Bio-Science Law Review

PROFESSOR DR MATTHIAS HERDEGEN

University of Bonn

Introduction

The EC Directive on the legal protection of biotechnological inventions (1998) is more than just a normative framework for patenting biological substances. After an uphill struggle against fierce opposition to ‘patents on life’, the Directive signifies a break through yearlong stalemate. The principles of the Directive also govern the application of the European Patent Convention (EPC). Having regard to the Directive, the Administrative Council adopted the revised guidelines for examination in the European Patent Office in 1999.

Reservations about the patentability of human DNA are still making themselves felt through the process of interpretation and implementation. Italy and The Netherlands have challenged the Directive before the European Court of Justice. France refuses to implement the Directive because of doubts as to the patentability of human DNA sequences without a concrete description of their functions.

Apart from addressing a range of specific issues, the main impact of the Biotechnology Directive lies in its generally favourable approach towards patent protection. The Directive’s framework leaves many details uncertain and vague. The greatest interpretative challenge relates to the patentability of human DNA sequences. The following observations first present the basic principles before addressing specific issues with respect to the human DNA.

Basic Principles

Patentability of Biotechnological Inventions

In its Article 3(1), the Directive establishes the principle that biotechnological inventions are amenable to patent protection:

For the purposes of this Directive, inventions which are new, which involve an inventive step and which are susceptible to industrial application shall be patentable even if they concern a product consisting of or containing biological material or a process by means of which biological material is produced, processed or used.

This clause reflects well-established principles in line with international treaty law. The three criteria of ‘new’, ‘inventive step’ and ‘susceptible of industrial application’ are globally accepted conditions for the patentability of inventions that ensure the differentiation between patentable inventions. These parameters ensure the delimitation between patentable inventions and non-patentable discoveries. Thus, Article 3(1) of the Directive provides nothing spectacular. It simply recognises that biotechnological inventions are subject to the same standards as any other invention. Indeed, there is no pertinent reason for a different legal treatment.

Invention vs Discovery

General rules for biotechnological material (Article 3 [2]) The differentiation between patentable inventions and mere discoveries is an elementary feature of virtually all treaty regimes for patents (see, for example, Article 27[1] of the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)).

Since then it has been settled that patents may be granted on substances that can be found in nature. However, there must be an inventive element in either isolating or synthesising the substance or in developing an industrial application. The EC Directive applies this principle to biological material in its Article 3(2):

Biological material which is isolated from its natural environment or produced by means of a technical process may be the subject of an invention even if it previously occurred in nature.

This provision relating to the isolation and synthetic production of naturally occurring substances is of vital importance. Opponents of the legal protection of biotechnological inventions hold the view that no material occurring in nature could be subject to patents. However, Article 3(2) of the Directive clearly rejects that philosophy. The Directive’s approach can be seen as a logical consequence of patent law’s basically neutral orientation. According to generally recognised principles, it is not the function of patent law to give a stamp of approval to any direction taken by research or to authorise the marketing of products generated by such research.

Patentability of DNA sequences and other elements of the human body In its Article 5 the Directive gives operable contours to the patentability of substances of the human body. Article 5(1) simply reiterates the non-patentability of mere discoveries:

(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.

The following paragraph clarifies that sequences of a human gene and other elements isolated from the human body or otherwise produced through a technical process can enjoy patent protection, regardless of structural identity between the isolated element and its natural equivalent:

(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.

It is important to read the first two paragraphs of Article 5 together. This joint reading clarifies that Article 5(1) simply reiterates the non-patentability of mere discoveries with respect to the human body, responding to sensivities in the public at large. This provision only fulfils an atmospheric function. It responds to the fundamental fear that allowing ‘patents on life’ would lead to the undue restriction of individual rights, and would entail the risk of incalculable and excessive dependence. Furthermore, Article 5(1) may be understood as expressing the respect of human dignity mentioned in the 16th Recital, which reads as follows:

… patent law must be applied so as to respect the fundamental principles safeguarding the dignity and integrity of the person; […] it is important to assert the principle that the human body, at any stage in its formation or development, including germ cells, and the simple discovery of one of its elements or one of its products, including the sequence or partial sequence of a human gene, cannot be patented; […] these principles are in line with the criteria of patentability proper to patent law, whereby a mere discovery cannot be patented.

