Alert April 11, 2013

Supreme Court to Decide Important Biotechnology Patent Cases This Term: Myriad and Bowman

In what appears to be a permanent trend, the United States Supreme Court will once again address important issues of patent law this term. There are two cases before the Supreme Court this term that directly impact patent law: Assoc. of Molec. Path. v. Myriad Genetics, Inc., No. 12-398 (“Myriad”), and Bowman v. Monsanto Co., No. 11-796 (“Bowman”). The Supreme Court’s decisions in both cases could have widespread ramifications on biotechnology patents.

In Myriad, the Supreme Court is confronted with the issue of whether human genes are patentable. In this case, Myriad owns patents covering isolated human genes (BRCA1 and BRCA2), mutations in those isolated human genes associated with a predisposition to certain types of breast and ovarian cancers, and analytical methods for determining whether a cancer-causing mutation exists in the human gene. The plaintiffs in the case, medical organizations, researchers, genetic counselors, and patients, brought this lawsuit challenging the patentability and validity of Myriad’s patents. The federal district court concluded that the isolated human genes and methods of analyzing them were not patent-eligible under 35 U.S.C. § 101 and, therefore, Myriad was not entitled to its patents.

In a 2-1 decision, the Federal Circuit Court of Appeals reversed the district court and held that the isolated human genes were patent-eligible because the isolated genes existed in a different form than the same gene found in a cell of the body. Writing for the Court, Judge Lourie reasoned that isolated DNA has been manipulated chemically so as to produce a molecule that was “markedly different” from that which existed in the body. Because the isolated DNA was “markedly different” from what was observed in nature, it was eligible for patenting as a composition of matter and did not fall into the “law of nature” exception to patentable subject matter. In a concurring opinion, Judge Moore explained her slightly different view that it was the combination of markedly different characteristics with the potential for significant utility, i.e., enlargement of the utility of the isolated gene sequence, that rendered the claimed isolated DNA to be patent-eligible subject matter. Judge Moore also explained that, had she been writing on a clean slate, she might have been inclined to find that some of Myriad’s claims to larger sequences of DNA were not patent-eligible because they did not have any enlargement in their utility as compared to the same DNA found in nature. However, given that the U.S. Patent and Trademark Office had a stated policy of allowing such patents to issue for nearly a decade (and had followed that policy for arguably a century or more), and because the settled expectation of the public (scientists, biotechnology companies, investors, etc.) was that human DNA was patent-eligible, that policy should not be disturbed in the absence of congressional action.

On Nov. 30, 2012, the Supreme Court granted the plaintiffs’ petition for certiorari limited to the following question: “Are human genes patentable?”  Briefing before the Supreme Court is underway, and a number of public interest groups, companies, academic institutions and individuals have submitted amicus briefs on that issue. The Supreme Court will hear oral argument in the case on April 15, 2013, and is likely to release its opinion by the end of June this year.

On Feb. 20, 2013, the Supreme Court heard oral argument in Bowman v. Monsanto Co. Monsanto initiated this lawsuit against Indiana farmer, Vernon Bowman, alleging that Bowman’s planting of second-generation soybean seeds (i.e., the progeny of genetically-altered seeds) purchased from a commodity supplier infringed Monsanto’s patents. Monsanto invented and developed technology for genetically modified “Roundup Ready®” soybeans that exhibit resistance to glyphosate-based herbicides, such as Monsanto’s Roundup® product. Monsanto sells its Roundup Ready® seeds with a limited use license that requires growers, among other things, “to use the seed containing Monsanto gene technologies for planting a commercial crop only in a single season” and “to not save any crop produced from this seed for replanting, or supply saved seed to anyone for replanting.”  Bowman argued that the authorized sale of second-generation seeds to the commodity seed suppliers, and those suppliers’ authorized sale of such seeds to Bowman, exhausted Monsanto’s patent rights with respect to the planting of such seeds under the Supreme Court’s analysis of the patent exhaustion doctrine, as set forth in Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008). The district court concluded that the doctrine was inapplicable and found that Bowman’s planting of seeds with Monsanto’s Roundup Ready® technology infringed Monsanto’s patents.

On appeal, the Federal Circuit Court of Appeals affirmed the district court’s finding of infringement. The Court of Appeals held that the doctrine of patent exhaustion was inapplicable to Monsanto’s patented self-replicating technology. The Court of Appeals reasoned that applying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder. The Court of Appeals further held that even if Monsanto’s patent rights in the second-generation seeds sold to commodity’s holders are exhausted, a grower like Bowman creates a newly infringing article when he plants the seeds containing Monsanto’s Roundup Ready® technology and a new generation of seeds is developed. According to the Court of Appeals, although growers like Bowman would be authorized to use the second-generation seeds purchased from commodity suppliers for other purposes, such as animal feed, they are not authorized to replicate Monsanto’s patented technology by planting those seeds to create newly infringing plants or more seeds.

The Supreme Court granted Bowman’s petition for certiorari to address the following issues:  “Whether the Federal Circuit erred by (i) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (ii) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?”  During oral argument in the case, the justices asked several questions of the lawyers for both parties trying to discern whether, in this area of self-replicating technology, a “first sale” was a sufficient incentive for commercial entities to invent and improve on existing technology. A decision from the Supreme Court is expected by the end of June 2013.

Both the Myriad and Bowman decisions are likely to have important consequences for patents covering DNA and self-replicating genetic technologies.