Agracetus: Patenting all transgenic cotton
Jos Bijman
Keywords:  Grace/Agracetus; Private industry; Cotton; Patent law; Genetic engineering.
Correct citation: Bijman, J. (1994), "Agracetus: Patenting all transgenetic cotton." Biotechnology and Development Monitor, No. 21, p. 8-9.

In recent years the US biotechnology firm Agracetus has received much attention for its aggressive patent strategy. The company currently holds wide­ranging patents on transgenic soya bean and cotton. Many claim these patents are unjustified and should be challenged since they block rather than stimulate innovation.

Agracetus specializes in biomedical and plant products. The company, based in Middleton, Wisconsin, was founded in 1981 as a subsidiary of Cetus Corporation. In 1990 Agracetus became a subsidiary of W.R. Grace & Co. This US transnational corporation produces specialty chemicals and health care services and products.
The core research competence of Agracetus is in gene delivery and in molecular and cellular biology. The three main business operations are: (1) plant as bioreactors, i.e. the production of biopharmaceuticals in green plants; (2) Accell=FE gene therapy, i.e. gene­based treatment of genetic and acquired illness; and (3) specialty fibres, i.e. high­performance cotton fibres by genetic engineering. Both biopharmaceuticals and gene therapy are developed for the human health market.

Gene gun
One of AGRacetus' most important proprietary techniques is its Accell=FE gene gun. This device uses an electronic accelerator to fire DNA­coated microprojectiles (e.g. gold particles) into living cells to introduce new genes into these cells. Agracetus uses this technique for genetically engineering plants, transforming somatic animal cells, and even for human gene therapy. Agracetus is applying its gene gun technique to a broad range of plants: poplar and spruce trees, (Indica) rice, cranberry, tobacco, maize, green and dry beans, and peanuts. 
Most of its research, however, focuses on cotton and soya beans, two of the major agricultural crops in the world, both in industrialized and developing countries. With the use of its Accell=FE technique Agracetus was, in 1990, the first to show that soya beans could be genetically engineered. The agronomic traits of transgenic cotton and soya beans focused on, are pest resistance and herbicide tolerance.

With its genetically engineered cotton, Agracetus wants to develop and market specialty fibres that will combine the preferred appearance and texture of cotton, with enhanced fibre properties. These customized fibres will be tailored to the needs of the textile industry. New properties may include greater fibre strength, enhanced dyeability, improved dimensional stability and altered absorbency. Another example are fibres containing enzymes that can biodegrade environmental contaminants. These fibres would be placed in filters through which contaminated water is led.
Agracetus also works on transgenic cotton plants with brightly coloured cotton bolls. Although several naturally coloured cotton varieties have been obtained by traditional breeding methods, no blue variety exists. As blue is in great demand in the textile industry, particularly for jeans production, synthetic fabric dyes are used. However, the ingredients of these dyes are often hazardous and their wastes are polluting. Additionally, they take time and energy to work into the cloth. Natural blue cotton does not have these disadvantages and therefore has great market potential. The genetic engineers plan to insert into cotton plants the genes that are responsible for the production of the blue colour in the indigo plant, formerly the source of blue dye, until a cheaper synthetic method of making it was discovered. Also Calgene, USA, has started a research project aimed at developing blue cotton.
How did Agracetus obtain such a broad cotton patent in the USA? 

Agracetus' broad patent was granted largely on a precedent set in Scripps versus Genentech. In 1991, Scripps Research Institute successfully challenged Genentech for infringing its patent for a purified clotting factor made from blood. The courts ruled that Genentech must obtain a licence from Scripps even though Genentech produced the factor using genetic engineering, thus using a different process.
The precedent of this case is that process limitations can be ignored, because ultimately only the product (the matter) counts. Originally, Agracetus filed for all of its claims in one patent. At that time the patent office rejected the broader claim focusing on the matter instead of the process. Only the product by process claim was awarded (US patent no. 5,004,863, in April 1991). Then Agracetus filed a continuation application saying that because of the Scripps versus Genentech case the process language is meaningless. Therefore it wanted to drop this useless process language, and keep the product claim. Thus, a patent for composition of matter was awarded on appeal by the Court of Appeals, Federal Circuit (CAFC). This patent (no. 5,159,135) was granted on October 27, 1992.

Sources: R. Mestel (1994), "Rich Pickings for Cotton's Pioneers". New Scientist, 19 February, pp.13-14. Genetic Engineering News, July 1994, p.1, p.13.

Agracetus has been very aggressive in obtaining patent protection for its newly developed techniques. On April 2, 1991, Agracetus was granted a US patent (no. 5,004,863) covering cotton plant genetic engineering technology using Agrobacterium tumefaciens. Also in April 1991, Agracetus received a US patent (no. 5,015,580) covering a method for genetically engineering soya bean plants using the gene gun technology. The Accell=FE gene gun itself was patented in 1992 (US Patent no. 5,120,657, issued in June 1992). 
Other patents do not only cover the technique, but also the transformed plants. For instance, in October 1992 Agracetus was granted a US patent (no. 5,159,135) covering all genetically engineered cotton plants. Similarly, in March 1994 the company was granted a European patent (no. 0,301,749,B1) on all transgenic soya beans (in the US the patent application is still pending). The cotton and soya bean patents have broad coverage, meaning that the most comprehensive claims cover all cotton and soya bean seeds and plants which contain a recombinant gene construct, i.e. are genetically engineered. A similar broad cotton patent has been granted in India, and patent applications are pending in Brazil and China. Together, the United States, Brazil, China and India account for sixty per cent of world cotton production.
Agracetus is in the business of developing and selling technological knowledge. Besides contract research, licence fees are its main source of income. Through non­exclusive licences others can use the genetic engineering technique. For its transgenic cotton, Agracetus already has non­exclusive commercial licence agreements with Monsanto and Calgene. Calgene is developing a herbicide­resistant cotton variety, while Monsanto plans to market an insect­resistant variety, transformed with a gene from Bacillus thuringiensis (Bt). Details about these terms are confidential. For companies that do not have the resources to develop transgenic plants, Agracetus provides a service to improve soya bean varieties under contract.
Agracetus stated that its broad patents will not affect public funded research, because research licences are available, free of charge, to all academic or governmental researchers. EU patent law includes a research exemption, allowing the use of protected intellectual property for true research purposes, without infringement of patent rights. In the USA, however, utility of industrial patent law (the type of patent granted to Agracetus) has no research exemption, although judicial decisions (in US courts) appear to provide an exemption for non­commercial research. As can be expected, this leaves room for ambiguity in determining what constitutes "non­commercial" research. Agracetus and public sector researchers may have differing opinions on this issue.

