Federal Circuit Denies Rehearing En Banc in Ariosa v. Sequenom

By Kevin E. Noonan --

The Federal Circuit declined to rehear en banc the panel decision in Ariosa v. Sequenom.  This decision was not surprising but what may be surprising was that only three judges wrote opinions, one in dissent (Judge Newman) and two concurring with the denial.  The first of these was by Judge Lourie, joined by Judge Moore and the second was by Judge Dyk.  There may be something to be gleaned from these opinions.

Judge Newman's dissent provides a suggestion of what her colleagues on the Court think about this case:  that is that it was wrongly decided but that the decision was mandated by Supreme Court precedent (in an echo of Judge Linn's concurring opinion in the panel decision).  She disagrees about that mandate, relying on her determination that the facts in this case "diverge significantly" from the factual predicates in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), and in Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013).  These distinctions include that "the medicinal product and its metabolites were previously known" in Mayo, "leaving sparse room for innovative advance in using this information as a diagnostic dosage tool."  Here, Judge Newman appreciates that in this case, "the claimed method was not previously known, nor the diagnostic knowledge and benefit implemented by the method."

Similarly, in Myriad, the Court noted with approval that the question before it did not involve "patents on new applications of knowledge about the BRCA1 and BRCA2 genes."  In this case, Judge Newman notes that the inventors were not claiming the discovery of paternal DNA in maternal blood, but rather a new diagnostic method that uses that information.  "Precedent does not require that all discoveries of natural phenomena or their application in new ways or for new uses are ineligible for patenting," Judge Newman writes, finding support in the Supreme Court's caution against such broad generalizations.  Here, this new diagnostic method was "novel and unforeseen, and [] of profound public benefit," quoting the majority opinion by the panel.  She also recognizes that the claims do not preempt further use of the knowledge that paternal DNA can be found in maternal blood or the "development of additional applications" of that knowledge.  She concludes with her view that the issue should be compliance with the other sections of the statute to confirm patentability.

Judge Lourie's concurring opinion likewise harkens back to Judge Linn's panel opinion concurrence in recognizing that this case is wrongly decided using traditional application of patent law.  Unlike Judge Newman, however, Judges Lourie and Moore believe that the Court's hands are tied by recent Supreme Court precedent.  Instead of belaboring that point, Judge Lourie uses his concurrence "to express some thoughts concerning laws of nature and abstract ideas, which seem to be at the heart of patent-eligibility issues in the medical sciences.  Those thoughts include that "[l]aws of nature are exact statements of physical relationships" in the natural world that are "often represented by equations," following the Supreme Court's lead in citing Einstein's equation regarding the relationship between energy and matter as well as other physical laws (Ohm's Law, Maxwell's equations and Newton's laws of motion).  The issue arises when what is claimed is an application of those laws, which of course is the basis for all claimed inventions, which perforce rely on natural laws or involve natural phenomena, according to Judge Lourie.  This leads him to the current conundrum, that an over-expansion of the Supreme Court's doctrines on patent ineligibility tend to make everything ineligible because of this reliance.

He diverges from the type of subject matter before the Court in this case to consider abstract ideas, which he says are essentially "mental steps" that are intangible and as such different from subject matter "that involve machines, which are tangible, steps that involve transformation of tangible subject matter, or tangible implementations of ideas or abstractions," distinctions regarding which, he reminds the Supreme Court, it agreed with the Federal Circuit as recently as its decision in Bilski v. Kappos.

