An Examination of the Issues Surrounding Biotechnology Patenting and its Effect Upon Entrepreneurial Companies
CRS Report for Congress
An Examination of the Issues Surrounding
Biotechnology Patenting and Its Effect Upon
Entrepreneurial Companies
August 31, 2000
John R. Thomas
Visiting Scholar in Economic Growth and Entrepreneurship
Resources, Science and Industry Division
Congressional Research Service ˜ The Library of Congress
An Examination of the Issues Surrounding Biotechnology
Patenting and Its Effect Upon Entrepreneurial Companies
Summary
The biotechnology industry is notable both for its heavy concentration of small
businesses and its weighty research and development (R&D) expenditures. Given the
small size and heavy expenses of many biotechnology firms, their ability to raise
venture capital may be of some consequence. The patent law has been identified as
a facilitator of these R&D financing efforts.
Although many observers believe that the patent law plays a significant role in
the biotechnology industry, two principal issues have arisen regarding biotechnology
patenting. First, observers have fundamentally questioned whether patents should be
granted for living inventions, genetic materials and other biotechnologies. Ethical
issues, concerns that biotechnology patenting promotes animal suffering and decreases
genetic diversity, as well as regard for the traditional agricultural community animate
many of these objections. Supporters of biotechnology patenting counter that trade
secret protection is a less attractive social alternative, observe that patents have long
been granted for biotechnologies, and question whether the patent law is the
appropriate vehicle for technology assessment.
Commentators have also differed over the extent to which an inventor must
show a specific, practical use for a biotechnology in order to be awarded a patent.
Some observers favor a strict view of the utility requirement due to concerns over
overlapping upstream patents that discourage research and commercialization. Others
believe that the utility requirement should be applied leniently, stating that a strict
view of utility will only lead to industry concentration and that biotechnology research
tools cannot be meaningfully distinguished from other sorts of inventions.
Congress may choose to exercise oversight on these issues. Such consideration
would likely include examination of U.S. commitments in international agreements
along with other factors.
Contents
Introduction ................................................... 1
The Biotechnology Industry: An Overview............................2
Cloning ................................................... 3
Gene Therapy..............................................3
Genetically Modified Organisms.................................4
The Human Genome Project...................................5
Research Products...........................................5
Therapeutics ............................................... 6
The Role of R&D Funding in the Biotechnology Industry.................7
Core Principles of Patenting Biotechnology............................9
The Patent Eligibility of Living Inventionsand Genetic Materials...........11
Objections to Patenting Biotechnology...........................14
Benefits of Patenting Biotechnology.............................16
The Chimera Application.....................................18
The Utility Requirement.........................................18
Proponents of a Strict Utility Standard...........................24
Proponents of a Lenient Utility Standard.........................25
Legislative Issues and Options.....................................26
Patent Eligibility............................................26
The Utility Requirement......................................28
This report was prepared under the supervision of Wendy H. Schacht.
An Examination of the Issues Surrounding
Biotechnology Patenting and Its Effect Upon
Entrepreneurial Companies
Introduction
Biotechnology may be broadly defined as the application of biological systems1
and organisms to technical and industrial processes. The discipline of biotechnology
may be traced to the 1944 identification of deoxyribonucleic acid (DNA).2 This
discovery commenced a significant research effort that culminated in the sequencing
of the human genome in 2000.3 The biotechnology industry has provided many new
technologies, including diagnostic kits, DNA fingerprinting, protein synthesis, enzyme
engineering, and transgenic plants and animals.4 Many observers forecast that the
completion of the human genome project will bring even more spectacular advances
in the future.5
The biotechnology industry is notable both for its heavy concentration of small
businesses and its weighty research and development (R&D) expenses. In 1998, a
total of 1,283 biotechnology firms participated in the domestic biotechnology market.
More than two-thirds of these firms employed fewer than 135 persons, and
approximately one-third employed less than 50 persons.6 The prominence of small
biotechnology enterprises belies the enormous expenses that must be devoted towards
R&D in this market. The U.S. biotechnology industry is one of the most research-7
intensive endeavors in the world, with $9.9 billion devoted to R&D in 1998.
1 Young, Frank E., Biotechnology and the Federal Food and Drug Administration, Forum for
Applied Research and Public Policy (1987), 80.
2 Weston, Cliff D., “Chilling of the Corn: Agricultural Biotechnology in the Face of U.S.
Patent Law and the Cartagena Protocol,” 4 Journal of Small & Emerging Business Law
(2000), 377.
3 Zawislak, Mike, “Genome project is just the start, director says,” Chicago Daily Herald (23
July 2000), 1.
4 Weston, supra note 2, at 377.
5 E.g., Atroley, Akansha, “Human Genome Project: Decoded,” Computers Today (31 July
6 See Biotechnology Indus. Org., 1998-99 BIO’s Guide to Biotechnology, available at
[http://www.bio.org/aboutbio/guide2000/facts.html].
7 Ibid.
Given their small size and heavy expenses, many observers believe that firms in
the biotechnology industry rely upon their ability to raise venture capital.8 The patent
law has been identified as a facilitator of these R&D financing efforts. Absent patent
rights, a biotechnology concern may have scant tangible assets to sell or license. By
providing members of the biotechnology industry with enforceable proprietary
interests in their inventions, the patent law is said to expedite capital infusion and
technology transfer.9
Although many commentators believe that the patent law plays a crucial role in
the biotechnology industry,10 numerous legal, economic and policy issues have arisen
concerning the patenting of biotechnology. This report considers these issues,
emphasizing the effect of intellectual property rights upon small, entrepreneurial
companies. This study first profiles the biotechnology industry, including a review of
its principal technologies and need for R&D funding. It next provides an overview
of the patent system and its relationship to the biotechnology industry. This report
then reviews two principal patentability requirements, statutory subject matter and
utility, and their application to biotechnologies. It closes with a discussion of
legislative issues and options for biotechnology patenting.
This study suggests that patents play a significant role in the ability of small,
entrepreneurial firms in the biotechnology industry to acquire capital for R&D.
Experience teaches that investors may be wary of uncertainties surrounding patent
rights, leading to diminished capital infusions into the biotechnology market.
The Biotechnology Industry: An Overview
The birth of the U.S. biotechnology industry dates to the founding of Genentech,
Inc., in 1976.11 Biotechnology today is a growing sector of the domestic economy.
The industry essentially doubled in size between 1993 and 1999, generating $20
billion in revenues in 1999.12 Biotechnology companies directly employed 150,800
persons in 1999, with an additional 286,600 persons employed by companies
supplying goods or services to the industry.13
8 Weston, supra note 2, at 377.
9 Merges, Robert P., “Intellectual Property and the Costs of Commercial Exchange: A
Review Essay,” 93 Michigan Law Review (1995), 1570.
