By Kevin E. Noonan —

The Biotechnology Industry Organization (BIO) filed an amicus brief with the Supreme Court last week in Bilski v. Doll, the appeal from the Federal Circuit's en banc decision establishing the "machine or transformation" test as the exclusive test for patent eligibility of process claims.  BIO was joined on the brief by the Advanced Medical Technology Association (AdvaMed, a medical device industry group), the Wisconsin Alumni Research Foundation (WARF) and the Regents of the University of California.

The brief bases its legal argument on the assertion that the Bilski "machine or transformation" test is "inconsistent with the broad standard for patent eligibility in §101 and this court's precedent."  It cites contrary Supreme Court precedent to counter the Bilski majority's apparent reliance on the same case law (much like Judge Newman did in her spirited dissent in Bilski).  The brief reminds the Court that its precedent supports a broad interpretation of the term "any" in the statute, and its exclusions from patent eligibility have been limited to laws of nature, abstract ideas, and natural phenomena, exemplified by Einstein's law of mass and energy, Newton's law of gravity, "a new mineral discovered in the earth or new plant found in the wild."  On the other hand, the brief argues, applications of the laws of nature "can be patented as part of a process" and "all inventions can be reduced to underlying principles of nature," citing Diamond v. Diehr; the brief even cites to this principle as enunciated by Justice Breyer in his Laboratory Corp. v. Metabolite Labs., Inc. ("LabCorp") dissent.

The amici argue that any difficulties attendant upon applying these precepts, of drawing the "line between a patentable 'process' and an unpatentable 'principle'" do not justify a bright-line test like the "machine or transformation" test in Bilski.  The brief asserts that the Court has rejected such bright-line tests of patent ineligibility; specifically citing the Court's statement in Gottschalk v. Benson that "[w]e do not so hold" that a patentable process must be tied to a particular machine or change articles to a different state or thing.

The brief characterizes the Court's earlier decisions that a process is patent-eligible if it is tied to a particular machine or of it transforms an article to a different state or thing as a "safe harbor," and that the Federal Circuit in Bilski transformed this safe harbor into a "rigid exclusionary rule" (no doubt in homage to the Supreme Court's displeasure with the rigid application of the Federal Circuit's "teaching-suggestion-motivation" test for obviousness in KSR International Co. v. Teleflex Inc.).  The brief discusses the KSR decision as well as Warner Jenkinson and Festo with regard to bright line rules, and with the consequences of "disrupting settled expectations of the inventing community."  Quoting from Judge Newman's dissent, the brief states:

Uncertainty is the enemy of innovation.  These new uncertainties not only diminish the incentives available to new enterprise, but disrupt the settled expectations of those who relied on the law as it existed [before Bilski].

The brief addresses prior Supreme Court precedent particularly relevant for biotechnology inventions, specifically Diamond v. Chakrabarty, J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, Inc., and Funk Bros. Seed Co. v. Kalo Inoculant Co., saying that each of these cases stands for the proposition that while a law of nature or a natural phenomenon is not patentable per se, applications of laws of nature or natural phenomena are patentable subject matter.  "While these cases involved claims to products rather than processes, 'the same principle applies' when analyzing process claims for patent eligibility" the brief asserts, citing Diamond v. Diehr.  The Federal Circuit's Bilski decision is contrary to this precedent, according to the brief, insofar as the lower court has applied the "machine or transformation" test outside the business methods or computer arts, specifically citing Classen Immunotherapeutics, Inc. v. Biogen Idec.

BIO and its fellow amici also ask the Court to abrogate secondary tests, like "preemption" and "post solution activity."  Whether a claim "preempts" an unpatentable natural law, abstract idea, or natural phenomenon asks the wrong question, the brief asserts, citing the patentable claims in the Telegraph cases (O'Reilly v. Morse) as an example of process claims that do not preempt all uses of electromagnetism; the issue is not patent eligibility but the scope of the claim and whether it is adequately supported by the disclosure, which is a matter for § 112, not § 101.  The brief also argues that the way the Federal Circuit uses the concept of preemption risks conflation with the patentee's ability to "preempt" others from infringing its claims.  Similarly, the brief argues that the "post-solution activity" test encourages "dissecting the claims and ignoring certain claim language," contrary to the principle that the claims should be read as a whole in determining whether an invention is patent-eligible.  This is because such an analysis risks conflating patentability with patent eligibility (a distinction made with great clarity by Judge Rich in In re Bergy).

