and short discussion so that we can have some time for questions. I will also, I'm afraid,

use a few more words in my slides than you may be accustomed to. Lawyers -- and I'm a

recovering lawyer -- do like words, and so there are more words than would be ideal.

But the words end up being kind of important.

So, as Eric has already indicated, the Supreme Court, on June 13th, having heard argument

on April 15th, decided that AMP versus Myriad Genetics, the challenge was brought by the

Association of Molecular Pathologists, represented by the ACLU and the Public Patent Foundation.

In its ruling, the court, the Supreme Court, that is, held that not all gene patents are

alike, and I'll spend some time talking about what specifically they meant by not all gene

patents being alike. As it happens, they got into the -- for them, I think, what was really

tough sledding with respect to molecular biology, they had to distinguish between cDNA and gDNA,

which I suspect for Justice Thomas was something of a struggle. But he did an interesting job.

So what I'm going to do today, for those of you that don't necessarily spend their time

thinking a lot about patent law, and that may be many of you, is provide a little bit

of basic background on patent law, and also on gene patents in particular, and how they

emerged and why they emerged. Then I'll discuss the history of the Myriad case very briefly,

and also, its ultimate resolution at the Supreme Court. And finally, I'll discuss what the

case might mean going forward. That's very much a work in progress in terms of what it

means, and there are subsequent lawsuits that I will mention briefly as well.

So, just in terms of background, this is Patents 101, and also, as it happens to be, Section

101 of the Patent Statute. That section has typically been interpreted very broadly to

cover basically anything under the sun made by man. That's a statement from the Legislative

History of the 1952 Patent Act. And the provision in the statute suggests as much -- suggests

that it's pretty broad in its scope, so any new and useful process machine, manufacturer,

or composition of matter is supposed to be encompassed within Section 101, which means,

basically, any new process or product. That said, there have been these long-standing

common law exceptions that the Supreme Court has enunciated, starting in the 19th century,

and by "common law," I mean as contrasted with statutory law. Common law is the gloss

that courts put on the statutory law.

And this common law gloss encompasses exceptions in the form of abstract ideas, laws of nature,

and products of nature. The exception at issue, specifically in the Myriad case, was products

of nature. However, as we will see, all of these three exceptions kind of run together

a little bit, and that becomes important for what the case means going forward.

So the product of nature doctrine actually has an interesting history beyond the Supreme

Court, and in most ways, the most important expositor of the product of nature doctrine

was a judge by the name of Learned Hand -- that was really his name. Judge Hand, albeit only

a district court judge at the time, rendered what is one of the most important decisions

in the product of nature space in a case called Parke-Davis that was decided in 1911. In that

case, he determined that isolated or purified adrenaline represented patent-eligible subject

matter, and in his view, this was not a product of nature -- isolated adrenaline represented

one patent, purified adrenaline represented another -- this was not a product of nature

because it was, and this was a quote from the opinion, "For every practical purpose

a new thing commercially and therapeutically," unquote. Because this language resonated with

some of the commercial instincts that patent lawyers have, they really have seized upon

this language for more than a century as representing what they determine to be the narrow exception

that product of nature represents; in other words, anything that is a new thing, commercially

or therapeutically, for many in the patent lawyer community, is not a product of nature.

This view of the expansive realm of what is within patentable subject matter, and therefore

not a product of nature, was, to some extent, reaffirmed in the patent lawyer community

in the Supreme Court case of Diamond vs. Chakrabarty that some of you may have heard of. That case

involved a recombinant bacterium, a bacterium that had two or more stable energy-generating

plasmids put into it, each plasmid constituting a separate hydrocarbon degredative pathway.

In that case, the Supreme Court, in a divided opinion, determined that this was not a product

of nature because "It was markedly different," quote, unquote -- again, these are the words

that the court used -- from anything found in nature. Not quite as expansive as the Parke-Davis

opinion which suggested that if what one had done provided something commercially useful,

it represented patent-eligible subject manner. So Diamond vs. Chakrabarty was not quite as

expansive, but the combination was taken by patent lawyers and the nascent biotech industries

to mean that basically anything that was isolated or purified could be patent eligible, and

that included gene sequences.

