Do Patents Promote or Stall Innovation?

A petition recently filed with the Supreme Court triggers renewed debate about the role of patents in the diagnostics sector.

By | June 1, 2016

© ISTOCK.COM/-OXFORDSeventeen years ago, Arupa Ganguly received a disturbing legal letter asking her to stop her work. Recently appointed to the faculty at the University of Pennsylvania’s Perelman School of Medicine, Ganguly, along with her colleagues, was offering screens for BRCA1 and BRCA2—two genes involved in DNA repair that, when mutated, increase a woman’s risk of developing breast and ovarian cancers. But in the late 1990s, molecular diagnostics company Myriad Genetics had acquired patents covering the BRCA genes, as well as dozens of BRCA mutations and methods to isolate and detect them, establishing a monopoly over the use of the genes in diagnostic testing. In the cease-and-desist letter received by Ganguly, the company asserted that the right to perform BRCA screens and return results to patients belonged solely to Myriad.

“I was very angry, to say the least. I was disappointed. I was sad,” says Ganguly, now the director of the Genetic Diagnostic Laboratory at Perelman. “But I had to go with it. No one was going to fight Myriad because, they thought, ‘A law is a law.’”

Following receipt of that letter, Ganguly avoided working on genes that were not in the public domain. Then, a decade later, the Association for Molecular Pathology organized a lawsuit to challenge Myriad’s BRCA patent claims, and Ganguly testified to a US District Court in New York that Myriad’s action had compelled her to halt BRCA research and screening. Over the next few years, the case made its way through the US Court of Appeals for the Federal Circuit to the Supreme Court, where, following a well-publicized hearing in April 2013, the justices unanimously ruled that the BRCA genes—and, indeed, any “naturally occurring” DNA sequences—“lie beyond the domain of patent protection” as products of nature and not of human engineering.

“When I came out of that chamber, I could feel the excitement,” Ganguly said. “It had been clear from the way the questions were being asked that the ruling would very likely go in our favor, but when it did, it was a very exciting moment. I was very happy that day.”

Ganguly’s relief was shared by many in the scientific community. Francis Collins, director of the National Institutes of Health (NIH), issued a statement calling the decision “a victory for all those eagerly awaiting more individualized, gene-based approaches to medical care.” On Twitter, Collins expressed himself more simply: “Woo Hoo!!!” But for others, the ruling—and the justifications it invoked—reflected part of a gradual erosion of patent eligibility that threatens to limit research and development in the diagnostics sector.

Now, a patent dispute between biotech companies Sequenom and Ariosa Diagnostics on a related theme—the analysis of naturally occurring fetal DNA for use in noninvasive prenatal diagnostic tests—is making headlines. And as the arguments for each side make their way toward the Supreme Court, the case is reinvigorating an unresolved debate about how to balance freedom in research with the demands of commercialization. Ganguly—along with many others who have a stake, either financially or as a matter of principle—is waiting with bated breath for a decision that could influence development in the diagnostics sector and basic research for years to come.

A natural minefield

When San Diego, California–based Sequenom began acquiring patent licenses in 2005 for methods to analyze cell-free fetal DNA (cffDNA) in maternal blood, the concept was certainly a new one. Company researchers later exploited the discovery of cffDNA to develop a noninvasive diagnostic test, called MaterniT21, that allowed them to estimate the relative abundance of each chromosome. “The theory is that if a pregnant woman has a fetus with, for example, trisomy 21 [Down syndrome], then the relative amount of chromosome 21 will be elevated,” Sequenom executive vice president of research Dirk van den Boom told The Scientist shortly after the test’s release in 2011.

A few months later, when San Jose, California–based competitor Ariosa Diagnostics released a test that also detected trisomies in fetal DNA, Sequenom sued for patent infringement—a procedure employed routinely by diagnostics companies as a means to protect the temporary rights to intellectual property afforded by patents. In retaliation, Ariosa filed a lawsuit claiming that Sequenom’s patent claims were never valid in the first place, because they depended on naturally occurring DNA and obvious (i.e., not inventive and therefore not patent-eligible) analytical procedures.