These broad­coverage patents so far have met criticism in the USA, in Europe and in developing countries. Given the far­reaching impact of those patents the criticism has been relatively small. 
Initially, the opposition came from NGO's which are concerned that the patents may lead to monopoly positions for companies or nations, thereby adversely affecting cotton production in developing countries. The Rural Advancement Foundation International (RAFI) has been one of the most outspoken opponents. In its Communique of July/August 1993, RAFI concludes that the Agracetus patents on cotton will stifle, rather than stimulate innovation on genetically engineered cotton outside the three to four major corporations and plant biotechnology companies that dominate transgenic cotton R&D.
But other new biotechnology firms as well as seed companies have also expressed their concern, even though in general they support patentability of intellectual property. Although most biotechnology firms are eager to licence their technology, there is no obligation to licence. Even if Agracetus does want to licence, it can exert considerable control over production and sale. The terms of the licence cover the height of the fees, but may also hold restrictions on special applications of the technology and on commercial activities in certain markets. For instance, for the improvement of special fibre qualities, Agracetus is not likely to grant any licence, as developing and selling specialty natural fibres is part of its own core business. 
Still, other companies are not expected to take action against the broad coverage as some have already signed a deal with Agracetus and/or hope to obtain broad patent coverage for their own areas of work. Calgene, for example, has filed a patent that would cover all genetically engineered vegetables in the Brassica family, including cauliflower, broccoli and kale. Plant Genetic Systems, Belgium, has filed patents covering all transgenic plants containing Bt­genes, and genes to induce nuclear male sterility, important for plant breeding.

Re­examination of cotton patents
The US Department of Agriculture (USDA) as well as an US law firm (for an undisclosed client) have filed for re­examination of Agracetus' transgenic cotton patents. The US Patent and Trademark Office has agreed to re­examine Agracetus' two product and process patents on cotton. The law firm argues that the Agracetus patentee omitted citation of relevant information on transgenic cotton that appeared in a European patent application filed earlier by a third party, thus challenging the novelty of the techniques. 
The criticism of the USDA is much broader in scope, claiming that the patents deter cotton research. USA's Agricultural Research Services administrator, dr. R.D. Plowman, has stressed his concern that the trend towards locking­up germplasms, both plant and animal, with patents could be disastrous for agriculture. The patents may give Agracetus virtual control over all applied research on transgenic cotton. The USDA­attorney also believes that the inventions patented by Agracetus are taught in the prior literature. Thus the claim of non­obviousness, one of the criteria for patentability, does not hold.
More arguments against these broad coverage patents for cotton and soya beans have been put forward. This precedent would encourage others to corner crops that depend on genetic engineering or other process technologies (like the Calgene and PGS examples). Agracetus contends that it has not set a precedent, pointing out that the very broad Cohen/Boyer patent covers all DNA­transfer. However, the latter does not claim any rights to matter that is produced by using the patented technology. The Agracetus case is clearly unprecedented in that it gives the company rights to all genetically engineered products from an entire crop.

In India the Agracetus'' patent has led to a strong debate, even at the highest government level. The broad cotton patent was granted in 1991. But now the Indian Council of Agricultural Research and the Department of Biotechnology are trying to revoke the patent, because it may restrict India's access to a crop line produced by this method or harm the interests of India's cotton economy. Through the working of this patent, Indian scientists working on transgenic cotton (even with totally different techniques) are in a stranglehold by Agracetus.
That Indian scientists and producers have difficulties in gaining access to new technology developed by foreign companies, was shown in a case with Monsanto. The Indian government wanted to enter into an agreement with the US­based agrochemical and biotechnology company for their transgenic cotton variety in which Bt­toxin is expressed successfully. However, the licence fee demanded by Monsanto was extraordinary, and the Indian government had to put off the deal. Several Indian NGOs have emphasized this case to criticize the installation, as part of the recent GATT agreement, of a new patent system that does not take into account the negative impact that such a "foreign" system may have on national innovation activities.
Jos Bijman

Agracetus (1993), Transgenic Cotton Patent: Background and issue brief, 10 December.

Agracetus (1994), Transgenic Soybean Patent: Background and issue brief, 14 April.

Agricell Report, June 1992, p.45.

P. Christou et. al. (1990), "Soybean Genetic Engineering: Commercial production of transgenic plants". Trends in Biotechnology, June, pp.145­151.

Down to Earth, March 31, 1994, pp.5­7.

D. Holzman (1994), "USDA files to Re­examine the Recombinant Cotton Patent". Genetic Engineering News, July, p.1, p.13.

R. Mestel (1994), "Rich Pickings for Cotton's Pioneers". New Scientist, 19 February, pp.13­14.

New Scientist, 31 July 1993, p.7.

Seed & Crops Industry, June/July 1994, p.29, p.42; Aug/Sept 1994, p.21.

RAFI Communique, July­August 1993.

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