 and 35 USC 103 work together with 35 USC 101 to prevent many of the hypothetical problems that the Supreme Court attempts to remedy by rewriting 35 USC 101.

For example, with respect to the Supreme Court's fear of an inventor potentially patenting "a natural law," the court ignores the fact that with a newly discovered natural law, many of the applications may have been performed prior to discovery of the natural law.

For example, people had been using prisms to produce spectra long before Newton discovered the natural law that produced spectra. Had Newton hypothetically tried to claim producing a spectrum from white light using a prism in the U.S. (an admittedly difficult feat, because the U.S. did not exist during Newton's lifetime), his claimed invention would have been anticipated under 35 USC 102 by everyone else who had used a prism to produce a spectrum.

The Supreme Court also provides no examples of a claim that would monopolize a law of nature and not been anticipated under 35 USC 102.

From beginning to end, the Alice Corp. v. CLS Bank decision is the Supreme Court legislating from the bench with no concern for interpreting 35 USC 101 and no understanding of how the various sections of 35 USC work together with each other.