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Insight & Intelligence : Jul 24, 2013
New Gene Patent Suit Sparks Talk of Trolls
The BRACAnalysis developer is poised to spawn a Myriad of lawsuits.!--h2>
A month after a unanimous U.S. Supreme Court struck down seven Myriad Genetics patents tied to two breast cancer susceptibility genes, the company has touched off another legal knock-down-drag-out to enforce other intellectual property unaffected by the decision—with consequences likely to include a new wave of patent-assertion litigation across the industry.
Earlier this month, Myriad sued two rivals in U.S. District Court, Utah District, claiming they infringed 10 patents associated with BRCA1 and BRCA2 that were not covered by the Supreme Court’s June 13 ruling. Myriad seeks a preliminary injunction to stop Ambry Genetics and Gene by Gene from offering BRCA tests, as well as damages that could be tripled if the court finds willful infringement.
Soon afterward, the Washington Post’s Wonkblog categorized Myriad’s new suit as among “enforcement efforts [that] are hard to distinguish from garden-variety patent trolling,” adding: “Its aggressive efforts to claim ownership of a basic fact of human biology—that the BRCA1 and BRCA2 genes are linked to breast cancer—raises many of the same issues.”
Does Myriad’s latest lawsuit indeed mean that patent trolling has come to biopharma?
Myriad’s case is not a classic “patent troll” lawsuit since Myriad is using the patents at issue in its own diagnostic, BRACAnalysis®. The troll lawsuits typically entail third parties—some calling themselves “nonpracticing entities” or “patent intermediaries”—hired by inventors, companies, universities, investors, or others to engage rivals to stop their use of the IP involved. Third parties can play nice by working out licensing or sale deals, or play rough through lawsuits or threats to sue.
What Myriad’s new case signifies is a wave of biopharma court cases centered around “patent assertion”—a term neutral enough to be used by some trolls as a preferred term of art.
“There are going to be competitors out there that are going to want to challenge the IP of these companies. Competitors are going to be emboldened by the Supreme Court ruling, and I really think we are going to see more litigation on this as competitors want to test the breadth of the ruling,” James J. Mullen III, Ph.D., managing partner of the San Diego office of law firm Morrison & Foerster, told GEN.
Not that there’s anything wrong with that, he might have added: “A patent is a right to exclude people from practicing your invention. That right is only as good as your wherewithal to enforce those rights in court.”
In its new lawsuit, filed July 9, Myriad contends the Ambry and Gene by Gene tests infringe on patent claims for BRACAnalysis related to DNA primers and concrete method steps for genetic screening methods. Myriad owns five of the 10 patents, and licenses the rest from their owners, all co-plaintiffs in the new lawsuit: the University of Utah, University of Pennsylvania, Toronto’s Hospital for Sick Children, and Endorecherche.
The defendants insist they have done nothing wrong: “We have had an overwhelming response from our clients seeking an alternative laboratory to perform BRCA testing and Ambry is fully committed to supporting our clients and patients moving forward,” Ambry CEO Charles Dunlop said in a July 10 statement.
It’s easy to see the commercial concerns behind the suit: Myriad wants to stop competitors from offering the test it says it spent $500 million to develop over 17 years. Myriad charges $3,340 for BRACAnalysis, which generated $115.4 million during the three months ending March 31, up 9% from a year earlier.
BRACAnalysis accounted for 74% of Myriad’s total revenue—no small consideration in the company’s playing hardball with rivals. GeneDx and Quest Diagnostics have launched their own BRCA tests. And as GEN reported last month, Pathway Genomics plans to launch its own BRCA test next month at what it calls a “substantially lower cost than the competition.”
“Myriad has suffered and will continue to suffer substantial damage to its business including, without limitation, lost profits, loss of business reputation, loss of business opportunities, and loss of market share,” the company asserted in its court complaint.
The Supreme Court enabled Myriad to play hardball by narrowing its decision to patentability of the seven genes at issue. The stringency of description requirements for biotech and pharma patents has insulated the industry from the extent of trolling cases in which software and e-commerce companies seek to monetize broadly written patents.
“You really have to describe exactly what you’re going after. And the patent office is not very generous with respect to the scope of the claims that they grant. It’s harder to get a patent to thing A, and then try to apply it to thing A-prime, which is what I see the patent trolls doing,” Dr. Mullen said.
NPE Suits on the Rise
The difference between biotech and computer tech patents explains a stark contrast in patent-suit activity chronicled in a report released earlier this year by a provider of patent risk-management services.
RPX found that in cases launched by nonpracticing entities last year covering 1,486 patents, 1% (18) covered “Drug, Bio-affecting, and Body Treating Compositions” patents involving 310 defendants, 7% of the total 4,351 defendants sued during the period. Biotech and pharma were among the U.S. Patent Classification categories of another 1% of cases, the 25 “surgery” technology patents asserted against 37 defendants last year.
NPE suits in biopharma can be expected to grow. The nonpracticing entity cited by RPX as naming the second-largest number of defendants in the past five years, Acacia Research Corp., includes among its portfolio patents for “purifying nucleic acids.” And top-ranked IP Navigation Group says it’s “technology-agnostic”: “Our Full Service Patent Monetization Platform is equally effective for patents in all scientific and technology fields.”
In contrast with biopharma, 34% (nearly 1,500) defendants were accused on infringing on the largest single category cited by RPX, software and e-commerce patents. Unlike the software industry, the investment required of biopharmas developing new products is much higher: “Before biotech companies decide to go into the market, they might be more cognizant or concerned about whether they have time to operate, because they’re going to invest a lot of time and money to get there,” Courtenay C. Brinckerhoff, a partner with the law firm Foley & Lardner, told GEN.
While a lot of those patents are being asserted years after commercialization, “biotech takes so long to get into any commercial embodiment that people know about the patent to begin with. It’s a different life cycle between the patents and technology development. It reduces the number of targets for infringement because [the commercialization pathway] reduces the number of people who are going to get on the market,” Brinckerhoff said.
So, too, will the America Invents Act, which requires more individual suits. That raises costs and thus requires more selectivity from patent asserters, she noted.
Multiple biopharma defendants can be found, according to Brinckerhoff, in cases involving generic drugs, where patents have been challenged by numerous potential competitors. That’s certainly one area where patent assertion suits will grow, as blockbuster drugs continue to lose protection. Another area is nucleic acid isolation and purification, since these are starting points for numerous other methods of sample preparation. Because the Supreme Court now links genetic material patentability to creation, alteration, or application of new knowledge, method patents will likely grow in importance as well as in number, creating opportunity for their holders and any third parties that may defend them.
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