10 Goozner, Merrill, “Suit Puts Biotech Drug Sales on the Line Patent Trial May Spur
Competition on Prices,” Chicago Tribune (16 May 2000), 1.
11 Gladwell, Malcolm, “Top Biotech Firm Sold to Swiss Company,” Washington Post (3 Feb.
12 See Biotechnology Indus. Org., 1998-99 BIO’s Guide to Biotechnology, available at
[http://www.bio.org/aboutbio/guide1.html].
13 Ernst & Young, The Economic Contributions of the Biotechnology Industry to the U.S.
Economy (May 2000).
The domestic biotechnology industry includes a handful of large companies with
a substantial market share.14 However, “a typical biotech R&D company is a small
start-up with all its financial and human resources invested in the development of one15
or two products or technologies.” It is often the case that a promising technology
is discovered and preliminarily developed by a small enterprise. A large
biotechnology firm then acquires the smaller enterprise, or its intellectual property
rights, in order to bring the technology to market.16
Domestic enterprises enjoy a commanding position in the global biotechnology
industry. The U.S. biotechnology industry is the acknowledged world leader in
biomedical research, benefitting the health of U.S. citizens, creating tens of thousands17
of jobs and improving our balance of trade. The biotechnology industry is also
diverse, employing its technologies in medicine, industrial processes, environmental
cleanup, food, agriculture and numerous other applications. A brief review of some
principal biotechnologies follows.
Cloning
Biotechnology has recently introduced the technique of cloning. Cloning employs
DNA from one animal to produce a genetically identical animal.18 Cloned organisms
may be created by fusing a cell from one organism with an immature reproductive cell
from a second organism. The second cell is then stimulated to replicate. The cells, if
placed into an appropriate womb, will result in the live birth of an animal genetically
identical to the one from which the original DNA was taken. In the case of Dolly, the
sheep cloned in 1997 in Scotland,19 an udder cell was fused with an unfertilized egg
cell from which the nucleus had been removed, and the cell mass grown was then
implanted in a sheep womb.
Gene Therapy
Scientists may introduce a gene directly into a patient through a technique called
gene therapy. This method involves the insertion of a gene into the cells of a
gene-deficient patient, either to correct a genetic error or to introduce a new function
14 Graham, Lawrence S., “Equitable Equivalents: Biotechnology and the Doctrine of
Equivalents After Warner-Jenkinson Co. v. Hilton Davis Chem. Co.,” 6 Journal of Law and
Policy (1997) 741, 742 n.6 (observing that five biotechnology enterprises – Amgen, Chiron,
Genentech, Quintiles, and Genzyme – collectively enjoyed a 70% market share in 1996).
15 High Tech Publishing Co., “Profiles of Success in Biotechnology: A Competitive Analysis
of Major Biotechnology Companies, Biotechnology Investment Opportunities,” (1 Sept.
16 Weston, supra note 2, at 377.
17 See Mack, Connie, “President’s poison pill hurts research,” Tampa Tribune (17 April
18 “Firms Will Try to Clone Pigs,” Washington Post, (24 July 1998), A24.
19 Walbolt, Kristen, “Dolly Has Three Mommies,” Sun-Sentinel (Ft. Lauderdale) (2 March
into the cell. The National Institutes of Health (NIH) first performed gene therapy on
a human patient in 1990.20 NIH scientists took blood cells from a four-year-old girl
suffering from an immune disease caused by the lack of a specific enzyme, adenosine
deaminase (ADA). They then introduced a functioning ADA gene into those cells,
which were then returned to the patient’s bloodstream.
Throughout the 1990's, thousands of patients were treated with various sorts of21
gene therapy on an experimental basis in the United States. The death of a patient
undergoing experimental treatment in late 1999 has chilled gene therapy efforts,
however.22 A subsequent inquiry revealed indications of unacceptable scientific
conduct and monitoring.23 These findings prompted both investigations by Congress24
and the Food and Drug Administration as well as suspensions of similar gene
therapy programs elsewhere.25
Genetically Modified Organisms
A specific gene may itself be used to endow its possessor with new properties
or functions.26 The agricultural division of the biotechology industry is based upon
this technology. The typical Genetically Modified Organism (GMO) results from the
insertion of a gene from one organism into another organism, conferring new
properties upon the receiving organism. Widely known examples include
insecticide-producing crops and rice enriched with vitamin A.27 The use of GMOs in
the United States has become widespread, with estimates that 33% of domestic corn
and 50% of soybean crops are genetically modified.28 Additionally, cotton and canola
oil are major crops also consisting substantially of GMO strains.29
20 Culliton, Barbara J., “Gene Therapy Begins,” 249 Science (1990), 1372.
21 Weiss, Rick & Nelson, Deborah, “Teen Dies Undergoing Experimental Gene Therapy,”
Washington Post (29 Sept. 1999), A1.
22 Wade, Nicholas, “Death Leads to Concerns for Future of Gene Therapy,” New York Times,
(30 Sept. 1999), A22.
23 Friend, Tim, “Scientists Violated Gene Therapy Rules in Teen’s Case, FDA Says,” USA
Today (9 Dec. 1999), A8.
24 Stolberg, Sheryl G., “Senators Press for Answers on Gene Trials,” New York Times (3 Feb.
25 “Firm Ordered to Stop Gene Therapy Studies,” Washington Post (12 Oct. 1999), A8.
26 See, e.g., Diamond v. Chakrabarty, 447 U.S. 303 (1980) (petroleum-eating bacteria).
27 See Gillis, Justin, Monsanto Offers Patent Waiver, Washington Post. (4 Aug. 2000), A1;
Weiss, Rick, Biotech Research Branches Out, Washington Post, (3 Aug. 2000), A1.
28 Henson, Lori, “Fooling Mother Nature: Genetic Engineering Offers a World of Possibilities
for Plants but Raises Questions About Ethics and Health,” Savannah Morning News (9 Feb.
29 Weston, supra note 2, at 377.
The Human Genome Project
The Human Genome Project is a publicly funded, international consortium of
scientists engaged in identifying each of the approximately 100,000 human genes.30
In the United States, the Human Genome Project was launched in 1990 under the
auspices of the U.S. Department of Energy and the Department of Health and Human31
Services. Private enterprise Celera Genomics, led by J. Craig Venter, also
endeavored to sequence the human genome.32
On June 26, 2000, President Clinton and UK Prime Minister Tony Blair
announced that the initial stage of the Human Genome Project had been completed.
Growing understanding of the human genome will allow researchers to move from
identifying genes to understanding their functions. In particular, scientists should
increasingly possess the tools needed to identify the genes associated with diseases.