Returning to this case, Judge Lourie acknowledges the concerns of many writing for Appellants and amici that "a broad range of claims of this sort appear to be in serious jeopardy.  It is said that the whole category of diagnostic claims is at risk.  It is also said that a crisis of patent law and medical innovation may be upon us, and there seems to be some truth in that concern."  His answer:  the deficiency in Sequenom's claims may be that they are indefinite or overbroad but not that they are ineligible on subject matter grounds.  Citing Diamond v. Diehr he contends that "[a]pplications of natural phenomena or laws to a known process may well be deserving of patent protection."  None of the claims at issue merely recite a natural law or are directed to a natural phenomenon, in his view.  The recited steps in the claimed methods "are all physical, and not insignificant, steps requiring human intervention."  The scope of the claims are another issue, but Judge Lourie believes that the "finer filter" of § 112 "might be better suited to treating these as questions of patentability, rather than reviewing them under the less-defined eligibility rules."  And herein lies at least part of the problem between the Federal Circuit and the Supreme Court:  the Supreme Court does not recognize that its patent eligibility rules are "less-defined" nor does the Court believe the substantive portions of the patent statute such as § 112 are preferable in deciding these questions.

Somewhat courageously Judge Lourie does strike back at the canard that careful and apropos claim drafting is some sort of underhanded way of obtaining claims to the properly unpatentable by stating that "a process, composition of matter, article of manufacture, and machine are different implementations of ideas, and differentiating among them in claim drafting is a laudable professional skill, not necessarily a devious device for avoiding prohibitions," and it is clear that he recognizes that obtaining a proper scope of protection is dependent on drafting claims to accepted classes of patentable (and patent eligible) inventions.

And then he concedes:

But focusing on the claims we have rather than those we might have had, the claims here are directed to an actual use of the natural material of cffDNA.  They recite innovative and practical uses for it, particularly for diagnostic testing: blood typing, sex typing, and screening for genetic abnormalities.  And it is undisputed that before this invention, the amplification and detection of cffDNA from maternal blood, and use of these methods for prenatal diagnoses, were not routine and conventional.  But applying Mayo, we are unfortunately obliged to divorce the additional steps from the asserted natural phenomenon to arrive at a conclusion that they add nothing innovative to the process.

He does so even though he understands that the claims are not abstract because they are directed to performing "actual physical steps on a physical material."  And the panel recognized that the claims do not unduly preempt the natural phenomenon, because "there were other uses for cffDNA and other methods of prenatal diagnostic testing using cffDNA that do not involve the steps recited in the various claims."

And finally:

In sum, it is unsound to have a rule that takes inventions of this nature out of the realm of patent-eligibility on grounds that they only claim a natural phenomenon plus conventional steps, or that they claim abstract concepts.  But I agree that the panel did not err in its conclusion that under Supreme Court precedent it had no option other than to affirm the district court.

In the other concurrence, Judge Dyk accepts the "framework" set forth by Mayo and Alice v. CLS Bank as being "an essential ingredient to a healthy patent system, allowing the invalidation of improperly issued and highly anticompetitive patents without the need for protracted and expensive litigation."  But this acceptance is not wholehearted and unqualified, because Judge Dyk also has reservations about "a too restrictive test" as set forth in Mayo that "may discourage development and disclosure of new diagnostic and therapeutic methods in the life sciences, which are often driven by discovery of new natural laws and phenomena."  Accordingly he writes to set forth his views but, like his colleagues, believes he is "bound by the language of Mayo, and any further guidance must come from the Supreme Court, not this court."

That language is clear, in his view, that there must be an "inventive concept" that ensures the claim is directed to something "significantly more" than the natural law per se.  "Mayo has unambiguously announced a generally applicable test for determining subject-matter eligibility under § 101 with respect to laws of nature, and we are bound to follow it.  We cannot confine Mayo to its facts or otherwise cabin a clear statement from the Supreme Court.  '[O]nce the Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law,'" he asserts, citing Rivers v. Roadway Express, Inc., 511 U.S. 298, 312 (1994).  Accordingly he concurs with the Federal Circuit's decision to deny rehearing en banc because the courts are bound by these decisions, and endorses the panel opinion because it properly applied this precedent.

