Broad Biotechnology Patents Hamper Innovation
Jeroen van Wijk
Keywords:  Patent law.
Correct citation: Wijk, J. van (1995), "Broad Biotechnology Patents Hamper Innovation." Biotechnology and Development Monitor, No. 25, p. 15-17.

European and American patent offices have recently granted patents on biotechnological inventions that are extremely wide in scope. These broad patents monopolize biotechnological research areas instead of sole inventions. Even within the biotechnology industry itself it is being realized that this patent policy may backfire. Broad patents may hamper further innovation and reinforce social protests against the patenting of life forms. The Western patent scene provides the rest of the world with a taste of what soon may happen to biotechnology patenting and innovation in their own country.

In 1992 a patent was granted to the North American biotechnology company Agracetus on all genetically engineered cotton plants. Two years later, the same company obtained a similar patent on all transgenic soya bean plants in Europe. At least five other companies have obtained similar broad patents on plant species, among them Coffea arabica, the most important commercial coffee species, and the entire Brassica family. In January 1995, Mycogen Corporation, California, obtained a patent on a method to design synthetic genes probably covering all plants containing these genes. And in March 1995, also in the USA, a patent was issued to the National Institutes of Health on all ex vivo gene therapies.
These examples are just a few of the recent wave of patents, granted in the USA and in Europe, which are very broad in scope (see for more examples the August 1995 RAFI Communique). Patents are private rights to prevent third parties from unauthorized use of what the holders claim to have invented. Patents have a duration of about 20 years. The patent claims are judged by patent offices, but they seem to have been remarkably easy-going in recent years. In the cases mentioned above, claims have been accepted which lead to the monopolization of entire technological areas. Even though patenting requires disclosure of the invention, the opportunity to prohibit innovation in a broad technological area makes broad patenting a barrier rather than a stimulus for further innovation. Opposition against the broad patents as well as increased expertise with the patent offices may lead to a re-examination of the patent claims.

Advantage of broad patents
Some inventions can be considered to be a breakthrough and enable a series of new technological developments. Patents on such inventions have a wide scope. Because basic inventions form the bridge to a new research area, patents related to the inventions cannot be neglected by those who want to enter this new area. Examples are Bell laboratories’ patent on the transistor, and to a large extent also the patent of Cohen and Boyer on DNA splicing. The holders of such patents have a good prospect of royalty income and a strategic position in negotiations with other firms.
The dream of many biotechnology firms and institutes is to acquire such a position. But because of the lack of a Cohen/Boyer type of invention, they have to resort to alternative methods. One of the options is to claim an invention in an early phase, too early to indicate the precise function of what has been invented. This route was followed by the US National Institutes of Health (NIH) when the organization filed for a patent on several thousands of partial human DNA sequences it had identified. Although NIH lacked knowledge about the function of the DNA, the organization filed for a patent which would ensure NIH a strategic position at the time a commercial product would come out of their work.
A second option for pursuing a strategic position in the biotechnology research is broadening the scope of the patent. This can be achieved by claiming an area in which the invention can be applied on the basis of limited exemplification. In this case the inventor extrapolates the effect of his invention in the "model system" to a number of other organisms without providing proof for that. For example, in their patent on a method to modify the genome of mice to make them develop cancer, obtained in 1988, Harvard University claimed that their invention would work with every other non-human mammal, even though the working examples included only mice.
The US biotechnology firm Agracetus followed a different approach. The company was the first to modify the genome of cotton and soya bean with Agrobacterium tumefaciens and claimed consequently patent coverage for all transgenic plants of these species, regardless of the techniques and genes used for the transformation. This claim is questionable for two reasons. Firstly, Agracetus does not prove that its method has the same effect with all genes. It has been brought forward, for example, that some genes may be too big for Agrobacterium. Secondly, Agracetus claims protection for the products of its invented process: the transgenic cotton and soya bean plants. This is in itself not unusual. In the chemical and pharmaceutical industry it is considered to be unfeasible to prove that a new product, which is similar to the product obtained by a patented process, has been produced through an alternative process. For this reason the patent often covers both the process and the product obtained by that process, accurately described in a chemical formula. Agracetus, however, does not claim clearly defined cotton and soya bean varieties, but all possible thinkable transgenic variants of both species. An American cotton researcher compared this claim with the situation in which Henry Ford would have filed for patent protection on the automobile.