This understanding should assist the development of new approaches for diagnosing,
preventing and treating disease.33
Research Products
Fragments of DNA may also be used in basic and applied research. Because
DNA is organized is a specific way,34 a set DNA strand may be employed as a probe
for the presence of the complementary strand. Researchers are thus able to use such
genetic probes in experimental and diagnostic procedures to search for specific DNA
and RNA sequences.
Living organisms, into which certain genetic dispositions have been engineered,
also can be used in research.35 A prominent example is the so-called “Harvard36
mouse,” which has been rendered especially susceptible to cancer. A similar mouse
30 Morse, Allison, “Searching for the Holy Grail: The Human Genome Project and Its
Implications,” 13 Journal of Law and Health (1999), 219.
31 Ibid at 220.
32 Golden, Frederic & Lemonick, Michael, “Mapping the Genome,” 156 Time (3 July 2000),
33 Quinlivan, Beth, “The Genome Gold Rush,” Business Review Weekly (28 July 2000), 104.
34 See Amgen v. Chugai, 927 F.2d 1200, 1207 n.4 (Fed. Cir. 1991) (“DNA consists of two
complementary strands of nucleotides, which include the four basic compounds adenine (A),
guanine (G), cytosine (C), and thymine (T), oriented so that bases from one strand weakly
bond to the bases of the opposite strand. A bonds with T, and G bonds with C to form
complementary base pairs. This bonding process is called hybridization and results in the
formation of a stable duplex molecule.”).
35 See Diamond v. Chakrabarty, 447 U.S. 303 (1980) (describing insertion into bacteria of
gene for petroleum-degrading enzyme); Ananda M. Chakrabarty, Microorganisms Having
Multiple Compatible Degradative Energy- Generating Plasmids and Preparation Thereof, U.S.
Pat. No. 4,259,444 (issued Mar. 31, 1981).
36 See U.S. Patent No. 4,736,866 (12 April 1988) (“Transgenic Non-Human Mammals”).
lacks a functional immune system, making it extremely useful for immunological and
infectious disease research.37
Therapeutics
Therapeutic genetic inventions involve isolated genes or their protein products.38
These proteins have broad applications to many diseases, including cancers, diabetes,
osteoporosis, as well as AIDS and other infectious diseases.39 For example, some
hormonal deficiencies may be treated with doses of human growth hormone, a
recombinant protein.40 Biotechnologies have also allowed the more rapid and efficient41
manufacture of human insulin in order to treat diabetes.
Clinicians may also use short, specific DNA sequences to search an individual’s
tissue or bodily fluid for the presence of a specific genetic element.42 One application
of DNA probes is in genetic screening. In this process, which is in a nascent stage of
development, tendencies toward hereditary diseases can be determined by assaying
the genetic make-up of a fetus or the prospective parents.43
Other biotechnologies include antibodies directed against specific proteins or
organisms44 and manufactured protein fragments bound by certain antibodies in an
infected patient’s bloodstream.45 These products may be used in diagnostic assays.
Such tests screen blood or other samples for indicators of pregnancy, cancer, human
immunodeficiency virus infection and other medical conditions.
37 See Mouse Without Immunity: Genpharm Expects Patent for an Animal, N.Y. Times, May
38 Arnst, Catherine, “Inhale, Don’t Inject,” Business Week, (9 Feb. 1998), 74.
39 Biotechnology Indus. Org., 1998-99 BIO’s Guide to Biotechnology [http://www.bio.org
/aboutbio/guide1.html].
40 See, e.g., BioSepra New Technology Enables Large Scale Production of Gene Therapy
Drugs, 6 BioAccess, July 1, 1998, available in 1998WL10755071.
41 For example, bioengineered insulin is produced more efficiently and in greater purity. See
Gillis, Justin “Biotech’s Payday Arrives: After Costly, Uncertain Start, More Firms Are
Turning A Profit,” Washington Post, (5 July 1998), H01.
42 Marcial,Gene G., “A New Remedy for What Ails Enzo?,” Business Week (31 Aug. 1998),
43 Bronson, Gail, “Where’s the Demand?,” Forbes, (20 Oct. 1986), 138.
44 See In re Wands, 858 F.2d 731 (Fed. Cir. 1988) (explaining the invention of antibodies for
use in clinical detection of hepatitis).
45 U.S. Patent No. 5,922,533 (13 July 1999) (“Rapid Assay for Simultaneous Detection and
Differentiation of Antibodies to HIV Groups”).
The Role of R&D Funding in the Biotechnology Industry
The biotechnology industry has generated a variety of technical advances that
have impacted fields ranging from agriculture, to health care, to the criminal justice
system. These advances have not been achieved without costs, however. The
significant presence of small firms, as well as substantial research and development
expenses, suggest that capital infusions play an important role in the biotechnology
industry. The need for funding looms largest for products intended for human
medical use.46 The typical biotech company generally requires $250 million to $50047
million to fund a product from research to profitability. Lengthy periods required
for regulatory approval account for much of this expense.48
Despite the promise it holds for future developments, the biotechnology industry
has recently encountered difficulty in attracting investors. One commentator recently
observed that “venture capital is tough to come by at a time when investors are
looking for quick payouts and have little patience for biotechnology, which seems to
be plodding compared to Internet, software and telecommunications companies.”49
For example, during the first six months of 1999, biotechnology initial public offerings
generated only $363 million, representing only about 10% of the $3.5 billion attracted50
by Internet and software companies.
As a result, many industry observers believe that a strong patent portfolio is
essential for capital infusion in the biotechnology industry.51 Even a firm that does not
yet market a product may be able to obtain income from its intellectual property.
Rights may be sold or the technology licensed for development or research purposes,
creating a revenue stream that supports additional research. Patent attorney Kenneth
J. Burchfiel has characterized biotechnology as an industry whose wealth resides in52
its patents more than its products.
Recent stock market movements suggest the significance of patent rights to
investors. For example, on March 14, 2000, President Bill Clinton and UK Prime
Minister Tony Blair issued a joint statement urging that “raw fundamental data on the
human genome . . . should be made freely available to scientists everywhere.”53 A
46 See Biotechnology Indus. Org., 1997-98 BIO’s Citizens’ Guide to Biotechnology, available
at [http://www.bio.org/aboutbio/guide1.html].
47 Copperthite, Charlotte H. & Lerner, Michael J., “Creative Use of IP Portfolios Helps
Secure Financing,” National Law Journal(24 May 1999), C4.
48 Ibid.
49 Jacobs, Paul, “Money’s There, but Hurdles Abound,” L.A. Times (11 Oct. 1999), C1.
50 Ibid.
51 Biotechnology Indus. Org., 1997-98 BIO’s Citizens’ Guide to Biotechnology, available at
[http://www.bio.org/aboutbio/guide1.html].
