Finders Keepers, or Finders Weepers? a Proposed Answer to a Question Raised by Myriad Genetics

• Publication year: 2014
• Citation: Vol. 22 No. 1

Finders Keepers, or Finders Weepers? A Proposed Answer to a Question Raised by Myriad Genetics

Jingshi Shi

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Shi: Finders Keepers, or Finders Weepers? A Proposed Answer to a Quest

FINDERS KEEPERS, OR FINDERS WEEPERS? A PROPOSED ANSWER TO A QUESTION RAISED BY MYRIAD GENETICS

Jingshi Shi^*

TABLE OF CONTENTS

I. INTRODUCTION..........................................................................................248

II. BACKGROUND.............................................................................................250

A. PATENT ELIGIBLE SUBJECT MATTER UNDER § 101.......................250
B. THE SCIENCE OF GENE PATENTS.....................................................252
C. THE CONTEXT OF THE MYRIAD GENETICS CASE..........................255
D. THE MYRIAD GENETICS CASE AND ITS IMPACTS............................256
E. PROPOSED SOLUTIONS.......................................................................261

III. ANALYSIS......................................................................................................263

A. THE COURT'S RULING IN MYRIAD IS PARTIALLY JUSTIFIED, BUT FAILS TO INCENTIVIZE FUTURE GENETIC RESEARCH..........263
B. CONGRESS SHOULD TAKE LEGISLATIVE ACTION..........................266
C. SOLUTION: THE REGISTRATION-REWARD SYSTEM.......................268

1. The Framework of the Registration-Reward System...........................268
2. The Advantage of the Registration-Reward System over Alternative Policy Choices.................................................................273
3. The Benefits of the Registration-Reward System Override its Potential Problems............................................................................275

IV. CONCLUSION...............................................................................................277

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I. INTRODUCTION

The first gene patent was issued to the Regents of the University of California on bacterium in 1982.¹ Since then, increasing knowledge about the characteristics of gene sequences and their therapeutic effects has fueled economic and noneconomic interests in them.² One way to preserve the economic value of a newly discovered gene is to procure patent protection on a particular gene segment,³ which would give owners of gene patents exclusive rights to use and profit from them.⁴ The exclusivity of gene patents has far-reaching implications. Opponents of gene patents argue that gene patents increase downstream transaction costs and thus become major barriers in the development of biotechnology.⁵ Proponents of gene patents, however, seek patent rights to protect their returns on millions of dollars of investment.⁶

The Supreme Court took up this hotly debated question of the patent-eligibility of gene segments for the first time in Myriad Genetics.⁷ The Court held that "a naturally occurring Deoxyribonucleic Acid (DNA) segment is a product of nature and not patent eligible merely because it has been isolated"⁸ because "laws of nature, natural phenomena, and abstract ideas" have long been held unpatentable.⁹ However, the Court distinguished complementary DNA, which

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is not naturally occurring, and thus patent-eligible.¹⁰ The impact of the Supreme Court's ruling on future DNA isolation and commercialization remains to be seen. One advantage of holding isolated DNA ineligible for patent protection is that by removing the exclusive protection that patents provide to owners of newly discovered genes, scientists can develop advanced tests based on the genetic information coded in the isolated genes without incurring patent liability and litigation costs. However, this holding may discourage private entities from investing in the discovery and isolation of DNA.¹¹ Alternatively, private entities may keep their newly discovered DNA as trade secrets, frustrating patent law's goal of encouraging the dissemination of information for the purpose of future genetic research.

This Note proposes an approach for the protection of gene discoveries without discouraging private investments: the formation of a Board consisting of technical and legal experts that determines how to award an entity that registers and publishes a newly discovered DNA segment with the Board. This solution, called the registration-reward system, is better than other purposed solutions, and would resolve Myriad Genetics's negative implications for genetic researchers.