To put it somewhat crudely, the protagonists of an ethical discourse may cherish the message contained in Article 5(1). For the lawyer, its normative impact is negligible. It is a placebo designed for the fundamental opposition.

In operative terms, Article 5(2) is the ‘Grundnorm’ that really governs the patentability of isolated DNA sequences and other elements of the human body. Even if biological material originates from the human body, it may constitute a patentable invention.

The rationale underlying the patentability of biological material stemming from the human body The most forceful arguments for the patentability of biotechnological material from the human body come from the field of medicine. Numerous serious illnesses can only be fought effectively if approaches are used which involve genetic engineering. In particular, medications derived from elements isolated from the human body have proved to be especially effective in the long-term treatment of serious and terminal illnesses. For example, production of insulin by micro-organisms is one of the milestones of genetic engineering. Ninety per cent of all patients suffering from diabetes are now being treated with the recombinant drug which is well tolerated to a higher degree and safer than the insulin obtained from animal sources which was used previously. Another more recent example is the development and production of a protease inhibitor that can be utilised to fight HIV infections. If one were to restrict intellectual property rights in this field, the erosion of financial incentives would paralyse technical progress, including most notably research and development. Therefore, patents catalyse further development of medical products and applications.

The scope of patent protection

It must be emphasised that the rights conferred by a patent do not extend to the human body and its elements in their natural environment. Patent protection never includes the natural substance in situ. An excised gene is eligible for a patent as a composition of matter or as an article of manufacture because that particular DNA molecule does not occur in that isolated, purified form in nature.

Mandatory patentability of substances?

The EC Directive does not specifically oblige the EU Member States to grant patents on substances (DNA sequences). Article 5 (2) of the Directive is explicit only in allowing patents on sequences of a gene or other elements identical (in substance or in structure) to parts of the human body. It follows, however, from the purpose of establishing a common framework and the preamble of the Directive, that such elements may not be excluded a priori from patentability. This conclusion is corroborated by Recital 20:

… it should be made clear that an invention based on an element isolated from the human body or otherwise produced by means of a technical process, which is susceptible of industrial application, is not excluded from patentability …

The draft by the German Government of an Act on the implementation of the Directive 16 maintains the patentability of substances for biotechnological inventions; the explanatory notes emphasise the need for such patent protection ‘in the interest of an effective protection of innovations’ and with reference to the TRIPs agreement. However, the explanatory notes seem to suggest that the scope of patents on DNA sequences should be limited to the function in the patent application. Such a restriction would seriously undermine the protection of substances and conflict with the EC Directive. De lege ferenda, it may, however, be discussed whether functional limitations of patents on DNA-sequences are appropriate.

Disclosure of Industrial Application

Article 5 (3) of the Directive states:

The industrial application of a sequence or a partial sequence of a gene must be disclosed in the patent application.

This Article contains a restriction of paramount importance. The mention of the industrial application of a sequence or a partial sequence of a gene prevents random patent applications. At the US Patent and Trademark Office in 1997, a total of some 350 patent applications were pending relating to over 500,000 sequences, without the applicant providing any knowledge of the specific function of the relevant genes.

The required industrial application must be a concrete application. Thus, this Directive effectively contains and controls the risk of such an improper use of the patent law. A mere DNA sequence without indication of a function does not contain any technical information and is therefore not a patentable invention. Therefore, a so-called EST (expressed sequence tag), which is a partial sequence of a clone picked at random from a cDNA library and used in the identification of [so far unknown] genes being expressed in a particular tissue, is not patentable. This restriction is reflected in the draft of the German Government of an Act on the implementation of the Directive.

Meanwhile, the restrictive approach seems to be gaining ground also in the United States. After some shifts in policy, the US Patent and Trademark Office now requires a concrete application instead of some possible applications in general. This requirement should also be the guiding principle for patents on a so-called ‘single nuclear polymorphism’ (SNP), that is, a single-base difference in a DNA sequence among individuals.

