UPDATE 3-U.S. top court bars patents on human genes unless synthetic
* Unanimous ruling is first of its kind for U.S. top court
* Compromise decision was sought by Obama administration
* Myriad Genetics shares rise after ruling, then fall
* Decision could help people get cheaper genetic tests
WASHINGTON, June 13 (Reuters) - A unanimous U.S. Supreme Court on Thursday prohibited patents on naturally occurring human genes but allowed legal protections on synthetically produced genetic material in a compromise ruling hailed as a partial victory for patients and the biotechnology industry.
The ruling by the nine justices, the first of its kind for the top U.S. court, buttressed important patent protections relied upon by biotechnology companies while making it clear that genes extracted from the human body cannot be patented.
Researchers and advocates for patients said it could make it easier for people to get cheaper genetic tests for disease risk.
The court's ruling came in a challenge launched by medical researchers and others to seven patents owned by or licensed to Salt Lake City, Utah-based biotechnology company Myriad Genetics Inc on two genes linked to breast and ovarian cancer.
Myriad's work on cancer screening gained worldwide attention this year when actress Angelina Jolie announced she had a double mastectomy after undergoing a test and finding she had an extremely high risk of developing breast cancer.
The biotech industry saw some good in the ruling, noting that the justices left intact patent protections on forms of DNA produced by scientists in laboratories and the processes used to carry out tests such as cancer screenings. The industry had warned that an expansive ruling against Myriad could have threatened billions of dollars of investment.
The contentious, uniquely 21st century question before the court was whether any human genes can ever be patented - meaning the holders have exclusive rights to their intellectual property for a defined period.
The court, in an opinion written by Justice Clarence Thomas, ruled that forms of DNA that have been manipulated in the lab in a way that alters their natural state can be patented.
Called cDNA - the "c" stands for "complementary" - it is essentially an edited form of a gene, with extraneous stretches excised. This DNA is patent eligible, the court said, because it is not naturally occurring, unlike isolated DNA simply extracted from a human body.
In the opinion, Thomas concluded that cDNA is not naturally occurring, which would prevent it being patented under federal law. A laboratory technician, he wrote, "unquestionably creates something new when cDNA is made." Thomas noted that so-called method patents, which concern technical procedures for carrying out a certain process, are not affected by the ruling.
The compromise outcome, which was recommended to the justices by the Obama administration, will have less impact on Myriad than if the court had barred patents for all types of human genetic material. The Myriad patents in dispute will all expire by 2015, though the company said it holds other patents that will protect its tests through 2018 and potentially beyond.
MYRIAD SHARES RISE, THEN DECLINE
Myriad shares rose more than 10 percent after the ruling on the expectation that the company will continue to profit from a cancer screening test, called BRACAnalysis, that focuses on the two genes at issue in the case, called BRCA1 and BRCA 2.
But it gave up those gains later in the day as more Wall Street analysts questioned the implications of the ruling for gene-based diagnostic tools in the longer term.
Myriad said the decision left intact 24 different patents that relate to the BRACAnalysis test. Peter Meldrum, Myriad's president and CEO, said the ruling ensures "strong intellectual property protection for our BRACAnalysis test moving forward."
A group of medical researchers, associations and patients - represented by the American Civil Liberties Union - filed suit in 2009, saying human genes including synthetically produced material should not be patented. A federal judge said the patents were invalid. An appeals court overruled that decision, and the case landed at the Supreme Court.
The plaintiffs said they were not concerned about the ruling on cDNA because patents relating to that, in their view, have little impact on genetic testing, their focus in the case.
Harry Ostrer, a professor at the Albert Einstein College of Medicine of Yeshiva University in New York, predicted a "much more even playing field" for genetic tests now that a company like Myriad cannot control access to the genes themselves.
"Today, the court struck down a major barrier to patient care and medical innovation," added Sandra Park of the ACLU Women's Rights Project. "Myriad did not invent the BRCA genes and should not control them. Because of this ruling, patients will have greater access to genetic testing and scientists can engage in research on these genes without fear of being sued."
The U.S. Patent and Trademark Office has granted patents on at least 4,000 human genes to companies, universities and others that have discovered and decoded them. Patents now cover some 40 percent of the human genome, according to one study.
The decision will stop the practice of the Patent and Trademark Office granting patents to companies that isolate DNA but will allow patents for firms that build DNA from its basic chemicals, said Ed Reines, of Weil, Gotshal & Manges LLP.
"The patent office was granting patents on isolated biological composition, such as DNA. That will not be happening in the future," Reines said.
The high court ruling focused narrowly on the complexities of patent law and genetic science, prompting Justice Antonin Scalia to write a brief concurring opinion conceding the limitations of his knowledge. He said he could not join parts of Thomas's opinion because "I am unable to affirm those details on my own knowledge or even my own belief."
The case is Association for Molecular Pathology v. Myriad Genetics, U.S. Supreme Court, No. 12-398.