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Wednesday, 17 August 2016

Bad and Good News for Bio-Pharmaceutical Patenting in the United States

Two recent developments in U.S. patent law mean mixed news for the bio-pharmaceutical industry.  First, the bad news -- the U.S. Supreme Court declined to accept for review the closely-watched Ariosa Diagnostics v. Sequenom case concerning the patentability of a diagnostic method.  Second, the good news -- a panel of the U.S. Court of Appeals for the Federal Circuit issued the Rapid Litigation Management v. Cellz Direct decision further clarifying application of the two-step Alice/Mayo test (1. claim directed to a patent ineligible category and 2. lack of inventive concept) concerning laws of nature.

Diagnosis?  Too many dumplings.
Prior to the U.S. Supreme Court's issuance of the Mayo v. Prometheus case invalidating claims to a diagnostic, there was general concern about patents inhibiting the use of diagnostics.  Indeed, the U.S. Supreme Court's decision in Association of Molecular Pathology v. Myriad Genetics was also, in part, directed to the use of claimed inventions for diagnostic purposes.  Since the issuance of the famous Alice v. CLS Bank International case and Mayo v. Prometheus, there is a concern that the Supreme Court has pushed too far against patent eligibility. Post-Mayo, it appeared that few diagnostic inventions would be patent eligible. 

In Ariosa Diagnostics v. Sequenom, a three-judge panel of the Federal Circuit found that Sequenom's diagnostic patent was patent ineligible.  This was despite the fact that the discovery made by Sequenom was very beneficial to patients and apparently against previous wisdom concerning the utility of the material used in the diagnostic.  Moreover, the patentee asserted that the natural phenomenon/law of nature was not preempted by the claimed invention.  Notably, Sequenom requested an en banc rehearing, but was denied by the Federal Circuit.  Interestingly, Judge Dyk wrote a concurrence essentially expressing concern that the Mayo case's sweeping test prohibiting the patenting of diagnostics would result in insufficient incentives for the invention of diagnostics.  Importantly, Judge Dyk set forth a way to distinguish and apply Mayo that would allow for some diagnostics to survive the Alice/Mayo test.  However, Judge Dyk signaled to the Supreme Court that it should take the case.  Unfortunately, the Supreme Court did not accept the invitation to hear the closely watched case.
Alice/Mayo back to the Vet!

In Rapid Litigation Management v. Cellzdirect, a three-judge panel of the Federal Circuit found that claims directed to a method to preserve liver cells were patent eligible.  The Federal Circuit further clarified the application of the Alice/Mayo test in the context of laws of nature/natural phenomenon.  As in the Enfish case, the Federal Circuit focused on the first prong of the Alice/Mayo test by finding that the claimed invention was not "directed to" a patent ineligible concept--the discovery that certain liver cells can survive multiple freeze/thaw cycles.  While the discovery was certainly made by the inventors, the patent claimed a "new and useful laboratory technique for preserving" those cells "for later use."  This approach seems to track part of Judge Dyk's analysis in his concurrence to deny en banc review of the Sequenom case.  The Federal Circuit further found that the second prong--inventive concept--was also satisfied to find patent eligible subject matter.  Notably, even though the additional steps were well-known, a method to preserve the cells was not known or present in the prior art.  An instruction to apply a known step a second time in the claims is essentially an inventive concept if prior art directed not to apply the known step again.

A press release issued by Sequenom notes that it has "equivalent" claims in enforceable and valid patents in other jurisdictions, including Europe, Japan and Australia.  It also states it is enforcing those patents in some jurisdictions.  From the perspective of global innovation, will there be less innovation in diagnostics if the Federal Circuit does not continue to "clarify" the U.S. Supreme Court's approach? 

9 comments:

Pol said...

It seems the new patentability landscape post-Alice, Myriad and Mayo is taking shape
- Alice really meant that computer implemented inventions were only patentable in as far as they related to the working of a computer somehow, and so business methods and mental acts are unpatentable inventions
- Myriad and Mayo could could not have meant all inventions relating to natural products and laws were not patentable, and products in particular which are different from nature and have practical uses remain patentable
- Mayo remains a bit of mystery until the Federal Circuit approves an invention based on a natural correlation. Sequenom shows it is difficult to get broad claims where any sort of natural correlation is involved and so diagnostic inventions remain in limbo.

Anonymous said...

Pol,

The "business methods are not eligible" remain a (dwindled) US Supreme Court position.

Your "could not have meant" vis a vis natural products likewise is not sustained in view of what the US Supreme Court stated.

The "murkiness" of terms left undefined ("abstract," sufficiently more") means that ALL inventions carry a degree of doubt with them.

Pol said...

Anon of 19:52:00, my comments relate to how the case law is developing on these issues, and is an interpretation of what Cellz Direct, Enfish and Sequenom say. We're moving on from the original Supreme Court decisions as the Federal Circuit develops the case law from here, and so of course what I say is not supported by US Supreme Court decisions but by subseqent Federal Circuit ones, and probably the Federal Circuit is back in the driving seat now for eligibility.

Anonymous said...

This is "Anon of 19:52:00,"

Anything by the Federal Circuit is of momentary import and cannot be considered "the driver seat."

This is a direct offshoot of what the Supreme Court has been doing and can be seen to be why the Court refuses to draw any clear lines. They Court simply does not want to be left out of any discussion of eligibility, even as it is beyond the Court's allocated powers to write law in this area.

So, you may think that you are "moving beyond," but that is merely a mirage, as you have never left what the Supreme Court has done (is doing) - and that is by design of the Supreme Court.

Do you really think that such critical terms as "abstract" and "significantly more" are left undefined lacking a reason?

NOTHING that the Federal Circuit does is of lasting import in the realm of eligibility. And this is so because basically they lack the backbone to call a spade a spade and to note when the Supreme Court has stepped beyond the Court's authority when it comes to the difference between interpreting the law and writing the law.

Pol said...

Anon of 19:52:00, I agree with a lot of what you say, but the reality is that the Supreme Court has some ability to define its own authority area. Its history in other areas of law shows instances where it has extended its own powers and Congress has not reacted. So the Supreme Court's relationship to interpreting, defining and writing law is a blurry one, and it gets on with what needs to be done until Congress want to stop it.

As I see it the relationship with the Federal Circuit on patent matters is a part collaborative one. The Supreme Court probably recognises the Federal Circuits' expertise to build 'detailed' case law based on individual cases, and now I think will give it space to do so. The tests which patent case law develops is more and more rooted in the specific technologies and issues that come up on individual cases and the Federal Circuit is best placed to develop the principles of Mayo, Myriad and Alice further.

Having said all of that I completely agree with your perspectives are valid

Anonymous said...

Diagnosis? Too many dumplings.

I beg to differ doctor. From the colours of her coat, this cat is female, and she is also pregnant.

Anonymous said...

Pol,

Collaborative one....?

You must live in a different universe. The Supreme Court has been down right hostile to the CAFC.

One only has to read the fractured In re Alice decision (prior to the Supreme Court rewriting of law), to see what a mess the Supreme Court has made in its pursuit of power.

\#\ said...

Anon

The following link also supports the idea of tensions between the Supreme Court and Federal Circuit: http://www.abajournal.com/magazine/article/tug_of_war_over_interpretations_of_patent_law_continues_between_federal

Anonymous said...

Thanks for the link - (very little surprise that it is academics Lemley and Rai trying to paint a picture that the unbridled power of the Supreme Court simply must be on the side of "correctness") - no matter that it is the Federal Circuit that acts in the mandate of Congress for the statutory law that is patent law.

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