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US personalized-medicine industry takes hit from Supreme Court

Recent decisions seem to drive spike in patent rejections.

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Rejections for US patents related to personalized medicine have spiked after recent Supreme Court decisions tightened the rules for such claims, an analysis of more than 39,000 patent applications reveals.

The data, presented on 11 August at the Intellectual Property Scholars Conference in Stanford, California, address patent applications in eight categories that commonly include personalized-medicine patents. They show that following a key Supreme Court decision in 2012, the US Patent and Trademark Office (USPTO) was nearly four times more likely to deem subjects of such applications unpatentable — and applicants were less than half as likely to overcome those rejections.

“The change in office actions was absolutely striking,” says Nicholson Price, who studies intellectual property at the University of Michigan Law School in Ann Arbor. “The data are very clear that the patent office has changed its behaviour.”

Over the past decade, the Supreme Court has used a series of patent cases to clarify what the USPTO should consider patentable. Natural phenomena and abstract ideas, for example, are not patentable, according to section 101 of the US patent code, and the court has attempted to distinguish between these categories and true inventions.

Two of those Supreme Court cases touched directly on the biomedical industry. In 2012, the Mayo Collaborative Services v. Prometheus Laboratories, Inc. decision struck down two patents on medical diagnostics, and in the 2013 Association for Molecular Pathology v. Myriad Genetics ruling, the court threw out patents on gene sequences used to assess cancer risk. In the wake of those decisions, many lawyers predicted that patents on inventions that are important to personalized medicine — particularly, diagnostic tests that could match individuals to a particular therapy — would be hard to come by, potentially driving away investors.

Numbers game

Legal scholar Bernard Chao of the University of Denver in Colorado decided to find out just how big the impact has been. Chao sifted through around 85,000 records of USPTO actions taken on more than 39,000 patent applications, and sorted out those that had been rejected for not meeting the requirements of section 101.

He found that last year, 22.5% of those office actions were rejections because of section 101, compared with only 5.5% in 2011, the year before the Mayo decision. Applicants were also less likely to overcome those rejections in the wake of the Mayo decision: before Mayo, 70.7% of the section 101 rejections were successfully overcome. After Mayo, that percentage dropped to 29.7%.

But Chao notes that there are caveats to his analysis: the categories he examined omit some personalized-medicine patents and contain other kinds of patents as well. In the future, he hopes to take a closer look at individual patent applications, and to learn more about whether certain applications are more likely to get through than others.

Those analyses will be key to finding out how patent applicants are adapting to the new requirements, says Price. “Patent attorneys are clever,” he says, and may have learned how to construct their patents to avoid conflict with the recent decisions.

Others have documented a clear effect of the Supreme Court’s patent decisions on software patent applications. But some have cheered that change, Chao adds. Software patents are controversial, and some scholars have argued that such patents cause more harm to the industry than help it. Personalized-medicine patents, however, tend to get more support:  “Personalized medicine is probably the poster child of what we think should be incentivized by patents.”

Ultimately, it will be difficult to unravel what impact the patent decline is having on the personalized-medicine industry, cautions Arti Rai, a legal scholar at Duke University in Durham, North Carolina. The sector is facing challenges from several sides: the US Food and Drug Administration has proposed tougher regulations, and insurance companies have been reluctant to pay for new diagnostic tests.

“Diagnostics start-ups are not in a good space right now, that’s clear,” Rai says. “But how much of that is due to Mayo is less clear.”

Journal name:
Nature
Volume:
536,
Pages:
382
Date published:
()
DOI:
doi:10.1038/nature.2016.20436

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