chapter 16 intellectual property law - princeton.edu

Chapter 16

Intellectual Property Law

Contents

Introduction .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Intellectual Property Law of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Law of Trade Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Patent Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Plant Breeders ’Rights Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Comparison of U.S. and Foreign Intellectual Property Law . . . . . . . . . . . . . . . . . . . . . . . .Patent Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Trade Secret Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Plant Breeders’ Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Evaluation of Effectiveness of Intellectual Property Law ToPromote the Development of Biotechnology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

United States.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ... a s+.......Foreign Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Issue and Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chapter 16 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Chapter 16

Intellectual Property Law

Introduction

Biotechnology will give rise to a vast array ofnew inventions. The inventions may be placedinto two general categories: products and proc-esses. Products will include organisms, such asgenetically modified micro-organisms, cell lines,hybridomas, plants, and possibly even animals.Products also include parts of organisms andrelated material such as high expression plasmids,viral vectors, synthetic genes, probes, and restric-tion enzymes. Finally, there will be products oforganisms, such as drugs, chemicals, biologics,and monoclinal antibodies (MAbs). Processes willinclude various ways to make new organisms orparts thereof or to use an organism to make someproduct such as insulin. Other examples of proc-esses include various bioprocessing techniques,regeneration of plant tissue culture, breedingtechniques, and methods of treating the humanbody. In addition, research and development(R&D) will give rise to new knowledge, which willbe of value to whoever possesses it.

The ability to secure a property interest in a ninvention and to protect related know-how gen-erally is perceived as providing an extremely im-portant incentive for a private company to spendtime and money to carry out research, develop-ment, and scale-up for the commercialization ofnew processes and products. Without the abilityto prevent other companies from taking the re-sults of this effort, many new and risky projectsthat could lead to important new products wouldnot be undertaken. Empirically proving this no-tion, however, is difficult (47). It is beyond thescope of this chapter to delve into the debatesamong experts on that problem. This chapter willassume—as our society does—that the ability tosecure property interests in or otherwise protecttechnological processes, products, and know-howwill encourage development of technology. There-fore, one factor to evaluate in assessing U.S. com-petitiveness in biotechnology is how well the lawof intellectual property of the United States andthe five other major competitor countries—Japan,

the Federal Republic of Germany, the UnitedKingdom, France, and Switzerland-aIlows inven-tors, private companies, and others to protect theresults of their efforts.

The three categories of intellectual law mostrelevant to biotechnology are those dealing withtrade secrets, patents, and plant breeders’ rights.These are the focus of this chapter. * Copyrightmay also be relevant, because it protects the tangi-ble expression of information, and a gene maybe viewed as the tangible expression of informa-tion (36). Because this idea has not been widelyaccepted, and several commentators have criti-cized its usefulness (16)40)52)) here it will not bediscussed any further.

The categories of intellectual property law worktogether as a system. If one has disadvantages,a company can look to another. To the extent thata country has available many alternative ways forcompanies to protect biotechnological inventions,it is more likely to be competitive in biotech-nology.

This chapter compares and contrasts the lawrelating to the protection of biotechnologicalinventions and related know-how in the UnitedStates, the United Kingdom, the Federal Republicof Germany, Switzerland, France, and Japan. Thechapter begins by examining U.S. law in orderto provide a basis for comparisons, raise the rele-vant issues, and explain some basic legal concepts.

—● Two other areas of law are also relevant to biotechnology but

will not be considered in this chapter: personal property law andcontract law. Traditional personal property law will apply to celllines and many other biological inventions because they are physicalobjects—just like cars and jewelry. Contracts create legally enforce-able rights and duties between the contracting parties. Thus, bio-technological inventions can be protected by contract, and in k’iewof some of the uncertainties in the intellectual property lam’ regard-ing biotechnolo~~,, contracts can be important to biotechnolo~~companies in many instances. These topics will not be consideredfurther in this chapter, because OTA was unable to obtain infor-mation on how they would apply to biotechnoloqv in other coun-tries. Some commentators have ad[iressed their applicability tobiotechnolo~~ in the LJnited States (10,40,42).

383

384 ● Commercial Biotechnology: An International Analysis

Foreign intellectual property laws are considered tected; and 3) what questions are unanswered?after the discussion of the U.S. law and also in Policy options for Congress addressing the issueappendix G. The strengths and weaknesses of the of how to improve U.S. competitiveness in bio-laws of the six countries are then analyzed by con- technology by strengthening U.S. intellectualsidering three basic questions: 1) what interests property law are identified and discussed at thewill the law protect; 2) how well will they be pro- end of the chapter.

Intellectual property law of the United States

As noted above, three categories of intellectualproperty law are particularly relevant to biotech-nology: trade secrets, patents, and plant breeders’rights,

Law of trade secrets

An inventor is regarded in the United States ashaving a natural right to keep an invention secret.This right is recognized by the law of trade se-crecy. A trade secret is generally viewed as “anyformula, pattern, device, or compilation of infor-mation which is used in one’s business, and whichgives him (sic) an opportunity to obtain an advan-tage over competitors who do not knew or useit” (l). * Examples of trade secrets in biotechnol-ogy are a method for genetically manipulating anorganism, a method for selecting among the orga-nisms for those particular characteristics, and theorganism itself.

The holder of a trade secret in the United Statescan enforce his or her interests in State courtsby securing either an injunction or monetarydamages against a person who takes or otherwiseacquires the secret through improper means, oreven against a person who acquired it throughmistaken disclosure by the owner.** Criminalpenalties may also be available in egregious casesin the majority of States. The underlying policyis that a person should not benefit by unfairlyusing another’s efforts.

“In recognizing the existence of a trade secret, the courts do notuse a hard and fast definition, but look at numerous factors, suchas the extent to which the information is known outside of thebusiness, the effort involved in developing and guarding the infor-mation, and the difficulty with which the information could be prop-erly acquired by others (see 34).

* ● The cases also recognize secret information that does not qualifyas a trade secret, but a person acquiring or using that informationis liable only if he does so by “improper means” (l).

In the United States, virtually any biological in-vention, including cells and their components, orrelated information would be protectable by thelaw of trade secrets. *

It should be noted, however, there are somelimitations on its scope. One important limitationarises from the fact that a trade secret must becontinuously used in a business. This requirementraises questions about the results of basic re-search. Generally, the courts have held that if in-formation is merely a preliminary idea, it doesnot qualify as a trade secret (41,51). Some degreeof commercial value must be established if theinformation is to be considered a trade secret. Afew States have taken a more expanded view ofthe concept of trade secret and protect informa-tion that also has only potential economic value.In those States—Arkansas, Idaho, Kansas, Minne-sota, and Washington—the results of basic re-search clearly would be protected.

Another possible limitation on the scope of thelaw of trade secrets arises from the fact that theholder of a trade secret must know the informa-tion and attempt to keep it secret from others.In the well-known case involving disputed owner-ship of an interferon-producing cell line, Hoff-mann-La Roche, hc. v. Go/de (28). Genentech(U. S.) and Hoffmann-La Roche (Switzerland) ap-parently argued that the University of Californiahad no trade secret interest in the cell line be-cause the university did not know about its abil-ity to produce interferon (10).

The advantages of a trade secret to its holderare several. First, there is no time limit on trade

*Misappropriation of an organism or other tangible biologicalmaterial constitutes misappropriation of the information it contains(see 53).

Ch. 16—Intellectual Property Law ● 385

secret protection. It should be noted, however,that in a fast moving area like biotechnology, the“useful life” of a trade secret may actually be quiteshort. Second, a trade secret does not have to bea patentable invention. Third, maintenance andenforcement are generally less expensive fortrade secret rights than for patents. Fourth, com-petitors are not apprised of the information, incontrast to the situation with patents (see below).Fifth, trade secret protection is valuable for cer-tain inventions that would be hard to police ifpatented. For example, if a product is capable ofbeing made by many different processes, keep-ing secret a new process for making the productmight be preferable to patenting it. Sixth, if thereis doubt as to the patentability of an invention,trade secrecy is a viable alternative. Finally, cer-tain organisms and parts thereof, such as high-expression plasmids, may be better off held astrade secrets, since they could not be reverseengineered from the products that they produce,but, if patented, would be placed in the publicdomain.

Disadvantages of relying on trade secrecy in-clude the following. First, the protection existsonly as long as secrecy exists. The holder of atrade secret has no rights against someone whoindependently discovers and uses the trade secretand has no rights against someone who may haveinnocently learned the secret from someone whooriginally obtained it improperly. Second, reverseengineering (the examination of a product by ex-perts to discover how it was made) is a legitimateway to discover a trade secret. The structure ofa gene, for example, may be determined by re-verse engineering a polypeptide that is on themarket. Because of the complexity of biologicalprocesses and organisms, however, most of thesewill not be capable of being discovered by reverseengineering of their products. Third, trade secre-cy is, by definition, incompatible with the desireof most scientists to publish the results of theirresearch. If a company wishes to attract and re-tain good scientists, it may not be able to rely ontrade secrecy to protect their work. Fourth, thereis always the chance that a trade secret will beindependently discovered by another, who thenobtains a patent on it. The patent holder may thenprevent the holder of the trade secret from using

it. Finally, the acquisition of a trade secret by acompetitor through misappropriation or breachof a confidential agreement may be difficult toprevent, discover, or prove. Microorganisms areespecially easy to steal, once one gains access tothem, because of their small size and self-repli-cating nature. Further, the thief would not evenhave to understand exactly the valuable informa-tion contained in the micro-organisms; he or shehas acquired the factory (i.e., the microorganism)and the ability to grow it in any amount desired.