How serious is a broad patent?
A broad patent can have several adverse consequences, although not necessarily. Research that is conducted with a non-commercial objective is usually not hampered by a patent, even though formal authorization is required in the USA. However, every commercially-oriented type of research in a wide technological field will be hit. For example, in March 1993, a US patent was issued to the company Enzo Biochem on a technique to block the activity of specific plant genes with antisense RNAs. Claims included both the technique as well as all plants in which antisense RNAs are active. On the same day the patent was granted, Enzo Biochem filed suit against the company Calgene Inc. because of alleged infringement of the newly obtained rights. Calgene also uses an antisense gene in the production of the Flavr Savr tomato. According to Calgene the company has developed the technology by itself and is seeking patent protection for it.
Not all cases will end in court. When researchers, involved in a project with a commercial objective, find out that a patent covers their research, they have to negotiate for a licence with the patent holder in order to continue their work. There are then a number of possibilities. The patent holder may pursue a flexible policy and grant non-exclusive licences against conditions which are considered to be reasonable by all parties involved. Such a policy was followed by the Stanford University with respect to the Cohen/Boyer patent. The advantage is that there is less risk that the patent is challenged and must be defended before court against high costs.
In other circumstances, the patentee may be less lenient in licensing out his invention. The required compensation for the use of the patented invention may be too high for smaller companies. Agracetus reportedly asks US$ 1 million for a licence. In principle Agracetus could ask a similar amount of money of any organization that wants to continue its, or enter into, commercially-oriented research in transgenic cotton and soya bean. Apart from the royalties, the patentee may restrict the exploitation by the licensee. In such a situation the licensing contract stipulates, for example, that products of the protected process may not be exported to certain countries because these are supplied by other licensees or the patent holder himself. It is also possible that the patentee prohibits the exploitation of the technological area that is covered by the patent. Agracetus, for example, has licensed companies such as Monsanto and Calgene, that use the technology to improve the insect resistance of cotton. But all efforts to alter the genome of cotton to improve its fibre characteristics have not been authorized by the company. This is the area which is monopolized by Agracetus. Consequently, companies and institutes that work in this area do have a problem, as they will have to remove their research programmes.
Such problems are not confined to researchers in the USA and Europe. Agracetus has filed for patents on transgenic cotton in the main other cotton producing countries, including India, Brazil and China (see Monitor 21). In India a broad cotton patent was initially granted in 1991, but subsequently revoked in October 1994. According to the Times of India (25 January 1995), a secret government paper has explained that the very objective of this patent was to deny the opportunity to biotechnologists in India to develop pest-resistant cotton plants by recombinant DNA techniques. And this was considered to be prejudicial to the public. Because of the revocation of the patent, the continuation of Indian research in transgenic cotton is not hindered. Future exports of this product to countries where the broad patent is still valid will be subject to authorization by Agracetus, however.
Governments have some opportunities at their disposal to prevent patents from frustrating innovation. They could force patent holders to licence out their invention in case of emergency, such as a food shortage. Situations in which compulsory licences could help to overcome such crises seldom occur, however. A compulsory licence may also be requested in order to exploit a later patented invention. Applied to the Agracetus case it would mean that an imaginary third organization must use a technique covered by Agracetus’ patent in order to exploit its own invention. Whether or not compulsory licences limit patent monopolies in such cases is not clear. Parties involved are inclined to negotiate privately on compensation matters. The fact that the option of compulsory licensing is seldom used may indicate that firms are able to reach agreements.

