On July 29, 2011, in an opinion written by Judge Alan D. Lourie, the U.S. Court of Appeals for the Federal Circuit issued its decision in Association for Molecular Pathology, et al. v. U.S. Patent & Trademark Office, et al., --- F.3d --- (Fed. Cir. 2011), in which it held, among other things, that claims for isolated DNA sequences are patent eligible under 35 U.S.C. § 101. The court’s decision is the latest ruling in the long-standing and controversial battle over gene patents. 
The case started in May 2009 when a group of medical organizations, scientific researchers, patients, and genetic counselors sued Myriad, the United States Patent and Trademark Office (PTO), and a group of individuals associated with the University of Utah Research Foundation, in the U.S. District Court for the Southern District of New York seeking declaratory judgment that several of Myriad's patent claims were invalid. The lawsuit sparked controversy as plaintiffs called into question the appropriateness of owning property rights over human genes. The asserted claims cover human BRCA1 and BRCA2 genes (collectively "BRCA1/2"); important in diagnosing a woman's susceptibility to breast and ovarian cancers. Mutations in the BRCA1/2 genes correlate with an increased risk of those cancers; women with BRCA mutations face a fifty to eighty percent risk of developing breast cancer (compared to the average twelve to thirteen percent risk for women without the mutation), and a twenty to fifty percent risk of developing ovarian cancer. Slip Op. at 17. Thus, detection of BRCA mutations is critical to the diagnosis and treatment of breast and ovarian cancers.
The challenged claims fall into three main sets: 1) composition claims that cover isolated DNA molecules of all or a portion of the BRCA1/2 genes; 2) method claims for comparing or analyzing DNA sequences; and 3) method claims for screening potential cancer therapeutics. The district court concluded on summary judgment that all of the challenged claims were invalid under § 101.
On appeal, the Federal Circuit first decided the threshold issue of whether the district court had declaratory judgment jurisdiction over the lawsuit. Applying the governing legal principles from MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) and SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372 (Fed. Cir. 2007), the court determined that only one of the plaintiffs, Dr. Harry Ostrer, had an actual "controversy of sufficient reality and immediacy." Slip Op. 30. Indeed, Dr. Ostrer's injury—i.e., his inability to engage in BRCA-related clinical diagnostic testing without first taking a license from Myriad—was directly traceable to Myriad's patent enforcement efforts. The Federal Circuit therefore affirmed the district court's decision to exercise declaratory judgment jurisdiction. All three judges on the panel agreed with this analysis.
On the merits, the Federal Circuit majority (Judges Lourie and Moore) considered whether composition claims on isolated BRCA1/2 gene sequences are patent eligible. The majority began by setting out the legal framework for patent eligible subject matter from Diamond v. Chakrabarty, 447 U.S. 303 (1980) and Funk Brother Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), where the Supreme Court stated that the distinction made "between a product of nature and a human-made invention for purposes of § 101 turns on a change in the claimed composition's identity compared with what exists in nature." Slip Op. at 41. The majority therefore reasoned that claims that "cover molecules that are markedly different—[that is,] have a distinctive chemical identity and nature—from molecules that exist in nature," are drawn to patent eligible subject matter. Id.
With that legal principle in mind, the majority concluded that the isolated DNA sequences are patent eligible. Notably, the parties did not dispute that the claimed isolated DNAs exist as distinct chemical molecules that are different from the native DNA found in the human body. The majority emphasized that the isolated DNA molecule no longer retains the chemical bond that the naturally-occurring gene has with other genetic materials, stating that the "covalent bonds in this case separate one chemical species from another." Id. at 44. The majority further gave weight to the fact that "the PTO has issued patents directed to DNA molecules for almost thirty years," and noted that any change in the law to exclude DNA inventions from the broad scope of § 101 would have to come from Congress, not the courts. 
On the method claims, all three judges agreed that, under Bilski v. Kappos, 130 S. Ct. 3218 (2010), all but one claim (i.e., the method for screening for potential cancer therapeutics) were invalid. Slip Op. at 49. Specifically, the court held that the claims directed to the methods of comparing or analyzing sequences only cover abstract mental processes and therefore fell outside § 101. Id. at 49-50. The court rejected Myriad's assertion that those method claims include transformative steps that would make them patent eligible under the machine-or-transformation test. The court concluded instead that those method claims merely amount to "the abstract mental process of comparing two nucleotide sequences." Id. at 52-53.
The method claims directed to screening for potential cancer therapeutics by measuring changes in cell growth rates, in contrast, include two transformative steps, which render them patent eligible. The steps of growing transformed cells and determining the cell growth rates, which are "central to the purpose of the claimed process," achieve the claims' goal of "assess[ing] a compound's potential as a cancer therapeutic." Id. at 53-54.
Judge Kimberly Moore joined the court's reasoning as to the method claims and to claims directed to isolated cDNA sequences (i.e., molecules that do not contain introns or non-coding sequences). As to the remaining claims, i.e., claims directed to isolated DNA sequences that are identical to the naturally occurring gene sequences, Judge Moore concurred with the court's decision. Judge Moore applied the test set forth in Chakrabarty and Funk Brothers, namely, whether there are "markedly different characteristics from any found in nature and one having the potential for significant utility." 447 U.S. at 310. Under that test, Judge Moore reasoned that the claims directed to the shorter isolated non-cDNA sequences have new and significant uses relating to clinical diagnostic testing and thus are patent eligible. Moreover, based on the governing case law, the substantial historical background, and the settled expectations of the biotechnology industry, Judge Moore concluded that the "laws of nature" exception to patentability should not be extended to cover isolated DNA sequences.
In a separate opinion, Judge Bryson dissented from the court's decision with respect to the patentability of claims that cover the BRCA gene itself and the BRCA gene segment claims. According to the dissent, the process of isolating genetic material from a human DNA molecule fails to make the isolated genetic material a patentable invention. Moreover, the dissent noted that the naturally occurring genetic material had not been altered in such a way that would matter under the governing principles of Chakrabarty, and therefore the isolated genes are not eligible for patentability.
Based on the Federal Circuit's ruling in this important case, isolated DNA sequences remain patent eligible subject matter under § 101. The court's splintered decision, however, as well as the numerous disputed issues relating to gene patenting, suggest that final resolution of this important area of law remains elusive. Nonetheless, the Federal Circuit's decision sheds light on the way the court will evaluate patent eligibility under § 101 post-Bilski. Indeed, the court made clear that it will place great emphasis on the machine-or-transformation test when evaluating method claims as an "important clue" in determining patent eligibility. Patent practitioners should therefore be sure to carefully draft claims to include at least one readily identifiable transformative step in order to protect the claim from falling outside the broad ambit of patent eligible subject matter under § 101.