So the first "gene patents," quote, unquote -- and that is, to some extent, now a term

of art because they mean different things to different people, that term means different

things to different people -- covered cDNA, in other words, DNA with introns excised that

was intended to be used to generate therapeutics and cover therapeutics. One of the reasons,

in part at least, these particular cDNA patents were not controversial was that they were

intended to cover a scope of genetic research and development, an area of genetic research

and development, i.e. therapeutics, that looked very much like what had been patent eligible

in the past in terms of small molecules. So these were just large molecules as opposed

to small molecules.

And so when, for example, when some of these patents began to issue in the early '80s,

and Amgen got one of these classic patents on DNA sequences encoding erythropoietin,

cDNA encoding erythropoietin in 1987, a patent that subsequently allowed it to make tens

of billions of dollars in revenue over the course of about 23 years, that wasn't considered

particularly controversial, at least certainly not in the patent bar community, and even

among the larger community, the idea of DNA sequences that would be patentable but would

correlate therapeutics wasn't particularly controversial. And this patent was a subject

of litigation; however, none of the litigation involved the issue of whether or not this

constituted patent-eligible subject matter, probably in part because everyone in the litigation

had their own gene patents. So Amgen sued Genetics Institute, and Transkaryotic, and

Roche, and, of course, all of those entities had their own gene patents to defend, and

so there was no incentive on the part of anyone to say that gene patents were not patent-eligible

subject matter.

Controversies began to emerge however when patents issued -- and some of these patents

issued relatively early on, including the Myriad patents -- that were later interpreted

to cover not just therapeutics but also diagnostics. Obviously, like all patents, patents that

covered diagnostics increase costs, or have the potential to increase costs, and restrict

access. The argument, or one of the reasons people were more concerned about patents covering

diagnostics was, in particular, with the respect to laboratory-developed testing of the sort

that Myriad does. That's not currently FDA regulated, so patents were seen as less necessary

for purposes of providing incentive to get a particular product to market. If one had

the relevant gene, it wasn't considered that expensive to then start doing testing on the

gene, and in point of fact, in a lot of the cases, testing started before the patents

emerged. And the patents ended up being used to shut down certain testing -- diagnostic

testing laboratories.

In addition there was a substantial amount of federal funding involved with some of these

patents, including in the Myriad case itself, and we'll talk about that a little bit more

-- I'll talk about that a little bit more towards the end.

So the access questions in particular, relative to the diminished need for an affirmative

incentive provided by patents, were the focus of this very prominent report issued by the

Secretary's Advisory Committee on Genetics, Health, and Society, and our own Jim Evans

was at the helm of that particular report. The focus there was not only on initial access

but also on problems for women who wanted to get second opinion testing, with the respect

to BRCA-1 and BRCA-2. The Secretary's Advisory Committee was -- relatedly was concerned about

whether sole providers of genetic diagnostic testing, such as Myriad, but also other providers,

like Athena, had the optimal incentive to work aggressively with all types of insurers,

in particular insurers that might cover less well off populations, such as state Medicaid

providers.

So the report discussed not only the BRCA-1 and BRCA-2 patents, but also patents on genes

implicated in certain types of colon cancer, Alzheimer's disease, spinocerebellar ataxia,

and long QT syndrome. This report was issued in 2010 after Myriad had been sued by the

Association of Molecular Pathologists, represented by the ACLU in district court. So it came

out as this debate was, for the first time, the Section 101 debate, was, for the first

time, unfolding in litigation. Again, never before had a Section 101 challenge been brought

to gene patents of any sort.

So we get to the Myriad gene patent litigation. Myriad, I think, was chosen by the ACLU for

a number of reasons, one of which was it was the provider that was most aggressive in terms

of asserting its patents against providers who considered themselves to be doing clinical

research in addition to providing patient care. In this particular case, the ACLU/AMP

challenged 15 claims in seven patents. Many of these patents, at it happens, were initially

owned and exclusively licensed by the University of Utah, which had received a fair amount

of NIH funding, particularly early on. NIH was actually the co-owner of one of the patents.

