In Ariosa Diagnostics Inc. v. Sequenom Inc., 788 F.3d 1371 (Fed. Cir. 2015), a Federal Circuit panel held that Sequenom Inc.’s prenatal diagnosis patent claims patent ineligible subject matter under the two-step test of Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012). Sequenom’s patent is premised on the breakthrough discovery that paternally inherited cell-free fetal DNA (“cffDNA”) can be found in maternal plasma, material which prior to this discovery was discarded as waste. Although Sequenom’s application of this discovery revolutionized prenatal diagnostics—making possible a noninvasive method for detecting prenatal defects without having to obtain fetal DNA directly from the fetus or placenta—the panel held that the claimed method was patent ineligible under Mayo. Applying Mayo’s two-step test, the panel determined that 1) the claimed method “begins and ends with a natural phenomenon,” and 2) the method steps are “well-understood, routine, and conventional.” As a result, the panel concluded that the claimed method is not substantially more than a claim to the natural phenomenon itself. Judge Linn felt constrained by Mayo, stating that “[b]ut for the sweeping language in the Supreme Court’s Mayo opinion, I see no reason, in policy or statute, why this breakthrough invention should be deemed patent ineligible.”

Sequenom petitioned the court for rehearing en banc, arguing that the panel’s failure to consider the claimed method as a whole was contrary to Diamond v. Diehr, 450 U.S. 175 (1981), Ass’n for Molecular Pathology v. Myriad Genetics, 133 S. Ct. 2107 (2013), and Mayo itself. The petition stated that “[i]t is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements,” particularly because “a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made.” Petition 8 (quoting Diehr). Sequenom’s petition received strong support from amici from numerous organizations, companies and academic groups. There were 12 amicus briefs in total, raising a variety of additional arguments in support of en banc review.

A number of amici argued that preemption (of abstract ideas, laws of nature, and natural phenomena) had to be considered in assessing patent eligibility. The panel expressly recognized that “[t]he Supreme Court has made clear that the principle of preemption is the basis for the judicial exceptions to patentability.” But despite undisputed evidence that Sequenom’s claims do not preempt all uses of cffDNA, the panel held that “the absence of complete preemption does not demonstrate patent eligibility” and, where an invention is patent ineligible under the Mayo two-step test, “preemption concerns are fully addressed and made moot.” In urging en banc review, the Intellectual Property Owners Association (“IPO”) argued that “evidence of lack of preemption is never ‘moot’ under the Supreme Court’s two-step test for patent eligibility.” IPO Br. 10. The New York Intellectual Property Law Association (“NYIPLA”) likened the panel’s application of Mayo to the “rigid analysis of prior Supreme Court patent-eligibility frameworks [] rejected in Bilski v. Kappos, 561 U.S. 593 (2010).” NYIPLA Br. 6.[1] The Wisconsin Alumni Research Foundation (“WARF”), along with the Marshfield Clinic and MCIS, Inc., also urged en banc review on preemption grounds. They distinguished between “a patent [that] impermissibly claims and prevents others from using a natural phenomenon, law of nature, or abstract idea itself” and a non-preemptive patent that “claims a practical application of one of those things.” WARF Br. 5. They explained that “[b]ecause Sequenom’s claims neither expressly nor practically monopolize the cffDNA that naturally appears in maternal fluids, they are patent-eligible under 35 U.S.C. § 101.” Id. at 6.

Many of the amici discussed the consequences of the panel’s decision to the biotech industry, particularly to diagnostics and personalized medicine. For example, Biotechnology Industry Organization (“BIO”) and the Pharmaceutical Research and Manufacturers of America (“PhRMA”) stated that the “dark cloud overshadowing thousands of issued and maintained biotechnology patents, many of which have been the basis for substantial investment, threatens investors’ expectations that appeared reasonable prior to recent jurisprudential developments.” BIO/PhRMA Br. 3. BIO and PhRMA noted that “the resulting uncertainty is affecting future investment decisions.” Id. Indeed, as explained in the amicus brief of a group of twenty-three law professors, “[t]he economics of innovative diagnostic tests reflect exactly the economic justification for the patent system: the cost of applying a genetic diagnostic test is relatively low, but the ex ante R&D cost is enormous and is not reflected in the marginal cost of the medical test itself.” Law Profs. Br. 3. In its amicus brief, Novartis stated that the “threat [the decision brings] begins with our own inventions related to personalized medicine, biomarkers and point-of-care testing, as well as the inventions of third parties upon which we now or may in the future depend to help meet our goal of providing the right medicine to the right patient at the right time.” Novartis Br. 4.

The UK-based BioIndustry Association (“BIA”) also urged en banc review. Its brief focused on the impact of the panel’s decision on foreign companies and efforts to harmonize U.S. patent law with the rest of the world. The BIA noted that “approximately 50% of all U.S. patent applications are filed by foreign entities” and that “startups and fledgling businesses rely on the U.S. market projections for securing R&D funding, as the U.S. accounts for 47% of the global biotechnology market.” BIA Br. 1-2. BIA expressed concern that the panel’s decision “jeopardizes the future of much needed diagnostics” and may lead to an “exodus of investment and businesses from the US market or the life science industry in general.” Id. at 2-3. BIA also described the panel’s decision as a “setback in long-standing efforts to harmonize patent laws” and at odds with the patent eligibility standard of other nations. Id. at 2. BIA noted that the European counterpart of Sequenom’s patent survived an opposition challenge and an appeal, with subject-matter eligibility never being an issue. Id. at 4-5. The European Patent Office’s guidelines explain that the mere discovery of a “previously unrecognized substance occurring in nature” is unpatentable, but “if a substance found in nature can be shown to produce a technical effect, it may be patentable.” Id. at 6. Due to the difference in patent eligibility for the same inventions in the U.S. and abroad, BIA fears that companies will “be forced to choose between patent protection in the rest of the world (except the U.S.) or trade secret protection everywhere.” Id. at 2. It urged en banc review to avoid that outcome.

The depth and breadth of support for Sequenom’s petition lends weight to Sequenom’s request for en banc review. Indeed, last week the Federal Circuit invited appellees to respond to Sequenom’s petition for rehearing en banc. The response is due on September 17, 2015.