Journal of Intellectual Property Rights Vol 6 November 2001 pp 479-486

Patents in the Life Sciences

Paul Haycock

Director, Apax Partners & Co and Chairman, Biolndustry Association 2000

(Received 6 August 2001)

The paper discusses the issue of gene patenting, a subject of considerable interna­tional public and media attention. Some groups have raised the issue whether it is appropriate to have patents in the field of biotechnology and others support the idea of patenting in principle, but are concerned about the effect of patents on the continuing research efforts and the cost of new medicines and diagnostics. The author further discusses about the importance of patents in biotechnology specifically for small and medium entrepreneurs because they invest substantially in R&D to bring new products to the market. There is also a brief discussion about the European Union Directive, new US patent and trademark guidelines focusing on the utility requirement of the patent statute, on-going ethical reviews and ethical issues. In the end, the author discusses about the supportive approach of BioIndustry Association to the develop­ment of biotechnology industry, which promotes research into new knowledge and new benefits for the society.

The international biotechnology industry has made significant advances in recent years that will revolutionise our under­standing of the human body and disease, changing the face of the preventative and diagnostic medicines. It will enable scien­tists and clinicians to develop new therapies for some of the world's most prevalent dis­eases. Already, there are more than 100 drugs and vaccines on the market today de-

rived from biotechnology for coronary heart disease, stroke, cancers, arthritis, hepatitis, diabetes and AIDS, which have benefited hundreds of thousands of people worldwide. Hundreds of more biotech medicines are in the late-stage of development for an array of disease areas.

The pace at which these developments are being made will continue to gain momen­tum. This is reflected in growing regulatory,

*Reproduced with pennission from Patent World, 131, 2001,2&-31.

480 J INTELLEC PROP RIGHTS, NOVEMBER 2001

media and public interest in issues associ­ated with these new technologies, however, the processes involved in developing biotechnology innovations can be misunder­stood by the general public, contributing to resistance towards this emerging technol­ogy. It is vital that a balance is struck be­tween allowing innovation and invention to prosper and addressing the need for trans­parent and open public debate around issues raised by biotechnology developments. The patenting of genetic material is a case in point.

Patent Issues

The issue of gene patenting is the subject of considerable international public and media attention, particularly following the an­nouncement that the draft sequence of the human genome has been completed. The unraveling of the billions of coded se­quences in human DNA is expected to revo­lutionise medicine unfolding the prospect of a raft of new, genetically based cures and diagnostic tests. This has instigated intense discussions about the economic, ethical and medical opportunities and challenges that this breakthrough represents. Fundamental issues have been raised by some groups about whether it is appropriate to have pat­ents in the field of biotechnology at all. Oth­ers SUppOlt the idea of patenting in principle, but have concerns about the effect of patents on continuing research efforts and the cost of new medicines and diagnostics.

There is concern that the full medical bene­fits that may result from decoding the hu­man genome will not be realized if the genes become subject to privately owned intellec­tual property and are exploited for profit. Nevertheless, there is concern that failing to give adequate protection to innovation will stifle the research and development process,

encourage imitation at the expense of inno­vation, lead to fewer scientific break­throughs, being developed into usable medical benefits and drive industries away to more favourable jurisdictions. These con­cerns are particularly pertinent to small to medium biotechnology enterprises in the UK~ businesses represented by the UK's Biolndustry Association. The importance of patents to SMEs in the UK, particularly in relation to the preservation of UK's leading position in Europe's bioindustry sector and the value of open ethical debate, requires close examination.

The aims of the organization are reflected in the UK Government's wish for the UK to remain the bioindustry hub of Europe, pro­viding and preserving expertise in the sector to build on the growing financial and scien­tific success of the industry so far. It i rec­ognized that, in order to maintain our leads and ensure investment in the future of the UK's bioindustry, patents will play a vital role. Ethical issues, for example, predictive genetic testing, should be debated in the overall context of bioscience and research development. If ethical criteria have to be introduced into the patent process, they should be done in a manner consistent with other areas of legislation and in a way that does not turn the patent process into an ethical gatekeeper for general bioscience re­search and development.

The Importance of Patents in Biotechnology to SMEs

Reliable and secure intellectual property rights (lPR) are the cornerstone ofbioindus­try, particularly to small and medium sized companies who invest in substantial re­search and development to bring new prod­ucts to market.

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The size of investment necessary to bring a pharmaceutical product to market is cur­rently estimated at £350 million and complet­ing the regulatory process can take from 8 to 12 years. Expenditure and risk taking of this magnitude can only be justified by the limited monopoly rights to the sales reve­nues for the remainder of a reliable patent life. Any threat to the security of patent rights would quickly precipitate a crisis in the funding of bioscience research.