However, Judge Dyk also acknowledges that the Court's framework under Mayo and Alice works best "when the abstract idea or law of nature in question is well known and longstanding."  He also believes the test to work well with respect to claims reciting abstract ideas, which have formed a greater portion of the Federal Circuit's recent jurisprudence on patent eligibility.  But the "problem" created by Mayo arises from the conclusion that "[an] inventive concept cannot come from discovering something new in nature -- e.g., identification of a previously unknown natural relationship or property."  He believes that the Court has not given sufficient weight to the "creativity and novelty" involved in the discovery of the law of nature itself, something "especially true in the life sciences, where development of useful new diagnostic and therapeutic methods is driven by investigation of complex biological systems."  This is particularly true with regard to the tension between Mayo and the later-decided Myriad opinions, which seem to treat differently the patent eligibility of applications of laws of nature and natural phenomena (including natural products) (although that tension is no excuse for not following the Court's precedent as Judge Dyk states in a footnote).

Turning to the question of (undue) preemption, Judge Dyk, like Judge Lourie appears to believe that this issue may be best addressed by applying other portions of the patent statute rather than § 101 to determine whether a claim applying a natural law or using a product of nature.  "[T]he novelty of a discovery should be enough to supply the necessary inventive concept," he writes, but preemption issues can be avoided by requiring the claims to be "narrow in scope and actually reduced to practice, not merely 'constructively' reduced to practice by filing a patent application replete with prophetic examples" (which was not the case for Sequenom's claims).  Limiting claims to what was actually shown to have utility would be incapable of "too broadly preempt[ing] the use" of the natural law, a concept Judge Dyk finds to be supported by the Supreme Court's opinion in O'Reilly v. Morse.  "This proposed approach, limiting the scope of patents based on new discoveries to narrow claims covering applications actually reduced to practice, would allow the inventor to enjoy an exclusive right to what he himself has invented and put into practice, but not to prevent new applications of the natural law by others," in Judge Dyk's view.  He is aware that making these determinations "could present difficulties of definition and line drawing," but permitting such narrowly tailored patents to pass the patent eligibility test is consistent in his view with the purpose of  § 101.  The benefit to the patent system is the assurance that "only diagnostic and therapeutic method patents limited in their claim scope would survive.  These patents would provide the world with disclosure and useful applications of previously unknown natural laws, and the opportunity to obtain such patents would help to restore the incentive to make those discoveries that the patent system has historically provided."

After pausing to mention that he does not believe Mayo to have been improperly decided on its facts, Judge Dyk concludes that, alas, even his proposed modification to how courts determine patent eligibility would not save Sequenom's claims.  This is not because the claims are not novel but rather because they are overbroad for reciting methods for detecting "any diagnosis of any disease, disorder, or condition" (provided that such disease, disorder or condition is genetically based and will arise when it is present only in paternal DNA).

In his final paragraph Judge Dyk states that

A future case is likely to present a patent claim where the inventive concept resides in a newly discovered law of nature or natural phenomenon, but the claim is narrowly drawn and actually reduced to practice.  That case will, I hope, provide the Supreme Court with an opportunity to revisit the Mayo/Alice framework in this one limited aspect.

This suggests, perhaps, that Judge Dyk believes this is not that case.

We know the views of these three judges, as well as Judges Reyna (who wrote the panel opinion), Wallach, and Linn from the panel decision.  The only other thing we know is that there were insufficient votes to review the decision, indicating once again an unwillingness by the Court to confront (or take the lead on) important issues for patent law in the face of Supreme Court disapproval.  Even if the Court believed the Supreme Court's recent turn in patent jurisprudence to be correct, we should expect the country's patent court to state their opinion fully and not in the opinions of a small minority of its members.  At the very least such a discourse would provide the Supreme Court with a better basis for deciding whether it should reconsider the disruption it has visited on protecting U.S. innovation by speaking with so much less than pellucid clarity in its recent subject matter eligibility decisions.

The deadline for petitioning for certiorari is early next year; should the Court grant the petition it is likely that the case would be argued in it the October 2016 term.

