UPDATE 2-U.S. justices wary of wide human gene patent ruling

Mon Apr 15, 2013 2:26pm EDT

* Court appears to be looking for compromise
    * Synthetic genes may not be affected
    * Myriad Genetics shares up more than 5 percent


    By Lawrence Hurley
    WASHINGTON, April 15 (Reuters) - U.S. Supreme Court justices
on Monday signaled reluctance to issue too broad a ruling about
patents on human genes, and some indicated they might seek a
compromise distinguishing between types of genetic material. 
    The biotechnology industry has warned that an expansive
ruling against Myriad Genetics Inc could threaten
billions of dollars of investment.
    In weighing the question of whether any human genes can ever
be patented - meaning the holders have exclusive rights to their
intellectual property for a defined period - the nine justices
asked tough questions about isolated genes that Myriad holds
patents for. 
    But the justices also appeared to be inclined to draw a line
between synthetically produced genetic material and natural
genes. 
    A court ruling along those lines, suggested by the Obama
administration, would have less impact on Myriad. Some of the
latest research using human genes involves a synthetic form of
DNA called recombinant DNA, or rDNA.
    Shares of Myriad were up $1.43 or 5.4 percent at $27.53 on
midday trading on the Nasdaq. The Standard & Poor's 500 Index
was down 1 percent.
    The Myriad patents in dispute will all expire by 2015. A
ruling is due by the end of June this year.
    In probing the limits of what can be patented, the justices
cited a wide range of products in raising hypothetical
questions, including chocolate-chip cookies and baseball bats.
    A group of medical researchers, associations and patients
say human genes, including synthetically produced material,
should not be patented. They sued in 2009, challenging seven
patents owned by or licensed to Myriad on two human genes linked
to breast and ovarian cancer. A federal judge said the patents
were invalid. An appeals court overruled that decision, and the
case landed at the Supreme Court.
    Under the federal Patent Act, an inventor can obtain a
patent on various new processes and products but "laws of
nature, natural phenomena and abstract ideas" are not
patentable. The broad legal question is whether the genes Myriad
patented, called BRCA1 and BRCA2, are a product of nature. The
appeals court said they were not.
    The U.S. Patent and Trademark Office has granted patents on
at least 4,000 human genes to companies, universities and others
that have discovered and decoded them.
    
    CHOCOLATE CHIPS AND BASEBALL BATS
    Lawyers from both sides and the Obama administration probed
the limits of what can be patented. Justices cited examples of
more familiar products, including chocolate-chip cookies and
baseball bats.
    It was Sotomayor who brought up the chocolate-chip cookies,
wondering whether if it was possible to get a patent on an
isolated human gene, it would be possible to do the same for
salt, eggs and other cookie ingredients.
    Separately, both Justice Samuel Alito and Chief Justice John
Roberts seized upon the suggestion made by Myriad lawyer Gregory
Castanias that a baseball bat doesn't exist until it's isolated
from the tree.
    Roberts said a baseball bat was "quite different" because
"you have to invent it" and not just "cut it off" from the tree.
    Alito raised an even more extreme hypothetical question by
asking whether a baseball bat that was naturally crafted after a
piece of wood was tossed about in the ocean before washing up on
shore could then be patented.
    Several of the justices also ruminated at length on another
colorful hypothetical question, also offered by Alito,
concerning under what circumstances a company could claim a
patent on material from a plant found in the Amazon jungle that
can help treat cancer.
    Others on the bench, such as Justice Elena Kagan, indicated
concerns about the impact a broad ruling could have on companies
that invest in such research.
    "Why shouldn't we worry that Myriad or companies like it
will just say, 'well, you know, we're not going to do this work
anymore'?" she asked Christopher Hansen, the lawyer representing
the challengers.
    Alito appeared most concerned about the court issuing a
sweeping ruling on what he described as a "very difficult"
question.
    "Why should we do that?" he asked.
    
    POSSIBLE COMPROMISE?
    Hansen sought to defuse concerns among the justices that he
was asking for too broad a ruling. He said he was not asking for
patents on rDNA to be invalidated, something industry groups had
raised concerns about.
    "Recombinant DNA is in fact what all the major innovations
in the industry are doing these days," he said. "There is
nothing in our position that would prevent recombinant DNA from
being patented."
    The Obama administration, which intervened in the case in
support of neither side, has urged a compromise position, which
several justices probed during the hour-long argument.
    Government lawyers say that "synthesized genetic materials"
can be patented because they are human-made inventions. But
simply removing, or isolating, human DNA does not substantively
change it and so it should not be eligible for a patent, the
administration says. 
    If the court were to adopt that approach, which neither the
plaintiffs nor Myriad accept, some of Myriad's patents,
concerning synthetic molecules called cDNA, could survive,
although the parties disagree on that point as well.
    A majority appeared inclined to find that cDNA could be
patented.
    Emphasizing a need to tread carefully, Justice Stephen
Breyer noted that patent law often involves "uneasy
compromises."
    Justice Anthony Kennedy asked Castanias directly whether a
ruling based on the government position would give industry
"sufficient protection" relating to innovation and research.
    "I can't tell you for a certainty whether it would hurt the
industry," Castanias said.
    The case is Association for Molecular Pathology v. Myriad
Genetics, U.S. Supreme Court, No. 12-398.
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