Patents are particularly important to SMEs. These companies base their research on breakthrough technologies that must come from basic biomedical research. SMEs must have strong protection to justify the consid­erable risk they take not least because there is no revenue from product sales to fund research; they depend on venture capital and public market investors.

The European Union Directive

The issue of patenting genetic material has been under discussion for over a decade. The European Commission's long awaited Directive on the Legal Protection of Biotech­nological Inventions was passed in 1998 af­ter a total of 11 years of consultation. The aim of the Directive is to harmonise the develop­ment of patent law between member states. During the course of the legislative process, the European Commission and Parliament sought advice from member states and all groups with an interest in the issue, includ­ing NGOs, religious groups, academics, in­dustry and the general public. The final Directive serves to address many of the con­cerns raised by the groups outlined. It speci­fies that the mere discovery of the sequence or partial sequence of a gene cannot consti­tute a patentable invention. However, it states that a gene, when isolated from the human body or otherwise produced by

means of a technical process can constitute patentable material provided that the re­quirements of novelty, inventive step and industrial applicability are met.

The only way it would be possible to patent a gene would be if it was isolated and con­tained in an artificial environment, or alter­natively if it was developed in a recombinant state - artificially coupled with other DNA to form something that does not exist in nature. This is clearly outlined in Article 5 of the Directive.

Article 5 1. The human body, at the various stages of its formation and de­velopment, and the simple discovery of one of its elements, including the se­quence or partial sequence of a gene, cannot constitute patentable inven­tions.

2. An element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable in­vention, even if the structure of that element is identical to that of a natural element.

Genes in situ in the body are not, therefore, patentable, but artificial copies of genes iso­lated from the body may be if they meet the requirements of novelty, inventive step and industrial applicability. Patent systems in Western Europe include exceptions in order to allow for research and experimentation on the subject matter covered by a patent. In addition, safeguards such as compulsory li­cences are provided to ensure that the pat­ent holders do not abuse their rights by unreasonably preventing access to their in­ventions.

482 J INTELLEC PROP RIGHTS, NOVEMBER 2001

New US Patent and Trademark Guidelines

New guidelines issued by the US Patent and Trademark Office focus on the utility (use­fulness) requirement of the patent statute. The guidelines tighten the utility rule by stating that a claimed invention must have a utility which is 'specific, substantial and credible'. Applications for patents will be re­jected if the claimed invention does not have 'a readily apparent, well-established utility'.

The new policy creates a higher barrier for the biotech industry in demonstrating the function and use of gene-based inventions, but the US biotech industry believes it is the 'best way to provide incentives for the pur­suit of new, innovative therapies'. For exam­ple, these changes enable th e pate nt examiner more discretion to reject the in­ventor's initial assertion of utility, thereby shifting the burden of proof to inventor. Guidelines make it clear that (isolated) genes and gene-based products remain in the scope of patent protection. They also make clear that if researchers come up with new applications for a gene already pat­ented, they will be able to patent the new invention regardless (provided, of course, that the later invention itself meets the pat­entability requirements) .

These guidelines fortify standards for dem­onstrating a gene-based invention's utility. To secure patents, applicants must demon­strate how the gene-based invention will be used. Under the new guidelines, applicants must not only provide an adequate descrip­tion of a gene, they must also link the gene with a specific, useful application. Those ap­plications could include using the gene to detect or treat diseases, or to make new drugs based on the gene.

On-Going Ethical Reviews

In addition to the Directive, the European Parliament outlined a series of reviews in recognition of the prominence and impor­tance of the ethical questions raised by the issue. The reviews are in place to assess future developments in biotechnology and monitor the effects of the Directive on the industry.

Und er European Union rules, member states had an obligation to pass the Directive into national law within two years of the date of the Directive coming into force. However, the Dutch parliament hJ '" made clear its de­termination not to comply and have launched action in the European Court of Justice to have the Directive declared illegal on procedural grounds. Progress towards adoption into national law across other mem­ber states is proceeding at different rate, however, the objective of a secure and har­monized patent regime to protect European innovations in the biosciences, has yet to be achieved.

Infelrred Function and ESTs (Expressed Sequence Tags)

Many of the first genes to be patented were based on a cloning technique in which the protein was first identified, and then the gene was found through tracking back­wards from the protein to identify the re­sponsible gene. It took years to isolate a single gene. Now, however, high-speed techniques allow genes as well as fragments of genes to be sequenced extremely quickly, without the need to know the functions of the proteins produced by the genes.

