Here's more detailed analysis of the Federal Circuit decision from Firday in the Association for Molecular Pathology v. US Patent and Trademark Office (the Myriad case) from the Patent Doc blog. As usual, read the actual blog post for all the nitty-gritty details and insightful analysis, I will recoount only the essence.
The majority opinion reminded parties in the case that the Supreme Court had established a test for product of nature and a human-made invention:
The distinction, therefore, between a product of nature and a human-made invention for purposes of § 101 turns on a change in the claimed composition's identity compared with what exists in nature. Specifically, the Supreme Court has drawn a line between compositions that, even if combined or altered in a manner not found in nature, have similar characteristics as in nature, and compositions that human intervention has given "markedly different," or "distinctive," characteristics.
In its opinion, the court concluded that isolated DNA molecules meet the definition of human invention under this test, and based its conclusion on the chemistry of isolated DNA:
It is undisputed that Myriad's claimed isolated DNAs exist in a distinctive chemical form -- as distinctive chemical molecules -- from DNAs in the human body, i.e., native DNA. Native DNA exists in the body as one of forty-six large, contiguous DNA molecules. Each DNA molecule is itself an integral part of a larger structural complex, a chromosome. In each chromosome, the DNA molecule is packaged around histone proteins into a structure called chromatin, which in turn is packaged into the chromosomal structure.
Isolated DNA, in contrast, is a free-standing portion of a native DNA molecule, frequently a single gene. Isolated DNA has been cleaved (i.e., had covalent bonds in its backbone chemically severed) or synthesized to consist of just a fraction of a naturally occurring DNA molecule....Accordingly, BRCA1 and BRCA2 in their isolated state are not the same molecules as DNA as it exists in the body; human intervention in cleaving or synthesizing a portion of a native chromosomal DNA imparts on that isolated DNA a distinctive chemical identity from that possessed by native DNA
In rendering the opinion, the Court also rejected the "product of nature" argument and the government's "magic microscope" argument. The Court said the District Court erred when it did not consider "the distinctive nature of DNA molecules as isolated compositions of matter that determines their patent eligibility rather than their physiological use or benefit."
The 'magic microscope" is out because "it misunderstands the difference between science and invention and fails to take into account the existence of molecules as separate chemical entities." The ability to visualize a DNA molecule through a microscope when it is bonded to other genetic material is "worlds apart from possessing an isolated DNA molecule that is in hand in usable. It's the difference between knowledge of nature and reducing a portion of nature to concrete form." The latter being patent eligible.
Finally, the Court said the patents have been granted to isolated DNA sequences for 30 years and the invention community needs to be able to rely on these expectations. Congress needs to put further exceptions or limitations in place to include DNA sequences under "products of nature", if that is what it wants, and not the Courts.