2016 has been a year of IP changes and these changes have had an effect upon biotechnology as well as trade secrets.

Patents: Will the U.S. Supreme Court Grant Cert. In Ariosa v. Sequenom?

Ariosa v. Sequenom was one of the most important Federal Circuit decisions in the field of biotechnology in 2015, given its far-ranging implications for patents on diagnostic methods. The patent in dispute claims a prenatal method for detecting the baby’s DNA from the mother’s blood, utilizing paternally inherited genetic sequences from cell-free fetal DNA (cffDNA) circulating in pregnant women’s plasma. The claimed method allows for prenatal diagnosis of certain fetal genetic conditions by accessing fetal DNA without putting the unborn child at risk. The breakthrough discovery was that fetal DNA might be present in the mother’s blood and that it could be separated from the mother’s DNA by focusing on the paternally inherited portion of its DNA.

The court applied the Mayo test and determined that the claims were not patent eligible under Section 101, because they were directed to a natural phenomenon (the presence of paternally inherited cffDNA in maternal blood and plasma), and that the recited steps for detecting such cffDNA were well-understood, routine activities. The Mayo test is a two-step test, where in the first step, the court looks to see if the claims are aimed towards an idea that is patent-ineligible (such as a law of nature, a natural phenomenon or an abstract idea). In the second step, the court looks to see whether the claims define an inventive way of using it. The decision starkly illustrates the severity of the Mayo test, because this newfound use of maternal plasma was hailed as a significant and crucial discovery which allowed for prenatal genetic testing without endangering the fetus. Absent Supreme Court review, Ariosa’s interpretation of Mayo, which many feel is overbroad, will likely have a further chilling effect on innovations in genetic and diagnostic testing. In regards to diagnostic testing, Sequenom petitioned the Supreme Court for certiorari presenting the following question:

Whether a novel method is patent-eligible where:
1. a researcher is the first to discover a natural phenomenon;
2. that unique knowledge motivates him to apply a new combination of known techniques to that discovery; and
3. he thereby achieves a previously impossible result without preempting other uses of the discovery?

Genetic Technologies Ltd. v. Merial L.L.C., or “Ariosa II,” is another Federal Circuit decision that struck down diagnostic method claims under Mayo. The patent in suit claimed a method for analyzing DNA sequences for genetic variations, and, specifically, the relationship between non-coding and coding sequences in “linkage disequilibrium.” In essence, the inventors discovered that coding regions (exons) typically correlate with “linked” certain non-coding regions (introns).

The court held that the claimed relationship between the non-coding and coding sequences, which was not limited in scope to any purpose or method of detecting any particular genetic variation, was a law of nature, and that there were insufficient additional physical or mental steps “to provide the inventive concept necessary to render the claim patent-eligible.”

This case again illustrates the importance of having the Supreme Court render an opinion in Ariosa; without the Court’s intervention and clarification, diagnostic method claims will continue to be at great risk of being ineligible for patent protection. Another hope is that Congress may eventually weigh in on this issue.

In a further development the USPTO issued some further guidance in May 2016 in which the patent eligibility of diagnostic methods was considered. In the guidance, the PTO drew a distinction between a claim detecting a specific protein in a patient by determining binding with a particular antibody and a claim wherein such a method was used to diagnose a particular condition in a patient when the protein in question was found. The former is indicated to be patent eligible because it did not seek to claim any law of nature. The latter, however, is considered to be patent-ineligible because it relies on a correlation between the condition and the presence of the protein that “is a consequence of natural processes.” Illogical as this may seem, it produces a result similar to that in the European Patent Office where there is a specific bar on the grant of patents for “methods of diagnosis”, but the Enlarged Board of Appeal of the EPO has held that such prohibition only applies if a step of applying experimental results to reach a diagnostic conclusion is included in the claim and that claims limited to the physical steps of obtaining the data from which the diagnosis can be made are permissible, as long as they meet all other requirements for patentability.

Personalized Medicine, Drug Discovery, Target Discovery and Validation, Leads and Safety

Given the enormous expense in identifying, developing and obtaining regulatory approval for medical treatments, scientists, doctors and industry continually look for ways to streamline this process.

One of the new techniques is Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR) which can be used for target identification, target validation, lead generation, lead optimization and in clinical studies. This technique can be used independently or with other methods that utilize siRNA, stem-loop shRNA and shRNA.

Many of the elements involved in the CRISPR method are not naturally occurring so when seeking to patent new advances related to this technology, rejections under 35 USC 101 (“Section 101”) can be avoided by claiming methods, systems and kits, proteins, artificial DNA and RNA sequences, plasmids and the like.

Patents have granted that include claims for an engineered, non-naturally occurring Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)-CRISPR associated (Cas) system comprising one or more vectors comprising: a) a first regulatory element operable in a eukaryotic cell … and b) a second regulatory element operable in a eukaryotic cell; a method of altering expression of at least one gene product comprising introducing into a eukaryotic cell containing, and expressing a DNA molecule having a target sequence and encoding the gene product an engineered, non-naturally occurring Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)-CRISPR associated (Cas) system comprising one or more vectors comprising: a) a first regulatory element operable… and b) a second regulatory element …; and an in vitro method for modifying a genome at a genomic locus of interest in a mouse ES cell.

Defend Trade Secrets Act

President Obama signed the Defend Trade Secrets Act on May 11, 2016 and it came into effect immediately. The Act for the first time creates a federal cause of action to enable those whose trade secrets have been misappropriated to bring a civil action in the federal courts seeking compensation and an injunction to prevent further misuse of the stolen secrets.

The new law applies to both technical and business information. Together with the changes in patent law made by the America Invents Act which, by virtue of its creation of a Prior Commercial Use Defense reduced the risk that a subsequent patent to another could require one to stop using a method that had previously been used in secret, it significantly raises the importance of trade secret law in the United States.

In addition to increasing the possible fines for an offense under the already existing Economic Espionage Act, the main features of the new law are:

1. as noted above, creation of a civil right of action in federal district courts for those who have suffered misappropriation of a trade secret related to a product or service used in or intended for use in interstate or foreign commerce; and
2. creation of a new right of civil seizure whereby in extraordinary circumstances a court may grant an ex parte application providing for seizure of property necessary to prevent the propagation or dissemination of a trade secret.

The new right of civil seizure can be particularly helpful in preventing the misappropriation of a trade secret particularly through a surprise action by law enforcement as ordered by the court and given that a federal court can order a remedy that is effective across state lines.

The above main provisions of the new law are, however, tempered in two ways to protect employees from overly enthusiastic application of the new law by present or former employers. First, to protect against the possibility that the new law could be used to prevent skilled employees from changing jobs (for example by application of the “inevitable disclosure doctrine”), injunctions should not prevent a person from entering into an employment relationship, although conditions may be placed on such employment as long as they are “based on evidence of threatened misappropriation and not merely on the information the person knows.” Secondly, protection is provided for whistle blowers who disclose a trade secret in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law. Furthermore, employers are required to inform employees who sign agreements relating to the confidentiality of their employers’ practices of the new whistle blower protections or risk losing the ability to obtain exemplary damages or attorney fees in a federal trade secrets action against an employee to whom notice was not provided.

Please see our separate Education Center article on the Defend Trade Secrets Act.