Supreme Court patent ruling on Bilski means much for diagnostics, less for pharma

Although Supreme Court upholds rejection of Bilski patent, it undercuts lower court ruling in some ways and introduces ambiguity

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WASHINGTON, D.C.—After more than seven months of deliberation, the U.S. Supreme Court finally rendered a decision for Bilski v. Kappos on June 28, affirming a federal court ruling in 2008 the U.S. Patent and Trademark Office were correct in rejecting a patent for a method for handling energy hedge funds.

What, you might ask, does an information technology/finance industry ruling have to do with pharma and biotech? At first glance, perhaps not much, but the ruling will have impact on all patent applications, since it sets a certain standard. As it stands now, this might not affect many pharma and biotech entities, but it might have some noticeable impact in the growing realm of diagnostics, particularly in light of cases like the one brought against Myriad by the ACLU and other groups over the patentability of a BRCA-gene-based diagnostic test.

So, as a result of the potential implications down the road, many in pharma, biotech and related fields have been watching the Bilski case with much interest.

The question before the Supreme Court was whether a patent can be issued for a claimed invention designed for the business world.

As patent attorney Brett Trout noted on his BlawgIT blog, "If the Court held that 'business method' patents were not patentable, billions of dollars worth of patents would be instantly worthless. If the Court upheld the patentability of the claimed Bilski invention, there would be a run on the patent office, with inventors trying to obtain a government monopoly on everything from how to write software code to how to brush your teeth. The resulting minefield of patents would stifle innovation among all but the very richest companies."

What came out of the Court of Appeals for the Federal Circuit (CAFC) in 2008 on Bilski, leading ultimately to the case going to the Supreme Court, was something called the "machine-or-transformation test," which considers whether a patent involves a machine or a method that in some way transforms some object from one state to another. While the Supreme Court largely upheld the lower court decision, and implicitly suggests that the machine-or-transformation test is a valid one, it stressed that machine-or-transformation isn't the only test that can or should be used.

But while this decision eased the risk of potential patentability problems from the stringent and narrow test of the CAFC ruling, it opened various ambiguities. Because, while it supported the rejection of the Bilski patent, the Supeme Court didn't provide any definitive test or broader set of guidelines that could be used to determine what business processes might be patentable—even though it agreed with the decision that abstract ideas could not be patented.

"For an awful lot of pharma companies, it just won't matter a lot," Tom Meyers, a partner in the Intellectual Property Group of Boston-based Brown Rudnick LLP told ddn recently. "When you're talking about synthetic drugs and such, this just isn't an issue. Where it becomes more of an issue, he says, is when natural products are involved, composition of nature issues, abstract thoughts, and the like." These aren't terribly commonplace in pharmaceutical discovery and development, he says, but they often are in the diagnostic realm.

"Pharma has other issues in terms of patents, such as how to intelligently and creatively craft their intellectual property portfolios to maximize the life of their patents," Meyers says. "It's a lot more interesting in diagnostics how Bilski might impact things, because the players in diagnostics rely much more on methods claims and process claims in their patents—especially process—than do pharmas. But the Supreme Court left a lot of ambiguity, which means these is going to have to be a lot of case-by-case basis rulings as to where to draw the line between what occurs in nature and isn't patentable because it's 'the hand of God' as opposed to what is created by the hand of man."

Meyers says the cases to look at now are two diagnostics patent cases: Classen Immunotherapeutics, Inc. v. Biogen Idec and Prometheus Laboratories, Inc. v. Mayo Collaborative Services. Both cases used the machine-or-transformation test as elucidated in the lower court ruling on Bilski, and that might not hold up now that the Supreme Court has said that cannot be considered the only test of patentability.

Some have said the Classen case is also important because it was seen as foreshadowing the decision in Laboratory Corp. v. Metabolite Labs., Inc., another diagnostics case, but one dealing with a vitamin deficiency rather than the chronic immune-related disorder related to an acute immunization schedule as in Classen—but otherwise very similar to Classen.

As these three cases alone show—not to mention what might follow—the CAFC ruling on Bilski quickly found its way from IT and finance into the world of life sciences, and while the Supreme Court ruling may change roll back the CAFC ruling on Bilski, Meyers is convinced it will still have lasting impact in the life sciences marketplace.

"All this means in the end, though, is that diagnostics has another hurdle to overcome in seeking patents," Meyers says. "The courts have given enough guidance in other cases that we will be able to determine some metrics to predict how the courts might rule and to develop some guidelines. Patents are not going away for diagnostics; the applications will simply have to be written according to new standards."

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