by MICHAEL FITZHUGH
Myriad Genetics (NASDAQ:MYGN) lost a court battle to protect gene patents central to its top diagnostic test, leaving the future of gene-related patents and the businesses that rely on them in question. The March 29 decision solely invalidates several of Myriad's and the University of Utah Research Foundation's patents on genes linked to breast and ovarian cancer, but it still set off a round of collective hand wringing among biotechnology investors and trade groups, which have expressed concern about its impact on businesses that rely on nearly 2,000 gene-related U.S. patents.
The case, brought by the American Civil Liberties Union on behalf of women's health groups and cancer patients, resulted in summary judgment against Myriad, surprising patent attorneys with the certainty of its judgment.
The ruling has brought an added level of uncertainty for investors in the biotech space since drug developers have many gene patents in place. Until the result of the appeals process are known, which could take many years, the landscape of biotech patent law has clearly been changed to the detriment of the industry.
“The court correctly saw that companies should not be able to own the rights to a piece of the human genome,” says Daniel Ravicher, executive director of the Public Patent Foundation and co-counsel in the lawsuit. “No one invented genes. Inventions are specific tests or drugs, which can be patented, but genes are not inventions.”
“Assuming the decision is upheld, it could be broadly interpreted and applied,” says Bill Quirk, a managing director and senior research analyst at Piper Jaffray. But, the case's ultimate standing after appeals will take a long time to be resolved. It's still too early to draw a final analysis of the decision's ramifications, he says.
Myriad will appeal Judge Robert Sweet's decision to the Federal Circuit court. But that process is likely to take at least a year, says John Conley, an attorney at Robinson, Bradshaw & Hinson. Meanwhile, the impact of the ruling could prove limited.
“Judge Sweet’s order will not affect any patents not directly involved in the case, nor be binding on any other court, and it is highly unlikely that the U.S.P.T.O. will change its gene patent examination standards just because of this decision,” he writes in a colorfully titled blog posting on the decision: “Pigs Fly.”
Behind the case lies a conviction by some that gene patents inhibit research and innovation. Ken Chahine, a visiting professor of law at the University of Utah, doesn't find that argument compelling.
“I would argue that the weight of the evidence points to the fact that it doesn’t inhibit research. So, if it doesn't inhibit research, why are we moving in this direction? I think there is the potential that at least in the short term, it could inhibit some investments," he says. [Hear The Burrill Report interview
Many life sciences organizations rushed to Myriad’s aid with concern over that very issue, filing briefs in support of gene patents.
The Biotechnology Industry Organization, the country’s largest biotechnology trade group, expressed the industry's over-arching concern:
“In many cases, gene-based patents are critical for a biotech company’s ability to attract the capital and investment necessary for the development of innovative diagnostic, therapeutic, agricultural and environmental products,” it said in its brief. “Thus, the issues raised in this case are of great importance to the U.S. biotechnology industry.”
At least one camp could benefit from the ruling, says Piper Jaffray’s Quirk. The dissolution of patents that now block diagnostic services and genetic information companies from providing information about key genetic indicators of disease risk could allow those companies to provide a more detailed picture to clients, potentially for a bigger payday.