Patent law

U.S. patent law, Title 35 of the United StatesCode, is designed to encourage invention by grant-ing inventors a limited property right in their in-ventions. A U.S. patent gives the inventor the rightto exclude all others from making, using, or sell-ing the invention within the United States withoutthe inventor’s consent for 17 years. In return, theinventor must make full public disclosure of theinvention.

The policy behind U.S. patent law is twofold.First, by rewarding successful efforts, a patentprovides inventors and their backers with an in-centive to risk time and money in R&D. Second,and more importantly, the patent system encour-ages public disclosure of technical information,which may otherwise have remained secret, sothat others are able to use it. The inducement inboth cases is the potential for economic gainthrough exploitation of the patent right.

To qualify for patent protection in the UnitedStates, an invention must meet the following re-quirements:

. it must be capable of being classified as aprocess, machine, manufacture, or composi-tion of matter;*

● it must be new) useful, and not obvious; and. it must be disclosed to the pubIic in sufficient

detail to enable a person skilled in the sameor the most closely related area of technologyto construct and operate it.

“These categories are set out in j 101 of Title 35 of the LlnitedStates Code (35 [T.S.C. $101). Sec. 101 is the basic section under whichmost inventions are patented. Patents under 35 U.S.C. $101 are oftencalled utility patents.

386 ● Commercial Biotechnology: An international Analysis

Plants that reproduce asexually may also bepatented under slightly different criteria.

The criteria for obtaining and enforcing patentson biotechnological inventions are quite similarin the six countries being examined in this report.The following eight subsections discuss the cri-teria of patentable subject matter, novelty, util-ity, nonobviousness, disclosure requirements, de-posit requirements, claims, and enforcement inthe United States in order to provide a basis fora comparative analysis of how each country’s pat-ent law will affect its competitiveness in biotech-nology.

PATENTABLE SUBJECT MATTER

The categories of patentable subject matterunder 35 U.S.C. $101—process, machine, man-ufacture, or composition of matter—are quitebroad but they are not unlimited. The courts haveheld scientific principles, mathematical formulas,and products of nature to be unpatentable on thegrounds that they are only discoveries of pre-existing things—not the result of the inventive,creative action of human beings, which is whatthe patent laws are designed to encourage.

One of the major patent law questions arisingwith respect to biotechnology is whether livingorganisms are patentable subject matter. The U.S.Supreme Court addressed this question in 1980in the landmark case Diamond v. Chakrabarty(21). In a five to four decision, the Court held thatthe inventor of a new micro-organism, whose in-vention otherwise met the legal requirements forobtaining a patent, could not be denied a patentsolely because the invention was alive. The Courtruled that Congress had not intended to distin-guish between unpatentable and patentable sub-ject matter on the basis of living v. nonliving, buton the basis of “products of nature, whether orliving or not, and human-made inventions” (22).

The U.S. Supreme Court stated that its decisionin the Chakrabarty case was limited to a human-made micro-organism, leaving unresolved ques-tions of whether eukaryotic cells or other higherorganisms would be patentable subject matter.In theory, however, the Chakrabarty decisionstands for the proposition that any organism ispotentially patentable, because the crucial test

used by the Court was whether or not the orga-nism is human-made. As a result, eukaryotic cells,cell lines, tissue culture, and even plants are gen-erally viewed as being patentable under 35 U.S.C.$101. The harder question is whether the U.S. Pat-ent and Trademark Office or the courts wouldpermit patents on higher organisms such asanimals. *

There is no question, however, that virtuallyany other biotechnological invention would bepatentable subject matter, providing that it meetsthe other requirements. Such inventions wouldinclude processes using micro0organisms, recom-binant DNA (rDNA) molecules, subcellular unitssuch as plasmids, methods for making these in-ventions, and biotechnological methods for treat-ing human or animal disease (29). * *

NOVELTY

The statutory requirement of novelty signifiesthat an invention must differ from the “prior art,”which is publicly known technology. Novelty isnot considered to exist, for example, if: 1) the ap-plicant for a patent is not the inventor; 2) the in-vention was previously known or used publiclyby others in the United States; or 3) the inven-tion was previously described in a U.S. or foreignpublication or patent (35 U.S.C. f102). The inabili-ty to meet novelty requirement is another reasonwhy products of nature are unpatentable.

Two questions are particularly relevant to bio-technology. First, how can naturally occurringsubstances, such as genes, plasmids, and evenorganisms, be patentable? Second, what actionson the part of an inventor, such as discussing theinvention with colleagues or publishing a paperabout the results of research, can place the inven-tion in a public domain, thus barring patentabil-ity because the invention will not be novel?

● The U.S. Patent and Trademark Office has stated that it will deter-mine questions as to patentable subject matter on a case-by~asebasis following the test set forth in Chakrabarty (49).

* ● A [J.S. Patent and Trademark Office official estimated that thereare currently 500 genetic manipulation related patent applicationspending, that the office is receiving applications at the rate of 200per year, and that the rate is increasing (46). These applications areclassified in Class 435, Subclass 172 in the U.S. Patent Classifica-tion System (46). This classification is not coextensive with OTA’Sdefinition of biotechnology.

Ch. 16—intellectual Property Law . 387

As to the first question, the crucial element ofpatentability for most biological inventions in theUnited States, as shown in the Chakrabarty case,will be the fact that the substance was in someway changed from the naturally occurring sub-stance by human intervention. For example,although genes and regulatory sequences may beobtained from natural sources, it is the removalof the DNA sequences from their natural habitatand their joining to other DNA sequences thatprovides the human-made requirement of theChakrabmty case. Thus, it is not the sequence thatis new, but the environment, such as the host orflanking DNA regions (44). *

As to the second question, it should be notedthat U.S. law, in contrast to the laws of mostforeign countries, provides a l-year grace periodbetween the date of any publication by the in-ventor relating to the invention and the filing ofa patent application, This grace period in theUnited States is generally viewed as favorable tothe rapid dissemination of new scientific knowl-edge, because knowledge pertaining to an inven-tion can be published without the inventor’sforegoing the opportunity to file for a patent.Most countries other than the United States re-quire the patent application to have been filedbefore the invention is disclosed, for example, ina scientific paper. This requirement is known as“absolute novelty” and will be discussed in greaterdetail in the section comparing and contrastingU.S. and foreign law. * *

UTILITY

The utility standard in the United States is gen-erally not a difficult standard for an invention tomeet to qualify for a U.S. patent. There is onepotential problem, however, with regard to bio-logical inventions. Since the courts have held thatan invention must show some practical or com-mercial utility (12,32,33), certain results of

● In a companion case to Chakrabart-v, a lower court, the Courtof Customs and Patent Appeals (now the Court of Appeals for theFederal Circuit), held that a purified culture of naturally occurringbacteria was patentable subject matter (3). For procedural reasons,the Supreme Court did not rule on this issue.

● *Japan provides for a limited 6-month grace period for: 1) ex-perimentation, publication, and papers presented before scientificorganizations by the applicant; Z) unauthorized disclosure by thirdparties; and 3) displays at authorized exhibits. Otherwise, it is con-sidered an absolute novelty country.

research that may be very important for researchpurposes (e.g., a new DNA probe or even certainorganisms) may not meet the utility standard. Thisproblem can generally be avoided by describingsome practical use of the invention in the patentapplication, even if that use will not be the onethat is of ultimate commercial value to thecompany.

NONOBVIOUSNESS

The nonobviousness standard that inventionsmust meet to qualify for a U.S. patent pertainsto the degree of difference between the inven-tion and the “prior art .“ An invention that wouldhave been obvious at the time it was made to aperson with ordinary skill in the relevant field oftechnology is not patentable (35 U.S.C. ~103). TheU.S. patent law requirements for nonobviousnessand novelty together represent a policy that a pat-ent should not take from the public somethingthat it already enjoys or potentially enjoys as anobvious extension of current knowledge.

Given the fact that many of the basic techniquesin biotechnology are well known and straightfor-ward to competent scientists, how can the variousinventions meet the nonobviousness standard?The answer is that biotechnology is still in manyrespects a very inexact science. Many of the var-ious manipulations of genetic material, for exam-ple, will give unexpected results. Difficulty in theisolation or preparation of materials and the un-expected or superior nature of results are someof the criteria that would be used to show non-obviousness.

It is interesting to note that some scientists viewhybridoma technology as more straightforwardthan rDNA technology. If this is true, patents maybe more difficult to obtain for hybridoma tech-nology than for rDNA inventions, necessitating.a greater reliance on trade secrets. However,there are still many problems associated withhuman-human hybridomas, so broad patents maybe able to be secured for inventions in that area.(See Box D.–patents on Hybridoma Inventions forfurther information on patenting hybridoma tech-nology.)