Industrial doubts about broad patents
Biotechnologists and their legal advisors now also seem to realize that the scope of protection of some recently issued patents is not in accordance with the scope of the invention. In the European Intellectual Property Review some of them have recently mentioned an industrial dilemma. On the one hand, it is difficult for lawyers to criticize the sweeping patents openly, as corporate interests force the lawyers to seek maximum protection. Moreover, criticism from the private sector would be grist for the mill of those pressure groups who oppose the patenting of living material in general. On the other hand, refraining from action would also harm the biotechnology sector. The controversy on excessive patent protection fuels the existing opposition against the patenting of life forms. In both cases there is the chance that patent offices or governments might feel that it is necessary to reduce the level of protection for biotechnological inventions in general. And that is not what the industry is aiming at.
The industrial concern about the counter movement is hardly surprising. For a number of years pressure groups in both the USA and Europe have been trying to stop the patenting of living material. The objectives of this movement are diverse. Some disapprove of the patenting of plants because it would harm plant breeding and farmers. Others contend that privatizing plants and animals is immoral, or criticize the patenting of human genes in particular. There are also opponents who argue that modifying the genome of animals or humans is unethical. They take the opportunities which patent law offers to discourage further research in this area. Western patenting of plants, micro-organisms, and cell lines of indigenous people from developing countries, has strengthened and internationalized the aversion to the patenting of life. Because of the granting of sweeping biotechnology patents, industrial representatives have joined the opposition. They do not resist patents on living organisms as such, but rather their unjustified broad scope.

Reversal of a trend?
There are a few indications that the growing dislike of broad patents is having some effect. The above mentioned attempt by NIH to patent thousands DNA fragments was eventually rejected by the US Patent and Trademark Office (USPTO). NIH did not appeal to the decision and decided to abandon its policy to seek patent protection for DNA sequences. The USPTO is also re-examining its earlier decision to grant a patent to Agracetus for all transgenic cotton. But the patent remains in force until all appeal procedures have been passed.
In Europe, the directive for the legal protection of biotechnological inventions was vetoed by the European Parliament, in March 1995. A first draft of the directive had been submitted by the European Commission in 1988 in response to a demand of the European biotechnology industry. Most EU countries adhere to the European Patent Convention (EPC) which contains provisions that could limit the patentability of biotechnological inventions. The aim of the directive was to avoid renegotiations about the EPC (to which also non-EU countries adhere), and to harmonize the patent laws of the individual EU member states and bring them in line with the less restrictive legislation of the USA. However, after years of controversies, the Commission had to accept that plant varieties and animal races remained exempted from patent protection, while small-scale farmers would be allowed to save seed from patented plants. The directive was still unacceptable for the Parliament because it envisaged the patentability of plants and animals that would not be defined as a variety or race, as well as isolated ex vivo human genes.
The main European forum for the controversy on patenting life forms is now again the European Patent Office (EPO). An indication of a changing patent policy of the EPO may be a recent decision of its highest appeal board in the case Greenpeace versus Plant Genetic Systems (PGS). In 1990, the Belgium biotechnology firm PGS had obtained a patent on a method to produce herbicide-resistant plants. The patent claims covered all plants and seed that result from the method. Greenpeace had opposed to the patent. During the procedure, PGS withdrew 6 claims related to seeds and plants which had been granted in 1990. On 21 february 1995, the appeal board rejected the earlier decision by the EPO because the examples provided by PGS concern mere plant varieties; varieties are excluded from patent protection under the EPC.
The scope of the initial PGS patent has been reduced considerably. The transgene plants and seed remain freely available for further breeding. Whether the EPO decision stands alone or is part of a trend to limit the scope of biotechnology patents remains to be seen.
Jeroen van Wijk

CEDLA, Keizersgracht 397, 1016 EK Amsterdam, the Netherlands. E-mail: jvwijk@sara.nl

This article is largely based on an article earlier published in Dutch in ZENO 5 1995.

"Sweeping Patents Put Biotech Companies on the Warpath". Science, 5 May 1995, pp.656-657.

RAFI (1995), "Utility Plant Patents: A review of the US Experience (1985 - July 1995)." RAFI Communique, July/August.

Contributions to the Biotechnology and Development Monitor are not covered by any copyright. Exerpts may be translated or reproduced without prior permission (with exception of parts reproduced from third sources), with acknowledgement of source.


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