The World vs. Myriad(‘s Patents’ Validity)

In the latest salvo in Myriad Genetic’s bloody patent disputes with its BRCA-testing competitors, Myriad has sued LabCorp after the company announced it was to begin offering its own BRCA-testing product, BRCAssure. This brings to six the total number of companies held at the point of Myriad’s bayonet: Ambry Genetics, Gene-by-Gene, Quest, GeneDx, Invitae, and now, LabCorp. With the threat of these lawsuits, a purely commodified BRCA-testing market is not coming online any time soon.

From a purely patent law perspective, Myriad has several pretty good claims. Out of the patents in play in its loss before the Supreme Court earlier this year, Myriad still retains a number of valid claims: claims directed to BRCA cDNA and primers and probes used for BRCA sequencing, generally. In addition, Myriad has since acquired a number of new patents that have yet to be touched by any federal court. In both of these cases, Myriad’s competitors will need to prove by “clear and convincing evidence” that those claims are invalid–a particularly high bar.

Nonetheless, I think Myriad’s “scorched earth” litigation policy is suicidal. Why? For two, interrelated reasons: (1) because of a rule the Supreme Court established over forty years ago in a case called Blonder-Tongue Labs., Inc. v. University of Illinois; and (2) because of the current composition of the lower appellate court, the Federal Circuit. I’ll briefly explain both and then talk about how they come together to augur poorly for Myriad.

One of the more complicated issues in the common law, generally, is that of preclusion. That is, if an issue has already been decided by another court, can someone else re-litigate it, and if so, under what circumstances? Historically, simply giving names to the variety of circumstances in which this is likely to occur has produced a menangerie of legal animals, including (but not limited to) issue preclusion, res judicata, and my personal favorite, non-mutual defensive collateral estoppel. I’ll save the discourse of preclusion for another time, but in patent law, this question had historically boiled down to the following: If, in an infringement suit, a court finds a patent valid (or invalid), what effect does that have on future accused infringers?

In Blonder-Tongue, the University of Illinois held a patent for a high-quality television antenna. After suing several manufacturers, one court held the patent to be invalid, and the appellate court affirmed. UI also sued Blonder-Tongue Labs., which argued that it could use the invalidity determination of the prior court to defend its patent suit. That is, that once a patent was invalid, it was invalid to the world. That litigation made its way up to the Supreme Court, which, in an opinion authored by Justice Byron White, ultimately agreed with Blonder-Tongue. (And, in doing so, overruled Triplett v.¬†Lowell, 297 U. S. 638 (1936), concluding the opposite.) But there was also a flipside to that coin: that a court’s determination of validity was not binding on subsequent accused infringers. Thus, every time a patent holder sued another for patent infringement, the defendant would be able to challenge the validity of patent de novo. Today, the rule derived from Blonder-Tongue is this: Each conclusion of validity is limited to the defendant in that particular action, but a determination of invalidity makes that patent invalid to the world.

The Current Federal Circuit
For anyone who regularly practices patent litigation, it’s no secret that the current Federal Circuit is sharply divided on many issues. As an exemplar of this division, one need only look at the Federal Circuit’s recent en banc decision in CLS Bank Int’l v. Alice Corp. Pty, which produced seven separate opinions spread across ten different judges. For litigants, this division means that many of the Federal Circuit’s decisions are panel-dependent; that is, that the outcome changes depending on which judges you get. To engage in gross and unfair generalizations, some judges are generally pro-patent, while others have somewhat of an anti-patent bent. And it’s impossible to tell beforehand which set of three will hear a particular case. (Current practice is that the Clerk tells litigants the week of argument who sits on the panels.)

This very much complicates appellate strategy at the Federal Circuit. A district court finding that some patent claims are invalid may, for some clients, not be worth appealing if it seems that a harsher panel could declare the remaining claims to be invalid. Or, for that matter, a rock solid victory in the district court could be immediately stripped away by an unforgiving panel. The potential outcomes are virtually limitless and difficult to predict.

Myriad, the Federal Circuit, and the Blonder-Tongue Rule
So what to make of all of this? Well, because of the Blonder-Tongue rule, Myriad’s lawyers essentially need to be flawless in all six litigations their client is currently pursuing. If any patent claim is declared invalid along the way, all of the other five litigants can use that determination as a defense against Myriad’s claim of infringement of that patent claim. Thus, if, for example, the District of Utah in Myriad’s litigation against Ambry decides that one of Myriad’s claims for cDNA is invalid, that claim would likely be invalid in the other five litigations as well. The preclusive push is decidedly on the defendants’ sides.

For any ruling of invalidity, it’s of course true that Myriad could appeal those issues to the Federal Circuit. But this has two problems. First, given the panel-dependency of the Federal Circuit, the strategy is complicated. Which patents are worth risking? Which ones aren’t? How important is maintaining the appearance that Myriad will “go the mat” for its intellectual property? What are the business effects of the reversal of a favorable infringement ruling?

Second, given the procedural posture of the six cases, it’s unclear whether Myriad could join all six defendants in one appeal. Thus, there is the distinct possibility that Myriad may need to argue multiple appeals for the same claims of the same patents. The problem here is it’s unclear whether those appeals will be assigned to different panels–and, again, because issues of invalidity are so panel-dependent, Myriad may wind up with conflicting results. But, because of the rule in Blonder-Tongue, if even one panel rules that some of Myriad’s claims are invalid, they will remain invalid for any future defendant. This means that Myriad’s lawsuits may ultimately have the opposite effect of that intended: Myriad may open the door to future competitors. Myriad’s lawyers, it would seem, will have to bat 6-for-6 at the Federal Circuit to absolutely ensure that Myriad’s patents–and its business position–remain whole.

This is why I think Myriad’s strategy is ultimately suicidal. Sequencing work doesn’t take much these days–some lab space, a lab tech, a sequencer, some reagents and cold space, a software platform, and a website. Competitors, once the intellectual property space is cleared out, can come online very easily. So while it’s certainly possible (and perhaps likely) that Myriad will win a few small victories on some of its claims in the instant six cases, it’s also likely that a number of claims will be declared invalid by some court along the way. Once those claims are knocked down, any competitor could easily come along and practice those claims to compete with Myriad. To use an analogy, Myriad’s litigation strategy is like picking fights with its neighbors until someone knocks down part of its fence, never to be rebuilt. That’s not much of a litigation strategy, let alone a business one.

Ultimately, assuming the Federal Circuit has something–and multiple somethings–to say about Myriad’s patents, there will be only one way to resolve the procedural mess: up, to the Supreme Court.

Jacob S. Sherkow