The nonobviousness requirement may presentanother problem for biotechnology. The rapid


development and complexity of the field will makeit difficult to determine as of a given point in timewhat is ordinary skill or what is obvious.

DISCLOSURE REQUIREMENTS

The requirement for adequate public disclosureof an invention is designed to ensure that thepublic receives the full benefit of the new knowl-edge in return for the granting a limited monopo-ly to the patent holder, Thus, a U.S. patent, whichis a public document, must contain a sufficientlydetailed description of the invention to enableothers in that field of technology to build and usethe invention without “undue experimentation. ”This is known as the enablement requirement.The patent also must disclose the best modeknown to the inventor for carrying out the in-vention at the time the patent application is filed.

In the case of biological inventions, satisfyingthe enablement requirement is a major hurdle.Because of their complex and unknown nature,many biological inventions, especially organisms,cannot be sufficiently described in writing toallow their predictable reproducibility on thebasis of that description alone. Even with fairlyprecise techniques such as rDNA, random eventsprovide uncertainty as to predicting the exactnature of the final product. There is always thepossibility during the manipulation of DNA frag-ments, plasmids, and transformed organisms thatrandom changes have occurred, The final prod-uct may in fact be quite different from the de-scription provided by the experimenter, eventhough the experimentation process itself mayhave been accurately described.

This problem has been dealt with for patent ap-plications on new micro-organisms or processesinvolving them by permitting the microorganismsto be placed in culture depositories, where theyare available to the public (31). The depositoryand the culture catalog number are then refer-enced in the patent application, and if the patentissues, the public gains access to the culture. *There is some debate over whether such thingsas plasmids must be deposited, because there issome question as to the reproducibility of the plas -mids on the basis of a written description alone.**

● The case law has left open the possibility of satisfying enable-ment in ways other than through a deposit (25,31).

* ● One of the questions raised by the patent examiner in the pend-ing Cohen-Boyer patent application on the products of rDNA tech-nique, e.g., plasmids, was whether the application disclosed a re-producible way to make a certain plasmid (5).

Ch. 16—intellectual Property Law 389

In an-y event, the enablement requirement willbe one major hurdle to the patentability of higherorganisms because of the logistical problemsassociated with depositing those organisms.

DEPOSIT REQUIREMENTS

Deposit requirements in the United States havedeveloped by court decision and administrativeaction. The practice of the U.S. Patent and Trade-mark office has been to require a deposit to b emade at a recognized depository no later than thepatent application filing date (50). The office fur-ther requires that deposits be maintained for thelife of the patent (50).

Along with the other five countries being con-sidered in this report, the United States is partyto the Budapest Treaty on the International Recog-nition of the Deposit of Microorganisms for thepurpose of Patent Procedure (14), which attemptsto harmonize the deposit requirements of the sig-natory countries. Under the treaty, the signatorystates recognize in their own patent proceduresa micro-organism deposit made in another coun-try if the deposit is made in a depository meetingthe requirements of the treaty. * Thus, if the pat-ent applicant is filing applications in several coun-tries, only one deposit need be made. Depositsmade under the treaty must be maintained forat least 30 years.

A potential problem that arises with respect todeposits should be noted. Although any valid pat-ent must describe an invention with sufficientspecificity so as to enable a person of ordinaryskill in that technology to make the invention,there is a significant difference between describ-ing an invention and actually turning it over tothe other person. The know-how that is associ-ated with the actual making and subsequent per-fection of an invention clearly provides the inven-tor with an advantage over a competitor whomust construct the invention from the descrip-tion in the patent. Yet in the case of a micro-organism, the invention must actually be turnedover to any competitor who desires it. In essence,therefore, the holder of a patent on a micro-orga-nism that produces a commercially useful poly -

*’l-h(~ American ‘1’vpe Culture Collection in Rock\ ri]k?, Nld., andLTsD,,\’s ~orth(?rn Kegional R e s e a r c h Lahorator~’ in Peoria, 11!.,together with fiiw foreign institutions, currently meet the require-

ments (45).

peptide such as insulin must turn his or her “fac-tory” (i.e., the micro-organism) over to competi-tors. Given the current state of the technology,this situation is probably unavoidable. Possibly,however, consideration could be given to allow-ing various restrictions to be placed on access tothe deposits.

CLAIMS

Claims are the precise language that define theboundaries of an invention protected by a patent.U.S. law permits a series of claims, ranging frombroad to narrow, to be made with respect to aninvention, so that if one or more of the claims aresubsequently held invalid (e.g., for covering someof the prior art or being indefinite), the inventormay still be able to rely on a narrower invention.of course, all of the claims could be held invalid.

The scope of permitted claims will be impor-tant for biotechnology. The scope is initially deter-mined by what the U.S. Patent and TrademarkOffice will accept. In any new technology, the ini-tial inventions tend to be broad and pioneering,so broad claims are usually permitted. As timepasses, however, prior art develops and new ex-tensions of the art become more obvious. Then,the claims permitted by the Patent and Trade-mark Office will be narrower. The Cohen-Boyerpatent on the basic rDNA technique (U.S. Patent4,237,224) is an excellent example of a broad, pio-neering invention, although some commentatorshave questioned its validity (7). In the case ofhybridomas and MAbs, however, there is someindication that the Patent and Trademark Officeis being fairly conservative from the start. Thedata supporting this perception are largely anec-dotal, because there have been few patents issuedon hybridoma technology. If the claims beingallowed are more narrow, however, the value ofpatents on this technology would be lessened.

A recent decision by the U.S. Patent and Trade-mark Office, Ex parte Jackson (24), has importantimplications for the scope of permitted claims onmicro-organisms, cell lines, and processes for pro-ducing or using them (6). The case involved theisolation and purification of three strains ofbacteria that made a new antibiotic. All threestrains had been deposited and referenced in thepatent application. Although the Board of Appeals

390 . Commercial Biotechnology: An International Analysis

of the U.S. Patent and Trademark Office uphelda claim to producing the antibiotic by using amicro-organism selected from the depositedstrains (or mutants thereof), it rejected a claimto producing the antibiotic by using any micro-organism of the same species on the grounds thatthe claim was not enabling. Thus, the scope ofthe patent on the applicant process for produc-ing the antibiotic will be limited, and others maybe able to legally practice the invention by usingother strains. This case, if broadly applied, mayhave a significant adverse impact on the incen-tive to patent many kinds of biotechnological in-ventions, because inventors may see the scope ofpatent protection as being too narrow.

Subsequent to patenting, the scope of the claimswill be determined by Federal courts ruling in pat-ent infringement suits. If the patent is upheld, thecourt has some discretion on how broadly to in-terpret the written claims. It will tend to inter-pret the scope more broadly for fundamental in-ventions. Sometimes the scope of the literal word-ing of the claims can be extended, if the infring-ing invention does substantially the same thing,by substantially the same means, and in substan-tially the same way, as does the patented inven-tion, yet the literal wording of the claims in thepatent for the invention does not cover the in-fringing invention (26). In such cases, the courtswill interpret the claim as covering the infring-ing invention. This is known in patent law as the“doctrine of equivalents.”

The fact that the claims define a new inventiondoes not mean that the new invention does notinfringe on a previously patented invention. Forexample, consider the Cohen-Boyer patent on thefundamental rDNA technique. Its existence willnot prevent new applications of the rDNA tech-nique from being patented (providing they alsomeet the other requirements of the patent law);however, the new inventions may infringe theCohen-Boyer patent. Thus, for a holder of the newpatent to make use of that invention, he or shemay have to pay royalties to the owners of theCohen-Boyer patent.

ENFORCEMENT

Patent infringement in the United States is de-fined as the unauthorized making, using, or sell-ing of any patented invention within the UnitedStates (35 U.S.C, \271(a)). No liability for infringe-ment exists prior to the date the patent is issued.

With respect to enforcing a patent, certainproblems arise. One problem, generally not aproblem for products but potentially a veryserious problem for processes, is knowingwhether or not an infringer is using the patent.If an unpatented product can be made by manydifferent processes, the owner of a patent on oneof those processes may have no way of knowingwhether a product made by a competitor hasbeen made by a different process or by the pat-ent owner’s process. This is a special problem forany process involving a micro-organism or cellline. To get a patent on such a process, a depositmust be made, making the microorganism or cellline available to anybody who desires to use it.For this reason, processes using such organismsare likely to be held as trade secrets unless theprocess is truly a major advance.