In June 2013, after reviewing the dispute, a US District Court in California sided with Ariosa, and was backed up by a Federal Circuit panel in 2015 on the basis of language from both the Myriad ruling and another recent decision concerning the patent eligibility of measuring levels of a drug metabolite (Mayo v. Prometheus). Because naturally occurring DNA is a “product of nature,” and methods to amplify and sequence this DNA applied techniques that have become “routine, conventional, and well-understood,” Sequenom’s patent claims for its fetal DNA test were invalid, the courts ruled.

Following a subsequent denial of appeal by the Federal Circuit last December, Sequenom filed a petition with the Supreme Court on March 21; the nation’s top court will decide whether to review the case later this year. Of course, there’s more riding on the outcome than just determining which company has the right to market its noninvasive prenatal tests. As one Federal Circuit Court judge put it, the current state of patent eligibility in the diagnostics sector is a potential harbinger of a “crisis of patent law and medical innovation.”

The problem, as many are quick to point out, is that “products of nature” and “conventional” techniques describe a significant portion of modern diagnostic tests, meaning that large swathes of previously patent-eligible methodology could suddenly become impossible to protect. “A lot of medical inventions—and, to a certain extent, Sequenom’s invention—are informational,” says Jacob Sherkow, a professor at New York Law School. “It’s about thinking about doing something a different way, and developing current technology to do it like that. It’s tricky to say whether that’s a piece of engineering, or whether that’s a piece of nature.”

Open to all

One of the principal concerns surrounding the issuing of patents in diagnostics research is that allowing ownership of the discovery and detection of naturally occurring molecules could hinder scientific progress. In 2000, a survey of more than 1,200 US geneticists in industry, government, and academia found that approximately three-quarters of respondents disapproved of patenting DNA altogether, while half noted that patents related to genetic testing had at some point limited their research. And these numbers may well increase among university scientists as they learn more about existing patents relevant to their work, says Lisa Campo-Engelstein, a professor with joint appointments in bioethics and obstetrics and gynecology at Albany Medical College in New York.

It’s tricky to say whether that’s a piece of engi­neering, or whether that’s a piece of nature.—Jacob Sherkow, New York Law School

“Academic institutions are becoming more aware of the fact that researchers are not checking or don’t know about patents,” she says. “They’re becoming more concerned about liability, and they’re notifying their researchers.” This, in turn, can pressure scientists to adjust their research questions to avoid any sort of legal confrontation with industry, she adds. “I’m concerned about the effects it will have on scientific research.”

Having experienced some of those effects directly, Ganguly is well aware of the potential dangers of allowing a single company to essentially own an entire research area, and argues that the same logic applied in the Myriad ruling ought to apply more broadly. “These are all natural products,” she says of genetic markers. “They’re something that nature is doing, not us. You’re just finding out [the sequence or mutation] and improving your methods so you can one day detect that in one cell out of millions.”

With the widespread adoption of next-generation sequencing, those methods increasingly consist of “conventional” techniques that many labs can reproduce—a situation that became clear during the Myriad proceedings, notes the University of Utah’s Sean Tavtigian, a former Myriad researcher and the lead inventor on the company’s now largely invalidated US patent for BRCA2. “Once massively parallel sequencing came along, it became considerably less expensive for other organizations to enter the testing field,” he says.

If it stands, then, the invalidation of Sequenom’s fetal DNA patent claims could improve the landscape for everyone by denying any single company control over conducting, and pricing, related tests, Ganguly concludes. “If Sequenom loses its monopoly, it will open up diagnostic testing to broader competition. It should again become a level playing field.”

A darker side?

The arguments that diagnostics patents inhibit research and prevent healthy commercial competition made a strong appearance in the Myriad dispute, and in the intensive media coverage that surrounded it. But support for these arguments, both then and now, is widely contested.

Some studies have suggested that academics are less likely to face obstacles from patents being enforced than from restricted access to patented materials and data—a problem that essentially becomes moot if the techniques being used are “routine, conventional, and well-understood.” And Myriad President Peter Meldrum argued in a controversial 2013 letter to The Washington Post that, far from limiting scientific progress, the company’s test had in fact promoted research, as demonstrated by the 18,000 scientists working on the BRCA genes and their more than 10,000 publications.

“In the best cases, patents and open science work in tandem with academics and industries to make things work and make them make a profit,” says New York Law School’s Sherkow. “The instances of bad behavior”—in which patent holders bully scientists out of doing their research—“have, frankly, been really, really small.”