52 Burchfiel, Kenneth J., Biotechnology and the Federal Circuit § 18.5 (1995).
53 Gosselin, Peter G. & Jacobs, Paul, “Clinton, Blair to Back Access to Genetic Code,” Los
(continued...)
number of biotechnology companies lost a substantial percentage of their market
capitalization as investors sold shares in record numbers.54 Among these enterprises
were Human Genome Sciences, Inc, which fell 25% on the day on the announcement,55
and Incyte Pharmaceuticals, Inc., which fell 30%. The chief concern of many sellers
was that biotechnology patent rights would be weakened or subject to uncertainty.56
The United States Patent and Trademark Office (“PTO”) responded by issuing a press
release on March 16, 2000, explaining that U.S. patent policy was unaffected by the
joint statement. As the impact of the Clinton-Blair announcement was better
understood, the stock prices of many biotechnology enterprises rose.57
The Clinton-Blair announcement was not an isolated incident. The market
capitalization of many biotechnology and other high-technology enterprises has been
impacted by patent-related developments. In a single day, CellPro Inc. lost 50 % of
its stock market value following the Federal Circuit holding that CellPro Inc.’s
Ceprate bone marrow transplant system infringed a competitor’s patent.58 Similarly,
Visx, a manufacturer of laser medical devices, lost a patent dispute and watched its
stock fall 40 % within one hour.59 A successful settlement of a patent infringement
lawsuit with Hitachi recently imparted substantial gains to Rambus Inc. stock.60
Similarly, the stock of Odetics Inc. rose 24% upon news of a favorable jury verdict61
in its patent litigation against Storage Technology Corp. in 1998.
These episodes suggest that individuals may be aware of a company’s patent
portfolio when making investment decisions. As a result, the strength or weakness
of intellectual property rights, as well as the certainty associated with their creation
and scope of granted rights, potentially impacts capital infusion into high technology
markets such as biotechnology.
53 (...continued)
Angeles Times (14 March 2000), C1.
54 Heberlein, Greg, “Market movers: Biotech bubble pops as Nasdaq falls 200,” The Seattle
Times (15 March 2000), C1.
55 “Clinton/Blair gene patent announcement draws reaction,” Biotech Patent News (1 March
56 Heberlein, supra note 54.
57 Woods, Bob, “Biotech Stocks Rebound After Analysts Address Clinton Speech,”
Newsbytes News Network (15 March 2000).
58 Smith, Carol, “Stock in Bothell’s CellPro Falls 50 Percent in Wake of Ruling,” Seattle
Post-Intelligencer (13 Aug. 1998), F5.
59 Katz, John, “You Can Still Bet on Biotech,” Sunday Business (U.K.), (12 Dec. 1999), 28.
60 Stewart, Janet Kidd, “Nasdaq Tumble Negates Week’s Earlier Advance,” Chicago Tribune
(24 June 2000).
61 “News of Court Verdict Pumps Up Odetics,” Los Angeles Times, (31 March 1998), D24.
Core Principles of Patenting Biotechnology
The rate of patenting biotechnology has dramatically increased in recent years.
More than 9,000 patents issued in the biotechnological arts in1998, as compared with
just over 2,000 patents in 1988.62 Patents concerning genetic materials are also being
filed at a growing rate. On July 13, 2000, the Director of the Patent and Trademark
Office (PTO), Q. Todd Dickinson, reported that approximately 20,000 patent63
applications concerning genetic materials were pending before the PTO. He also
explained that approximately 6,000 gene-related patents had already issued by that64
date, including 1,000 that were specifically drawn to human genes.
The patenting process begins with the filing of an application at the PTO. In
deciding whether to approve a patent application, a PTO examiner will consider65
whether the submitted application fully discloses and distinctly claims the invention.
The examiner will also determine whether the invention itself fulfills certain66
substantive standards set by the patent statute. Among the more important
requirements are that the invention must be novel and nonobvious. To be judged
novel, the invention must not be fully anticipated by a prior patent, publication or
other knowledge within the public domain.67 A nonobvious invention must not have
been readily within the ordinary skills of a competent artisan at the time the invention
was made.68
Beyond novelty and nonobviousness, two patentability requirements are of
particular significance for biotechnology. First, the invention must be judged to
comprise subject matter the patent law was designed to protect.69 This gatekeeper to
patentability is variously known as the requirement of “patent eligibility,” “patentable
subject matter,” or “statutory subject matter.”70 A crucial biotechnology patenting
issue is whether living inventions and genetic material are appropriately subject to the
patent system. The debate concerning biotechnology patents is reviewed below.
62 Biotechnology Industry Organization, Total Patents Granted Per Year, available at
[http://www.bio.org/aboutbio/guide2000/statistics.html#patents].
63 Dickinson, Q. Todd, Statement, House Judiciary Committee, Subcommittee on Courts and
Intellectual Property (13 July 2000), 5 (available at [http://www.uspto.gov/web/offices/
ac/ahrpa/opa/bulletin/genomicpat.pdf]).
64 Ibid.
65 35 U.S.C. § 112 (2000)
66 These requirement apply to so-called “utility patents.” The patent statues also allow for
design patents, see 35 U.S.C. § 171 (2000), and plant patents, see 35 U.S.C. § 161 (2000).
Subject matter and other patentability standards differ somewhat for these more specialized
patent regimes.
67 35 U.S.C. § 102 (2000).
68 35 U.S.C. § 103 (2000).
69 Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980).
70 Adelman, Martin J. et al. Patent Law: Cases and Materials (Minnesota: West Publishing
Co., 1998).
The other significant substantive patentability standard is the so-called utility
requirement. This requirement is ordinarily satisfied if the invention is operable and
provides a tangible benefit.71 Although the utility requirement is readily met in most
fields, it presents a more significant obstacle to patentability within biotechnology.
Biotechnicians sometimes synthesize compounds without a precise knowledge of how
they may be used to achieve a practical working result. When patent applications are
filed claiming such compounds, they may be rejected as lacking utility within the
meaning of the patent law. This report will later consider the utility requirement in
some detail.
Once the PTO allows a patent to issue, the patent instrument is formally72
published. Issued patents therefore present a full technical disclosure of the patented
invention.73 The patent proprietor then obtains the right for twenty years to exclude
others from making, using, selling, offering to sell or importing into the United States
the patented invention.74 The Patent Act allows these rights to be enforced in federal
court. Unauthorized infringers may be enjoined and required to pay monetary
damages in favor of the patentee.75
A few core points concerning the patent law should be noted here. First, the
patent grant is in the nature of the right to exclude. A patent owner may prohibit
others from employing the patented invention, but does not obtain the right to make
or use the patented invention itself.76 For example, simply because the PTO has
granted an individual a patent on a gene therapy does not mean that the Food and
Drug Administration has approved, or will approve, the practice of that therapy. In
addition to the Food and Drug Administration, the Environmental Protection Agency
and Department of Agriculture regulate the use of biotechnological inventions.77
Second, the patent right applies not only to full-fledged commercial activities,
but also to most unauthorized experiments involving the patented invention. The
patent statute itself contains no “experimental use” infringement defense analogous
to the fair use privilege codified within the Copyright Act.78 As a result, the United
States Court of Appeals for the Federal Circuit has held that mere experimentation
with the patented invention constitutes an infringing act, so long as this
71 35 U.S.C. § 101 (2000); see also Brenner v. Manson, 383 U.S. 519 (1966).