Another problem with respect to enforcingprocess patents granted in the United States isthe fact that the patented process may be usedin other countries to make the same product,which can then be imported into the United Statesand compete with the product made by the ownerof the U.S. process patent. Although many coun-tries would define this action as infringement ofthat process patent, the United States does not.A remedy for the owner of the process patentis available through an action before the U.S. In-ternational Trade Commission. If the owner ofthe patent can prove that the foreign activity in-fringes the US. process patent and that impor-tation of the product would injure an efficientlyconducted U.S. industry (or prevent its establish-ment), the product can be excluded from theUnited States (19 U.S.C. \1337, \1337(a)). Thisremedy has been criticized as leaving much to bedesired (39). However, one commentator haspointed out many substantial advantages of go-

Ch. 16—intellectual Property Law ● 391

ing this route as compared to an action in Federaldistrict court (13). The requirement for provinginjury to an industry is not as problematical asit might seem because the International TradeCommission has held that the domestic industrymay consist of only one company, the U.S. patentowner (13). Thus, the issues of whether biotech-nology is an industry or whether one importedproduct could injure that whole “industry” wouldnot be relevant. In fact, an International TradeCommission action is one way the owners of theCohen-Boyer patent might enforce it againstforeign users of the rDNA process.

Another problem area relevant to biologicalinventions has been the general attitude of thecourts in the United States toward patents. De-spite a statutory presumption of validity, aboutone-half of all litigated patents are held invalidby the courts (48). There has been a certain judi-cial hostility toward patents because they are“monopolies, ” even though permitted by the U.S.Constitution and Title 35 of the U.S. Code (29).Certain language in U.S. Supreme Court decisions,for example, refers to such “monopolies” andstates that patents must be construed very nar-rowly and must not be upheld on “mere gadgets”(27). In the 15 years before Chakrabarty, theSupreme Court had not ruled in favor of a singlepatent applicant or patentee (29).

On the other hand, this judicial hostility appearsto be changing. In some recent U.S. SupremeCourt decisions, including the Chakrabarty case,the Court has upheld the patents and has usedbroad language to do so (20,23).

PATENT V. TRADE SECRET PROTECTION ●

Patents and trade secrets are alternative andnot necessarily mutually exclusive ways to pro-tect biotechnological inventions. Companies arelikely to choose between them on a case-by-casebasis. In choosing, they would evaluate the follow-ing factors:

. whether there is any significant doubt thatthe invention can meet the legal require-ments for patenting,

● whether there is the likelihood of others— — . . —

‘This section draws on the analogous section in 017A’S report im-

pact ot’,-lpplifll {;fvwtics: Aficro<)rganisnw, Plants, and Animals [47).

●

●

●

●

●

●

discovering the invention independently orthrough reverse engineering,what the invention’s projected commerciallife is and how readily others could improveon it if it were disclosed in a patent,how easily the patent could be “policed)”whether it is a pioneer invention,the cost of the related R&D and regulatoryapprovals,whether there are any plans for scientificpublication, andwhat the costs of patenting are versus reli-ance on trade secrecy.

The first factor speaks for itself. The next twofactors require difficult decisions to be made onthe basis of the characteristics of the inventionand the competitive environment. If research todevelop a particular product is widespread andintense (as is the case with interferon), the riskof a competitor developing the invention inde-pendently provides a significant incentive for pat-enting. On the other hand, reverse engineeringby competitors is virtually impossible for mostproducts of micro-organisms because of the vari-ability and biochemical complexity of microbio-logical processes.

The fourth factor, how easily the patent couldbe policed, is especially relevant for processes.Greater protection may lie in keeping a processsecret, even if the microbe and the process couldbe patented. This is especially true for a processthat is only a minor improvement in the state ofthe art or that produces an unpatentable productalready made by many competitors. The commer-cial life of the process might be limited if it werepatented, beause infringement would be difficultto detect and not worth the time and money toprosecute. Reliance on trade secrecy might thenextend its commercial life.

Most companies would patent truly pioneerinventions, which often provide the opportunityfor developing large markets. Moreover, patentsof this sort tend to have long commercial lives,since it is difficult to circumvent a pioneer inven-tion and since any improvements are still subjectto the pioneer patent. Furthermore, infringementis easy to detect because of the invention’s trail-blazing nature. This would be true for processesalso.


High costs for research, development, and reg-ulatory approval of products is a factor in favorof patenting because a company will want to pro-tect its investment. The research-oriented phar-maceutical companies have traditionally relied onpatents for this reason.

The last two factors involve considerations sec-ondary to a product and its market. obviously,any publication of the experiments leading to aninvention forecloses the option of trade secrecy.Also, a company must evaluate the options of pro-tection via either patenting or trade secrecy interms of their respective cost effectiveness.

Plant breeders’ rights statutes

Ownership rights in new varieties of plants arespecifically granted by two Federal statutes: 1) thePlant Patent Act of 1930 (35 U.S.C. ~~161-164) and2) the Plant Variety Protection Act (PVPA) of 1970(7 U.S.C. \2321 et seq.).

The Plant Patent Act, which covers new anddistinct asexually reproduced varieties other thantuber-propagated plants or those found in nature,confers the right on the patent holder to excludeothers from asexually reproducing the plant orfrom using or selling any plants so reproduced,for a period of 17 years. Because of the impossi-bility of describing plants with the same degreeof specificity as machines and the inability torecreate a new plant solely from a written de-scription, this law also liberalized the enablementrequirement; the description need be only as com-plete as “reasonably possible.”

PVPA provides for patent-like protection tonew, distinct, uniform, and stable varieties ofplants that are reproduced sexually, excludingfungi, bacteria, and first-generation hybrids. Thebreeder may exclude others from selling, offer-ing for sale, reproducing (sexually or asexually),importing, or exporting the protected variety. Inaddition, others cannot use it to produce a hybridor a different variety for sale. However, savingseed for crop production and for the use andreproduction of protected varieties for researchis expressly permitted. The period of exclusionis 18 years for woody plants and 17 years forother varieties.

These acts are basically consistent with an in-ternational treaty designed to provide consisten-cy in the international protection of plant breed-ers’ rights—the International Union for the Pro-tection of New Varieties and Plants—known asUPOV. * UPOV has been signed by 16 countries,including all those discussed in this chapter, butnot all of those countries have yet conformedtheir laws to it.

Until the Chakrabarty decision, the Plant PatentAct and PVPA were generally viewed as the solesource of plant breeders’ rights in the UnitedStates. The Chakrabarty decision raises thepossibility of protecting plants under 35 U.S.C.101, because the essential point of the decisionis that a human-made organism is a “manufacture”or “composition of matter” as those terms areused in 101. Further, there is no indication inthe decision that the Plant Patent Act and PVPApreempt protection for plants.

There would be certain advantages and disad-vantages of securing protection of sexually andasexually reproduced plant varieties through101. One advantage is that more than one claimcould be presented, as opposed to the single claimpermitted under the Rules of Practice relating toplant patent applications (37 C.F.R. $1.164) Thiswould allow parts of the plant to be covered aswell as the whole plant. Further, a patent grantunder 35 U.S,C. 101 for a new variety would pro-vide more comprehensive protection against in-fringement in certain situations.

The disadvantages of proceeding under 35U.S.C. ~101 are that other currently irrelevantsections of the patent law would come into play.For example, the Plant Patent Act (35 U.S.C. $162)significantly modifies the disclosure requirementsof 35 U.S.C. $112, simply requiring that the de-scription be as complete as reasonably possible.This would at least theoretically no longer be true.However, the use of depositories for plant mate-rial, as required for micro-oganisms, could satisfythe enablement requirement. A further potentialfactor is the applicability of the nonobviousness

“The Plant Patent Act conforms, but PVPA does not. Since theUnited States is a party to UPOV, some changes in PVPA may benecessary. At this time, however, it is hoped that conformity canbe achieved through administrative practices (45).

Ch. 16—/nte//ectua/ Property Law ● 393

requirement of 35 U.S.C. $103. This test is inher- example, tuber-propagated plants such as pota-ently difficult for plant material. toes, which are not patentable under the Plant

On balance, the Chakrabarty decision is likely Patent Act, would appear to be patentable under

to provide yet another protection option which 35 U.S.C. ‘$101.

can, in certain circumstances, be very useful. For

Comparison of U.S. and foreignintellectual property law

Much of the analysis in this section is based onthe more detailed description of intellectual prop-erty law of the Federal Republic of Germany, theUnited Kingdom, France, Switzerland, and .Japan

found in Appendix r G: Intellectual Property Law.

Patent law

The Federal Republic of Germany, the UnitedKingdom, France, and Switzerland, along withseven other Western European countries, are sig-natories to a treaty that creates a European pat-ent system. That treaty, known as the EuropeanPatent Convention (EPC), went into force on Oc-tober 7, 1977. The EPC establishes a legal systemfor granting European patents through a singlesupranational European Patent Office and a uni-form procedural system with respect to patentapplications. The single European patent applica-tion, if granted, become a bundle of individualEuropean patents, one for each of the countriesdesignated by the applicant. * The EPC system andthe resulting patents exist in parallel with the pat-ent systems of the member countries. Enforce-ment, however, is handled by the individualmember countries. The ultimate goal is for eachof the member countries to adopt in its nationallaw the same substantive law of patents set forthin the EPC. The following discussion comparesthe patent law of the EPC countries and Japanwith that of the United States.

● A proposed European Community Patent Comwntion would takethe EPC one step further by pro~iding for a single patent coleringthe entire European Fxonomic Community,

PATENTABLE SUBJECT MATTER

One of the most difficult problems facing theowners of biological inventions is the inability ofthe law to respond rapidly enough to keep pacewith the development of the technology. This isespecially a problem in the case of the law’s defini-tion of patentable subject matter. Questions aboutwhat constitutes patentable subject matter createa significant degree of uncertainty for owners ofinventions.

