RISK FACTORS 4 increase the likelihood that our own licensed patents and any al l natural ly occurring nucleic acids. Patents for certain of our future patents owned by us will be challenged, thereby increasing product candidates may contain claims related to specific DNA the uncertainties and costs of maintaining and enforcing them. sequences that are naturally occurring and, therefore, could be Moreover, if such challenges occur, as indicated above, we have the subject of future challenges made by third parties. In addition, no right to control the defense. Instead, we would essentially rely the recent USPTO guidance could make it impossible for us to on our licensor to consider our suggestions and to defend such pursue similar claims in U.S. patent applications we may prosecute challenges, with the possibility that it may not do so in a way that in the future. best protects our interests. We cannot assure investors that our efforts to seek patent The U.S. Supreme Court has ruled on several patent cases in protection for our technology and products in the United States recent years, either narrowing the scope of patent protection will not be negatively impacted by the decisions described above, available in certain circumstances or weakening the rights of rulings in other cases or changes in guidance or procedures issued patent owners in certain situations. by the USPTO. We cannot fully predict what impact the Supreme Court’s decisions in Prometheus and Myriad may have on the The patent positions of companies engaged in the development ability of life science companies to obtain or enforce patents and commercialization of biologics and pharmaceuticals are relating to their products and technologies in the future. These particularly uncertain. Two cases involving diagnostic method decisions, the guidance issued by the USPTO and rulings in other claims and “gene patents” have recently been decided by the cases or changes in USPTO guidance or procedures could have Supreme Court of the United States, or the Supreme Court. a material adverse effect on our existing patent portfolio and On March 20, 2012, the Supreme Court issued a decisionin our ability to protect and enforce our intel lectual property in Mayo Collaborative Services v. Prometheus Laboratories,Inc. or, the future. In December 2014, the USPTO issued its Interim Prometheus, a case involving patent claims directed to a process Guidance on Patent Subject Matter Eligibility, in which it extended of measuring a metabolic product in a patient to optimize a drug Myriad’s “marked difference” standard for patent subject matter dosage for the patient. According to the Supreme Court, the eligibility to all potential natural products. This standard applies addition of wel l-understood, routine or conventional activity to patent claims that recite not only nucleic acids (such as DNA in such as “administering” or “determining” steps was not enough Myriad), but also other subject matter that could be considered a to transform an otherwise patent-ineligible natural phenomenon natural product, such as peptides, proteins, extracts, organisms, into patent-eligible subject matter. On July 3, 2012, the USPTO antibodies, chemicals, and minerals. As a consequence of the issued a guidance memo to patent examiners indicating that Myriad decision and the USPTO’s Interim Guidance, if any of our process claims directed to a law of nature, a natural phenomenon future product candidates utilize isolated DNA, peptides, proteins or a naturally occurring relation or correlation that do not include or the like, we will not be able to obtain patents in the U.S. claiming additional elements or steps that integrate the natural principle such novel gene targets that we discover, which could limit our into the claimed invention such that the natural principle is ability to prevent third parties from developing drugs directed practically applied and the claim amounts to significantly more against such targets. than the natural principle itself should be rejected as directed to not patent-eligible subject matter. On June 13, 2013, the Moreover, although the Supreme Court has held in Myriad that Supreme Court issued its decision inAssociation for Molecular isolated segments of natural ly occurring DNA are not patent- Pathology v. Myriad Genetics, Inc., or Myriad, a case involving eligible subject matter, certain third parties could al lege that patent claims held by Myriad Genetics, Inc. relating to the breast activities that we may undertake infringe other gene-related cancer susceptibility genes BRCA1 and BRCA2. Myriad held patent claims, and we may deem it necessary to defend ourselves that an isolated segment of naturally occurring DNA, such as the against these claims by asserting non-infringement and/or DNA constituting the BRCA1 and BRCA2 genes, is not patent invalidity positions, or paying to obtain a license to these claims. eligible subject matter, but that complementary DNA, which is an In any of the foregoing or in other situations involving third-party artificial construct that may be created from RNA transcripts of intellectual property rights, if we are unsuccessful in defending genes, may be patent eligible. against claims of patent infringement, we could be forced to pay damages or be subjected to an injunction that would prevent us On March 4, 2014, the USPTO issued a guidance memorandum from utilizing the patented subject matter. Such outcomes could to patent examiners entitled “2014 Procedure For Subject Matter harm our business, financial condition, results of operations or Eligibility Analysis Of Claims Reciting Or Involving Laws Of prospects. Nature/Natural Principles, Natural Phenomena And/Or Natural Products.” These guidelines instruct USPTO examiners on the The laws and regulations governing patents in the United States, ramifications of the Prometheus and Myriad rulings and apply the European Union and elsewhere could change in unpredictable the Myriad ruling to natural products and principles including ways that would weaken our and our licensors’ ability to obtain GENSIGHT BIOLOGICS – 2017 Registration Document– 51