(Reuters) - A U.S. federal appeals court has once again affirmed the right of Myriad Genetics Inc to patent two genes linked to breast and ovarian cancer, after the U.S. Supreme Court told it to take another look at the hotly contested case.
A 2-1 panel of the U.S. Federal Circuit Court of Appeals in Washington, D.C., on Thursday upheld the biotechnology company’s right to patent “isolated” genes known as BRCA1 and BRCA2, which account for most inherited forms of breast and ovarian cancers.
But the court denied the company’s effort to patent methods of “comparing” or “analyzing” DNA sequences.
Women who test positive using Myriad’s gene test, called BRACAnalysis, have an 82 percent higher risk of breast cancer and a 44 percent higher risk of ovarian cancer in their lifetimes.
The lawsuit against Myriad and the University of Utah Research Foundation, which hold the patents on the genes, charged that the patents are illegal and restrict both scientific research and patients’ access to medical care.
The American Civil Liberties Union, which brought the case, argued that patents on human genes violate the First Amendment and patent law because genes are “products of nature.”
But Circuit Judge Alan Lourie, writing for the court majority, said, “Everything and everyone comes from nature, following its laws, but the compositions here are not natural products. They are the products of man, albeit following, as all materials do, laws of nature.”
Thursday’s decision in the ethically charged litigation came five months after the U.S. Supreme Court, in a case involving a blood test developed by Prometheus Laboratories Inc, unanimously ruled that companies could not patent observations about natural phenomena.
A week later, the Supreme Court set aside the Federal Circuit’s July 2011 decision favoring Myriad and directed that court to review the case again in light of the Prometheus ruling.
Myriad’s patenting effort has drawn opposition from groups such as the American Medical Association, the March of Dimes, the American Society for Human Genetics and the Association for Molecular Pathology.
In a brief arguing against patenting genes, Dr. James Watson, co-discoverer of the double helix structure of DNA, said he feared the court failed to appreciate the fundamentally unique nature of the human gene, which stores information necessary to create and propagate life.
“It is a chemical entity, but DNA’s importance flows from its ability to encode and transmit the instructions for creating humans. Life’s instructions ought not be controlled by legal monopolies created at the whim of Congress or the courts.”
Nevertheless, the appeals court accepted the argument of Myriad supporters that denying patent protection could stifle innovation by the Salt Lake City-based company and others.
“Patents encourage innovation and even encourage inventing around; we must be careful not to rope off far-reaching areas of patent eligibility,” Lourie wrote.
In upholding Myriad’s main patent claims, the Federal Circuit again reversed much of a 2010 ruling by U.S. District Judge Robert Sweet in Manhattan.
“We have viewed this as the most important (part of the) decision for Myriad and therefore view the appeals court reversal as a clear positive,” Cowen and Co analyst Doug Schenkel wrote. He rates Myriad “outperform.”
Roughly 20 nonprofit groups, medical organizations, doctors and individuals challenged Myriad’s patent claims, and it is unclear whether an appeal is planned.
Thursday’s “extremely disappointing” decision “prevents doctors and scientists from exchanging their ideas and research freely,” ACLU lawyer Chris Hansen said in a statement. “Human DNA is a natural entity like air or water. It does not belong to any one company.”
Myriad’s argument is that when it isolates the genes by removing them from the body, this process changes their chemical structure, and the company’s test looks for this distinct chemical form.
Gregory Castanias, a partner at Jones Day representing Myriad, said in a phone interview: “We’re very pleased that the panel has continued to recognize that isolated DNA molecules are products of human ingenuity, and are thus eligible for patent protection.”
Supporters of Myriad have also said denying patent protection could slow advances in personalized medicine, which uses genetic tests to identify specific therapies for individual patients.
Biotech patent attorney Tim Worral of Dorsey and Whitney said in a statement the implications of the decision extended to most corners of the biotech industry.
“Although the decision will probably be appealed to the U.S. Supreme Court, the biotech industry is breathing at least a temporary sigh of relief,” Worral said.
For today, he said the decision is “a win” because much of the value associated with DNA-based inventions are based on the notion that DNA claims are patentable.
Circuit Judge William Bryson dissented from Thursday’s decision, saying it “will likely have broad consequences,” and perhaps pre-empt methods for whole-genome sequencing.
Sandra Park, an attorney for the ACLU, said the Myriad patents have allowed the company to “maintain a monopoly on BRCA testing in the United States,” noting that women have only one option for discovering their genetic risk for breast and ovarian cancer.
And the test does not look for all of the potential causes of hereditary breast cancer, she said.
Park said in recent months, the National Comprehensive Cancer Network issued revised treatment guidelines about BRCA genetic testing, suggesting that all women should also be tested for large rearrangements on the genes. Myriad’s $3,000 test does not look for those changes, so doctors have to order a second, $700 test, which insurance companies may or may not pay for.
Park said the ACLU needs to consult with its clients before deciding whether to appeal to the U.S. Supreme Court. It has 90 days in which to do so.
In afternoon trading, Myriad shares were down 13 cents at $24.86 on the Nasdaq. They traded in a range of $23.07 to $25.24 within a half-hour of the Federal Circuit’s issuance of its decision.
The case is Association for Molecular Pathology et al v. U.S. Patent and Trademark Office et al, U.S. Federal Circuit Court of Appeals, No. 2010-1046.
Additional reporting by Julie Steenhuysen in Chicago; editing by John Wallace, Dan Grebler and Bernard Orr