One of the basic decisions to be made by ownersof inventions is whether to maintain their inven-tions as trade secrets or to attempt to protectthem by patents. An intelligent decision is near-ly impossible when one does not even knowwhich basic subject matter is patentable underthe laws of particular countries. In the UnitedStates, the trade secret route can still be selectedin the event that no patent protection is ultimatelysecured. In most foreign countries, including theUnited Kingdom, France, the Federal Republic ofGermany, and Japan, however, pending applica-tions are published before it is known whetherpatenting will be possible, thereby providing com-plete and enabling disclosure to the public, in-cluding samples of any deposited micromganismsnecessary to carry out the invention. Such pub-lication usually occurs 18 months after the ap-plication is f i led. This s i tuat ion ef fect ivelyprecludes reliance on trade secrecy once a patentapplication is filed. As a result, there exists inmany foreign countries today considerable dis-incentive to seek patent protection for certaintypes of biological inventions, particularly thoseinvolving basic genetic procedures and the result-ing products. However, with respect to the five

25-561 0 - 84 - 26


foreign countries under study here, much of theuncertainty surrounding subject matter patent-ability of biotechnological inventions has beenresolved.

This uncertainty in many foreign countries mayindirectly discourage U.S inventors from filing forpatent protection in the United States, since thereis no way available at present to confine withinthe United States the culture deposit sampleswhich must be made available once a U.S. patentissues. While enabling disclosure theoretically iscommunicated upon issuance of a U.S. patent toall countries, regardless of whether correspond-ing protection is available or is actually soughtin those countries, it is only in connection withmany biological inventions that an applicant is re-quired to provide also the physical means to carryout the invention, i.e., a self-replicating organism,which in many instances is a “factory” capableof carrying out the invention.

One important aspect of this problem of uncer-tainty in the definition of patentable subject mat-ter is the uncertainty of classification of certaintypes of biological inventions. It is not clear in thecase of certain lower organisms, for example,whether they are to be classified as plants, ani-mals, or something else (e.g., protista) (see, e.g.,15,19). Fortunately, in the United States, it seemsto be a matter of choosing between multiple op-tions for protecting such subject matter by eitherutility patents or plant patents, but in most othercountries, plants and animals are explicitly ex-cluded from patentability. Thus, a definition maybe determinative of patentability.

As a result of the 1980 U.S. Supreme Court’sdecision in the Diamond v. Chakrabarty case, theU.S. definition of patentable subject matter is verybroad. It is broader than that under the EPC orany of the national laws of the five other coun-tries being examined in this assessment. In con-trast to the United States, the EPC, which has avery liberal definition of patentable subject mat-ter, excludes methods for treatment of the humanor animal body by surgery or therapy and diag-nostic methods. Also, the EPC excludes plant andanimal varieties and biological methods for pro-ducing them, which are apparently not excludedby Chakrabarty. In all other respects pertainingto biological inventions, the United States and EPC

appear to permit patenting of the same generalclasses of subject matter. France, Switzerland, theUnited Kingdom, and the Federal Republic of Ger-many follow the EPC, except Switzerland does notallow patents on micro-organism themselves.

Japan’s definition of patentable subject matteris essentially coextensive with the definition ofthe EPC, excluding processes in the fields of medi-cine, diagnosis, therapy, and pharmacology inwhich the human body is an indispensible ele-ment. However, certain microbiological inven-tions could be excluded from patentability inJapan if they are “likely to injure the publichealth.” The situation with respect to plants andanimals in Japan is unclear.

NOVELTY

U.S. law requires the patent application to befiled by the inventor. If two different applicantshappen to have the same invention, the patentwill issue to the one who invented it first. Hence,the U.S. system is called a “first-to-invent” system.The laws of the other five countries, in contrastto U.S. law, permit someone other than the in-ventor (e.g., the employer) to file the patent ap-plication. If there are two applications for thesame invention, the patent will issue to the ap-plicant who filed first. These countries thus havewhat is called a “first-to-file” system. The combina-tion in the United States of a first-to-invent systemwith the provision of a l-year grace period be-tween the date of any publication relating to aninvention and the filing of a patent applicationmakes the U.S. system fundamentally differentfrom nearly all foreign systems, which are gen-erally first-to-file systems are characterized by ab-solute novelty (i.e., allow no grace periods).

This difference manifests itself in connectionwith prior disclosures by the applicant. UnderUS, law, the general rule is that a disclosure ofan applicant’s own invention cannot be used toprevent the applicant from obtaining a patent,unless the disclosure satisfies the requirementsof one of the statutory bars under 35 U.S.C. $102(18). For example, consider the following typesof possible disclosure by an inventor of his or herown work:

I. Communicating with colleagues by tele-phone, letter or in person;

Ch. 16—/nte//ectual Property Law ● 395

a. under expressed confidentiality;b. with no indication as to confidentiality; orc. under expressed nonconfidentiality.

2. Delivering a paper at a conference or semi-nar, orally only.

3. Delivering a paper at a conference or semi-nar, both orally and with a disseminated writ-ten text.

4. Submitting a paper for publication.5. Submitting an abstract prior to a conference

to the conference promoting organization.

Under U.S. law, items 1, 2, 4, and 5 would notbar patentability. * Item 3 will become a statutorybar 1 year after the paper is disseminated in sometangible form, assuming the disclosure was enabl-ing.

Under the laws of the four Western Europeancountries, items 2 and 3 would prevent the grant-ing of a patent if they occurred before the earliesteffective filing date (e.g., before a U.S. applicantfiled a patent application in the United Stateswhich will later serve as a basis for claiming theright of priority in corresponding foreign appli-cations). * * Items 4 and 5 would normally not bara patent, assuming that the paper and/or abstractwere not disseminated to members of the public,(e.g., conference attendees) prior to the actualdate the patent application was filed. This is basedon the implied confidentiality under which sub-missions of this type are usually handled by pub-lishers. Similarly, the concept of expressed or im-plied confidentiality prevents items l(a) and l(b)from constituting prior art under German lawconcepts, which commentators believe will applyto the EPC and other European countries (11). Itappears that even item I(c), in and of itself, doesnot necessarily constitute prior art under Germanprinciples, inasmuch as such a nonconfidentialdisclosure must be available to an u n l i m i t e d

number of persons (43). If the disclosure werelimited to the colleagues contacted and not other-wise made freely available, it would not defeatnovelty of a subsequently filed application. It istoo early to tell how EPC law will develop on thisissue. The same can be said for the United King-dom, where introduction of the EPC noveltystandards represents a significant change fromprior law and practice.

The Japanese law provides a limited 6-monthgrace period for publications and papers pre-sented before scientific organizations. Thus, items1, 4, and 5 would not bar patentability, and items2 and 3 would bar patentability after 6 months.

It must be noted that the above discussion re-garding bars to patents because of lack of novel-ty is predicated on the assumption that the dis-closure is enabling. If the disclosure is not enabl-ing, even a published paper about the inventionwould not bar patentability.

Because of the different approaches with re-spect to novelty, the US. patent law provides acompetitive advantage in that scientific informa -tion can be quickly disseminated in the UnitedStates without forgoing patent rights, if the ap-plication for a patent is filed within a year. Thisadvantage is qualified by the fact that the inven-tor who also wishes to file abroad cannot public-ly disclose the invention until the priority applica-tion is filed. The case of the Cohen-Boyer patenton the rDNA technique is a well-known exampleof a case in which the inventors were able to ob-tain a U.S. patent, even though they had publishedpapers about the techniques, but were unable tofile for foreign patents because of the absolutenovelty requirement in other countries. The prob-able result will be a substantial loss of incomefrom foreign royalties.

● If a paper or proceedings of conference were published, how-ever, then the inventor would be barred if he or she filed a patentapplication more than 1 year after the date the proceedings or paperwere published. A]so if the invention were sufficiently disseminatedso that it was deemed to be “in public use, ” then the int’enter wouldbe barred by sec. 1020)) from patenting it after the expiration ofthe I -year grace period.

● * IInder the Paris LJnion Convention, to which a]] six competitorcountries subscribe, applications filed in any country within I zmonths of the first filing in a member countr} ha~e, as their efl’&’-titw fihng date, the filing date of the first application. ‘1’his is kmmnas the “right of priorit} ,“

UTILITY

The U.S. patent law’s requirement for practicalutility differs slightly from the requirement ofEuropean and Japanese law for industrial appli-cability. The U.S. utility doctrine has been criti-cized by the American patent bar, but has notproved to be a major obstacle for industry (45).It has undoubtedly disadvantaged some research-ers and simultaneously deprived the public of

396 ● Commercial Biotechnology: An International Analysis——— —— .— -.

prompt disclosure of research on, for instance,new pharmacological compounds and processesthat do not yet have an established utility (45).In some cases , ef fort has undoubtedly beenwasted in establishing trivial or unimportant yet“practical” utilities for such inventions in orderto satisfy the U.S. Supreme Court’s definition (45).This problem will affect researchers in biotech-nology to some extent, particularly those work-ing with pharmaceuticals.

