1999 Genetics, Law and Society Conference, Saint Paul, Minnesota

Legal, Economic and Social Issues of Patenting Genetic Materials
Executive Outline1
by Linda Hopkins, J.D.
August 13, 1999

I. Themes: Unifying legal threads derive from principles of good faith, fairness and order underlying systems of property rights, interwoven with practical economics of commerce and trade.

A. Example: the legal principle that persons should have the right to control the fruits of their labors is combined with economic principle that commercial incentive depends on profit opportunity.

II. What is patentable subject matter?

A. Life Forms

1. General rule: products that occur in nature are not patentable.

2. In Diamond v. Chakrabarty, the U.S. Supreme Court changed its position.

a. History: PTO refused to grant a patent on bacterium that included genetic modification

i. Purpose of bacterium was to treat oil spills

ii. Reason for PTO denial: bacteria are living things, whether by nature or modified in the lab and not within the scope of the patent statute.

b. Supreme Ct stated:

i. the terms "manufacture" and "composition of matter" (Sec. 101 of the Act) do not exclude living things

ii. Patent statute is intended to include anything under the sun that is made by man

c. Actual and feared effects:

i. Enabled the rapid growth in the biotech industry in U.S.

ii. Potential environmental hazards and social consequences of genetic engineering, stated by the Court, are separate issues from the question of patentability.

3. 1988 Patent on the "Harvard" mouse was in controversy

a. Mouse was genetically designed for use in cancer research

b. Issue: Value of genetic research versus proprietary of tampering with natural order.

i. Prompted Congressional hearings

ii. Four-year moratorium on patents on new life forms.

4. In 1992, the moratorium was listed

a. Several patents were granted including:

i. Mouse producing human Interferon

ii. Mouse developing benign prostatic hypertrophy and

iii. Mouse without immune system for use in studying cancer and AIDS

b. Other patents have been granted on animal life forms since that time

i. Usually life forms that are used for medical research

5. Study of potential consequences of such life forms, done by OSTP in 1992

a. Conclusion: major problems exist related to:

i. animal rights,

ii. release of new species into the environment, and

iii. changing relationships between large and small agribusinesses.

6. Today, products that were not previously known to exist or that had not been previously isolated and purified are patentable subject matter.

7. New Issues have been raised such as new biological research procedures

a. Example is procedure to separate and identify the clotting agent in blood in order to cure hemophilia

b. Isolation of Factor VIII:C was done using newly developed procedures (purification, characterization and production using recombinant techniques)

B. Plant Varieties:

1. In 1930, the Patent Act allowed patenting of new varieties of plants that are asexually reproduced

2. Seed-grown crops were excluded because of public policy concerns about food prices

3. In 1970, Plant Variety Protection Act was enacted

a. Public policy concerns of disadvantages to U.S. agriculture due to dearth of improved crop varieties.

b. "Breeders' rights" laws in most foreign countries seen as reason for lack of development of new plants domestically.

c. Asgrow Seed Co. v. Winterboer (989 F.2d 478, 479 n.1 (Fed. Cir. 1993) commented that after enactment of PVPA over 3,000 new crop varieties were commercially developed in the U.S. as contrasted with 150 new varieties over the previous 10 years.

d. Public policy: expansion of world's population accordingly causes reduction in arable land and an increased need for improved agriculture productivity.

e. Genetically modified plants are frequent subjects of protection under PVPA.

f. Act requires description of modification and also adherence to permitted and prohibited use of the new varieties.

g. Principle of the Act: grant of exclusivity related to the innovation of a new plant product.

III. Requirements of Patentability:

A. Process requirements:

1. First determination as to patentability is made by the PTO

2. Any refusal of patent application is appealable either to a federal district court for de novo determination or directly to the Court of Appeals for the Federal Circuit on the administrative record.