One problem that has pushed the US patent office to re-evaluate its guidelines is that -due to very sophisticated computer technol­ogy - a gene sequence can be found

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First report on the implication of the Directive - mid 2001

EU Ethics Committee

Five year review of international agreements

Two year review of developments in the field

through a database of sequences that is ho­mologous to a sequence of known function. This sequence of unknown function may be inferred to act similarly to that of the known similarities. Thus, patents have been issued based on the probable determined function. It is clearly important that the patent system reward genuine advances in the field and does not give unmerited protection either to useless inventions, or to inventions that could easily be achieved by anyone skilled in the fi eld.

In the UK and Europe, this issue is ad­dressed within the criteria that must be met before patents are granted - potential pat­entees must satisfy the patent office of the 'industrial applicability' (and therefo re func-

The Directive called for a report on the implications of any failure or delay in the publishing of scientific papers because they describe results or ideas that could give rise to a patentable invention.

The mo s t important provision is the establishment of an EU-wide e thic s committee. Th e m e mb ership of thi s independent committee will represent a range of differe nt opinion s and the committee will have responsibility for the evaluation of all e thical aspec ts of biotechnology

A report will be produced every five years on problems encountered between the Directive and international agreements on the protection of human rights to which EU member states have acceded.

In addition, a report will be prepared every two years on the development and implications of patent law in the field of biotechnology and genetic engineering.

tion) and 'inventive step' of their invention before a patent is granted. The situation in the US is similar in effect, but somewhat different in language. There, the patentabil­ity criterion which is the equivalent of inven­tive s te p is non-obvious ness, and th e equivalent of industrial applicability is utility. (In fact, the English Court of Appeal has indicated that our criterion of industrial ap­plication is really directed to the idea of use­fulness). To complicate the comparison further, European patent law partly deals with the idea of usefulness under the head­ing of inventive step, which in Europe in­volves the idea of solving a technical problem.

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It is the job of the patent offices in the first instance to ensure that these and other cri­teria are rigorously and fairly applied to all patent applications. Each case is examined individually and treated strictly on its own merits. And if the patent office gets it wrong, that does not mean that a bad patent is here to stay. Patent systems provide for the ability for someone else to review the validity of a granted patent, or even to stop it being granted . In Europe, for example, the 'oppo­sition' system allows anyone to challenge the grant of a patent shortly after grant; and before a patent is granted anyone can submit arguments to the examiner handling the ap­plication saying why a patent should not be granted in this particular case.

On the specific issue of ESTs, many patent specialists, on both sides of the Atlantic, would agree that the criterion of industrial application or utility may be met by a patent directed to the ESTs themselves, if the ESTs are indeed useful in discovering the full length gene. But where controversy has arisen in the relation to whether such pat­ents should be granted sufficiently broadly also to cover the underlying gene: in other works, whether the 'catch' as well as the hook can be patented . It seems likely the European and UK patent offices would not allow claims of that breadth on the strength of a disclosure of the EST alone. And the new regulation in the US underlines this in its revised policy of defining a clearly utility.

In the BioIndustry Association's (BIA's) view it would not, in general, be right to grant patents to ESTs with such broad claims. The contribution made by the inven­tion to its field seems to be out of the balance with the scope of the patent with which the invention is rewarded; that is, to say, the inventor has invented the hook and not the catch. Patent law has long set its face against

rewarding limited disclosure with a gener­ous monopoly.

Ethkal Issues

As well as the legal issues, ethical and moral questions have been raised that have led to lengthy international discussions about the role and importance of patents in the devel­opment ofthe global biotechnology industry and the best way to ensure new knowledge is applied for the good of humanity.

Ethical and moral issues were hotly debated throughout the passage of the European Di­rective and continue to rcise questions in the public arena. Arguments against patenting range from objections to the nature of the legal patenting process itself (opponents claim - wrongly, infact - that there is no mora] or ethical assessment required in the legal patenting process and as a result, pat­ents could be granted for unethical and im­mora] inventions) to arguments concerning the potential social effects of commercializ­ing human material.