On the other hand, the foreign systems presenta different problem of “utility. ” They excludemethod inventions in the field of therapeutic ordiagnostic treatment, at least those involving treat-ment of humans, as not being part of “industry. ”Thus, certain types of biological inventions (e.g.,monoclinal antibody diagnostic assays) will notbe patentable in EPC member countries or pos-sibly in Japan, although patent protection can beobtained for them in the United States. This is,in most cases, not a serious obstacle, since patentprotection is not precluded for the materials thatare used in the excluded methods or the productsof those methods.

DISCLOSURE REQUIREMENTS

U.S. disclosure requirements are stricter thanthose of the EPC and Japan. The U.S. law requires(35 U.S.C. l12):

● a written description of the invention,● enablement both with respect to “how to

make” the invention and also with respect to“how to use” the invention, and

. a disclosure of the best mode known t. th e

inventor for carrying out the invention as ofthe time of filing.

As to the basic enablement standard, however,U.S. law does not differ substantially from theforeign laws. Under the U.S. law, the test ofenablement is whether the invention can be car-ried out by a person of ordinary skill in the artwithout “undue experimentation” (30). This isanother way of stating the requirement for “re-producibility” which is fundamental to Europeanlaw.

As previously mentioned, compliance with theenablement requirement creates serious difficul-ties for many biological inventions, because such

intentions may have been produced by randommutation and selection or another procedure thatcannot be repeated with the certainty of obtain-ing the same results. The solution that has beenadopted essentially worldwide is to permit adeposit of the appropriate biological material ina depository, from which samples will be madeavailable to the public.

The Federal Republic of Germany’s requirementfor reproducibility raises additional obstacles topatenting a micro-organism itself. It requires thata patent application describe a repeatable proce-dure for reproducing with certainty the depositedorganism apart from the deposit itself (i.e., “fromscratch” so to speak) before a patent can begranted on the organism per se. This is not re-quired if one claims only a method of using sucha deposited organism. Thus, this requirement, ineffect, could preclude patents on many micro-organisms.

Neither the EPC countries nor Japan specify abest mode requirement in their respective laws.In the United States, the best mode requirementarguably requires the best producing micro-organism strain to be deposited, but this issue isnot resolved.

The written description of the invention re-quirement under U.S. law is not articulated assuch in foreign laws, but a requirement similarin principle is applied in some situations underthe laws of most countries.

DEPOSIT REQUIREMENTS

At present, uncertainty regarding the depositrequirements exists in many countries. The cir-cumstances under which a deposit is necessaryare not clearly spelled out. Moreover, before re-ceiving a substantive examination on this ques-tion in the EPC, for example, the patent applicantmust take action that has the effect of making thedeposit, and also access thereto upon publicationof the application, irreversible. In the UnitedStates, the same basic uncertainty exists, but theapplicant need not make a commitment until aftersubstantive examination is completed. *

*,% a practical matter, however, if patent protection is soughtin other countries, this irret’ersible effect will have taken placealread~’, prior to conclusion of the examination in the CJnited Statesberause of the l%nontb publication prartice in other countries.

Ch. 16—Intellectual Property Law ● 397—

The United States does not have any explicit de-posit requirements in the patent statute or rulesthereunder. For deposits necessary in order tocomply with the enablement requirement, how-ever, certain requirements for the deposit havebeen developed by aciministrative action (S O) andcourt decisions.

As far as timing and location of deposit, the U.S.practice is basically consistent with the practicemost countries, i.e., the deposit is to be made nolater than the patent application filing date andat a recognized depository (so). The United Statesdoes not have a specific list of recognized deposi-tories and therefore maintains more flexibilitythan the EPC and certain national offices that dohave such lists. Of course, the United States alsorecognizes deposits meeting the requirements ofthe Budapest Treaty.

The U.S. Patent and Trademark office has re-quired only that deposited cultures be maintainedfor the life of the U.S. patent (although any depositmade under the Budapest Treaty must be main-tained for a minimum of 30 years). The EPC andmany European countries have opted to apply thelonger period of the Budapest Treaty to any de-posit made in accordance with national law. Thiswill require additional costs for the applicants inthose countries.

Samples of deposited micro-oganisms becomeavailable to the public under U.S. practice at thetime the patent issues, after which time no restric-tions on access are permitted. The situation in theUnited States is quite different than that in theEPC countries and Japan. In the EPC countries(except for Switzerland) and Japan, patent applica-tions are published approximately 18 monthsafter the effective filing date. Such publication,which also makes the deposit publicly available,may place foreign applicants at a disadvantage.

On the other hand, under many foreign sys-tems, including the EPC, the patentee is entitledto maintain certain limited restrictions on thosereceiving samples of the deposited culturethroughout the life of the patent. The restrictionsalso apply to cultures derived from the originalone (EPC Rule 28(6)). The Federal Republic of Ger-many also allows territorial restrictions to beplaced on deposited micro-organisms.

potential problems exist in the present depositsystem as a result of import/export restrictionsimposed by countries. In one case, a German ap-plicant was unable to perfect a deposit in a US.depository (one of two in the world which ac-cepted his type of cell line) within the 12-monthpriority period because of health-oriented importrestrictions imposed by the United States (9). Itis also possible that a patentee could lose his orher rights entirely in a given country if that coun-try imposed restrictions on the import of samplesof a culture in a foreign depository that is other-wise recognized by its patent office. The sameresult could occur if the country in which thedepository is located refuses to permit export ofsamples of the deposited culture. In the latter in-stance, however, the Budapest Treaty permits asecond deposit to be made in another depositorywithout loss of deposit date.

CLAIM PRACTICE

Claim practice in the United States is extreme-ly liberal and is regulated primarily by the re-quirement for definiteness contained in the sec-ond paragraph of 35 U.S.C. $112. This fact, togeth-er with the fact that patentable subject matter inthe United States is generally less restricted thanin most other countries, results in an very broadfreedom for an applicant to claim his or her in-vention in a U.S. patent application.

There is a dearth of experience with claims di-rected to the relatively new inventions of biotech-nology, and the EPC itself is too new for any sig-nificant precedent. Existing precedent primarilyinvolves processes for the use of micro-oganisms.

Under U.S. practice, biological inventions canbe claimed in many different ways. In additionto process claims directed to methods of geneticmanipulation, t h e p r o d u c t s t h e r e o f c a n b eclaimed with regard to their structure, or if theirstructure is not known, with regard to theirchemical and/or physical characteristics or interms of the process steps for preparing them.Despite this flexibility, however, the previouslydiscussed Jackson case (24) indicates that the U.S.Patent and Trademark Office may impose signifi-cant limitations on the breadth of claims.


Some of the patent offices in foreign countrieshave taken positions similar to that taken in theJackson case. Switzerland and Japan have refusedto grant claims that are broader than the spe-cific microorganisms disclosed in the applicationand deposited (Swiss Patent Ordinance, Section15.15.3, May 12, 1980; Japanese ExaminationGuidelines).

There is little reported precedent regarding ju-dicial interpretation of claims pertaining to bio-logical inventions in infringement cases. Never-theless, one can extrapolate from general prin-ciples of claim interpretation in the various for-eign patent systems. The law in most countriesprovides for application of the doctrine of equiva-lents in some form, although in some countries,including Japan, the scope of equivalents is ap-parently very limited. As a general rule, it can besaid that the scope of equivalents must be deter-mined on a case-by-case basis, depending on fac-tors such as the degree of unpredictability of thetechnology (i.e., equivalents must be obvious topersons of ordinary skill) and the degree of ad-vance which the claimed invention exhibits overthe “prior art .“ The more unpredictable the sub-ject matter, the smaller the scope of equivalents,whereas the more pioneering the invention, thebroader the scope of equivalents. Biological inven-tions typically involve highly unpredictable phe-nomena; thus, claims are likely to be narrowlyinterpreted.

Even if it is assumed that a reasonable degreeof equivalents will be given for biological inven-tions, the next problem is to determine what con-stitutes an equivalent. No precedent is available,and, of course, the determination will be madeon a case-by-case basis. It would seem that goodarguments can be made to the effect that closelyrelated strains of the same species can be lookedon as equivalents, that different species normal-ly would not constitute equivalents, and thatmutants of the basic strain would, in most in-stances, be expected to have equivalent proper-ties to the basic strain (see 8).

ENFORCEMENT

The United States, the four European countries,and Japan define patent infringement in similarways. The major difference is that, unlike the

other countries, the United States does not grantextraterritorial effect to process patents by defin-ing as infringement the importation of a productmade by the patented process without the author-ization of the patent owner.

The United States grants the basic remedies ofinjunction and monetary damages for infringe-ment (35 U.S.C. $283, $284), as well as reasonableattorneys’ fees to the prevailing party in excep-tional cases (35 U.S.C. $285). The foreign coun-tries provide for similar remedies. There are nocriminal penalties provided under the U.S. patentstatute, contrary to many foreign patent laws.

