Saturday 20 July 2013

Myriad—Enforcement Continues and Now March-in Rights to Protect the Public?

Immediately after the U.S. Supreme Court issued the Myriad opinion, numerous competitors to Myriad announced that they would offer genetic testing for breast cancer at a much lower price than that offered by Myriad before the decision.  One of those competitors was Gene by Gene who offered the possibly noninfringing test for a price that was about one third of Myriad’s price before the U.S. Supreme Court’s decision.  Myriad responded with several patent infringement suits alleging infringement against some competitors including Gene by Gene.  Here is the Gene by Gene complaint filed on July 10, 2013. 

Notably, some of the patents held by Myriad were funded by the federal government and thus, are subject to the provisions of the Bayh-Dole Act.  The influential U.S. Senator Patrick Leahy of Vermont has sent a letter to the Director of the National Institutes of Health urging the exercise of “march-in rights” under the Bayh-Dole Act.  March in rights can be exercised by the federal government in certain circumstances:

(a) With respect to any subject invention in which a small business firm or nonprofit organization has acquired title under this chapter, the Federal agency under whose funding agreement the subject invention was made shall have the right, in accordance with such procedures as are provided in regulations promulgated hereunder to require the contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the contractor, assignee, or exclusive licensee refuses such request, to grant such a license itself, if the Federal agency determines that such--

(1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use;

(2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees; . . . .

March in rights have never been exercised by the federal government even though there have been several requests.  What good are the rights if they are never exercised?  As a deterrent?  How good is the deterrent if the rights aren’t going to be exercised?  The prior requests have mostly involved claims concerning reasonable pricing—a theory which has been rejected by some.  Is this the perfect case for a change (at least for federally funded patents)?  Can Myriad price its tests in such a way that allows it to recover its alleged $500 million in developing the patented inventions, earn a “reasonable” profit and provide relatively wide access? What do you think? 


Suleman said...

As a society we need to balance many competing concerns. The patent system recognises the need for investment in IP to be protected. However the cost of diagnostics and drugs will also impact how many lives can be saved. Clearly we don't seem to be able to find the right balance, and don't seem to have any mechanisms for doing so. The relevant provision of the Bayh-Dole Act must be pretty non-functional if it has never been used. However this is clearly an emotive issue on which there is public concern. I hope the US is able to find ways of resolving the issue. Perhaps NICE in the UK has made everyone see that even in the developed world prices of diagnostic tests and drugs can be challenged.

Mike Mireles said...

Thank you for your excellent comments. Pricing is a difficult issue and one that Bayh-Dole Act apparently does not reach even for government funded inventions. The issue under Bayh-Dole concerns legislative intent for march in rights as well as a practical concern that the National Institutes of Health does not have the technical competence to set prices for drugs. Apparently, the argument for triggering march in rights needs to not focus on pricing, but perhaps a failure to commercialize a technology. Although it may be hard to find the case where a company doesn't commercialize something with a viable market--they probably would not have licensed it in the first place (particularly with an exclusive license that already likely has commercialization milestones which means you would probably never need march in rights anyway). Best, Mike