The greater portion of the brief sets out policy considerations of paramount concern to these groups.  The brief points out that many of the inventions made by their members involve "[p]reviously unknown biological correlations" (which they characterize as 'natural laws or principles' discovered through molecular biology techniques) that are "increasingly used to guide biotechnological product development."  Patentability of these inventions is necessary so that investors can "recoup vast development expenses incurred during the decade-long product development" that are made based on these correlations.  According to the brief, current and future developments in the biotechnology area may be precluded from patentability by the Federal Circuit's "rigid and constricted patent-eligibility test."

"Because these technologies require investment in unusually high-risk, expensive research and development," what is needed are "broad, well-established eligibility standards," the brief asserts.
  In addition, the amici remind the Court that the Bilski rule would preclude from patentability not only current but already-patented technology, and would "deter critical investment in the biotechnology and medical technology industries."

The brief recites a wealth of beneficial effects in the biotechnology industry that resulted from the Court's expansive reading of § 101 in Diamond v. Chakrabarty (neglecting to mention that this was a 5-4 decision); the decision "paved the way for biotechnology discoveries" (Humulin, hGH, tPA, and IFN, for example).  The brief argues that the biotechnology industry is responsible for more than 200 new drugs and vaccines, with more than 400 new drugs in clinical trials, directed to more than 200 diseases, (including cystic fibrosis, AIDS, cancer, heart disease, MS, Alzheimer's, Parkinson's, and diabetes).  This requires investment:  more than $30 billion annually, "[v]irtually all of this investment . . . through private funding.  . . . ("98% of R&D investment comes from the private sector)."  The brief justifies this expense by citing Masi & Grabowski for statistics that it costs more than $600 million to bring "a biologic from the laboratory to human clinical trials," and that "FDA-mandated human testing consumes another $624 million."  And this investment is risky; the brief cites "thousands" of candidate biologic drugs that are tested and rejected "after large investments have been made" (1 in 5,000 according to a HHS study from 2004).  If the failure rate was reduced by a mere 10%, $100 million in development costs per drug could be saved, according to the FDA.  (In addition, the brief cites $9 billion in annual research and development costs for AdvaMed's members.)  Specifically regarding diagnostics companies, the brief sites a 35% investment of revenue into R&D, and for companies having less than $5 million in annual sales, investment equal to 200% of revenue.  The good news is that this investment has paid off, with the number of diagnostic tests on the market increasing by 60% between 1989 and 2004, with an estimated increase in life expectancy of half a year.

The brief then connects these achievements with the question before the Court:

[R]aising funds to support product research and development requires the expectation of reasonable financial returns from commercial products and services that are successful.  That expectation rests on the understanding that novel, useful, and unobvious biotechnological innovations will be patent-eligible under the principles established by Chakrabarty.

The brief cites as an example of the effects of uncertainty in patent eligibility the 13% decline in the NASDAQ biotech index after President Clinton and British Prime Minister Blair suggested that these governments might act to limit patent protection for human genes.

The brief characterizes as "havoc" the consequences of assessing patent-eligibility of biotechnological process claims under the Bilski machine or transformation test, because this would "create new uncertainty":

Requiring biotechnology and medical technology process claims to be coupled to a physical transformation of matter or tied to a specific machine will exclude from patent eligibility inventions directed to new and useful methods which are of great value to society – inventions that also are specific and concrete (are not abstract ideas), that result from human intervention (are not natural phenomena) and that are applications yielding a new and useful end (are not laws of nature).

These principles are illustrated in the brief with hypothetical claims to methods for diagnosing a disease by detecting a metabolite in a bodily fluid (a LabCorp–type claim) and a method for identifying drug susceptibility of a malignant tumor by detecting expression of a particular gene.  The brief concedes that neither claim satisfies the Bilski test, but maintains that neither claim is directed to a natural phenomenon, a law of nature, or an abstract idea, and thus should be patentable under the Court's precedent.

