Isolated DNA not patentable subject matter, says the US Supreme Court.

Keeping up with the recent trend of path breaking decisions, the Supreme Court of the United States, four days ago, in a unanimous ruling in Association for Molecular Pathology v. Myriad Genetics held that DNA is not patentable in the United States any longer. 

The issues before the Court were as follows:

1. Do DNA sequences amount to patentable subject matter?

2. If not, are cDNA (Complementary DNA) excluded too?

As regards the first question, the court unanimously held that DNA sequences, being products of nature cannot be granted patents. Myriad, in this case, did not create anything new but merely extracted existing genetic material found in human blood. The genetic information in the BRCA1 and the BRCA2 genes were neither created nor altered, the court added. 

The court also held that HAD Myriad created synthetic genetic material, it would have obtained a patent, for the simple fact that those do not exist in nature, thus answering the second question. (cDNA is nothing but synthesized DNA from a messenger RNA template). cDNA, by virtue of having a chemical composition distinct from that of naturally occurring genes, is thus entitled to patent protection. 

This decision overrules the landmark judgment in the Diamond v. Chakravarthy case which had upheld patentability of human genes. It is important to now note that the court, however clarified that the instant case does not include method claims, patents on new applications of knowledge about the genes or the patentability of DNA sequences in which the order of naturally occurring nucleotides has been altered. 

In most patent systems including the US, EPC and India, abstract ideas are not patentable as they are not regarded as being inventions in themselves. Laws of nature, comparable to abstract ideas are thus not patentable, either. What is patentable is a method of practical application of the abstract idea. 

In the Myriad judgment, the court, in my opinion has failed to differentiate between two vital things- That patenting an idea is not the same as patenting something that embodies that idea. In this case, Myriad's contribution was the knowledge of the function of the BRCA1 and BRCA2 genes and its 

claims were constructed similarly- they focussed on the genetic information contained in the said genes and not on their chemical composition. 

Therefore, Myriad's claim, in effect, related to these genes embodying this information. If seen this way, the court's only objection seems to have been with the claim- The claim to the information in the genes alone. Had Myriad constructed its claim in such a way that it clarified it sought to patent the information as embodied in the molecule, the court would have perhaps granted the patent. 

By this, the court has only erred by being ambiguous. If indeed, as the court clarifies in the end, new applications of knowledge about the genes are patentable, if it is possible to enumerate all applications of knowledge about the genes in the claim, would it effectively not be the same as seeking a patent for the genes themselves? 

U.S Supreme Court applies International Exhaustion in Parallel Imports of Books

On the 19th of March, the United States Supreme court decided on the much debated question of parallel importation in books in what is possibly one of the most important copyright cases of the century. The court, through this decision in Kirtsaeng v. John Wiley, legitimized grey market goods by answering the long overdue question of whether the common law doctrine of first sale applies to copies of a copyrighted worked lawfully made abroad, in the affirmative.

Facts:

Kirtsaeng, a student from Thailand studying in the US, in order to fund his education, resold textbooks in the US that were mailed to him by family and friends from Thailand. Being a lower segment market, textbooks in Thailand are available at a price much lower than in the US and through this, Kirtsaeng made profits that helped him get through college and supplement his scholarship from the Thai government.

Enter the respondent, John Wiley & Sons, publisher of textbooks, which prints, publishes and sells abroad through its fully owned subsidiary John Wiley & Sons (Asia). In 2008, Wiley sued Kirtsaeng for infringement of its exclusive right to distribute and import its copyrighted textbooks under 17 USC Section 106(3) and 602, respectively. 

Doctrine of First Sale:

To succinctly summarize, the doctrine of first sale allows the owner of a copyrighted work to sell or dispose the work in any manner as he wishes. The question under consideration in the present case was whether the Doctrine of First Sale as embodied in 17 U.S.C Section 109(a) applies to copies of a copyrighted work lawfully made abroad. Specifically, the issue was whether the textbooks imported from Thailand to be considered as ‘lawfully made under this title’. The doctrine is set out in the provision which reads as follows:

"Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."

Section 109(a) is one of the many limitations on the exclusive right of a copyright owner to distribute copies of the copyrighted work to the public through sale which is provided for under Section 106(3).

Decision:

The court, speaking through Justice Breyer, in a 6-3 decision, held that there is no geographical limitation on the operation of the doctrine, either in the language of the statute or in the intent of the legislature as deciphered from the history of the Copyright Act. It further clarified that the phrase ‘lawfully made under this title’ does not impose any such limitation on copies that are ‘lawfully’ made abroad.

The court identified 3 problems with reading geographical limitation into the provision. Firstly, that such an interpretation would render the word ‘lawfully’ redundant, as it is absurd to think of a situation where something is ‘unlawfully’ made under this title. Secondly, reading in such a limitation would not be in consonance with the ‘equal treatment’ principle between domestically manufactured copies and those made abroad. Thirdly, it was a parade of horribles. It was noted by the court that such an interpretation would result in disastrous consequences for libraries, the used book industry, museums as well as industries such as the automobile industry. 