72 35 U.S.C. § 122 (2000). 1999 amendments to the Patent Act also call for the publication
of certain pending patent applications eighteen months after the date they are filed. Ibid.
73 35 U.S.C. § 112 (2000).
74 35 U.S.C. § 271 (2000).
75 35 U.S.C. §§ 283, 284 (2000).
76 Chisum, Donald S., et al., Principles of Patent Law (Foundation Press, New York 1998),
77 Biotechnology Industry Organization, “Some Facts About Biotechnology,” available at
[http://www.bio.org/aboutbio/guide2000/facts.html].
78 See 17 U.S.C. § 107 (2000).
experimentation holds the potential to impact the patent holder negatively.79 The
court concluded that only the use of the patented invention wholly for “amusement,
to satisfy idle curiosity, or for strictly philosophical inquiry” may possibly be exempted80
from infringement liability. Given the expenses associated with biotechnology R&D,
increasing collaboration between industry and academia, and ultimately commercial
motivation of most researchers, successful use of this so-called experimental use
defense is unlikely.81
Finally, the PTO bases its patentability determinations only upon the relatively
limited criteria set forth in the Patent Act. These criteria include whether the patent
application appropriately discloses and claims the invention for which protection is
sought, as well as the impact of the novelty, nonobviousness, statutory subject matter
and utility requirements upon the claimed invention.82 The PTO is not statutorily
authorized to consider other issues, such as whether the patented invention may be
licensed to ensure access by researchers and other interested parties, when making this83
decision.
The Patent Eligibility of Living Inventions
and Genetic Materials
The issue of whether living organisms are merely unpatentable products of
nature, or whether ethical or policy concerns should bar their patenting, continues to
command public attention. As with other sorts of inventions, the governing statute
is section 101 of the current patent law, the Patent Act of 1952, which is codified in
Title 35 of the United States Code. Section 101 allows patents to be granted for any
“process, machine, manufacture, or composition of matter.” As a result, an invention
is eligible for patenting if it is a “process,” which the Patent Act defines as a “process,
art or method.”84 Alternatively, the invention may be a “machine,” which has been85
interpreted to include any apparatus; a “composition of matter,” including
synthesized chemical compounds and composite articles;86 or a “manufacture,” a
broadly oriented, residual designation.87
79 Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir. 1984).
80 Ibid at 863.
81 Karp, Jonathon P., “Experimental Use as Patent Infringement: The Impropriety of a Broad
Exception,” 100 Yale Law Journal (1991), 2169 (observing that courts apply the
experimental use doctrine restrictively).
82 See supra notes 65-71 and accompanying text.
83 Dickinson, supra note 63, at 5.
84 35 U.S.C. § 100(b) (2000).
85 Nestle-Le Mur Co. v. Eugene, Ltd., 55 F.2d 854 (6th Cir. 1932).
86 Diamond v. Chakrabarty, 447 U.S. 303 (1980).
87 Ibid.
Under the literal language of the Patent Act, most biotechnologies would qualify
as either a composition of matter or process. Genetic materials are at bottom
chemical compounds, albeit very complex ones, that are considered to be88
compositions of matter. Illustrative is the patent application at issue in In re
Deuel,89 which claimed a “purified and isolated DNA sequence consisting of a
sequence encoding human heparin binding growth factor of 168 amino acids having
the following amino acid sequence: Met Gln Ala . . . [the remainder of the lengthy
amino acid sequence is omitted here].” An inventor could also obtain a process
patent directed towards the techniques of biotechnology. For example, in In re
O’Farrell,90 the patent applicant claimed a “method for producing a predetermined
protein in a stable form in a transformed host species of bacteria.”
Despite the broad statutory language, the courts had traditionally crafted several
exceptions to patentability. One significant restriction is that a “product of nature”–a
preexisting substance found in the wild–may not be patented per se. For example, an
individual may not obtain a patent on a new variety of plant found in a remote part of
the Amazon Basin, even if the existence of this plant was previously unknown.91
However, the courts have also established that significant artificial changes to a92
product of nature may render it patentable. By purifying, isolating or otherwise
altering a naturally occurring product, an inventor may obtain a patent on the product
in its altered form.93 The rule that patents may be granted for altered products of
nature renders patentable many inventions of biotechnology, including genetic94
materials and proteins. For example, in Amgen, Inc. v. Chugai Pharmaceutical Co.,
the patentee claimed a “purified and isolated DNA sequence consisting essentially of
a DNA sequence encoding human erythropoietin.”95
With the scope of patentable subject matter limited, one expert has concluded
that a properly issued patent cannot give rights over a gene as found in a person’s
chromosomes. The artificial nucleic acid construct claimed by the patent would not
be the same as found in a living organism.96
Patent protection may also be obtained on so-called living inventions. The
leading Supreme Court opinion on the subject, the 1980 decision in Diamond v.
88 See Amgen, Inc. v. Chugai Pharmaceutical Co., 927 F.2d 1200, 1206 (Fed. Cir. 1991).
89 51 F.3d 1552 (Fed. Cir. 1995).
90 853 F.2d 894 (Fed. Cir. 1988).
91 See, e.g., Ex parte Latimer, 1889 Comm’r Dec. 13 (1889).
92 See, e.g., Amgen, Inc. v. Chugai Pharmaceutical Co., 927 F.2d 1200 (Fed. Cir. 1991).
93 See Scripps Clinic & Research Foundation v. Genentech, Inc., 927 F.2d 1565 (Fed. Cir.
94 927 F.2d 1200 (Fed. Cir. 1991).
95 U.S. Patent No. 4,703,008 (27 Oct. 1987) (“DNA sequences encoding erythropoietin”).
96 Henner, Dennis J., Statement, House Judiciary Committee, Subcommittee on Courts and
Intellectual Property (13 July 2000).
Chakrabarty concluded that a genetically engineered microorganism was patentable.97
Diamond v. Chakrabarty involved the PTO rejection of Dr. Ananda Chakrabarty’s
claims towards an artificially generated bacterium with the ability to degrade crude oil.
