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A federal appeals court has reaffirmed an earlier decision and ruled that Myriad Genetics Inc. of Salt Lake City can hold patents on material from genes related to breast and ovarian cancers.

The decision likely sets up another battle before the U.S. Supreme Court, which had vacated the previous appeals court decision in Myriad's favor and sent the case back for more work. The lawsuit is being closely watched by the nation's biotechnology industry, which fears an adverse decision will make it harder for it to raise money for research, and by academic and other scientists who believe patents on genes restrict their ability to do investigations and create tests and treatments.

The lawsuit was filed in May 2009 by the American Civil Liberties Union and Public Patent Foundation on behalf of patients, researchers, medical groups and women's health advocates who argued that patenting genes was contrary to law and doing so restricted research and the range of possible tests and treatments. Besides Myriad, the lawsuit names the University of Utah, which holds the patents that are licensed to Myriad.

The Court of Appeals for the Federal Circuit ruled Thursday that Myriad holds legal patents related to two genes known as BRCA1 and BRCA2.

The ACLU said it would consult with its clients and then decide whether to file another appeal to the U.S. Supreme Court.

"Human genes are not like new genetic tools or drugs, which can be patented because they are manufactured," Daniel B. Ravicher, executive director of the Public Patent Foundation, said in a statement. "It is absurd to think that a company can own naturally occurring human genes simply because they removed them from the body."

Myriad had argued that genetic material, as removed from its context in the human body, should be eligible for patents because in that state it is not an actual product of nature. Myriad sells a test based on the patents that can detect whether a patient has gene mutations that mean the holder has an extremely high risk of developing cancer.

"Importantly, the court agreed with Myriad that isolated DNA is a new chemical matter with important utilities that can only exist as the product of human ingenuity," Myriad Genetics CEO Peter Meldrum said in a statement.

The U.S. Supreme Court had ordered the appeals court to take a second look at the case in light of a ruling the nation's top court had made in another case.

The appeals court, however, ruled in a 2-1 decision that the other case did not apply to the Myriad lawsuit. Instead, its decision focused on whether genetic material isolated from other genes with which it normally resides is still a product of nature and not eligible for a patent or substantially different and can be patented.

"The isolated DNA molecules before us are not found in nature," the majority decision said. "They are obtained in the laboratory and are man-made, the product of human ingenuity."

Richard Marsh, Myriad executive vice president and general counsel, said the latest appeals court decision delved more deeply into the science and the law, and strengthened Myriad's case for the expected appeal.

"I think there is a greater appreciation for the underlying science behind isolated DNA," he said.

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What's next?

The ACLU, Public Patent Foundation and their clients have to decide whether to appeal to the U.S. Supreme Court.

However, even if the Supreme Court were to rule in their favor, all of Myriad Genetics patents affected by this case expire by Dec. 18, 2015.