Washington Editor

WASHINGTON - The Supreme Court's decision Thursday not to rule on a patent infringement case rippled through the biotech industry.

In the dismissal, five justices decided that the dispute was improvidently granted and should not have reached them, which upheld the ruling of two lower courts. Their reasons were not clear; they could have dismissed the case on its merits or on procedural grounds. But whatever the reason, it means that Laboratory Corp. of America Holdings must pay Metabolite Laboratories Inc. for breaching U.S. Patent No. 4,940,658, which relates to a testing method that correlates elevated homocysteine levels and the risk of heart disease.

"Congratulations to the biotech industry," said Glenn Beaton, a partner with the law firm Gibson, Dunn & Crutcher LLP, which represented Metabolite. "It's a good day."

That's because the non-ruling thwarted the dissenting opinions of three opposing justices who argued that such intellectual property should not have been issued around a natural phenomenon. But despite that apparent desire to tighten the patent system, things will stay the same for now, and that's generally perceived as good for biotech companies. In recent years, the industry largely has resisted proposed legislation to narrow the scope of patentable matter, as well.

"Patents are necessary for the industry to attract the sort of investment and spend the sort of money that is needed to develop new products," Beaton told BioWorld Today, noting that a decision in favor of LabCorp "would have immediately invalidated literally thousands of diagnostic patents and perhaps biotech patents. It could have had implications for gene sequence patents. I think it could have been a catastrophe for the biotech industry."

But the line on patentable matter has not changed, yet. Clearly, though, some on the Supreme Court are clamoring against broad patent interpretations such as that which was upheld in this case.

Justice Stephen Breyer, in his dissenting opinion, wrote that "patent law seeks to avoid the dangers of overprotection just as surely as it seeks to avoid the diminished incentive to invent that underprotection can threaten."

Conceding that a phenomenon of nature is "not easy to define," he nonetheless later added that the Supreme Court should clarify the law around this area "sooner rather than later."

Relative to this case, he added that those backing Metabolite's patent "cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge."

Paul Burns, an attorney with Steptoe & Johnson LLP, said Breyer and his fellow dissenters, Justices David Souter and John Paul Stevens, comprise "a philosophical alliance that wants to limit the impact of what they believe to be unworthy patents."

The trio was part of a concurring opinion with another justice on separate patent case involving eBay in which they also expressed recent concern over "vague patents of questionable validity," Burns told BioWorld Today. "I assume from that, that they believe patent holders that enforce questionable patents are a problem that they want to eliminate or reduce."

In oral arguments heard by the court this spring, lawyers for Denver-based Metabolite cautioned that this case was not a proper venue for vetting the natural phenomenon matter because such issues were not raised in lower court rulings. (See BioWorld Today, March 22, 2006.)

Burns inferred that the Supreme Court's decision against ruling signaled that there were no procedural grounds to insert a judgment beyond that of the Federal Circuit Court of Appeals.

He added that from a legal standpoint, it could indicate that the majority of its members "appear to be satisfied" with the Federal Circuit's ability to interpret patent claims and determining whether they are patentable and valid.

Beaton, though, said it was speculative to leap to the latter conclusion.

Regardless of the reasons for the final verdict, the majority of Supreme Court justices showed that they are not ready to narrow those types of method patent claims.

"We are probably not going to see further expansion of the scope of patentable subject matter as a result of these three voices," Burns said. "But I don't think we're going too see a contraction either, because the majority appears to believe that the status quo is acceptable."

Still, he cautioned that the minority could have an effect on the majority "at some point in the future."

Beaton largely agreed. "For at least the time being, the patent system will still operate to motivate companies and investors like venture capitalists to research, develop, and invest in medical diagnostic and other method inventions," he said, adding that Metabolite and Competitive Technologies Inc. would seek an injunction in the district court against any further infringement by LabCorp.

Metabolite has a license to the patent from Fairfield, Conn.-based Competitive Technologies.

Chief Justice John Roberts was not involved in this case, purportedly because of a prior employer's ties to LabCorp, of Burlington, N.C.