3. An issued patent is subject to attack in court.

a. Issued patent is assumed to be valid

b. Courts remain final arbiter of what is patented

B. Economic issues: companies concerned about pressures for early filings of patent application; regulatory restraints; and the high cost of in vivo testing.

C. Issues considered in determining patentability as applied to new issues of biological invention:

1. Novelty (35 U.S.C. §102) - Technical limitations include publication, public use or placing invention on sale prior to one year before filing of patent application

2. Utility (35. U.S.C. §101) - For biological inventions, this generally concerns the kind and quality of evidence of biological activity that must be provided to support patentability (such as whether or when therapeutic utility is established based on in vitro tests) and amount of data that is required.

a. Brenner v. Manson (383 U.S. 519 (1966)), Sup. Ct. held that a process to make product of unknown utility does not meet statutory requirements of "usefulness" or utility.

b. Recent example is proposed patenting by NIH of certain sequences of complementary DNA derived from human brain cells.

i. Public policy issues include preserving licensing and other commercial incentives versus undue restrictions on research at early stages.

ii. Academic discussions do not agree on whether early disclosure would be more or less likely if patenting were available at that stage.

iii. Result: the NIH patent applications were withdrawn.

3. Non obviousness (35 U.S.C. §103)

a. Decisionmaker must view the issue with the mind of a person of ordinary skill in the particular specialized field and make a decision upon reconstruction and understanding of the past state of knowledge in that particular field.

b. Conventional criteria of obviousness is stated in Graham v. John Deere Co. (383 U.S. 1 (1966))

i. Technical Content (35 U.S.C. §112) -

ii. The patent applicant must provide a sufficiently "full, clear and concise" statement of the invention as to describe it and enable its practice, including the best mode known to the inventor.

iii. Biological products are not precisely definable as simpler chemical molecules that have been under past court scrutiny.

ai. Example: The statutory requirement of enablement is deemed met if others can practice the patented invention without "undue experimentation" - the definition of this term is highly litigated.

bi One way for biological products to meet the requirements of the statute is by depositing a sample of the product in a public depository (e.g., a sample of the recombinant DNA)

ci. The deposit of such products is the subject of international treaties

D. Attribution of inventorship

1. On patents, only inventors are named

2. Incorrect designations can invalidate the patent

3. Controversy exists because presently correction is only allowed by the PTO or the courts. Researchers point out that today it is more common to find collaborative research testing and consultation in developing an invention.

E. Other areas at issue in patent litigation are determination of priority of invention; meaning of conception and reduction to practice; and issues related to offshore practices of patented processes.

IV. Trade Secrets

A. Considerations of public policy and fairness underlie the legal rules governing commercial behavior and misappropriation of secret or proprietary information raises issues of unfair competition or tort, civil and criminal violations, contractual and common law obligations.

B. The principles derived from common law reg. scope of protection and remedies for misappropriation generally arise under state, not federal, law.

C. Public policy concern exists reg. the widespread practice of trade secrecy of scientific information that is unpatentable but having commercial value.

V. International Trade issues

A. Economic Impact: Biotech (but not just genetics) has created over a thousand more businesses, many thousands of jobs and billions of dollars of Gross National Product for this country.

B. By statute in 1988, importation of a product made offshore by a process patented in the U.S. would constitute infringement of the patent.

C. Agreement on Trade-Related Intellectual Property Rights (part of General Agreement on Trade and Tariffs)

1. Came into force on 1 January 1995.

2. Established World Trade Organization

3. First global system of intellectual property rights on biological diversity and, specifically, plant varieties.

4. Signed by 170 countries.

5. Signatories must protect and promote the rights of communities, farmers and indigenous peoples with respect to their biological resources and knowledge systems as well as provide equitable sharing of benefits arising form commercial use of communities' biological resources and local knowledge.

6. Intellectual property rights must not conflict with conservation and sustainable use of biodiversity.

7. TRIPS was designed to ensure that intellectual property rights could be applied to all technologies (especially those previously declared unsuitable for monopoly rights at the national level -including pharmaceutical products and biological materials such as microorganism).

