In biotech, your company is only as good as its intellectual property. And the Supreme Court on Monday left a whole lot of biotech entrepreneurs fearful that their inventions may not be worth all that much after all.
The justices spooked the industry by declining to hear an appeal from Sequenom, a California company that markets a prenatal test based on screening fetal DNA. A lower court had ruled that Sequenom couldn’t patent the test because it was based on a natural biological process.
Now that the Supreme Court won’t hear the case, the prior ruling stands — to the dismay not just of Sequenom, but of startups and giants across the life sciences, including Pfizer (PFE), Eli Lilly, and Novartis (NVS), all of which had begged the justices to intervene.
“This is a huge ruling,” said David O. Taylor, an assistant professor at Southern Methodist University’s Dedman School of Law.
Justices in lower courts were effectively pleading for the Supreme Court to provide some guidance on the issue of patent eligibility in biotech, Taylor said. The top court’s silence leaves an entire industry guessing.
Taylor predicted that companies and investors will be less likely to fund expensive research for fear of having patents invalidated by the courts. Sequenom CEO Dirk van den Boom made a similar argument.
“Their refusal to clarify this area of the law would seem to point in the direction of reduced investment in diagnostic invention, and that is obviously problematic from a public health concern,” Taylor said.
Sequenom’s opponent in the legal case, Ariosa Diagnostics, said the fetal test was not novel enough to deserve a patent. Asking the justices to intervene “is inviting the court to revisit and rewrite decades of jurisprudence covering patent-eligible subject matter,” the company wrote in a brief. “In the future, there may be a case that tests the boundaries” of what’s appropriate to patent, Ariosa wrote, “but this is not that case.”
The tell-tale DNA
Sequenom’s story begins in 1996, when a pair of doctors noted that there were trace amounts of tell-tale fetal DNA in the plasma of expectant mothers. So they created a test that could extract that DNA and determine a baby’s sex and risk of genetic disorders like Down syndrome, without the need for the invasive procedures that were then the norm. They patented the idea the following year, and their test is now sold by Sequenom as MaterniT21.
But a lower court invalidated that patent in 2013.
That ruling was based on a Supreme Court decision from 2012, in the case known as Mayo Collaborative Services v. Prometheus Labs. In that case, the justices ruled that any patent stemming from a natural process — like fetal DNA turning up in maternal blood — must “more than simply state the law of nature while adding the words ‘apply it.’”
Sequenom’s test doesn’t clear that hurdle, according to the lower courts, because the methods it uses to analyze fetal DNA were already well-understood when it was invented.
Such logic is dangerous in the life sciences, according to Kevin Noonan, a biotech patent lawyer at McDonnell Boehnen Hulbert & Berghoff. Sure, Sequenom didn’t invent DNA analysis, but it was the first to apply it to maternal plasma, and that should count for something, he said.
He and others fear that the Supreme Court’s ruling in Mayo was so broad that judges will be able to invalidate a slew of life science patents by picking apart the components of an invention to find the naturally occurring biological process that inspired it.
“What you end up with is no standard at all,” Noonan said. “You end up with a Potter Stewart pornography test where he knows it when he sees it.”
Even Noonan, however, said courts were unlikely to invalidate patents based on truly novel discoveries, such as CRISPR-Cas9 gene editing, which is about to be tested in humans.
The CRISPR technology harnesses a naturally occurring process, but it’s “so revolutionary,” Noonan said, “that even the Supreme Court wouldn’t overrule it.”