During the past 30 years, companies routinely obtained patents on isolated genes. Many biotech firms built their businesses by exploiting these patents, the validity of which was regularly upheld by U.S. district courts and the Federal Circuit. All that was swept aside on June 13 when the Supreme Court ruled that isolated human genes are products of nature and thus not patent-eligible. The unanimous decision in Association For Molecular Pathology v. Myriad Genetics, Inc. upset many in the biotech sector.

Myriad, which lost its patents on genes related to breast and ovarian cancer, saw its stock drop 5.6 percent on the day of the decision.

The court’s ruling, however, was quite narrow. Isolated genes are not patentable, but man-made variants of those genes are patentable, the justices held. And the court explicitly left open the possibility that many other gene-related inventions are patent-eligible, including new applications for genes and new processes for obtaining or using genes.

As a result, Myriad will have a surprisingly small effect on the biotech industry, according to experts. “Very few people use isolated DNA, so the impact of the decision [on the biotech sector] will be pretty minimal,” says Jorge Goldstein, a partner in Sterne Kessler Goldstein & Fox.

The ruling could create major problems for some other areas of the economy. “My main concern is how the decision will affect nanotechnology, antibiotics and other natural products,” Goldstein says.

Defining Decision

The Patent Act defines patent eligible subject matter in sweeping terms: “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” But the courts have “long held that this provision contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable,” the Supreme Court stated in Myriad.

Genes are natural phenomena. Even when technology is used to separate a gene from its chromosome, the isolated gene remains a natural product, according to the court. “Separating that gene from its surrounding genetic material is not an act of invention,” Justice Clarence Thomas wrote in the court’s opinion.

However, man-made DNA molecules are a different story. These molecules are patent-eligible, provided they are not identical to some naturally occurring DNA (or the isolated form of such natural DNA), the court held. The court’s distinction between patentable and unpatentable molecules may seem clear and simple. But it’s not, according to experts.

Consider “complementary DNA.” More commonly known as “cDNA,” these man-made molecules have the same genetic information as naturally occurring genes, but generally omit some extraneous chemical structures found in natural genes. The Supreme Court held that cDNA is patent-eligible so long as it is not identical to naturally occurring DNA.

Why is such cDNA patentable, while isolated DNA isn’t? Both are man-made molecules not found in nature. Both contain the same genetic information as naturally occurring DNA and are chemically different from the naturally occurring version. (Because isolated DNA is separated from the chromosome, the ends of the isolated molecule have different chemical structures than chromosomal DNA.)

So why isn’t isolated DNA patent-eligible? The court doesn’t provide an answer. “[Myriad] leaves open the question of what distinguishes patent-eligible cDNA from patent-ineligible isolated DNA,” says Professor Rebecca Eisenberg of University of Michigan Law School.

Expect inventors, businesses and the courts to have plenty of fights over which man-made molecules are patentable. “The patent-eligibility of synthetic molecules will be an issue in the future,” says Professor Rochelle Dreyfuss of New York University School of Law.

Looking Ahead

Myriad also will create disputes about the patent-eligibility of isolates of naturally occurring products. And these disputes will reach beyond the biotech sphere.

“The nanotechnology industry is upset because many of its patented products consist of isolated parts of natural products. Carbon nanotubes, for instance, are isolated from graphite. After Myriad, it is unclear if these nanotech products are patent-eligible,” Goldstein says.

The pharmaceutical industry is concerned about the ruling too. Many important patented drugs consist of molecules isolated from nature. For example, rapamycin, an immune-suppressor used to prevent transplant rejection, is produced by the bacterium Streptomyces hygroscopicus. The drug generates billions of dollars in annual sales.

Patents on these products might survive Myriad, according to experts, because the patent before the Supreme Court was unusual. Instead of claiming the chemical structure of an isolated DNA molecule, the patent described the isolated molecule by its genetic information. This genetic information was identical to that found in natural DNA, so the patent claimed a natural product, the court held.

If the patent had claimed the isolated DNA molecule in purely chemical terms—describing a molecule not found in nature—the result might have been different, according to some experts. The Supreme Court seemed to express a more favorable view of patents on “specific chemical compositions,” says Professor Arti Rai of Duke Law School. Patents on drugs like rapamycin are usually claimed in terms of their chemical composition, so “these compounds may fall outside the realm of the product-of-nature doctrine,” Rai says.

Although the full ramifications of Myriad are unclear, experts widely agree that the ruling will have only a modest impact on the biotech industry. Companies no longer have exclusive rights to isolated genes, so competitors can start offering genetic tests. These tests will become cheaper, more widely available and more accurate, which will be good news for patients, employers, insurers and all other purchasers of healthcare.

Isolating genes, however, is old technology. The vast majority of biotech work now involves man-made molecules, such as cDNA and recombinant DNA, which seem to be patent-eligible under Myriad. “It will be fairly easy to write around this ruling,” says James Mullen, a partner at Morrison & Foerster.