The court noted as follows:

“Associations of libraries, used-book dealers, technology companies, consumer-goods retailers, and museums point to various ways in which a geographical interpretation would fail to further basic constitutional copyright objec­tives, in particular “promot[ing] the Progress of Science and useful Arts”

It is also pertinent to note the court’s observation that the doctrine prior to codification in the statute was a common law doctrine and the Congress is presumed to retain the substance of common law which does not impose geographical limitations.

The court ended with the following lines with a beautiful note to the respondents:

“Wiley and the dissent claim that a nongeograph­ical interpretation will make it difficult, perhaps impos­sible, for publishers (and other copyright holders) to divide foreign and domestic markets. We concede that is so. A publisher may find it more difficult to charge different prices for the same book in different geographic markets. But we do not see how these facts help Wiley, for we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights…. The Constitution’s language nowhere suggests that its limited exclusive right should include a right to divide markets or a concomitant right to charge different purchasers different prices for the same book, say to increase or to maximize gain”

Implications of the decision:

The decision is bound to have implications on pricing practices of copyright holders in the US. This holding against the interests of copyright holders reduces the incentives to engage in price discrimination across different markets. This may result in an increase in prices of such works in low and middle segment markets or result in their abandonment altogether.

The decision is also likely to resolve a similar case on the point, Pearson Education v. Liu, which is now pending before the US Supreme Court.

As the tremendously enjoyable IPKat blog notes, the ruling also confirms that the decision applies only to analogue copies of copyrighted works. Procuring a digital copy does not make the procurer the proprietor of such a copy (the procurer will merely be a lessee) and thus, the first-sale doctrine does not apply in such cases.

If the US, being a pro-copyright regime can allow parallel imports, India should perhaps take cue. Courts in India have time and again enlarged the scope of exclusive rights under copyright law by disallowing parallel imports in the book industry even where such copies have been lawfully procured.

Even post the decision in Penguin Books Ltd v. India Book Distributors courts have continued to hold parallel imports to be illegal despite the explanation added to Section 14 through the amendment in 1994. The explanation which states that ‘For the purposes of this section, a copy which has been sold once shall be deemed to be a copy already in circulation’ has been overlooked in subsequent cases such as Eurokids International Pvt. Ltd v. India Book Distributors Ltd. decided by the Bombay High Court.

As Mr. Ananth Padmanabhan, who in his excellent book Infringement and Remedies in Intellectual Property Rights (which has also greatly enriched my understanding on the point) notes on page 407, it is incorrect to manipulate the words of a statute by courts merely because the sale of low priced editions elsewhere is perceived to be unfair. It is the duty of the legislature to step in and make appropriate changes if such an end is, in fact, desired.

“Unsolicited Delivery of Goods Could Lead to First Sale Exhaustion” Says US Court

Here’s something some of our copyright owners might want to know. If you were to send a promotional CD, which contains your copyrighted work, make sure you build in all trappings of a license. 

If you do not, it could amount to first sale, which means you have no control over the product’s movement in the stream of commerce.

In a judgment delivered on January 4, 2011, in UMG Recordings v. Augusto,the US Court of Appeals for the Ninth Circuit held that for a license to be treated as one, it must:

1. Call itself a license

2. Prohibit transfer of title and

3. Contain notable use restrictions.

In the absence of either of these requirements, the transaction, even if undertaken for no consideration, would amount to sale or at least transfer of title. The case in which this judgment was delivered makes an interesting read, the facts of which are as follows:

A. UMG Recordings sent unsolicited promotional CDs to select individuals with the caveat that the CDs were meant solely for promotional use and that they were being licensed the CDs. The notice on the CDs read thus:

“This CD is the property of the record company and is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws.”

B. Some of these promotional CDs ultimately found their way into the hands of the Defendant Augusto, an individual. Augusto auctioned these CDs on Ebay.

C. UMG wanted Ebay to take down Augusto’s offer since his acts violated UMG’s copyright.

D. Ebay did not budge, so UMG took Augusto to Court

Augusto’s Defense

1. UMG’s transaction with the initial recipients of the CDs was in the nature of “sale”, therefore they had no further rights to control the movement of the CDs

2. In the alternative, he had rights under the Unordered Merchandise Statute, which gave original recipients of the CDs rights to retain, use, discard, or dispose of the CDs in any manner they saw fit.

3. Since Augusto had received the CDs from the original recipients, who had to per force be treated as owners, and not licensees, his possession of the CDs and subsequent auction on Ebay were legitimate acts.

Court’s Verdict

A. Mere label of a license did not make the transaction one

B. No recipient of the CD was expected to revert to UMG recordings with an acceptance of the terms. UMG could not have assumed their acceptance (sounds more like the Google books project...)

C. No recipient was charged even a dime for the CDs

D. There was no mechanism by which the possession of the CDs could be traced

E. There were no use restrictions or requirement for return or destruction of the CDs

F. Further, first sale doctrine was a misnomer of sorts in the sense that the sale envisaged in the doctrine need not be one for consideration. It could be transfer of title through any other means, including a gift.

Considering all the above reasons, the Court observed that it was a stretch of an argument for UMG to contend that the transaction was a license.

Moral of the Story

Sometimes free lunches could cost you more than you can imagine, so be careful when you handout doles!