And if patent eligibility requirements become too restrictive, innovation could suffer as a result of less industry investment, Sherkow adds. “We have a system of very burdensome regulatory approval in the United States that costs lots and lots of money. Companies wouldn’t be spending hundreds of millions of dollars doing clinical trials if they weren’t going to come out on the other side with some sort of property asset.”

Sequenom highlights this very point in its petition, and it’s an argument that has seen growing support among other biotech leaders and law professionals over the last few months. While it’s conceivable that companies could find ways to work around the decision—by tacking on a therapeutic step post-diagnosis, for example—if the federal courts continue to side with Ariosa, it could change the way the industry approaches innovation, says Kevin Noonan, a biotech patent lawyer at McDonnell Boehnen Hulbert and Berghoff LLP, who filed an amicus brief to the Federal Circuit on Sequenom’s behalf in late 2015.  “If [the ruling] doesn’t get overturned, it is going to make it very, very difficult for companies to protect their intellectual property,” he says. Following the 2013 ruling and last December’s denial of appeal, Sequenom’s shares fell 22 percent and 10 percent, respectively, and earlier this year, the company laid off 20 percent of its workforce and sold its prenatal testing facility in North Carolina.

Researchers at Sequenom aren’t the only ones feeling the effects of the shaky state of patent eligibility. Brian Van Ness, a geneticist at the University of Minnesota who heads the gene sequencing and diagnostics startup Target Genomics, is also noticing an apparent loss of investor confidence now that the intellectual property protection offered by patents is harder to guarantee. “Compared to five years ago, the investment community has gotten very, very cautious about what they’re investing in,” says Van Ness, who also acted as an expert consultant in litigation related to Myriad’s patents. “Raising capital has become more difficult.”

Far from boosting data sharing and reducing secrecy, as many opposed to such patents hope to achieve, the loss of protection for diagnostic tests and associated decrease in investment could lead to a reduction in research openness, says Noonan. Rather than filing their ideas as public patents, “companies, as much as they can, would try to keep things as trade secrets,” he says, adding that it’s a pattern he is already beginning to see among clients working with biomarkers and diagnostics. “That would mean, for example, that [companies] would offer a test, but you’re not going to know what molecule or gene is being detected. That’s just not a good thing.”

Of course, it’s difficult to measure the impact of legal decisions on research and industry, and even more difficult to predict the downstream effects of these rulings on the lives of the patients that the research is supposed to help. But the Ariosa v. Sequenom case may at least offer an opportunity for the Supreme Court to clarify what constitutes protectable innovation in the diagnostics sector.

“Whatever happens, we are going to live with the consequences,” says Sherkow. “We’ll have to wait and see whether we get the present that we want under the tree at the end of the year, or whether we’re getting lumps of coal.” 

DOMINO EFFECT

So far, the US federal court system has sided with Ariosa in its argument that Sequenom’s patent on a method to analyze fetal genetic abnormalities from a maternal blood sample is invalid, due to the courts’ designation of fetal DNA as a natural product and the techniques employed as routine. If that decision holds, some lawyers have suggested that the fallout could eradicate patent protection for thousands of life science inventions. Below are just three examples of cases that have relied on the Ariosa ruling to invalidate diagnostics patents in the last 12 months.

Esoterix Genetic Laboratories LLC v. Qiagen Inc.
In August 2014, Esoterix sued Qiagen for infringing on a patent covering a method to determine the effectiveness of certain cancer drugs on patients’ tumors. Qiagen responded in July 2015, citing the Federal Circuit’s decision in Ariosa v. Sequenom, and argued—successfully—that Esoterix’s claims were ineligible due to a reliance on “laws of nature.” In September, the Court sided with Qiagen and invalidated Esoterix’s patent.

Cleveland Clinic Foundation v. True Health Diagnostics LLC
Until recently, Cleveland Clinic Foundation (CCF) held patents for a test that assesses a patient’s risk of developing cardiovascular disease using a combination of enzyme measurements and known risk factors. When sued for infringement by CCF, True Health Diagnostics responded by arguing that CCF’s methods pertained to natural phenomena and contained no inventive steps. In February, citing both Myriad and Ariosa v. Sequenom, a US District Court ruled in True Health’s favor, and found three of CCF’s patents invalid.

