A US appeals court heard pivotal arguments today in a landmark case involving gene patenting and breast cancer testing, which puts to the test the legal basis for many patents that support the biotechnolgy industry.

The arguments in Association of Molecular Pathology, et al. v United States Patent and Trademark Office, et al took place before a three-judge panel of the Court of Appeals for the Federal Circuit, whose jurisdiction includes patent disputes. The animated back-and-forth between judges and lawyers in the packed courtroom a stone’s throw from the White House made clear just how much is at stake in this case, in which research scientists, patients, and other groups led by the American Civil Liberties Union (ACLU) and the Public Patent Foundation are suing the US Patent and Trademark Office (PTO) as well as Myriad Genetics and the University of Utah Research Foundation, which hold patents on the genes BRCA1 and BRCA2.

The plaintiffs argue that claims in seven of Myriad’s 23 patents on the two human genes, which greatly increase the risks of inherited breast and ovarian cancer, are stifling diagnostic testing and research, and limiting women’s medical care options. They also contend the patents are illegal because the genes are naturally-occurring. A precedent-setting Supreme Court decision in 1980 determined that patent claims apply only to a thing that is non-naturally-occurring and “a product of human ingenuity.” The central question at the heart of the case is whether the disputed Myriad patents, which have allowed the company to develop an exclusive, $3,000 genetic test for mutations in the two breast cancer genes, fall within that category.

This isn’t just an academic dispute,” said judge Alan Lourie, noting that physicians, breast cancer survivors, genetic counselors and others are among the plaintiffs. So are scientific associations representing 150,000 geneticists, pathologists, and laboratory professionals.

Much of the 65-minute session focused on the legal question at the heart of the case: do the maniuplations that Myriad performed in isolating the genes merit patent protection, or is Myriad claiming unwarranted ownership of naturally-occuring DNA – ownership that the patent system should not validate?

Chris Hansen, a staff attorney with the ACLU, told the judges: “Myriad’s entire business is built on the proposal that isolated DNA and [naturally occurring] DNA are identical.” They don’t write to patients with their test results, saying: “You’ve got a mutation in your isolated DNA but I have no idea what’s going on in your body,” he said.

Judge William Bryson countered that the act of isolating DNA involves breaking covalent bonds, thus creating a product that does not exist in nature.

“With respect, your honor, I think not,” Hansen replied. “DNA is DNA.”

But Greg Castanias, a lawyer with the Jones Day firm in Washington DC who represented the defendants, begged to differ. “Isolated DNA does not exist in nature,” and wouldn’t exist at all without human ingenuity, he said. The entire biotechnology industry, he added, is built on interpreting existing law to say that DNA isolation is sufficient to show the human invention that is required for a patent.

Judge Kimberly Moore seemed to concur. To argue, with the plaintiffs, that the mere act of isolating a substance does not make it patentable, “is a pretty dramatic theory that would undo a lot of existing patents,” Moore told acting US Solicitor General Neal Katyal, the other lawyer who argued on behalf of the plaintiffs today.

Katyal contended that the vast majority of gene-related patents cover manipulated genomic material like complementary DNA (c-DNA), which is made in the laboratory from RNA and whose patentability the Justice Department doesn’t dispute. “I don’t think this is some dramatic theory that undoes” a lot of patents, he said.

Katyal presented as an example the element lithium, which occurs in nature only as a salt, and was first isolated through electrolysis of its oxide in 1885. Few would argue, he said, that the isolated element lithium should be patentable.

“I get a little nervous extending the umbrella” of what is naturally-occurring after 35 years of patent law has gone the other way, Moore said, especially since the US government is effectively split on the issue.

Last October, the Department of Justice filed an amicus brief in the case, surprising many observers by arguing for limits on gene patents. The department’s argument runs counter to that of the PTO, which granted the patents. Given that fact, Moore added, “why shouldn’t Congress figure this out, not us?”

Both the lawyers and the judges repeatedly compared the case to efforts to extract a valuable mineral from the ground.

“Why isn’t the ingenuity [that justifies patentability] the process of extracting [the mineral]” rather than in the mineral itself, Moore asked Castanias. “God made it. Man didn’t make it.”

Castanias retorted: “What we have here are new tools [that are] the products of molecular biologists. They are not the products of nature. They are not the products of God.”

If that’s the case, Bryson pushed Castanias, are you saying that isolation of pure lithium is properly an invention?

“Yes,” the lawyer replied.

After the court adjourned, Castanias was upbeat. “We were very happy about the arguments,” he said. We felt like the judges understood our case very well.”

Outside the courthouse, at a press conference convened by the ACLU, Harry Ostrer, a plaintiff who is a medical geneticist at New York University School of Medicine — and who received one of Myriad’s cease-and-desist letters 13 years ago — bemoaned what he called the stifling effect of Myriad’s BRCA patents on genetic testing. Currently, “It’s either Myriad’s way or no way,” he said. “When the fear of reprisal is lifted, absolutely” he will engage in BRCA testing himself, he said.

The lawsuit was filed in 2009. Last year, in a decision that stunned the biotechnology industry, Judge Robert Sweet of the US District Court for the Southern District of New York, found for the plaintiffs. Today’s arguments resulted from Myriad’s appeal of that decision. It is widely expected that whichever side loses in the circuit court will appeal to the Supreme Court. A circuit court decision is expected in June.