By Brenda Simon and Vinita Kailasanath

Today, the U.S. Supreme Court invalidated the patent at issue in Bilski v. Kappos (opinion).  The Bilski patent covered a method of hedging risk in commodities trading.  The Court invalidated the method claims, as directed to an abstract idea, and discussed the history of business method patents.

This decision also considered that the Federal Circuit’s “machine-or-transformation” test for determining the patentability of process claims.  As the Federal Circuit applied it, to be patentable, a particular process was required to be tied to a machine or transformative.  In today’s decision, the Court held that the machine-or-transformation test is not the exclusive test for determining the patentability of a process, but is merely an investigative tool or a clue in the patentability assessment.  The Court specifically noted the limitations of the machine-or-transformation test in evaluating inventions related to emerging technologies and invited courts to develop other limiting criteria on subject matter eligibility.

How might this affect pending cases such as AMP v. Myriad or Prometheus v. Mayo?

In March, a New York district court invalidated Myriad’s method and composition claims related to BRCA1 and BRCA2, though the Bilski decision is only relevant to the method claims.  This case will be heard by the Federal Circuit on appeal.  The diagnostic claims at issue analyze a person’s susceptibility to disease by comparing his or her sequence to the BRCA sequences.  The district court relied on the machine-or-transformation test, finding that Myriad’s method claims were not limited to any specific analysis and comparison methods, and were therefore unpatentable.

Although the analysis or comparison of BRCA 1/2 gene sequences would seem to incorporate physically transformative steps to isolate the patient’s DNA, the literal language of the claims was only directed to the “abstract mental processes of ‘comparing’ or ‘analyzing’ gene sequences.”  It seems questionable that the preparatory transformative acts to isolate and sequence DNA that enable its analysis or comparison would be read into the claims, as under the literal claim language, the sequencing could be carried out by a third party.

Courts might find that identifying a gene that corresponds with an increased susceptibility to disease is transformative:  it takes biological material and transforms it into information about disease risk.  It is not clear why the “transformation” should be measured in terms of similarity rather than difference.  The outcome is unclear.

In addition, the district court invalidated the growth rate comparison claims for screening potential cancer therapeutics, finding that the invention covered a scientific principle.  Despite acknowledging that the administration of the test compound might be transformative, the court found that such steps would be mere data-gathering steps.    However, such claims are almost certainly transformative, as they assess cancer therapeutics’ impact on tumor growth rate.

In light of the Bilski decision, the question is whether the Federal Circuit will apply the machine-or-transformation test to the Myriad claims, or introduce a different way of assessing subject matter eligibility in the biotechnology realm.

In its September 2009 decision in Prometheus v. Mayo, the Federal Circuit applied Bilski to the act of determining drug metabolite levels.  The patent at issue covers a method of “optimizing therapeutic efficacy” by administering a drug to a person and then using the person’s metabolite level to adjust later doses.  The Federal Circuit held that the physical acts of administering the drug and determining the dosage satisfy the transformation prong of Bilski.  Certiorari is pending before the Supreme Court.

In view of today’s decision, the Prometheus decision should stand.  The Federal Circuit employed the machine-or-transformation test as an investigative tool, determining that the required physical acts rendered the invention sufficiently transformative.

In sum, the Supreme Court’s recent pronouncement on subject matter eligibility allows for the use of the machine-or-transformation test as an investigative tool or clue to patentability, but allows for the courts to introduce additional or different ways to determine whether an invention preempts a fundamental principle.  This will at least allow the flexibility to adjust the determination for differences in subject matter eligibility in the biosciences, as opposed to in business methods.