Genetic Technologies Ltd v. Merial LLC
Merial LLC responded to an infringement lawsuit from Genetic Technologies Ltd over a patent covering methods to detect alleles using selective PCR by challenging the patent’s validity. In April, a Federal Circuit panel found that the methods in question were “remarkably similar” to the genetic testing involved in Ariosa v. Sequenom and upheld an earlier US District Court decision invalidating the patent claims.
PROTECTING YOUR PROPERTY

Patent attorney Larry Manber of Lucas and Mercanti LLP in New York City provides advice on how researchers can manage diagnostics patent claims in the current climate of IP uncertainty.

Highlight novel claims: When drafting new patents, “make sure you have something in there that’s nonroutine,” Manber says. “Is there a newly discovered molecule, a new reagent, something that you crafted for the purpose as opposed to one you bought at the store? Is there a step that’s completely new—some manipulation of the reagent, or the data? These are all things worth trying.”

Think twice before suing: As happened in the case of Ariosa v. Sequenom, when one diagnostics company sues another for patent infringement, the sued company may turn it right back on the plaintiff, arguing that the first company’s patent is no good, says Manber. It may behoove companies, then, “not to be so aggressive in pursuing your claims,” he says.

Going global: While patent eligibility in the United States is in a state of turmoil at the moment, companies looking to pursue patents for their inventions in other countries are unlikely to face the same problems abroad, says Manber. “We do caution [researchers] not to be optimistic in the U.S. if they have a classic diagnostics claim,” he says.  But “although the U.S. is the largest and certainly the most profitable biotech and pharmaceutical market, it’s not the only patent office in the world.”

 

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Comments

Avatar of: Inventor

Inventor

Posts: 10

June 15, 2016

Patenting a sequence you spent money and time to discover is normal and patenting a drug or dignostic you invented based on that scientific information qualifies it for a patent also.

Its not "obvious" It takes ingenuity and research to reduce an idea like using a particular sequence to make diagnoistic kit to a practical product.

Taking away the right to patent a dignostic favors the biggest companies that have the resouces to research and develop and  manufacture diagnostics on a large scale with no patent protection- at the expense of start ups that also benefit society by developing life saving drugs and dignostics.

If the court rules that diagnostics are also exempt becuse they are based on genetic sequences, expect a lot less research by smaller companies and that will stifle progress in medicine and hurt partients.

 

Avatar of: Inventor

Inventor

Posts: 10

June 15, 2016

Patenting a sequence you spent money and time to discover is normal, and patenting a drug or dignostic you invented based on that scientific information qualifies it for a patent also.

Its not "obvious" It takes ingenuity and research to reduce an idea like using a particular sequence to make a diagnoistic kit to a practical product.

Taking away the right to patent a dignostic favors the biggest companies that have the resouces to research and develop and  manufacture diagnostics on a large scale with no patent protection- at the expense of start ups that also benefit society by developing life saving drugs and dignostics.

If the court rules that diagnostics are also exempt becuse they are based on genetic sequences, expect a lot less research by smaller companies and that will stifle progress in medicine and hurt partients.

 

Avatar of: Stuart21

Stuart21

Posts: 14

June 15, 2016

Do you mean an ideal patent system, or the patent system as it is?

Let me copy & paste this, still warm, from 'The Engineer'

"I have been in inventing limbo since 1988 when the EPO dissed my Inventor of the Year winning invention (That Sony only had two words for, on first sighting; ‘Excellent’ and ‘Brilliant’)" with the words ‘As there are no technical impediments to the implementation of your invention, it is therefore not unobvious’.

Think about that. How is it not indicia of unobviousness, that it might be readily made? Esp when the inventor is one from outside the industry – when there are thousands of engineers and designers all trying to come up with the better mousetrap.

And the reason that it had not made it to the market, at 6 years after conception, despite heaps of investment from family and friends? 

Technical impediments. 

Must be good to be a shiny bum patent examiner sitting in their ivory towers.

That decision was fatal to the project. And more. 

Patent system is totally unrealistic, assuming inventors have unlimited funds, unlimited wisdom, and of course, an MBA. I’ll take the rest of my inventions with me, thanks. Mostly environmental – thank god we don’t have any problems there, eh!

Stuart Saunders

Intellectual Property Rightful Owners Action Group

reform@iproag.org

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