Bad and Good News for Bio-Pharmaceutical Patenting in the United States

Two recent developments in U.S. patent law mean mixed news for the bio-pharmaceutical industry.  First, the bad news -- the U.S. Supreme Court declined to accept for review the closely-watched Ariosa Diagnostics v. Sequenom case concerning the patentability of a diagnostic method.  Second, the good news -- a panel of the U.S. Court of Appeals for the Federal Circuit issued the Rapid Litigation Management v. Cellz Direct decision further clarifying application of the two-step Alice/Mayo test (1. claim directed to a patent ineligible category and 2. lack of inventive concept) concerning laws of nature.

Diagnosis?  Too many dumplings.

Prior to the U.S. Supreme Court's issuance of the Mayo v. Prometheus case invalidating claims to a diagnostic, there was general concern about patents inhibiting the use of diagnostics.  Indeed, the U.S. Supreme Court's decision in Association of Molecular Pathology v. Myriad Genetics was also, in part, directed to the use of claimed inventions for diagnostic purposes.  Since the issuance of the famous Alice v. CLS Bank International case and Mayo v. Prometheus, there is a concern that the Supreme Court has pushed too far against patent eligibility. Post-Mayo, it appeared that few diagnostic inventions would be patent eligible. 

In Ariosa Diagnostics v. Sequenom, a three-judge panel of the Federal Circuit found that Sequenom's diagnostic patent was patent ineligible.  This was despite the fact that the discovery made by Sequenom was very beneficial to patients and apparently against previous wisdom concerning the utility of the material used in the diagnostic.  Moreover, the patentee asserted that the natural phenomenon/law of nature was not preempted by the claimed invention.  Notably, Sequenom requested an en banc rehearing, but was denied by the Federal Circuit.  Interestingly, Judge Dyk wrote a concurrence essentially expressing concern that the Mayo case's sweeping test prohibiting the patenting of diagnostics would result in insufficient incentives for the invention of diagnostics.  Importantly, Judge Dyk set forth a way to distinguish and apply Mayo that would allow for some diagnostics to survive the Alice/Mayo test.  However, Judge Dyk signaled to the Supreme Court that it should take the case.  Unfortunately, the Supreme Court did not accept the invitation to hear the closely watched case.

Alice/Mayo back to the Vet!

In Rapid Litigation Management v. Cellzdirect, a three-judge panel of the Federal Circuit found that claims directed to a method to preserve liver cells were patent eligible.  The Federal Circuit further clarified the application of the Alice/Mayo test in the context of laws of nature/natural phenomenon.  As in the http://androidtabletgadgets.blogspot.com /2016/05/the-federal-circuit-resurrects-computer.html"> Enfish case, the Federal Circuit focused on the first prong of the Alice/Mayo test by finding that the claimed invention was not "directed to" a patent ineligible concept--the discovery that certain liver cells can survive multiple freeze/thaw cycles.  While the discovery was certainly made by the inventors, the patent claimed a "new and useful laboratory technique for preserving" those cells "for later use."  This approach seems to track part of Judge Dyk's analysis in his concurrence to deny en banc review of the Sequenom case.  The Federal Circuit further found that the second prong--inventive concept--was also satisfied to find patent eligible subject matter.  Notably, even though the additional steps were well-known, a method to preserve the cells was not known or present in the prior art.  An instruction to apply a known step a second time in the claims is essentially an inventive concept if prior art directed not to apply the known step again.

A press release issued by Sequenom notes that it has "equivalent" claims in enforceable and valid patents in other jurisdictions, including Europe, Japan and Australia.  It also states it is enforcing those patents in some jurisdictions.  From the perspective of global innovation, will there be less innovation in diagnostics if the Federal Circuit does not continue to "clarify" the U.S. Supreme Court's approach?