Enforcement of patents claiming biological in-ventions involves unique problems. The first issimply identification of infringing activity. Manyof the products will be unpatentable for lack ofnovelty and will be manufactured in small quan-tities. Thus, it will be difficult to determine if acompeting product infringes one’s patented proc-ess. In addition, strains of micro-organisms canbe altered through mutation and other modifica-tion techniques to produce different organismsthat possess the same basic characteristics of theprotected organism.

It may prove to be an essential, or at least im-portant, element of the case for the patentee toestablish that the alleged infringer actually de-rived his or her organism from a sample obtaineddirectly or indirectly from the culture deposit ofthe patentee’s organism. Without adequate con-trols on the access to samples of deposited strains,proof of this fact will be extremely difficult.

Proving the identity and equivalence of the pat-ented microorganism with an allegedly infring-ing microorganism can also present difficultproblems for the present state of this technology.The technology is still sufficiently undevelopedthat much room exists for honest differences ofopinion among experts. Most questions of in-fringement will probably turn out to be a battlebetween the respective parties’ expert witnesses,until more objective criteria are established.

Trade secret law

Of the countries considered in this assessment,the Federal Republic of Germany seems to have


the strongest statutory system for the protectionof proprietary information, and its courts aremost consistent in enforcement of those statutes.Switzerland’s system, which closely resemblesWest Germany’s, has also been very effective inprotecting such information. However, Swiss lawdoes not recognize as trade secrets the secretsheld by professors, scientists, and others notengaged in a business (45). This could affect theexploitation of commercial rights by educationalinstitutions in Switzerland.

The United States and the United Kingdom ap-pear to be slightly less effective than the coun-tries just mentioned in protecting proprietaryinformation. The British courts emphasize the‘(confidential” over the “secret” aspects of suchinformation. Breaches of confidence are thereforenot tolerated, regardless of whether the particularinformation misappropriated fits within a pre-established “trade secret” category. The U.S.courts often overlook the breach of obligationaspect of misappropriation and concentrate ondetermining whether or not the information qual-ifies as a ‘(trade secret. ” As a result, misappro-priators of confidential information are some-times held not liable in the United States, whereasthey would be held liable for the same activityin the United Kingdom (45). Nevertheless, U.S.courts have shown much greater flexibility thantheir British counterparts in fashioning remediesthat prevent the use of misappropriated informa-tion. Furthermore, U.S. law provides for crimi-nal penalties in addition to the usual civil rem-edies provided for under U.K. law. Finally, thesheer mass of successful trade secret cases, in-cluding favorable rulings from the U.S. SupremeCourt in the Kewanee case (38) and in AronsonV. Quick point (4), indicates that the United Statesis probably more effective than the United King-dom in safeguarding such information (45).

France does not have as strong a system for pro-tection of proprietary information as the UnitedKingdom or the United States. French courts havebeen rather restrictive in defining the types ofinformation that may receive protection and moreprotective of the employee who leaves with theemployer’s confidential information than thecourts in other industrialized countries (45).

The protection of proprietary information inJapan has been improving over the last two dec-ades, but still is not on a level with the protec-tion in the United States or the major Europeancountries. As Japan continues its developmentfrom a technology-importing country to a tech-nology-generating country, further progress inthis area may be expected (45).

Plant breeders’ rights

CHOICE OF TYPE OF PROTECTION

A breeder of asexually reproduced varieties ofplants in the United States will normally proceedunder the Plant Patent Act, However, 35 U.S.C.$101 may provide a viable option. Although ad-ditional disclosure requirements for asexually re-produced plant material will be required (e.g., thedeposit of plant material in a satisfactory deposi-tory), this is not an onerous burden. Moreover,with the depository, there is the additional advan-tage that the patented plant material will be avail-able during the life of the patent for comparisonpurposes with any alleged infringing varieties.The public would also be able to practice the in-vention when the patent expired.

For sexually reproduced plant varieties, theprincipal advantages of proceeding under 35U.S.C. $101, as opposed to PVPA, are the substan-tially reduced costs of filing a patent application(as opposed to an application under PVPA)* andthe possible increased protection afforded by thepatent as opposed to the protection certificateissued pursuant to PVPA. Moreover, whereas nu-merous judicial decisions have been renderedunder the patent statutes, judicial interpretationof PVPA is relatively limited.

In the United Kingdom, the Federal Republicof Germany, Switzerland, France, and Japan, asingle statute covers both sexually and asexuallyreproduced plant varieties. As previously noted,protection is in the form of protection certificatesrather than patents. Therefore, there is no choiceof the type of protection obtained in these coun-tries.

“The cost of filing an application under PL’PA is $1,000, as com-pared with the cost of filing a utility patent application f$15tI forsmall entities and $300 for others).

400 ● Commercial Biotechnology: An International Analysis. —

LIMITATION ON PROTECTABLE VARIETIES

In the United States, only tuber-propagatedplants or plants found in an uncultivated state areexcluded from protection under the U.S. PlantPatent Act. As a practical matter, this exclusionaffects only the Irish potato and the Jerusalemartichoke. All other plant varieties that can bepropagated true to type through asexual repro-duction can be protected. Similarly, under PVPA,only first-generation hybrids are excluded, andall other varieties otherwise meeting the act re-quirements can be protected.

In most countries other than the United States,by contrast, the number of specific genera or spe-cies that can be protected is restricted. The 19 7 8UPOV Text requires only a very limited number

of designated genera or species for a country tocomply with the provisions of the text. Thus, theprotection provided in the European countriesand Japan is relatively limited when comparedwith the all-encompassing protection provided bythe U.S. Plant Patent A& ‘and PVPA -.

EFFECT ON COMPETITIVENESS

With respect to plant breeders’ rights,provides a competitive advantage over the othercountries. The scope of protection is much broad-er in terms of the tvpes of varieties than can he.protected, andoption of using$ 101).

U.S. law provides 101 of the patent

the additionallaw (35 U.S.C.

Evaluation of effectiveness of intellectual property lawto promote the development of biotechnology

United States

U.S. patent law embodies a number of pro-innovation features: a “first-to-invent” systemcoupled with a l-year grace period; secrecy of theinvention subject matter until grant of the patent;and, as a result of the latter, no requirement forowners of biological inventions to grant accessto deposited cultures until after protective rightshave been established. These features provide in-centive for owners of biological inventions toutilize the patent system, thereby making theirinventions known to the public to aid further de-veloprnent. They also provide a sufficient periodof time for the patentee to develop a leading posi-tion in the technology before being forced to handover his or her enabling disclosure (includingmeans for immediately practicing the invention,in the case of culture deposit samples) to com-petitors, both domestic and foreign. The “first-to-file” systems in the other competitor countriesdo not provide these advantages to applicants.

Another strength of the U.S. system is thechoice of protection routes it now offers to in-ventors. Developers of new varieties of plants can

now choose between the special plant proprovisions of the law and the possibilitytaining a utility patent.

The 1980 Chakrabarty decision has far g

ectionof ob -

reatersignificance than merely holding that living orga-nisms constitute patentable subject matter underU.S. law. It, together with other recent cases, rep-resents the first truly positive pronouncement inmany decades from the U.S. Supreme Court re-garding the role and value of the patent systemin promoting and maintaining technological com-petitiveness of U.S. industry (37,45 ).* This shouldhave an effect on the way in which the lowercourts will treat patents in the future. In addi-tion, creation of the new Court of Appeals for theFederal Circuit should provide uniformity andconsistency at the appellate level, as well as a bodyof law that is well informed and respected bythose whom the patent laws serve. The impor-tant role of trade secret protection has been re-af f i rmed by the Supreme Court in i ts 1974

“Jus[ire Jarkson uas prompted to state in his dissenting opinionIn JIJngPrSOn y’ OS(QJI & Barton [.’(J. (35) that: “The only patent thatis \ a]i(! is onf~ ~~hirh this (:ourt hus not heen ahk> to get its hands 01]. ”

Ch. 16—Intellectual Property Law . 401

Findings


organisms per se to be patented. A major depar-ture from U.S. law under the EPC and in Japanis the exclusion from patentability of therapeuticand diagnostic methods.

Japan appears to be moving in the direction ofproviding significant patent protection for bio-technology products and processes. One possibleobstacle, however, is that Japan has strict healthand safety guidelines regarding genetic research,which may bar patenting of genetically manipu-lated organisms viewed as hazardous,

The concept of utility in the patent laws of mostforeign countries is based on industrial (includingagriculture) applicability, which differs in inter-pretation from the utility standard in the UnitedStates. In countries with the former concept, in-cluding the five foreign countries discussed in thischapter, even products and processes of scientif-ic research satisfy the utility requirement, as longas the basic endeavor falls into the broad categoryof industry; however, therapeutic and diagnosticmethods do not. In the United States, certainchemical products and processes of research in-terest only are considered not to satisfy the util-ity requirement. The fact that utility under U.S.law includes utility in the therapeutic and diag-nostic fields, however, helps U.S. competitivenessin biotechnology.