At the Supreme Court, the PTO Solicitor’s chief argument was that because genetic
technology could not have been foreseen at the time the patent statute was drafted in
the early 1950's, the resolution of the patentability of such inventions should be left
to Congress. On its way to reversing the PTO decision, the Court disagreed: “A rule
that unanticipated inventions are without protection would conflict with the core
concept of the patent law that anticipation undermines patentability.”98 The Court
also dismissed concerns over the possible perils of genetic research. It stated that
researchers would assuredly pursue work in biotechnology whether their results were
patentable or not, and the regulation of genetic research was a task that also fell to the
legislature. 99
Following the lead of the Supreme Court, the PTO Board has held that an100
artificial animal life form constitutes patentable subject matter. In Ex parte Allen,
the Board reasoned that a claimed polyploid Pacific oyster constituted a non-naturally
occurring manufacture or composition of matter within the meaning of § 101.
Contemporaneously, PTO Commissioner Donald Quigg issued a formal notice, stating
that non-naturally occurring, non-human multicellular living organisms are patentable
subject matter.101 Among the notable patents the PTO issued in keeping with this
notice concerned the Harvard mouse, which was genetically engineered to be
susceptible to cancer.102
The PTO notice did advise that “the grant of a limited, but exclusive property
right in a human being is prohibited by the Constitution.”103 This statement appears
consonant with the Thirteenth Amendment, which provides that “[n]either slavery nor
involuntary servitude, except as a punishment for crime whereof the party shall have
been duly convicted, shall exist within the United States.”104 The Commissioner
further advised that claims directed to a non-plant multicellular organism which would
include a human being within its scope should include the limitation “non-human” to
avoid a § 101 rejection.
97 447 U.S. 303 (1980).
98 447 U.S. at 316.
99 447 U.S. at 317.
100 2 USPQ2d 1425 (Board of Patent Appeals and Interferences 1987), aff’d, 846 F.2d 77
(Fed. Cir. 1988) (nonprecedential).
101 See 1077 PTO Official Gazette 24 (21 April 1987).
102 U.S. Patent No. 4,736,866 (12 Apr. 1988) (“Transgenic non-human mammals”).
103 1077 PTO Official Gazette 24 (21 April 1987).
104 U.S. Constitution, Amendment XIII.
Objections to Patenting Biotechnology
Several objections have arisen to patenting the inventions of biotechnology.
Most of these objections have been raised with regard to human genetic materials and
genetically modified organisms, but they typically apply with varying force to other
biotechnologies. A central position of many commentators is that the grant of
proprietary rights for these inventions is degrading and inappropriate. These concerns
principally stand on ethical, moral and theological grounds.
Some individuals believe that patenting biotechnology devalues the worth and
dignity of living beings. These commentators believe that biotechnology patents
would allow individuals to obtain an ownership right in another sentient being. From
this perspective, such a patent right is akin to slavery and morally wrong.105
Other observers have identified a fundamental right of species and individuals to
biological integrity. Biotechnology activist Jeremy Rifkin, for example, has expressed
concerns that the patenting of genetic materials reduces living beings to mere bundles
of information. When living creatures are abstractly expressed as claims in a patent
instrument, Rifkin urges, the notion of manipulating them at a fundamental level
becomes more palatable.106
Theological arguments have also been raised against patenting biotechnology.
Some observers believe that reverence for life is eroded by economic pressures to
view living beings and genetic materials as industrial products. Noting these
theological concerns, Reverend Wesley Granberg-Michaelson identified
a background of Judeo-Christian thinking about how we relate to the
natural environment. In a nutshell that background says that we have a
responsibility for preserving the integrity of that creation, and for working
with it to preserve its intrinsic values . . . . [T]he doctrine of trust in legal
parlance is synonymous about the relation of creation to humanity. The
Judeo-Christian view says that the creation is, in essence, held in trust;
there are limitations on what we can do. We have a responsibility to see
that its integrity is preserved. This background has led to legislation such
as endangered species laws, animal welfare laws, laws regarding
environmental quality.107
Others are concerned that biotechnology patenting places the values of the
traditional agricultural community at stake. They explain that patenting may cause
a handful of large, multinational enterprises to control genetically modified animals,
105 See Clark, Margaret, “This Little Piggy Went to Market: The Xenotransplantation and
Xenozoonose Debate,” 27 Journal of Law and Medical Ethics (1999), 137.
106 Rifkin, Jeremy, The Biotech Century: Harnessing the Gene and Remaking the World
(1998), 214-15.
107 See Patents and the Constitution: Transgenic Animals, Hearings Before the Subcommittee
on Courts, Civil Liberties, and the Administration of Justice of the House Committee on the
Judiciary, 100th Cong., 1st Sess. 399 (1987).
seeds and other fundamental tools of the farmer. While farmers could previously
employ resources at their own disposal, they may now be dependent upon others to
obtain seeds. Some observers also believe that plants and animals with increased108
production efficiencies will reduce the number of farmers needed.
Other concerns over biotechnology patenting are instrumental in character.
Some commentators believe that allowing patents on living inventions, genetic
materials and other biotechnologies will encourage their continued commercial
development.109 Others are concerned that granting patents lends an aura of
legitimacy to biotechnology.110 In either case, this set of concerns about patenting
biotechnology echoes concerns about the impact of biotechnology more generally.
Although such arguments are numerous and diverse, some of the principal objections
are summarized here.
During his June 26, 2000, remarks commemorating the completion of the first
survey of the human genome project, President Clinton noted several common
concerns regarding the identification of genetic information. As explained by
President Clinton:
We must ensure that new genome science and its benefits will be
directed toward making life better for all citizens of the world, never
just a privileged few.
As we unlock the secrets of the human genome, we must work
simultaneously to ensure that new discoveries never pry open the doors
of privacy. And we must guarantee that genetic information cannot be111
used to stigmatize or discriminate against any individual or group.
Other observers oppose patents on genetically modified organisms due to their
belief that they contribute to animal suffering. They cite such instances as the
incorporation of the bovine growth hormone gene into pigs. This gene encourages
an increased lean to fat ratio that produces a healthier meat product. Animals
expressing the gene were found to be lethargic, arthritic, and possessing an heightened
vulnerability to stress.112 Other biotechnologies, such as the Harvard mouse,113
dramatically increase the likelihood an animal will experience disease and suffering.
108 Dresser, Rebecca, “Ethical and Legal Issues in Patenting New Animal Life,” 28
Jurimetrics (1988), 399, 422.
109 Diamond v. Chakrabarty, 447 U.S. 303, 317 (1979).
110 Naik, Paul S., “Biotechnology Through the Eyes of an Opponent: The Resistance of
Activist Jeremy Rifkin,” 5 Virginia Journal of Law and Technology (2000), 86.
111 The White House, Office of the Press Secretary, “Text of Remarks on the Completion of
the First Survey of the Human Genome Project” (25 June 2000) (available at
[http://www.whitehouse.gov]).
