South Africa: The Myriad Decision: A Mixed Bag For The Biotech Industry

Last Updated: 29 July 2013
Article by Joanne van Harmelen

Most Read Contributor in South Africa, September 2018

Myriad Genetics is known as a leader in the market for diagnostic testing of BRCA1 and BRCA2 gene mutations that have been linked to breast and ovarian cancer.  These same diagnostic tests were recently in the celebrity press, as Angelina Jolie announced she had been tested positive for the mutations, resulting in her electing to have a preventative double mastectomy. 

Myriad has a broad patent portfolio covering the BRCA1 and BRCA2 genes and diagnostic methods for cancer testing with these genes.  However, scientists and civil rights organisations have sought to challenge Myriad's monopoly in court, in the interest of the public's right to affordable access to medicines.  This challenge was balanced against a patent holders' exclusive right to exploit an invention for a set period of time, thereby to enable the sometimes significant costs incurred in the development of the invention to be recouped, and fostering the progress of technology and innovation.

In essence, and specific to the challenge in question, apart from the requirement that an invention is new, non-obvious and has industrial utility in order to be patentable, it is also a requirement according to §101 of the United States Code 35 on Patents, that an invention is not a naturally occurring phenomenon, or "product of nature".  It is necessary that there be human intervention for the invention to be patentable.  The challengers in the Myriad case argued that mere separation or isolation of naturally occurring DNA segments cannot be considered to constitute sufficient human intervention to be a patentable invention.  Myriad, on the other hand, argued that the process of isolation of DNA fragments did indeed fall within the ambit of a "human-made invention".

The challenge came to a head on 13 June 2013 when the United States Supreme Court, in a unanimous decision, held that the mere separation or isolation of naturally occurring genomic DNA is not sufficient human intervention to give rise to a patentable invention.  Specifically, the Supreme Court stated: 'Myriad did not create or alter either the genetic information encoded in the BRCA1 and BRCA2 genes or the genetic structure of the DNA. It found an important and useful gene, but ground-breaking, innovative, or even brilliant discovery does not by itself satisfy the §101 inquiry'. 

In an obiter decision, on the other hand, the Supreme Court held that cDNA, which is a synthetically created form of DNA corresponding to a gene sequence, is indeed patentable under §101.  The Court said in this regard 'Its order of the exons may be dictated by nature, but the lab technician unquestionably creates something new when introns are removed from a DNA sequence to make cDNA'.

The Supreme Court decision has resulted in a mixed bag of reactions and implications.  Public advocacy groups described the ruling as 'a victory for civil liberties, scientific freedom, patients and the future of personalised medicine'.

Initially reactions were fairly bullish for Myriad, with investors focusing on the positive aspect of the ruling, that cDNA was indeed patentable, leaving Myriad with more than 500 valid and enforceable claims in 24 different patents relating to its BRACAnalysis gene test.  Thereafter, however, Myriad's stock price took a hit, down almost 20% at the close of trading the day after the decision was made.  This was no doubt due to investors taking into consideration that due to the Supreme Court decision, competitors would start to make inroads into Myriad's "dominant" market share.

The decision had a positive effect on the shares of other genetic companies such as Amgen, Vermillion and Qiagen.  In fact, because of the limited ruling by the Supreme Court, the decision is unlikely to have much effect at all on biotech companies, as claims to recombinant or synthetic proteins and their nucleotide sequences, vectors including isolated gene sequences, transgenic organisms or cells and methods of making these are all still patentable.  Patent attorneys' drafting biotech claims will merely need to take the Myriad ruling into account in order to ensure that the claims encompass patent eligible subject matter.  Agricultural biotech companies, such as Mendel Biotechnology, have indicated that they were confident that the judgment would have little impact on their business, since genetically modified seed and transgenic plants and plant material are believed to be modified sufficiently to fall outside of a "product of nature" and would therefore be patentable.

On the other hand, industry organisations such as the American Intellectual Property Law Association (AIPLA) have cautioned that the decision might reduce the incentive for biotech companies to invest in innovation.  Furthermore, the decision did not give much weight to the vast number of granted US patents that claim isolated DNA sequences.  American patent attorneys have also indicated that the decision might push the practice of biotech companies from patenting genetic inventions to maintaining them as trade secrets.  Such a practice would likely also reduce the likelihood of research collaboration which is important in driving technology development.

The impact of this decision globally remains to be seen.  In South Africa, current biotech patent drafting practice closely follows the European patent practice, with gene sequences being patentable as long as they have been isolated from their natural environment and the description of the patent sets out a function and use for the sequence.  Considering the lack of patent litigation in the biotech field in South Africa, it is likely that the status quo will remain for some time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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