So this is -- the federal funding issue was intimately involved with this particular case.

The litigation, notably, however, the litigation strategy by the ACLU didn't focus on access

at all. And I think the ACLU determined that they were going to kind of talk the typical

patent lawyer's line of access -- not access, but innovation. And so the arguments that

were used very much were along the lines of these patents were diminishing innovation

in the area of genomic research and development.

In point of fact, at the federal circuit, Judge Lourie stated what I think all the judges

in this litigation agreed with, at least implicitly, by not saying anything about access. He's

stated explicitly, and he wrote the majority opinion, "This appeal is not about whether

individuals suspected of having an increase risk of developing breast cancer are entitled

to a second opinion." Similarly, even the dissent in the federal circuit case, before

it got to the Supreme Court, really focused on innovation, and the dissent drew a distinction

between cDNA and gDNA that had been alluded to in the Secretary's Advisory Committee report,

but for the purposes of saying that cDNA patents wouldn't impede research and development in

genome sequencing, whereas gDNA patents might. So, again, very much focused on innovation.

The Department of Justice's intervention in this case at the federal circuit level also

drew the cDNA/gDNA distinction with a focus on follow-on innovation, and Eric has mentioned

that NIH was influential in crafting the U.S. government's opinion. I think that's an understatement

in many ways; NIH was a critical player, and NIH, as it happens, has had a long history

in helping to shape genomic patent policy starting in the late -- the end of the 20th

century with the so-called utility and written description guidelines that were very significantly

shaped by NIH, and I think had a very positive influence in terms of making sure that genomic

innovation was not impeded by patents. All of this, by the way, is drawn out in exhaustive

detail in many more words in a Duke Law Journal article; the role of NIH over the last 15

years or so is drawn out in exhaustive detail in this Duke Law Journal that were published

last year, so if you're interested, you can go to that. But, again, the focus on innovation,

and the fact that cDNA patents are unlikely to impede innovation whereas gDNA patents

might well impede whole genome sequencing.

At the Supreme Court only claims at issue were the so-called product claims; the process

claims had been taken out of the litigation, so there were only nine composition of matter

or product claims at issue. The Supreme Court, like Judge Bryson in dissent below, like the

solicitor general, and like Eric Lander, who's also been previously mentioned, adopted a

cDNA versus gDNA distinction. Unfortunately, the court's opinion was not as clear as to

why it was adopting this distinction as it might have been. It did say that cDNA was

not naturally occurring, and thereby implicitly suggesting that gDNA could be naturally occurring,

but it didn't really specifically say that, and we can only infer based upon the fact

that Eric Lander's brief was mentioned about six times in oral argument, that they relied

upon Eric Lander's brief's argument about gDNA being found -- isolated gDNA being found

in fetal DNA and also upon cell death. So, unfortunately, though, the opinion doesn't

explicitly say that, so that a little bit hard to parse on the why gDNA is naturally

occurring versus cDNA is not.

Another piece of the opinion focuses -- and this important going forward for purposes

of what the opinion means for future patenting, and also existing patents outside the cDNA/gDNA

context -- focuses on the so-called information versus chemical distinction. This was a distinction

that was drawn by the district court judge in this case, and the Supreme Court picked

it up again. Again, however, it didn't completely connect the dots as to why cDNA versus gDNA

mapped onto that distinction. In point of fact, the court even suggested -- the Supreme

Court, that is -- that cDNA and gDNA both covered information suggesting that, however,

that, nonetheless, cDNA was less problematic in terms of the informational claims it made.

All we can assume, and this is what I would assume and have argued should be the interpretation

of the case, is that Justice Thomas had been impressed by Eric Lander and the solicitor

general, and their statements that cDNA, even though it claimed information or could be

seen as claiming information, didn't -- those sorts of things wouldn't impede future follow-on

innovation in the same way as gDNA. And Bob Cook-Deegan and I put that interpretation