Court Rules Medical Diagnostic Can’t Be Patented, Leaving Biotech in ‘Legal Mess’

(Bloomberg) -- A way to diagnose a severe neurological disorder can’t be patented as it covers a law of nature, a U.S. appeals court ruled Wednesday in a closely watched case that sought to clarify the patenting for medical diagnostic tests and instead has resulted in calls for Congress to step in.

The patent, for a method of diagnosing neurological disorders through the detection of certain antibodies, was licensed to Quest Diagnostics Inc.’s Athena unit, which sued the Mayo Clinic in 2015, seeking royalties on tests conducted by the Minnesota medical facility. Mayo got the case dismissed by successfully arguing that the patent simply covered a law of nature -- the correlation between certain antibodies and the autoimmune disease Myasthenia gravis.

The case law on what’s eligible for a diagnostic patent “is a legal mess,” said William Atkins, a lawyer with Pillsbury Winthrop Shaw Pittman in Washington, who wasn’t involved in the case. The ruling “could adversely affect the life sciences and biotech industries where a lot of inventions deal with identifying and dissecting things found in nature.”

Mayo’s legal argument rested on a 2012 Supreme Court decision, in a case won by the clinic, that put limits on what types of diagnostic tests could obtain the legal protection of a patent. The Biotechnology Innovation Organization had sought to use this case to eliminate what it called “unabated uncertainty” about patenting diagnostic tests following that 2012 ruling and now says Congress needs to step in.

In a 2-1 ruling Wednesday, a panel of the U.S. Court of Appeals for the Federal Circuit sided with Mayo regarding the Athena patent.

“This correlation exists in nature apart from any human action. There can thus be no dispute that it is an ineligible natural law,” Circuit Judge Alan Lourie wrote for the majority, though he expressed reluctance over his decision. “The claims at issue here involve both the discovery of a natural law and certain concrete steps to observe its operation.”

While laws of nature can’t be patented, the application of those laws can, the court said. Still, it takes more than “conventional steps” such as the use of a man-made substance to conduct the test, the court said.

“Claiming a natural cause of an ailment and well-known means of observing it is not eligible for patent because such a claim in effect only encompasses the natural law itself,” Lourie wrote. “But claiming a new treatment for an ailment, albeit using a natural law, is not claiming the natural law.”

The patent was obtained by Oxford University and Max-Planck-Gesellschaft Zur Forderung der Wissenschaften e.V, which discovered the link between antibodies to a specific protein and the disorder that causes muscle weakness. Until the discovery of the diagnostic method, 20 percent of patients suffering from Myasthenia gravis couldn’t be diagnosed.

In her dissent, Circuit Judge Pauline Newman said the majority just added to the confusion about what could be patented.

“For procedures that require extensive development and federal approval, unpredictability of patent support is a disincentive to development of new diagnostic methods,” Newman wrote. “The loser is the afflicted public, for diagnostic methods that are not developed benefit no one.”

In a footnote, Lourie said he agreed with Newman but said he was bound by the precedent of earlier rulings. The judge in 2015 warned that the Supreme Court needed to provide more guidance because “the whole category of diagnostic claims is at risk.”

The uncertainty has affected both companies that develop diagnostic tests and those that use them, said Pauline Pelletier, a patent lawyer with Sterne Kessler Goldstein & Fox in Washington, who wasn’t involved in the case. It’s been “an unwieldy and onerous test” that requires inventors to explain how they aren’t trying to patent a law of nature but a specific technique, she said.

“The line is not clear, at least to people who are pursuing patent protection,” Pelletier said. “The line not being clear is not good for those who want to practice it either.”

The decision could put more pressure on Congress to pass a law ensuring diagnostic tests can be patented, said Hans Sauer, deputy general counsel for BIO, the biotechnology industry’s trade group.

“If anything can be learned from this decision, it is that the law of so-called patent-eligible subject matter is simply too unstable to offer any guidance to inventors, innovative businesses, patent examiners and judges,” Sauer said. “At this point only Congress can provide the needed clarity, and cases like this one underscore the urgency with which Congress must act.”

Companies are able to obtain patents on diagnostics outside the U.S., so some companies may opt to “give up the American market” or keep their new tests in a “black box” without telling others how it works, said Kevin Noonan, a patent lawyer who heads McDonnell Boehnen Hulbert & Berghoff’s biotechnology group in Chicago.

“As we get more and more of these gene-related discovery, we’re going to get less and less disclosure,” Noonan said. “This has real world consequences.”

Not everyone thought Athena should win the case. Arup Laboratories Inc., which conducts lab tests as part of the University of Utah, said court rulings that limited patents have helped it provide “additional tests based on natural phenomena, while reducing the threat of patent infringement litigation.”

“Athena’s patent and others like it allow no room to design around, imitate, or improve upon the so-called ‘invention’ of a law of nature,” Arup said in a filing with the court.

The case is Athena Diagnostics Inc. v. Mayo Collaborative Services, 1717-2508, U.S. Court of Appeals for the Federal Circuit (Washington).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net;Malathi Nayak in Arlington, Virginia at mnayak11@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman

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