112 Chiapetta, James R., “Of Mice and Machine: A Paradigmatic Challenge to Interpretation
of the Patent Statute,” 20 William Mitchell Law Review (1994), 155.
113 See supra notes 34-36 and accompanying text.
Other commentators have expressed concerns over diminishing genetic diversity.
According to Jeremy Rifkin, while biotechnology may provide gains in the short run,
the long term consequences include the depletion of genetic stock. In his view,
because biotechnology would may lead to the development of “optimal” plants and
animals, the gene pool will suffer for lack of variety. These specialized breeds may
be susceptible to unknown weaknesses and not be sustainable.114
Observers have also noted the environmental hazards associated with release of
artificial entities. The consequences of the release of genetically modified organisms
are difficult to predict. As living entities, these organisms may reproduce, mutate and
migrate once released into the environment. Artificial products may also result in115
deleterious interactions with other animals and plants in uncertain ways.
Benefits of Patenting Biotechnology
Proponents of biotechnology patenting offer numerous arguments in favor of
their position. First, they observe that patent rights provide the right to exclude
others from practicing the claimed invention.116 Patent ownership does not provide
an affirmative right to market the technology. These commentators believe that
disallowing patents to issue on biotechnologies may decrease research and
development efforts, but would neither suppress biotechnology nor allow meaningful
control on the manner in which biotechnologies are employed.
Observers such as Professor Robert P. Merges have further stated that the patent
system is not the proper vehicle for technology assessment.117 He explains that the
patent system has a more basic goal: “to promote the progress of science and useful118
arts,” as stated in the Constitution. As a result, Professor Merges believes that
potential social consequences of biotechnologies are better addressed through
regulatory regimes. Agencies such as the Food and Drug Administration could
review health and environmental hazards. Scientists could establish seed banks to
preserve the genetic variety of various crops, for example, or establish protocols to
address concerns over privacy. In the view of Professor Merges, these measures have
little to do with patents.
In deciding to uphold PTO decisions to grant patents on living inventions, the
courts have also observed that patents have long been granted on living inventions.
Exemplary is the 1873 patent issued to Louis Pasteur on “yeast, free from organic
germs of disease, as an article of manufacture.”119 Microbiological processes have
been used for centuries in order to make wine, age tobacco, bate leather, digest
114 See Naik, supra note 110, at 23.
115 Ibid at 26.
116 See supra notes 74-77 and accompanying text.
117 Merges, Robert P., “Intellectual Property in Higher Life Forms: The Patent System and
Controversial Technologies,” 47 Maryland Law Review (1998), 1051.
118 U.S. Constitution, Article I, clause 8, section 8.
119 Diamond v. Chakrabarty, 447 U.S. 303, 314 n.9 (1979).
sewage and for numerous other applications, and many of these techniques have been
patented in the United States.120
Attorney James R. Chiapetta believes that the denial of patent protection would
not dampen enthusiasm for biotechnology development. Instead, he asserts, this step
would merely encourage inventors to maintain biotechnologies as trade secrets. The
concealment of the workings of biotechnologies would only hinder the development121
of regulatory measures that would reduce any perceived threats of harm.
Mr. Chiapetta also explains that a purpose of the patent system is to enhance
industrial efficiency. Part of this process can be the obsolescence of older technology
as a result of innovative advances. Mr. Chiapetta finds it unfortunate that
biotechology may place further strains on the viability of the traditional family farm,
but observes that biotechnologies are hardly unique in this regard. Many technical,
economic and social factors are leading to fewer and larger farms within the United
States, and he argues that biotechnology should not be singled out within the patent
law for this reason.122
Proponents of biotechnology patenting also observe that this prospect appears
rather benign in the face of current social norms. According to LeRoy Walters,
Ph.D., Director of the Kennedy Institute of Ethics at Georgetown University, given
that individuals routinely buy, sell, breed, confine, eat and perform research on plants
and animals, the practice of patenting them does not seem particularly worrisome.123
A number of scientific commentators have dismissed the notion of species
integrity as specious. For example, Dr. Oliver Smithies of the University of Wisconsin
explained that many mammalian species with no possible means of inter-breeding124
have remarkably similar genomes. Dr. Smithies further observed that inter-species
genetic transfer has occurred naturally, albeit rarely, without human intervention
through viral and other microbial agents. Dr. Finnie A. Murray of Ohio University
has explained that all species are constantly evolving; no species has a fixed genome,125
and genetic plasticity is a fundamental property of living beings. As a result, many
observers do not believe that artificial inter-species genetic transfers can be said to
violate any fundamental norm of genetic integrity.
Other commentators have also noted that traditional breeding programs often
perpetuate genetic defects. One expert points out that purebred cats, dogs and horses
120 See In re Bergy, 563 F.2d 1031, 1038 (CCPA 1977).
121 Chiapetta, supra note 112, at 155.
122 Ibid.
123 Patents and the Constitution: Transgenic Animals, Hearings Before the Sub-committee on
Courts, Civil Liberties, and the Administration of Justice of the House Committee on the
Judiciary, 100th Cong., 1st Sess. 389 (1987).
124 National Institutes of Health, “Recombinant DNA Research, Actions Under Guidelines,”
125 Ibid.
often suffer from a variety of genetic defects leading to diseases ranging from
metabolic disorders to arthritis.126 Genetic engineering potentially avoids these
problems by allowing expression of a single desirable trait without concomitant127
selection of others. In arguing that biotechnology may be put to work to diminish
animal suffering, some observers have pointed to the genetically engineered transgenic
chicken that resists avian leukemia virus. The result has been healthier birds and
significant savings to the chicken industry.128
Finally, proponents of patenting in this field point to the many gainful advances
already achieved by the biotechnology industry. The continued availability of patent
protection may encourage innovation and product development, proponents say,
yielding concomitant social benefits. Although many of these commentators are
cognizant of concerns for animal results, they regard the treatment of human diseases
and the amelioration of human suffering as a primary moral imperative.129
The Chimera Application
A team of inventors decided to place the issue of biotechnology patenting
squarely before the PTO and the courts. In conjunction with biotechnology activist
Jeremy Rifkin, cellular biologist Dr. Stuart Newman filed a patent application on
December 18, 1997, claiming a method for combining human and animal embryo cells
to produce a single embryo.130 This embryo could then be implanted in a human or
animal surrogate mother, resulting in the birth of a “chimera,” or mixture of the two
species. The Newman-Rifkin application specifically mentions chimeras made in part
from mice, chimpanzees, baboons, and pigs. The PTO has rejected the application on
several grounds, among them ineligible subject matter under § 101, although final131
administrative action has not yet happened. No matter what the ultimate
disposition of their application, Newman and Rifkin may once more bring the debate
on the patentability of living inventions into the judicial system.