Non-patentability on Ethical Grounds

Exceptions under Article 6 of the Directive

Article 6 of the Directive rules out patent protection for inventions that compromise human dignity and other basic tenants of ethic. Article 6(1) contains a general exclusion clause. Article 6(2) enumerates certain processes which automatically qualify for an exclusion under Article 6(1). Article 6 runs as follows:

(1) Inventions shall be considered unpatentable where their commercial exploitation would be contrary to ordre public or morality;26 however, exploitation shall not be deemed to be so contrary merely because it is prohibited by law or regulation.

(2) On the basis of paragraph 1, the following, in particular, shall be considered unpatentable:

(a) processes for cloning human beings;

(b) processes for modifying the germ line genetic identity of human beings;

(c) uses of human embryos for industrial or commercial purposes;

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

By setting up these different barriers, Article 6 of the Directive plays a paramount role in the current discussion. Some of the main problems that result from the application of Article 6 are addressed in the following observations.

Embryonic Stem Cell Procedures

The possibility of maintaining human stem cells in culture opens a novel dimension of medical research. The goals of this research include the development of cell transplantation therapies for disorders for which other therapeutical modalities are not yet available, such as Alzheimer’s disease, and for disorders urgently requiring improvements of currently available therapeutic means, such as cardiovascular diseases, cancer, diabetes, or disorders of the nervous system, for example, Parkinson’s disease. A long-term goal is the generation of complex tissue aggregates or whole organs.

Stem cell procedures involving embryonic cells raise problems under Article 6(2)(a) (human cloning) and Article 6(2)(c) (uses of human embryos for industrial or commercial purposes). According to Article 6(2)(a) of the Directive, processes for cloning human beings shall be considered unpatentable. This raises the question of whether or not stem cell procedures are patentable. A stem cell is any that possesses the capacity to reproduce itself by cell division any number of times (‘immortal’ cell) and to differentiate into cells of different degrees of specialisation (differentiation). The term cloning is a simple circumscription for copying and identical reduplication. It is used with respect to molecules, cells, tissues, and humans. In the light of the Directive’s definition of cloning, each duplication of an embryonic stem cell could be treated as a case of cloning. As a result, such stem cell procedures would not be patentable. However, this judgment does not stand up to scrutiny.

As mentioned in Recital 41, a process for cloning human beings may be defined as any process, including techniques of embryo-splitting, designed to create a human being with the same nuclear genetic information as another living or deceased human being. Although the Recitals are legally non-binding but merely an explanatory help, there is no reason to suppose that Article 6(2)(a) understands the term ‘cloning’ in a different way. Therefore, the provision does not apply to stem cell procedures that are not designed to create a human being. As a result, stem cell procedures aiming at the generation of tissue aggregates or whole organs are patentable: they are designed to create only parts of human beings. For the same reason, the mere cloning of animals is patentable even if the technique used or its results are applicable to human beings.

The exclusion of the use of embryos under Article 6(2)(c) is restricted to industrial or commercial purposes. Therefore, stem cell procedures may enjoy patent protection with respect to therapeutic application.

Nuclear Transfer

It is a matter of controversy whether nuclear transfer procedures fall within the exclusion of cloning under Article 6(2)(a). Nuclear transfer is a technique allowing the transfer of a cell nucleus into another somatic cell or germ cell from which the nucleus was previously removed. The DNA of the transplanted nucleus directs further development of the recipient cell. As the transfer does not apply to the cell´s DNA in its entirety – the DNA of the mitochondria remains untreated – some authors take the view that nuclear transfer of human cells is not a case of cloning human beings. This argument disregards Recital 41, which demands ‘the same nuclear genetic information’. Nevertheless, Article 6(2)(a) of the Directive is not applicable to nuclear transfer procedures as far as they do not relate to creating human beings. In this context, the reproduction of single cells in the 4-, 8- or 16- cell stadium not designed for further embryonic growth does not aim at creating a ‘human being’.

Patents as Bottleneck Resources

The granting of a patent does not confer on the patent owner the right to make use of the patented invention. A patent is an exclusive right, limited in time, to exploit an invention. Therefore, third parties may not use the invention without the permission of the patent owner. That raises the issue to what extent patents may generate risks of monopolisation. In general, patent law is taking precautions against disproportional dependence. The Directive reflects these international accepted standards.