Ariosa Diagnostics, Inc. v. Sequenom, Inc. (Fed. Cir. 2015)
Per curiam

Comments

[Curious George]

What a bunch of wimps.

[EG]

Hey Kevin:

Sigh. How many amicus also (strongly) suggested that the Ariosa panel decision was wrongly decided?

What is particularly galling is how Dyk accepts the "framework" set forth by Mayo and Alice v. CLS Bank as being "an essential ingredient to a healthy patent system, allowing the invalidation of improperly issued and highly anticompetitive patents without the need for protracted and expensive litigation." How Dyk can say that with a straight face, and still believe that the "rule of law" (i.e., the express language of the statute, as expressed in 35 USC 101) is being obeyed escapes me.

I also place the blame for all this nonsense squarely at the feet of the Royal Nine. May be Congress will finally listen to those amicus when diagnostic methods become "invisible" because they are kept strictly trade secrets.

[Dan Feigelson]

Hey EG:

The Senate just released a report in which it criticized Gilead for keeping the price of its Hep C treatment high so that it could - gasp! - realize high profits. You know, profits: revenues above and beyond the revenues that offset the costs of the R&D and clinical trials that got the drug to market in the first place, revenues that get plowed back into additional research and, occasionally, get paid out to shareholders as dividends. Ooh, that evil pharma company!

I share your sentiments, but I wouldn't hold my breath on Congress stepping in and fixing anything in this area any time soon.

[skeptical]

The statement of:

"indicating once again an unwillingness by the Court to confront (or take the lead on) important issues for patent law in the face of Supreme Court disapproval."

is far less a sign of "wimpiness" as Curious George may put it, and far more a sign of natural conditioning brought upon the court created (in substantial part) to bring order to patent law BY the overbearing brow beating of the Supreme Court.

I am reminded of the story of monkeys in a cage, being fire-hosed when they reach for a hanging bunch of bananas. Once "trained," new monkeys are introduced one at a time and it is the previous monkeys that "train" the new ones not to reach for the bananas.

Eventually all the monkeys are not from the originally fire-hosed monkeys and they don't know why they should not reach for the bananas, only that they don't dare reach for them - nor let anyone reach for them.

When we have reached the state of such "conditioning" that a primary purpose of having this court established can no longer reach its mandate, it is time to SERIOUSLY consider disbanding the court and trying something else (going back to the original arrangement should be considered - but it is doubtful that such will suffice).

[EG]

Hey Dan,

I'm not "holding my breath on Congress," but it's the only way this mess created by an overzealous and overreaching Royal Nine can be fixed. If Big Pharma would get behind such a fix and push hard, it might actually happen, especially if it is pointed out that the only "realistic" options without such a fix are: (1) keep all such diagnostic methods as trade secrets; or (2) spend no R&D on such diagnostic methods, and thus they're not developed. Either of options (1) and (2) will lead to slower development of such diagnostic methods. It would especially cause serious angst in the university tech transfer community which cannot choose option (1) and might reluctantly choose option (2) (or diminish support of academic research on diagnostic methods) because there's no hope to get commercialization of such diagnostic methods by businesses.

[Paul Cole]

It is disappointing to find so few of the serious questions raised in this appeal addressed by the court e.g. the relationship between new utility or new result and eligibility under Section 101.

However, the opinions are almost an open invitation for the Supremes to take the case.

[EG]

"The opinions are almost an open invitation for the Supremes to take the case."

Paul,

I wish that were true. But the Royal Nine seems to enjoy keeping us "mere mortals" in the dark and continually "hiding the pea" as to how a medical diagnostic method can reach the patent-eligibility zone. If you sense that I give the Royal Nine a "Vote of No Confidence" on this question, you would be correct.