Part II of this Note discusses the patent eligibility requirements under 35 U.S.C. § 101 and the science of isolating DNA for the purpose of gene patents. Additionally, this part describes the Myriad Genetics case and the lack of incentives for private investments in the discovery and isolation of DNA under the Myriad Genetics ruling. Part III partially justifies the Supreme Court's ruling in Myriad Genetics, while demonstrating the insufficiency of the patent system to address the lack of investment incentives for genetic researchers. Finally Part III, proposes a registration-reward system administered by a newly formed USPTO Board to award protection to an entity who registers a new DNA segment, and why this registration-reward system is the best solution among alternatives to promoting future genetic research in light of Myriad Genetics's categorical rejection of patents on naturally occurring DNA segments.

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II. BACKGROUND

A. PATENT ELIGIBLE SUBJECT MATTER UNDER § 101

Patent-eligible subject matter includes "any new or useful process, machine, manufacture, or composition of matter."¹² The Supreme Court has long recognized three exceptions to this general principle: laws of nature, natural phenomena, and abstract ideas.¹³ Interpreting the meaning of these three exceptions, however, has long puzzled the courts.¹⁴ The Court in Diamond v. Chakrabarty declared that Congress intended statutory subject matter to "include anything under the sun that is made by man,"¹⁵ but, in an effort to clarify the doctrine of unpatentable subject matter, the Court has stepped back from this holding throughout cases decided in the last half-century.¹⁶ Three of these cases are important precedents for understanding the Myriad Genetics Court's holding that isolated DNA is a product of nature and thus patent ineligible.¹⁷

First, the composition patent in Funk Brothers concerned an inoculant for leguminous plants comprising a selection of mutually non-inhibitive strains of different species of bacteria of genus Rhizobium.¹⁸ The Supreme Court held that "[d]iscovery of the fact that certain strains of each species of these bacteria can be mixed without harmful effect of the properties of either" is "no more than the discovery of some of the handiwork of nature and hence is not patentable."¹⁹ In other words, the Court held that the composition was not patent eligible because the patent holder 'did not alter the bacteria in any way,' and thus it fell within the law of nature exception.²⁰ The Court reasoned, "[i]f there is to be an invention from such discovery, it must come from the application of the law of nature to a new and useful end."²¹

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The Court in Chakrakarty, on the other hand, found that when "scientists added four plasmids to a bacterium, which enabled it to break down various components of crude oil," the modified bacterium was patent eligible.²² The Court explained, the "claim is not a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter—a product of human ingenuity having a distinctive name, character, and use."²³ Importantly, the bacterium had additional characteristics not found in nature, this creating a "new . . . composition of matter."²⁴

Third, the patented invention in Mayo was a method of administering a drug to a patient and measuring how the drug is metabolized against a known threshold for efficacy.²⁵ The Supreme Court stated that the application did not add any inventive concept to the claimed method but instead, the application only relied on the elements that had been known in the field.²⁶ Thus, the invention preempted a law of nature and was ineligible subject matter.²⁷ As the Court explained, "phenomena of nature, though just discovered . . . are not patentable, as they are the basic tools of scientific and technological work. And monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it."²⁸ The Court, in laying the foundation for a two-step test later clarified and expanded upon by the Court in a subsequent case,²⁹ declared that "the claimed processes (apart from the natural laws themselves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field," and that "upholding the patents would risk disproportionately tying up use of the underlying natural laws, inhibiting their use in the making of further discoveries."³⁰

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Once a patentee meets the requirement of eligibility, a patentee must also demonstrate that an invention is novel,³¹ nonobvious,³² and enabling.³³ These three patentability requirements are separate and distinct from the § 101 analysis, and other bases for invalidating a patent. If a patentee meets all of the statutory requirements, he or she will receive an exclusive right to use the invention for twenty years,³⁴ and empowering the patentee to license the invention to others at a significant fee.

B. THE SCIENCE OF GENE PATENTS

Gene patents, although now patent-ineligible in light of Myriad Genetics, were categorized as a "composition of matter" under § 101.³⁵ The science behind isolating DNA segments is thus important to understanding the Court's rejection of gene patents. A DNA molecule consists of two strands of long polymer chains that are made of four types of nucleotides attached to backbone chains.³⁶ The two strands are twisted in a spiral ladder shape, giving rise to "double helix" chains of nucleotides.³⁷ DNA consisting of different series...