The four European countries studied here havean absolute novelty standard, with no graceperiod for either oral or written disclosures ofan invention by the inventor before the date heor she files an initial patent application coveringthe invention. The United States has a l-yeargrace period, and Japan has a limited 6-monthgrace period for presenting scientific papersbefore filing a patent application. In all of thecountries, the novelty defeating disclosure mustbe enabling. Thus, the notion that any disclosurebefore filing a patent application will bar patent-ability is incorrect.

Most countries have a disclosure standard forinventions based on the concept of enablement.This standard typically includes an aspect of re-producibility, i.e., an invention must be repeat-able with a fair degree of certainty and the resultsmust not be merely randomly achievable. Particu-lar problems in satisfying the disclosure stand-

ard have been encountered up until now in con-nection with many biological inventions. Thissituation has led to the practice of requiring aculture deposit of new micro-organisms used tocarry out an invention or forming the subject mat-ter of the invention. The Federal Republic of Ger-many has refused to grant patent protection onmicro-oganisms themselves in those cases wheredisclosure of a reproducible method for produc-ing the micro-organism cannot be given apartfrom a culture of the micro-organism itself.

In those countries that publish unexamined pat-ent applications (all but the United States and Swit-zerland of the six competitor countries), a seriousproblem for owners of biological inventions is thefact that deposited cultures can become publiclyavailable before any patent rights are granted.Although the access to deposited cultures usual-ly is granted with some safeguards in the formof assurances given by the recipient, these safe-guards often do not adequately protect the validinterests of the technology owner (e.g., they usu-ally are not geographically limited or do notrestrict the activities of the recipient to only ex-perimental use). In fact, it may be desirable tohave some restrictions on access even after thepatent grant, in view of the fact that the patenteemust furnish a “working model” of the invention,which patentees in other fields are not requiredto do.

Because of the nature of biotechnology, specialproblems are faced by patentees in the enforce-ment of their rights. Apart from the general prob-lems of policing for infringement, the possibilitiesfor disguising the use of a biological invention bygenetic manipulation will present difficult ques-tions of law and fact. The law and practice ofclaim interpretation in this field are in their in-fancy. In the present state of the technology, itis likely that patent-granting authorities generallywill limit claims to the specific organisms or partsthereof disclosed in patent applications.

All of the countries studied provide some ele-ment of legal protection for trade secrets. Mostaspects of biotechnology lend themselves to pro-tection via the trade secret route, and owners ofsuch technology may rely on trade secrets whenpatent rights are uncertain or when they judge


trade secrecy to be more advantageous in a par-ticular case.

With the major international and national ef-forts regarding plant variety protection, culminat-ing in the 1978 UPOV treaty, there is a trendtoward providing such protection without requir-ing satisfaction of any enablement standard. Thenature of the protection for plant varieties is dif-ferent from traditional patent protection in thati t protects bas ical ly against der ivat ion andcopying.

The U.S. intellectual property law system appearsto offer the best protection for biotechnology ofany system in the world. In general, it appearsthat the United States offers protection for broad-

est scope of biological subject matter, especiallybecause of the 1980 ruling by the U.S. SupremeCourt in the Diamond v. Chakrabarty case (21)that the inventor of a microorganism could notbe denied a patent solely because the inventionwas alive. The United States also offers some ofthe best procedural safeguards for inventors, in-cluding the l-year grace period and no publica-tion of the patent application before patent grant.In addition, the United States offers a choice ofprotection to plant breeders. Finally, the tradesecrecy protection “offered in the United Statesis as good as that offered in most countries, withthe exception of the Federal Republic of Germanyand Switzerland.

Issue and options

I S S U E : H o w c o u l d C o n g r e s s i m p r o v e U . S .competi t iveness in biotechnology bystrengthening U.S . inte l lectual prop-er ty law?

Option 1: Pass a statute specifically covering livingorganisms and related biological inventions,

The advent of the new biotechnology has raisedquestions in the United States regarding what in-ventions will be patentable, under what condi-tions, and what the scope of protection will be.Although the Diamond v. Chakrabarty case in1980 answered in the affirmative the basic ques-tion of whether Iiving organisms would be patent-able, other questions remain.

A statute specifically covering living organismsand related materials could help resolve this un-certainty. Greater certainty would allow com-panies to plan their R&D and marketing strategiesbetter and in some cases would lower the finan-cial risks involved. The result should be increasedinnovation. The alternative is to rely on case-by-case developments in the U.S. Patent and Trade-mark Office and the courts. Patent litigation is ex-tremely expensive and may be unaffordable forsmall, new biotechnologgy firms.

Another argument in favor of a special statuteis that it could help patentees to secure better

ownership rights in biological inventions. The ex-isting U.S. patent law was developed primarily forinanimate objects and processes. Living organismsare fundamentally different. Unlike a machine,a living organism reproduces itself and occasional-ly mutates during its lifetime. Furthermore, a liv-ing organism is extraordinarily more complexthan any machine. Although the inventor of themost complex machine knows all of its parts andunderstands completely how it functions, no oneknows all of the components of the simplestmicro-organism or understands completely howit functions. Finally, many biochemical pathwaysin an organism are not unique to that organism;because there are many different ways to pro-duce a product, a patent on one of the ways mayprovide only limited protection. In the case ofbiological inventions, therefore, there may beproblems in meeting the enablement and writtendescription requirements, in securing an adequatescope of protection for inventions, and in polic-ing for infringement.

The complexity of living inventions will makeit difficult to fully describe them, Although depos-iting a microorganism in a culture collection maycircumvent these difficulties with regard to en-ablement, it may be of little help in establishingnovelty and the bounds of patent protection. Mi -


crobial taxonomy is an imprecise art. Micro-organisms have different characteristics in dif-ferent environments, and taxonomists often dis-agree on their classification and description. Thus,it may be impossible to distinguish sufficiently amicro-organism for patent law purposes fromsimilar ones created by other inventors or fromones existing in nature.

The fact that organisms reproduce may requirea change in the definition of infringement. Thelaw currently defines infringement as the un-authorized making, using, or selling of the pat-ented invention. If someone took a patented or-ganism from a public depository, reproduced it,and gave it away to many users, would this beinfringement? One could argue that the persondid not “make” the invention.

The fact that organisms mutate may cause prob-lems with respect to the scope of the claims andinfringement, For example, if a patented organismsubsequently mutated, it might no longer be with-in the scope of the claims. Also, if the depositedorganism is the standard against which infringe-ment is measured, a patent holder may have dif-f icul ty enforcing the patent i f the organismmutated after it had been deposited. On the otherhand, culture deposits generally are preserved byfreezing, so mutations may not be much of aproblem.

Finally, there is the problem of adequately pro-tecting a product that can be made many differentways, only some of which may be known at thetime the patent application is filed. For example,because of the degeneracy of the genetic code,a particular protein can be made by various basesequences. Claiming a particular sequence willprovide insufficient protection, and claiming theprotein will not help if the protein is not novel.Claiming the novel organism is one solution, butothers can easily construct different organismsto produce the same product.

These problems have been addressed in PVPA(and to a lesser extent in the Plant Patent Act),which could be used as a model. For a plant varie-ty to be protected under PVPA, for example, itmust be distinct, uniform, and stable. The defi-nitions of these terms embody the concept thatit is necessary only to know the important char-

acteristics of a new plant variety in order todistinguish it from others and that only thesecharacteristics need to be stable through succeed-ing generations. In addition, PVPA defines in-fringement to include unauthorized reproduction.If this approach were taken, the plant acts couldbe subsumed in the new statute.

There are several arguments against this option.First, any new technology raises questions aboutthe scope and nature of patent protection, andmany of these will only be able to be resolved ona case-by-case basis rather than by statute. Sec-ond, most patent attorneys argue that the patentlaws are flexible enough to accommodate any newtechnology, including biotechnology. Third, de-spite the possible limitations in applying the pa-tent law to living organisms, utility patents actual-ly may provide the patentee with the greatestdegree of protection when compared to the pro-tection provided by a statute like PVPA. One ofthe principal reasons is that a multiplicity ofclaims is permitted for utility patents, which couldcover components of organisms, whereas just theplant itself (and its seeds) is covered by a plantvariety protection certificate. Fourth, many ex-perts would argue that since the Chakrabarty caseresolved the fundamental issue—the patentabilityof living organisms —there is no need to under-take the major effort needed to pass legislationto solve more minor problems. In addition, sincethere is some degree of public sentiment againstpatenting living organisms, the fundamental issuealso would be raised again. Finally, a new statutewould create its own new issues and questionsof interpretation.

Option 2: Allow patentees to place restrictions onmicro-organism cultures supplied to thirdparties.

U.S. patent law requires complete and enabl-ing disclosure of an invention in order to placeit in the public domain. In the case of patentedmicro-organisms, the patentee is in effect re-quired to turn over more than his or her inven-tion—the micro-organism is virtually a complete“factory” ready to begin production. For thisreason, inventors may be more inclined to relyon trade secrets than on patents, and the publicwill not gain the benefits of the new knowledge

Ch. 16—Intellectual Property Law . 405

Chapter 16 references*

—


12. Brenner v. Manson, 383 U.S. 519, 153 U. S.P.Q. 45(1966).

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34

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Ch. 16—Intellectual Property Law ● 407

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