At this week’s Biotechnology Industry Organization show in Chicago, a panel of law experts bemoaned the recent Supreme Court hearings on whether individual genes can be patented, saying there was no sign that anyone involved in the case truly understood the technology or the business implications of their arguments. That’s disturbing, because the decision could have important effects on industries including the developing field of molecular diagnostics.

BIO attendees, mostly executives in a variety of biotech fields, crowded into meeting rooms to stand through overfilled sessions on the promises and challenges of personalized medicine and diagnostics. In some cases, these tests can help doctors diagnose disease or predict whether a particular drug will work in a patient or cause unwanted side effects. Other tests can determine how quickly a patient metabolizes drugs, information that can help doctors decide how big a dose to prescribe. At the convention, panelists described the many challenges facing companies that develop these tests. Among others, they are still working out how much to charge for diagnostics and how to partner with drug companies, and the industry is still not governed by clear regulatory rules. In this context, the turmoil over gene and biomarker patents is disconcerting.

Association for Molecular Pathology v. Myriad Genetics, the case in which the Supreme Court heard arguments last week, turns on the question of whether an isolated human gene is patentable. Myriad, a company based in Salt Lake City, Utah, currently has exclusive rights to perform diagnostic tests that screen two genes for variants linked to breast and ovarian cancer. A decision is expected this summer.

One expert at BIO’s session on the patent case said she was surprised by how poorly the lawyers arguing the case seemed to understand the biotechnology involved. Another was concerned that the arguments failed to consider the consequences the decision could have for issues such as genetic sequences that might be used for vaccine development.

Last summer, the Supreme Court overturned a patent claim on a process for monitoring levels of a metabolite in a patient’s blood to determine the correct dosage of certain drugs. Some say that this earlier case is likely to affect their industry more than the Myriad case will.

But the Myriad decision will also have a big impact, says Jim Chinitz, cofounder and CEO of Population Diagnostics, a genomics company based in Melville, New York, that is developing a test to diagnose a broad spectrum of autism types before symptoms are seen in kids. “Just having these questions hovering over this industry is problematic,” says Chinitz. “Since we are finding novel biomarkers that nobody has ever associated with the diseases that we study, we think we are generally safe,” he says of Population Diagnostics. “But even though the details of the case probably won’t materially harm us, the gray cloud over the industry is preventing investors from taking action.”

Nicholas Conti, vice president of business development at Quest Diagnostics, says that as the largest service testing lab, his company could benefit if the court’s decision costs other companies their exclusive rights to diagnostic tests—that would make more tests available for Quest to run. But the risk, he says, will be the loss of innovative tests for Quest to acquire, because small companies and academics will have trouble getting the funding they need to develop new ideas. “If the patent field opens up, I don’t know what we’d do in terms of new tests,” he says. “The danger is that there will be no new tests to take on.”

Others, however, see gene patents themselves as hindering new test development. One such observer is Lana Feng, who worked for years in business development at the diagnostics company Genoptix (now owned by Novartis). The state of the art in disease diagnostics is to screen patients for many different genetic variants at once, says Feng, who recently started a new company called Personal Diagnostics to broker deals between Chinese and American diagnostics and drug developers. For example, if a patient comes in with lung cancer, an oncologist could use this approach to quickly determine which of the many subtypes that patient has. “The problem we ran into very immediately is that you need a panel of genes, but a lot of these genes are patented individually—so you have to go to many different companies to clear each one, and it becomes cost prohibitive,” says Feng. “For us, that was a huge hurdle for innovation.”