8. Member states can exclude inventions from patentability that threaten public morality, including that needed to protect human, animal or plant life or health or to avoid serious prejudice to the environment.

D. North American Free Trade Agreement

1. This treaty involves the countries of Canada, Mexico and the United States.

2. Each country gives "national treatment" to the intellectual property applications of individuals from the other two countries.

3. Article 1709 provides that:

a. each party may exclude from patentability inventions which, when commercially exploited, cause a breach of public morality, including protection of human, animal and plant life or health or serious prejudice to nature or the environment,

b. but, provided that the exclusion is not based solely on the ground that the Party prohibits commercial exploitation in its territory of the subject matter of the patent.

4. A party may also exclude from patentability:

a. plants and animals other than micro-organisms;

b. essentially biological processes for the production of plants or animals, other than non-biological and microbiological processes for such productions.

5. Each party shall provide, however, for the protection of plant varieties through patents, an effective scheme for sui generis protection, or both.

(RELATED AGREEMENTS)

E. Convention on Biological Diversity (Signed but not ratified by United States, 1992)

1. Article 8(j) requires each Party, as far as possible and as appropriate and subject to its national legislation, to "respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity and promote their wide application with the approval and involvement of the holders of such knowledge, innovations and practices.

2. Article 11, requires Parties to create economically and socially sound incentives for the conservation and sustainable use of the components of biological diversity as far as possible and as appropriate.

3. Article 12 © requires that Parties promote and cooperate in the use of scientific advances in biological diversity research in developing methods for the conservation and sustainable use of biological resources, taking into account the special needs of developing countries and in keeping with the provisions of Articles 16, 18 and 20.

4. Article 15, establishes principles for the access to and sharing of the benefits of genetic resources.

5. Article 17, requires Parties to facilitate the exchange of relevant technical and scientific information, including indigenous and traditional knowledge both as such and in combination with technologies transferred under Article 16.

6. Article 19 requires Parties to take measures to provide for the effective participation in biotechnological research of other Parties providing genetic resources that are used in such research, especially developing-country Parties. It also requires them to take all practicable measures to promote priority access for Parties, especially those that are developing countries, to the results and benefits from Biotechnologies based upon genetic resources provided by those Parties.

7. Article 20 requires each Party to provide acc. To its capabilities financial support and incentives for national implementation. (To the extent that IP create or can create financial incentives for implementation measures, they can contribute to implementation of this obligation).

F. Draft-International Convention on the Human Genome (23 October 96)

1. Article II includes a proscription on all germline therapy in humans except when there is indisputable proof, in acc. With international scientific standards, of the benefits and safety of such therapy.

2. Article VI states that the human genome in its natural state is not subject to private, national or transnational ownership by claim of right, patent or otherwise.

a. Intellectual property based upon the human genome may be patented or otherwise recognized in acc. With national laws and internationals

b. The collection, distribution and use of human genomic materials and associated information shall be undertaken on a basis which reflects an interest of the original source and of the depositor of the material to an equitable share of the economic benefit of commercialization based upon:

i. Use of the material and associated information;

ii. The relative significance and/or unique nature and/or rarity of the genomic characteristics of the material and associated information; and

iii. the original source and the depositor's relative contributions to the overall creation and commercial development of relevant intellectual property.

VI. Judicial Responsibility

A. It is the judge's responsibility to determine the meaning and scope of the patent claims, before the issue of liability for infringement is presented to the jury (Markman)

B. The judge is responsible for determining the scientific validity of proffered evidence and its relevance and admissibility before the issue of liability is presented to the jury (Daub

Note

1. This outline is based, in part, on an article by Judge Pauline Newman of the U. S. Federal Circuit Court of Appeals, printed in Judges' Journal, Vol. 36; No. 3, "Intellectual property Law and the New Biology") ^

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