First of all, the Directive does not restrict the so-called ‘scientist’s privilege’. This exemption for experimental research shall ensure that patents cannot inhibit scientific and technological progress. Under most patent laws, experiments aimed at perfecting, improving and further developing protected inventions do not constitute acts of patent infringement either. However, research aimed at obtaining and isolating elements valuable to medical production should be encouraged by means of the patent system. This incentive is also recognised in the joint statement by former US President Bill Clinton and British Prime Minister Tony Blair.

Furthermore, the Directive maintains possible exemptions from medical treatment under national Patent Laws in terms of Recital 35:

Whereas this Directive shall be without prejudice to the provisions of national patent law whereby processes for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body are excluded from patentability.

Finally, Recital 25 purposes to reduce the so-called dependency:

For the purposes of interpreting rights conferred by a patent, when sequences overlap only in parts which are not essential to the invention, each sequence will be considered as an independent sequence in patent law terms.

Still, patent-owner’s rights may operate as an excessive barrier for the rights of third parties, giving rise to a so-called bottleneck resource. For similar situations US competition law developed the ‘essential facilities doctrine’. The application of this principle to biotechnological inventions should be seriously considered. Thus, under certain circumstances, the patent-owner could be obliged to give his consent to the use of his invention by third parties, though there would be no possibility of removing the patent-owner’s rights as a whole. Recourse to the ‘essential facilities doctrine’ must be distinguished from the grant of compulsory licence, which is usually limited by rather strict conditions, especially a related invention of the licensee and the dependency of its use on such licence. The ‘essential facility concept’ has a broad operation. In any case the instrumentalisation of this concept calls for a high degree of caution so as not to destroy incentives for innovation and research investments.

‘Patent pools’, which have played an important role in the United States over the last 150 years, could present another solution to the problem of access in biotechnology patents. A ‘patent pool’ is an agreement between two or more patent-owners to license one or more of their patents to another or third parties.

Ethical Aspects

Some problems are introduced by ethical considerations. According to Article 7 of the Directive, the Commission’s European Group on Ethics in Science and New Technologies has to evaluate all ethical aspects of biotechnology. Furthermore, account has been taken of Opinion No. 8 of the Group of Advisers on the Ethical Implications of Biotechnology to the European Commission. The impact of these provisions is not yet clear. In the literature a certain trend towards observing ethical bounds can be seen.

Strong reservations against the commercial exploitation of biotechnological advances are also reflected in Article 3 (2) of the Charter of Fundamental Rights of the European Union which prohibits

… making the human body and its parts as such a source of financial gain.

Despite the legitimacy of the underlying reservations against the use of the human body, this development gives rise to concern. The erosion of intellectual property through hazy ethical limitations may easily remove the incentive for medical and technological innovation. Ethical aspects may be the driving motive for new legislation. But ethical reservations may not trump existing laws.

Conclusions

Intellectual property law provides the necessary incentives for sponsoring the whole range of extremely expensive developments of new techniques, drugs or applications. While some governments or non-profit organisations may offer some funding, the enormous resources of stem cell research risk remaining untapped without industrial research and development. Insofar as a patent represents a bargain between the inventor and the society, in exchange for the disclosure of his invention, the inventor is granted an exclusive right.

In all, the Directive follows a well-balanced approach. In principle, it imposes no specific restrictions on the patentability of human genes. Only if their commercial exploitation were contrary to ordre public or morality, would inventions be considered unpatentable.

The protection of biotechnological inventions in terms of the Directive will certainly be of fundamental importance for the Community’s industrial development. The new framework for the patent protection of biotechnological inventions gives a healthy impetus to European endeavour to narrow the research and development gap in transatlantic competition.

To make any comments on this article, or to ask a question of the author, please contact the publisher. If you would like to submit an article, please contact the editors.

The opinions expressed in the articles published in this section do not necessarily reflect those of Pharmalicensing or UTEK Corporation. No actions including proposals to or agreements with other companies should be taken by any reader without obtaining specific business or legal advice. Neither the publisher nor the authors accept any liability for any actions or activities undertaken by any reader or other third party as a consequence of these articles or for any errors or omissions therein.