Bloomberg BNA Hosts Panel on Subject Matter Eligibility

By Kevin E. Noonan —

Last month at the BIO convention, Randy Kubetin, Managing Editor of Bloomberg BNA's Life Sciences Law & Industry Report moderated a panel entitled "Patent Eligibility from the Trenches: Practical Implications of the Supreme Court's Mayo and Myriad Decisions."  The panel provided a counterpoint to the USPTO's presentation earlier in the day (see "USPTO Provides Update on Myriad-Mayo Guidance"), which set forth the Office's position on subject matter eligibility.  This panel consisted of Theresa "Terry" Stanek Rea, former Deputy Director of the PTO under David Kappos and Acting Director upon his departure; Dr. Dianna DeVore, Senior Vice President, IP and Legal Affairs, Ariosa Diagnostics Inc. (familiar to readers for taking the position that nothing related to natural products or diagnostic methods is or should be patent eligible; Katherine Neville, a patent prosecutor from Marshall Gerstein and Borun in Chicago; and Matthew MacFarlaine, an author of Bloomberg BNA's Report, Stopped at the Threshold: The Practical Implications of the Supreme Court's Mayo and Myriad Decisions on Biotechnology Patent Practices (see "Bloomberg BNA Issues Report on PTO's Patent Eligibility Guidance").

Mr. Kubetin introduced the panel and the topic by recapitulating some of his rhetoric he used in an earlier press conference introducing the Report:  speaking of the Mayo and Myriad cases and the USPTO Guidance, he asserted that the cases and the Guidance had "rewritten the playbook" and were (to use PTO Official June Cohan's phrase) "game changers."

He then introduced the panel and Ex-Deputy Director Rea was the first to speak.  Asking that the session should be "highly entertaining" and "interactive, she presented what she called a "where we are" talk with regard to the Guidances and recent case law.  She argued that the Court's "judicial exceptions" were a "coarse filter" better assessed using substantive patent law.  She also asserted that in a close case, where patent eligibility is a tossup, the Office should choose to let an application pass through the Section 101 test.  She said that the Office was looking for "bright line" tests and for the public's help in properly applying the Court's rubrics, citing the Office's May 9th forum on the scope of the Guidances.  She also cautioned restraint by the Office, and asked the audience to advise clients to encourage them to pursue claims outside the scope of the Guidelines to help the Office "get it right."  She also mentioned that the deadline for written comments was extended by the Office until July 31, 2014 and said "[e]ach and every person in [the audience] has a moral duty" to provide comments on the Guidelines to help the Office "get it right."

But she acknowledged that the "easy days" of having patent eligibility satisfied merely by reciting that a natural product was "isolated and purified" are gone, and what the Office needs are distinctions from the case law, particularly from the "scholars."  Ms. Rea also believes (from anecdotal evidence) that the Office and even certain examiners are looking for help in making the right determination; in this regard Ms. Rea cited the seven additional examples issued by the Office, including the one involving production of an antibiotic in yeast, which she believes should be patent eligible (unfortunately contrary to the Court's Cochrane v. Badische Anilin Soda Fabrik, 111 U.S. 293 (1884) precedent).

Ms. Rea also argued (by example) for transparency by the Office, recalling her experience with the Written Description Guidelines from January 2001 and Director Kappos's supplemental guidelines in 2010, both of which were fully vetted through the formal agency rulemaking process.  She then directed her argument to why "getting it right" was important to her (as it should be to all of us, grey-haired or not): "I want as many drugs as possible and as many diagnostic tests as possible so I can look as good as possible for as long as possible."  She ended her portion of the panel by reminding the audience of the comments earlier in the morning by former Solicitor General Nancy Linck, agreeing that the Office should err on the side of patentability and said that she has optimism that the Office will do the right thing but needs our help in getting there.

Next to speak was Dianna DeVore, Chief Patent Counsel of Ariosa Diagnostics; for those with short memories, Ariosa has taken the position (in its case against Sequenom) that genetic diagnostic tests utilizing "naturally occurring" fetal DNA were invalid under Section 101.  Dr. DeVore began her talk by stating that the "optimism is now over" and that the issue isn't how to get patents to grant from the Office but on how they can be enforceable.  Dr. DeVore acknowledged that the issues have not been completely resolved and that the current state of the law has had a "chilling effect" on diagnostics.  A result of this chilling effect is a "change IP regime," from "content based" (presumably genetic information) to "technology based," for example technology applicable to many diagnostics areas (she cited prenatal diagnostics and oncology as examples).  While admitting that not everyone believes these changes are good for diagnostics (a brave understatement particularly in front of this audience), she then predicted that as a result of the changes in the law, genetic diagnostic technology would rely more on trade secrets than patent protection, saying that the worst case scenario for a genetic diagnostics company would be to disclose its "secret sauce" in a patent application without being able to protect its methods.  (Without impugning Dr. DeVore's motivation it is clear that such a regime favors companies like Ariosa because it not only does not require disclosure but actively discourages it, so that the "term" of a proprietary diagnostic method can last far longer than the statutory patent term.)  Former Deputy Director Rea then piped up, saying that this scenario "really scares her" because the point of the patent system was disclosure; if Dr. DeVore's predictions became true the future would create specialized "institutes" where patients would need to visit to get a diagnosis.  Under these circumstances these institutes would "control" such testing because it would be difficult if not impossible to reverse engineer the test.  Dr. DeVore deflected this criticism by reminding the audience of the competition between the Scolnick lab and Mary Claire King's lab over the BRCA genes, implying that this sort of competition could avoid the consequences Ms. Rea had envisioned.  Unfortunately, while in the BRCA case there could have been such competition, the type of diagnostics Ms. Rea was talking about is unlikely to have the same sort of competition if only because such diagnostic tests are unlikely to involve inheritance of a single gene having the cancer-predisposing effects of BRCA (if only for the reason that it is one of the very few having such effects).