The European Directive itself seeks to ad­dress these ethical issues by confirming the existing law in excluding any invention from being patented if its publication or exploita­tion would generally be considered immoral or contrary to public order. However, soon after the Directive was introduced, it be­came clear that the European Parliament was strongly of the opinion that some legis­lative guidance was needed. As a general guide to the interpretation of this provision, the Directive includes a list of biotechnology inventions, which are explicitly excluded from patentability. These include:

processes for reproductive clon­ing of human beings

processes for modifying the germ line genetic identity of human be-

HAYCOCK: PATENTS IN THE LIFE SCIENCES 485

ings (in other words, processes which could enable genetic modi­fications to be passed on by par­ents to their children)

uses of human embryos for indus­trial or commercial purposes; processes for modifying the ge­netic identity of animals which are likely to cause them suffering without any substantial medical benefit (in terms of research, pre­vention, diagnosis or therapy) to man or animal; and also animals resulting from such processes.

processes for modifying the ge­netic identity of animals which are likely to cause them suffering without any substantial medical benefit (in terms of research, pre­vention, diagnosis or therapy) to man or animal; and also animals resulting from such processes.

The BIA is supportive of the Directive's aim to strike a balance between the objective of promoting innovative research in the EU by ensuring that there is adequate and uniform legal protection for biotechnological inven­tions and the desire to meet ethical and other concerns surrounding the protection of such inventions. In all the cases listed above, how­ever, the debate is whether society wants these technologies in practice. The question of whether they should be patentable be­comes a secondary issue. A patent does not permit a patentee to practise an invention; and the grant of a patent certainly does not convey any sense of government 'approval' of whatever may have been patented.

A Central issue of concern is that informa­tion about our genetic make-up is used for beneficial purposes rather than for commer­cial gain. However, no company will spend hundreds of millions of pounds necessary to

prove a drug or treatment to be safe and efficacious, if, having done that others can copy it for free. So the patent system, prop­erly administered, provides a shelter for an invention, proportionately sized to the inven­tion's contribution, and encourages the nec­essary investment to tum good science into medical benefits for society.

Proponents of patenting genes argue that the effort, time and expertise required to isolate, decode and determine the action of genes justifies intellectual property rights. The development of treatments for disease is dependent on the possibility of an ade­quate return - without patenting; for exam­ple , drug companies cannot fund the expensive drug research required, as they can have no possibility of recovering their investment. Not all drug research is success­ful ; in fact, most potential medicines selected for development fail to make it to market. If patents were not available, there would be little incentive for companies to conduct re­search, eliminating the identification and de­velopment of treatment for life threatening genetic disorders. The patent process re­quires disclosure; without the ability to pat­ent, much information may simply be kept secret never becoming available to the pub­lic and other researchers at any price. How­ever, opponents of gene patenting argue that the granting of exclusive rights to an individ­ual or company will halt the progress of potential treatments as others working in similar fields will be unable to access vital research/material without paying a price. This could lead to a situation where compa­nies able to produce and patent material faster and more efficiently than others be­come market leaders as a result of commer­cial exploitation of their knowledge, rather than of its practical application.

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This pessimistic view is not, in the BIA's opinion, likely to come about. First, the pat­ent system has a net beneficial effect on research, by protecting product-oriented re­search, publishing full details of otherwise non-disclosed inventions and exempting re­search on the subject matter of inventions from patent infringement. Secondly, phar­maceutical companies have been in compe­tition with each other for decades and have relied heavily on the patent system to protect their investments; market leaders have emerged, but competition is healthy and public healthcare systems remain viable. 111irdly, if society wants new medicines, a system must exist that enables those re­searching and developing them to make the investments necessary in the knowledge that they will have the chance of recouping them in the market place.

The BIA's View

The BIA is wholly supportive of an approach to the development of the biotechnology in­dustry, which promotes research into knowledge and new benefits for society whilst ensuring a responsible regulatory framework.

It believes that the patent system is funda­mental in fostering the motives necessary for the advancement of science that will bring human health benefits; allowing scien­tific know-how to be made publicly available. However, the patent system alone cannot act as the sole 'gatekeeper of morality'. It is vital that we use forums like UNESCO's recent international symposium on ethics, intellec-

tual property and genomics to continue de­bate and discussion in a wider context.

The BIA recognizes that patenting in rela­tion to human genes raises special issues of public concern and it encourages infonned anell transparent discussion between all in­terested parties. The BIA's broad position is that:

Without an effective patent sys­tem, fewer scientific advances would be developed into practical products, particularly in the area of medical research and the devel­opment of cures for previously un­treatable diseases;

It is important that the patent sys­tem does not discriminate against inventions relating to human ge­netics; the patentability criteria, which apply to all areas of technol­ogy, should apply equally - no more than any less-to this new field of research;

The patent system as it presently operates promotes the funding of development work to transform early research into useful prod­ucts and promotes the wide avail­ability of infonnation for medical research;

The BIA is committed to open and responsi­ble research and infonnation sharing pro­grammes that take into account regulatory guidelines, the recommendations of ethics advisory boards within both industry and government and a full and open debate with wider audiences.