On June 13, 2013, the Supreme Court issued a decision supposedly resolving the patentability of DNA in Association for Molecular Pathology v. Myriad Genetics. Immediately, all parties on both sides of the case declared victory. The American Civil Liberties Union, the real force behind the case, announced “VICTORY” on their web page. A spokesman for the owner of the DNA patents in question, Myriad Genetics, Inc., informed the press that their patents were as strong as ever. Although the patent protected Myriad’s main product, Myriad’s stocks rose 13%, then ended down 6% for the day; its share price has since stabilized at about the same price it was in January of 2013.

Press reports indicated that this was either a minor defeat or a minor victory for biotechnology companies.

Based on the conflicting spin and opinions about this case, parties with an actual stake in genetic research and personalized medicine may well be uncertain as to what, if anything, they need to do differently. If a real blow has been dealt to gene patents, why is Myriad’s stock value the same as six months ago? If the Supreme Court’s restriction on genetic patenting is trivial, why did the value of Myriad’s stock change at all?

The answer is very simple: those who understand the decision can benefit from it going forward, but those who do not risk liability or losses due to reliance on existing invalid patents. This is true for all kinds of parties with interests in genetic technology: innovators, licensees, and imitators alike.

The Decision

The basic position of the Supreme Court in this case was clear (not a common characteristic of the Court’s recent decisions): a DNA molecule can be claimed in a patent, unless the claim covers a DNA molecule with only a genetic sequence that is found in nature. The popular press has correctly downplayed the importance of this decision on the patentability of biotechnology. Inventions such as genetically modified organisms, genetic probes, and recombinant DNA are not affected by the decision, and remain patentable. Going forward, biotechnology innovators simply must avoid attempting to claim DNA that only includes a naturally occurring sequence. The utility of such DNA is highly limited in the context of modern biotechnology, and its exclusion from patent eligibility should only complicate patenting in very few circumstances.

However, the impact of this decision on existing patents and pending patent applications is enormous.

Existing Patents Invalidated

For decades biotechnological inventions have been claimed as “isolated polynucleotides” defined by a certain genetic sequence. In many cases, the sequence claimed was the same a sequence found in non-isolated naturally occurring DNA, which is part of a living cell. However, the adjective “isolated” was universally interpreted to rule out naturally occurring DNA and to confer patentability to such claims. As a result, there are uncounted thousands of patents and pending patent applications containing such claims.

The Supreme Court’s decision has likely rendered a large fraction of these patents invalid. This creates grave risks and vast opportunities for anyone with an interest (adverse or beneficial) in such patents. Such parties fall into three major categories.

A party that owns one or more DNA patents or pending applications defines the first category. Any such party should ask competent patent counsel to analyze the claims in its patents and pending applications to determine whether any of the claims have been invalidated. If so, procedures exist for revising such claims to comply with the Supreme Court’s new rule for DNA patents. Failure to do so could result in patents becoming unenforceable, and could result in successful challenges to their validity from competitors.

A party that has a license to one or more DNA patents defines the second category. Again, any such licensee should analyze the claims in the licensed patent. If they appear to be invalid, then the licensee should consider whether there is any further benefit in abiding by the terms of the license. Depending on the licensee’s position, it may wish to either (1) ask the patent owner to revise the patent so that it complies with the new rule, or (2) challenge the validity of the patent.

A party that is in competition with an owner of one or more DNA patents defines the third category. Such parties should analyze the claims in the competitor’s patent. If they appear invalid, then the party may wish to consider simply using the competitor’s previously protected invention (which would have constituted infringement prior to Myriad), or challenging the validity of the patent.

In many cases, the question of whether a DNA patent will be invalidated will turn on whether the owner can revise it before another party mounts a challenge to it.

Future Inventions: The Need for Secrecy

For genetic inventions that are not yet the subject of patent applications, the Supreme Court’s ruling increases the need for secrecy. Customarily, newly identified genes have been submitted to public databases (such as GenBank) and provided to the academic community in the form of research publications. Because isolated DNA containing such genes could be patented, there was no commercial disadvantage to publicly sharing such information.

The situation is now changed. Serious consideration should be given to maintaining any newly discovered genes in strict secrecy until their commercial potential can be ascertained, so that patent applications can be filed for all commercially viable, artificially modified, forms of the DNA. In addition, if the gene could be useful in an industry outside of those which have governmentally mandated rules of public disclosure (such as drugs, diagnostic tests, food additives, and pesticides), then consideration should be given to maintaining the gene as a permanent trade secret. Such permanent trade secret status may be available in many biotechnological fields, such as research tools, biofuels, and bio-manufacturing.

The balance between secrecy and patenting has always been a consideration for innovators in every area of technology, but the Myriad decision is another nudge in the direction of secrecy for DNA-related inventions.

Take Home Message of Myriad

The overall effect of the Myriad decision will be a somewhat modest change in strategy in patenting new DNA-based inventions. However, existing patents may face an upsurge of attempts to reform and attack them; if you have an interest in a DNA patent, you may wish to join the upsurge. If you are a biotechnological innovator, you may want to think twice before publicly sharing information about potentially valuable DNA sequences.