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The second stage is now set in an epic legal question over a weighty and emotional matter of public policy: Whether patents connected to naturally occurring genes can be granted by the federal government.

For Myriad Genetics, a lawsuit over its patents that concern two human genes related to breast and ovarian cancer represents a threat to businesses and industries far beyond the small Salt Lake City company.

The suit by 20 researchers, organizations and cancer victims "is nominally directed to Myriad, but actually imperils the entire biotechnology industry — molecular diagnostics, therapeutic drugs, agricultural applications, animal husbandry, etc.," Myriad told a Washington, D.C., court last week.

Myriad filed legal and factual arguments last week before the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., the body of the federal court system that hears appeals of cases involving patents. Myriad expects to be supported by trade groups whose members have a substantial stake in the outcome.

The company seeks to overturn a March decision by U.S. District Judge Robert Sweet in New York that parts of seven Myriad patents related to the genes are invalid because they are products of nature and thus not eligible for protection under U.S. patent laws.

Pitted against Myriad are researchers and professional organizations, along with several cancer victims who say the patents have stifled or have the potential to limit research along with the number of tests and treatments available for women at risk of breast and ovarian cancer.

Based partly on pioneering research at the University of Utah and other institutions, Myriad in 1994 and 1995 obtained patents for the so-called BRCA1 and BRCA2 genes (BRCA for breast cancer). It then went on to develop diagnostic tests that identify mutations that make women more susceptible to breast and ovarian cancer and to aggressively market its products.

During the past 29 years, the U.S. Patent and Trademark Office has issued more than 50,000 patents related to genes in humans, animals, plants, bacteria and others, Myriad told the court, making the case a potential landmark of patent law.

Myriad's appeal revolves around three questions:

• Whether those who sued have "standing," a legal requirement that they must show they were adversely affected in some way by Myriad's actions and are eligible to go to court to seek redress.

• Whether the genetic material involved is not found in nature as Myriad contends but the result of its specific methods that isolated and removed it from its context in the human body and is, therefore, eligible to be patented.

• Whether Myriad's methods of subtracting and transforming genetic material can be patented because they create something substantially different from the naturally occurring genes.

Myriad contends none of the groups or individuals named as plaintiffs in the lawsuit can show any harm, that thousands of researchers have conducted research on the two genes and published about 7,000 papers since the patents were granted. Its tests are 90 percent covered by health insurance and women who cannot afford them are offered help, the company said.

"In Myriad's case we have never prohibited or told anyone not to do research," Richard Marsh, executive vice president and corporate counsel for Myriad, said in an interview. "Of all the listed plaintiffs, Myriad has never taken an adversarial position against them vis-รก-vis our patents."

The lawsuit put together by the American Civil Liberties Union and the Public Patent Foundation — was "manufactured to serve the ends of two public-advocacy groups," the company told the appeals court.

In addition, Myriad says that the material and methods that were patented are substantially different than those found in the body.

It argues the materials are "new and useful compositions of matter, that the isolated molecules do not exist in the body, and that they perform substantial utilities that cannot be performed by 'native' genes in the human body."

Chris Hansen, staff attorney for the ACLU, said there appeared to be nothing new in Myriad's arguments from those decided by Judge Sweet and that he doesn't believe any additional patent expertise on the appeals court will affect the outcome of its decision.

"The fundamental question in this case is whether genes can be patented," Hansen said. "It turns on large part on what is a gene and what is an isolated gene and that is as much a fact question as it is a law question."

Sweet ruled the existence of an isolated form of DNA — or genes — like that claimed by Myriad does not alter the fundamental quality of the material as it exists in the body nor the genetic information it encodes.

He rejected arguments that it was acceptable to grant patents on DNA sequences as long as they are claimed to be "isolated" from the body — a practice the judge called "a 'lawyer's trick' that circumvents the prohibitions on the direct patenting of the DNA in our bodies but which, in practice, reaches the same result."

Kenneth Chahine, a visiting professor at the S.J. Quinney College of Law at the University of Utah, said he believes the odds are good the appeals court will alter at least parts of Sweet's ruling. But, he said, this part of the legal battle likely is just a setup for a third stage.

"Whoever wins, I think it's very likely this will be appealed to the Supreme Court," he said.

The Supreme Court in a recent case "showed a fair amount of interest in this basic question, which is 'When is something eligible to be patented and when is it so fundamental it cannot be patented,' " Chahine said. "So I think certainly they will take the [Myriad] case."