George Nathanael is a JD Candidate at Osgoode Hall Law School.

Earlier this month a United States District Court denied a motion to dismiss a lawsuit brought forth against the USPTO, Myriad Genetics, and directors of the University of Utah Research Foundation. The suit had to do with patents covering the genes BRCA1 and BRCA2 (for which mutations have been associated with a higher risk of breast cancer) and their usage in genetic testing. The plaintiffs, composed of a broad range of individuals and organizations from researchers to individual women with breast cancer, claimed that the patents should be unenforceable and that the USPTO’s practices in allowing such gene patents are unconstitutional. For a good primer (pun intended for the molecular biology folks) on the lawsuit and the issues it raises, read Stephanie Anderson’s IPilogue article from this past summer here.

In his decision, Justice Robert W. Sweet, a veteran judge of the Southern District of New York, separated his analysis into five major sections: the subject matter jurisdiction over the claims against the USPTO, the plaintiffs’ standing to sue the USPTO for constitutional violations, the plaintiffs’ standing to sue Myriad and the directors, the personal jurisdiction of the Court over the directors, and the adequacy of the allegations of constitutional violations. All of these issues were, perhaps surprisingly, decided in favour of the plaintiffs.

With respect to the first issue, the USPTO argued that the Court did not have subject matter jurisdiction over the claims because Congress had already created a “comprehensive scheme … to govern patent grants”, which precludes the courts from getting involved. However, Sweet said that the cases brought up by the USPTO to substantiate its point only included claims that the Patent Act already provided a remedy for; but in this instance there is no “statutory scheme providing a remedy for persons who complain about the constitutionality of patents issued by the USPTO and/or the policies and practices of the USPTO”.

The plaintiffs’ standing to sue the USPTO for constitutional violations is quite interesting considering the potential wide-reaching consequences of such a precedent. Despite the USPTO arguing that there was no sufficient causal connection between its acts and the supposed injuries to the plaintiffs, Sweet ruled:

While the USPTO is correct that Myriad’s refusal to license its patent broadly contributes to Plaintiffs’ alleged injuries, the patents were issued by the USPTO, in accordance with its policies and practices. It is those policies and practices that the Plaintiffs allege are unconstitutional. The injury alleged is therefore “fairly traceable” to the USPTO.

This reasoning could potentially open up the floodgates. The constitutional rights claimed by the plaintiffs as being infringed include freedom of speech under the First Amendment, and Congress’ power to “promote the progress of science and useful arts” under Article 1, Section 8, Clause 8. Since anyone can claim to be restricted when certain acts become unlawful due to the new existence of a patent-holder’s rights, it seems to me that virtually anyone can then have standing to sue the USPTO for the issuance of any patent it grants.

Regarding the plaintiffs’ standing to sue Myriad and the individual directors of the University of Utah Research Foundation, Sweet determined that the case law dictated that to get standing in such a declaratory judgment case, there must be an affirmative act by the patentee protecting their product, and also “meaningful preparation to conduct potentially infringing activity” on the part of the plaintiff. The first condition was found to be met when threatening cease-and-desist letters were sent by the defendants. The second condition was met for the researcher plaintiffs because they were ready to immediately perform BRCA1 and BRCA2 genetic testing. For the non-researcher plaintiffs, Sweet said that there were no authorities put forward by the defendants to show that indirect contributory infringement is not sufficient for standing in a declaratory judgment action, and that the non-researcher plaintiffs’ solicitation of and contribution to the infringement of the researcher plaintiffs was enough. I would again have to say that this reasoning could further open the floodgates for declaratory judgment litigation by third parties whose rights are only affected in an indirect way.

The issue of the Court’s personal jurisdiction over the directors was not too interesting in comparison to the other parts of the judgment. It was held that even though the directors were located out of state, they entered into a licence agreement that allowed for the marketing of products and services in New York, and also sent cease-and-desist letters to uphold their rights in New York. It was found that these were sufficient connections to the state for the district court to have specific personal jurisdiction.

The adequacy of the allegations of constitutional violations ought to have been a particularly important aspect of the judgment in light of the general novelty of the claims being made. However, Judge Sweet only spent about three pages out of the 85-page decision discussing this. After bringing up case law that rules that a complaint must state a plausible claim for relief in order to survive a motion to dismiss, the judgment briefly went through the specifics of the plaintiffs’ complaint. It was then held that, “[t]he facts alleged in the Complaint are plausible, specific, and form a specific basis for Plaintiff’s legal arguments. Consequently, the pleading requirements as set forth in Iqbal are satisfied.” I suspect that Judge Sweet did not wish to delve too deeply into the substance of this lawsuit at this point in time.

This decision should probably be viewed as quite the victory for the plaintiffs, since they are likely facing an uphill battle. Considering the major implications that would follow if their claims are successful, this suit is definitely one to keep track of. The next step in the process is the hearing of arguments for and against the motion for summary judgment, which is scheduled to occur in just over a couple of weeks.

Posted in Patentability, Patents