The brief also discusses biomarkers in some detail, defining "biomarker" as "a characteristic that is objectively measured and evaluated as an indicator of normal biological processes, pathogenic processes or pharmacological responses to a therapeutic intervention" (citing Biomarkers and Surrogate Endpoints, 69 Clinical Pharmacology & Therapeutics 89, 91 (2001)).  The brief recognizes that the utility of biomarkers is in making a "correlation" between the marker and a disease or organism status, "performed through mental operations or otherwise."  These types of inventions are illustrated using U.S. Patent No. 5,674,680 for "predicting the time of onset of the development of immunodeficiency associated with disease progression" by "determining a level of expression of HIV messenger RNA . . . in peripheral blood cells" and "correlating the level of expression of HIV messenger RNA with the time of onset of the development of clinical signs of immunodeficiency," with a high expression levels correlating with a high likelihood and low expression levels with a low likelihood of the development of clinical signs of immunodeficiency.  The brief cites this invention as contributing to the development of combination therapies.

Also cited with regard to biomarkers and personalized medicine are claims to methods for detecting expression levels of human genes relating to susceptibility to the anticancer drug Camptosar®.  Specifically, expression levels of an enzyme, UGT1A1 can vary as a genetic polymorphism, and the different expression levels can affect the activity of the drug (leading to the possibility of overdose); this is claimed in U.S. Patent No. 6,395,481 as a screening method.  Also cited is the role that recognition of varying expression levels of HER-2 in breast cancer patients played in development of Herceptin® for treating breast cancer, and how this marker is used for screening patients (citing U.S. Patent No. 4,968,603 for identifying HER-2 as a marker for these breast cancers).

Finally, the brief discusses the usefulness of these markers for drug development, citing FDA reports and NIH programs aimed at facilitating drug development using biomarkers.  Research on K-ras mutations enables "tailor[ing] such therapy to the genetic status of the individual patients and to identify patients who are likely to respond" to a particular therapy.  As a result, "[p]atients who formerly would have undergone needless, ineffective treatment now can be redirected immediately to alternative therapies."

The brief then states in conclusion that:

Innovations in the fields of biomarkers and medical devices show great promise of revolutionizing medicine in the coming decades, allowing for personalized medicine and a higher standard of patient care.  The Bilski
"machine or transformation" test would stifle investment and innovation in these fields, and is not an appropriate standard for determining patent eligibility under §101.

The brief makes its arguments strongly and cogently based on these legitimate and important policy considerations.  For anyone familiar with this area, however, reading the brief brings to mind another Court with other amici making policy-based arguments on the wisdom of biotechnology patenting:

To buttress his argument, the petitioner, with the support of amicus, points to grave risks that may be generated by research endeavors such as respondent's.  The briefs present a gruesome parade of horribles.  Scientists, among them Nobel laureates, are quoted suggesting that genetic research may pose a serious threat to the human race, or, at the very least, that the dangers are far too substantial to permit such research to proceed apace at this time.  We are told that genetic research and related technological developments may spread pollution and disease, that it may result in a loss of genetic diversity, and that its practice may tend to depreciate the value of human life.  These arguments are forcefully, even passionately, presented; they remind us that, at times, human ingenuity seems unable to control fully the forces it creates — that, with Hamlet, it is sometimes better "to bear those ills we have than fly to others that we know not of."

It is argued that this Court should weigh these potential hazards in considering whether respondent's invention is patentable subject matter under § 101.  We disagree.  The grant or denial of patents on micro-organisms is not likely to put an end to genetic research or to its attendant risks.  The large amount of research that has already occurred when no researcher had sure knowledge that patent protection would be available suggests that legislative or judicial fiat as to patentability will not deter the scientific mind from probing into the unknown any more than Canute could command the tides.  Whether respondent's claims are patentable may determine whether research efforts are accelerated by the hope of reward or slowed by want of incentives, but that is all.

Chakrabarty.  That other Court in another time declined to limit patent eligibility and in doing so opened the biotechnology era.  It is fervently to be hoped (in view of Justices Breyer and Stevens antipathy voiced in the LabCorp dissent, and the unknown views of Chief Justice Roberts and new Associate Justice Sotomayor) that this Court in our time does not succumb to the temptation to close the doorway to innovation represented by biotechnology, by limiting patent eligibility under Bilski.