Dr. DeVore also conflates the Mayo and Myriad holdings (as Ariosa has in its arguments to the District Court and the Federal Circuit), illustrated as saying the holdings were "not internally consistent" because producing cDNA from mRNA was "routine" (and implying that cDNA thus should not be patent eligible subject matter).

Dr. DeVore ended her talk by mentioning the Court's decision in Alice Corp. v CLS Bank, saying that she has been "surprised" that the Court had been so interested in this area of the law.  She also stated that she believes the Federal Circuit will ultimately determine where the lines on patent eligibility will be drawn.

Ms. Katherine Neville was the next speaker, and her talk was directed to the expanded scope of patent ineligibility in the Guidance that she said included antibodies, antibiotics, and other natural products.  She said that in her experience as a patent prosecutor for Biomarin and other pharmaceutical clients she had seen "viable 101 rejections and ridiculous ones, and cited the NIH study on the source of approved drugs over the past thirty years that has been discussed at the BIO IPCC meeting in April (see "Sherry Knowles 'Speaks Truth to Power' on the PTO's § 101 Guidelines").

Ms. Rea again spoke up, reminding the audience that such drugs would not be brought to market unless a company can have an exclusivity position, citing bacitracin and taxol as examples.  Finally, Ms. Neville spoke about alternative claiming methods (such as methods of treatment) and the limitations of using these claim forms rather than claiming such natural products as compositions.

The final speaker was Matt MacFarlaine, one of the authors of the Bloomberg BNA Report, and his presentation was largely a recap of the information disclosed in Bloomberg BNA's earlier press conference.  His message:  that the Office was broadly applying the Guidance on a case-by-case basis, to invalidate many claims encompassing widely varying subject matter (including in a particular example methods for identifying products of selective breeding of cod using genetic testing; these claims were deemed patent ineligible).  The pattern the authors detected was to "reject first" and then review an applicant's response to determine whether it overcame the assertion of patent ineligibility.

Mr. Kubetin then started the truly interactive part of the program, presenting three claims and having the audience vote on whether the claims were patent eligible under the Guidances.  These claims were related to the following technologies:

• A method for optimizing treatment of breast cancer with Tamoxifen, patterned very closely to the claim invalidated in Mayo;

• A method for amplifying DNA patterned very closely on claims to the polymerase chain reaction (PCR); and

• A vector comprising a nucleic acid operatively linked to a heterologous promoter.

Perhaps not surprisingly, the vast majority of audience participants believed the first claim not to be patent eligible, based on its similarity to the Mayo claim.  This sentiment seemingly ignored the question of whether it was known (at the time the method was invented) that Tamoxifen was a treatment for breast cancer; the similarity to the Mayo claim was enough for most of the audience to arrive at its conclusion of patent ineligibility.  At least one questioner pointed out that this sentiment was based on the assumption that Tamoxifen was not a new compound and posed the question of whether the result would be different if it was novel (Dr. DeVore remained steadfast in her position that this claim would just be a natural correlation whether Tamoxifen was a new compound or not.)

The other two claims were deemed by the majority of the audience to be patent eligible.  However, one audience member reacted to the PCR claim by stating that "this was exactly what the Supreme Court was trying to get rid of in Myriad, . . . control of genetic information."  Unless this was an ACLU plant, this outburst provided a measure of how far the ACLU's position has taken hold even among BIO attendees.  However, it is important to realize that this position conflates claims to a method for obtaining (genetic) information with the information itself, and also forgetting that genetic information per se is not patent eligible and has never been patented.  The recombinant DNA claim was less controversial if only because it was polled at the very end of the session (which had of course gone overtime); from earlier discussions it was clear that even this claim had some audience members believing that patent eligibility would depend on whether making recombinant DNA was "routine and conventional," something the Supreme Court has not held but criteria clearly implicated in the Office's Guidance.

Taken together, this session, Bloomberg BNA's press conference regarding its Report, and the PTO's session earlier in the day firmly established that the law of subject matter eligibility is in flux throughout the patenting space, a situation created by the Supreme Court, abetted by the USPTO and the excessive Guidances, and one that decidedly does not "Promote the Progress of . . . the Useful Arts."