[Paul F. Morgan]

All the amici in this case seem to have in common a position that this discovery itself was a great scientific breakthrough. But was it, since most patent cases ended on 101 grounds do not ever get to 103 issues?
Here is one 103 allegation made in a Patently-O comment on this case. I have no idea is valid or not, but readers of this blog can: At the time the subject patent application was filed (March 4, 1997)?, was there really no POSITA hypothesis that fetal DNA might be floating around in the mother’s blood and that the fetal DNA could be selectively amplified by focusing on the paternally inherited portion of its DNA?
It was alleged in this comment that both parts of that hypothesis were proven at least as early as a hotlinked 1993 paper entitled: "Isolating fetal cells from maternal blood. Advances in prenatal diagnosis through molecular technology." Is that true?

[Paul F. Morgan]

Here is the cite to the alleged prior art article, which is noting earlier work:
JAMA. 1993 Nov 17;270(19):2357-61.
"Isolating fetal cells from maternal blood. Advances in prenatal diagnosis through molecular technology."
Simpson JL1, Elias S.

[Kevin E Noonan]

Paul: There are some practical implications to this even if the paper stands for the proposition that people knew there were fetal cells in maternal blood. For example, 1 mL of blood contains 7 million white blood cells. Separation methods exist to separate white blood cells from red blood cells and plasma, but I don't know of any physical method for separating fetal cells from maternal white blood cells. (Detecting fetal cells is different from separating them, and you can't do the analysis without separating.)

So while it is possible that there are ways to do such separation, what the inventors discovered was that nature had done the work for us, in that fetal DNA was contained in the plasma/serum. Separating the cellular from acellular components of blood has been understood for a very long time, so that you could do the analysis for fetal DNA in ways you couldn't do the analysis for fetal cells.

And the "Shazam" factor is that not only did no one know fetal DNA was in plasma but plasma was routinely discarded when performing analyses like looking at the mother's white blood cell count.

I don't think the paper affects the patentability assessment.

[The Memory Motel]

Kevin: "fetal DNA was contained in the plasma/serum."

Right. Maternal DNA is also in that serum. As everyone knew, you could distinguish between maternal DNA and fetal DNA by probing paternal sequences in the fetal DNA.

Maternal DNA is in maternal serum because maternal cells are floating around in maternal serum. Where you find cells, you find broken cells and where you find broken cells you find DNA. Where you find DNA, you can apply PCR to detect it. All this was known. It was so well known that people were contemplating taking dinosaur DNA from fossilized insect stomachs.

What wasn't well-known is what were the exact isolation and reaction conditions needed to get a reliable result that you could market commercially. The answer to that question isn't anywhere near the asserted claims which do nothing more than recite a discovery and state "detect it using conventional tools."

Is your position is that without that kind of extraordinary claim breadth nobody is going to discover and disclose valuable information anymore, then you just come out and say it, Kevin! Ideally you'd have some evidence to back you up on that remarkable assertion. One problem for you, of course, is that nobody doubts that had this "discovery" not been made by these alleged "discoverers" it would surely have been made by someone else shortly thereafter. Likewise everyone is keenly aware of how patentees will behave if the gates are left wide open to the type of claims you seem to favor. See, e.g., Prometheus and Myriad.

[The Memory Motel]

There's also this from the Abstract of Steele et al. (1996) http://www.ncbi.nlm.nih.gov/pubmed/8934032

"PCR has been shown to be a powerful tool in allowing amplification and identification of very small amounts of fetal DNA. However, this is limited to cases in which a specific and unique gene from the father is sought. ... It remains to be determined whether testing maternal blood for fetal cells **or DNA** will be used as a screening tool, similar to the maternal serum screening currently in use, or whether the accuracy can be improved to a level such that the techniques can be used diagnostically. Although there are many questions that remain unanswered at this time, the outlook for noninvasive prenatal genetic testing in the future is optimistic."

Sure doesn't sound like "teaching away" to me.

[Kevin E. Noonan]

MM: we would be having a different conversation if the claims were invalidated under Sec. 103.