The Utility Requirement
Section 101 of the Patent Act also mandates that patents issue only to “useful”
inventions. Utility ordinarily presents a minimal requirement that the invention be
126 50 Federal Register at 9763 (statement of Dr. Fox).
127 Chiapetta, supra note 112, at 180.
128 Ibid at 183 (citing savings of an estimated $50 million to $100 million per year).
129 50 Federal Register at 9764 (statement of Dr. Friedman).
130 Magnani, Thomas A., “The Patentability of Human-Animal Chimeras,” 14 Berkeley
Technology Law Journal (1999), 443.
131 Bureau of National Affairs, “Patent and Trademark Office: Patent Application is
Disallowed as ‘Embracing’ Human Beings,” Patent, Copyright and Trademark Journal (17
June 1999), 203.
capable of achieving a pragmatic result.132 Patent applicants need only supply a single,
operable use of the invention that is credible to persons of ordinary skill in the art.
As demonstrated by Justice Story’s 1817 instructions to the jury in Lowell v.
Lewis133 and Bedford v. Hunt,134 the notion of utility is a longstanding feature of
United States patent law. In Lowell, Justice Story remarked:
All that the law requires is, that the invention should not be frivolous or injurious
to the well-being, good policy, or sound morals of society. The word “useful”,
therefore, is incorporated into the act in contradistinction to mischievous or
immoral. . . . But if the invention steers wide of these objections, whether it be
more or less useful is a circumstance very material to the interest of the patentee,
but of no importance to the public. If it be not extensively useful, it will silently
sink into contempt and disregard.
Under Justice Story’s view, the utility requirement does not provide a significant place
for technology assessment. Outside of the most narrow limits, valuation of the
invention is left to the market rather than to the mechanisms of the patent law.
Historically, courts employed the utility requirement to strike down patents
concerning inventions that were judged to be immoral or fraudulent. A handful of
early decisions invalidated patents on inventions intended for use in gambling or other135136
disfavored activities. A patented toy automatic race course, lottery devices and
a slot machine137 were among those held to lack utility because their functions were
judged unwholesome. Inventions that were designed to mislead consumers were
similarly invalidated.138
The modern view is that so long as the invention may be put to a single lawful
use, it possesses utility within the patent statute. Representative of the contemporary
position is the Federal Circuit opinion in Juicy Whip, Inc. v. Orange Bang, Inc.139
The plaintiff, Juicy Whip, held a patent concerning a post-mix dispenser that included
a transparent bowl. According to the patent, the bowl was filled with a liquid that
appeared to be the beverage available for purchase. While the bowl was arranged in
such a way that it seemed to be the source of the beverage, in fact no fluid connection
existed between the bowl and the beverage dispenser at all. Instead, the beverage was
mixed immediately prior to each beverage sale. The district court struck Juicy Whip’s
patent on the ground of lack of utility, reasoning that the patented invention acted to
deceive consumers.
132 Mitchell v. Tilghman, 86 U.S. (19 Wall.) 287, 396 (1873).
133 15 Fed. Cas. 1018, 1019 (No. 8568) (C.C. Mass. 1817).
134 3 Fed. Cas. 37 (No. 1217) (C.C. Mass. 1817).
135 National Automatic Device Co. v. Lloyd, 40 F. 89 (N.D. Ill. 1889).
136 Brewer v. Lichtenstein, 278 F. 512 (7th Cir. 1922).
137 Schultze v. Holtz, 82 F. 448 (N.D. Cal. 1897).
138 Richard v. Du Bon, 103 F. 868, 873 (2d Cir. 1900).
139 185 F.3d 1364 (Fed. Cir. 1999).
The Federal Circuit reversed on appeal, concluding that the fact that one product
can be altered to make it look like another is in itself a specific benefit sufficient to
satisfy the statutory requirement of utility. The appeals court reasoned that many
valued products, ranging from cubic zirconium to synthetic fabrics, are designed to
appear as something that they are not.140 The Federal Circuit further concluded that
the utility requirement does not direct the PTO or the courts to resolve issues of
product safety or deceptive trade practices, which were left to such agencies as the141
Federal Trade Commission or the FDA.
As a result of decisions such as Juicy Whip, in most technical fields the utility
requirement is employed merely to sift out utterly incredible inventions from the
domain of patentability. For example, the utility requirement has led to the rejection
of patents claiming a perpetual motion machine142 and a method of slowing the aging
process. 143
In modern practice, the utility requirement most often comes into play in the
fields of biotechnology and chemistry. In these disciplines, inventors often synthesize
a new compound, or a method of making a new compound, without a preexisting
knowledge of a particular use to which the compound may be put. Scientists may
generate a compound based on their knowledge of the behavior of related
pharmaceutical compounds, for example, or may wish to isolate a fragment of genetic
material for which some application may develop in the future. However, at the time
the inventor generates the compound, no precise knowledge of the compound’s utility
is known.
Today there are considerable incentives for biotechnicians to obtain patent
protection on compounds of interest as soon as possible. For example, in the case of
medical treatments, food and drug authorities require extensive product testing before
the pharmaceutical can be broadly marketed. Before investing time and effort on
laboratory testing and clinical trials, biotechnology concerns desire to obtain patent
rights on promising compounds even where their particular properties are not well
understood. But when patent applications are filed too close to the laboratory bench,
inventors have discovered that the utility requirement can pose a considerable hurdle.
The Supreme Court opinion in Brenner v. Manson addressed such a situation.144
The inventor Manson filed a patent application claiming a method of making a known
steroid compound. Although the particular compound Manson was concerned with
was already known to the art, chemists had yet to identify any setting in which it could
be gainfully employed. However, it was known that another steroid with a very
similar structure had tumor-inhibiting effects in mice, Manson’s new method of
making the compound was a research tool of interest to the scientific community.
140 Ibid at 1367.
141 Ibid at 1368.
142 Newman v. Quigg, 877 F.2d 1575, 11 USPQ2d 1340 (Fed. Cir. 1989).
143 Ex parte Heicklin, 16 USPQ2d 1463 (BPAI 1990).
144 383 U.S. 519 (1966).
The Patent Office Board affirmed the examiner’s rejection of the application.
The Board reasoned that because Manson could not identify a single use for the
steroid he produced, the utility requirement was not satisfied. The Board was
unimpressed that a similar compound did have beneficial effects, noting that in the
unpredictable art of steroid chemistry, even minor changes in chemical structure often
lead to significant and unforeseeable changes in the performance of the compound.
Manson appealed to the Court of Customs and Patent Appeals, which reversed. Key
to the court’s reasoning was that the sequence of process steps claimed by Manson
would produce the steroid of interest. According to the Court of Customs and Patent
Appeals, because the claimed process worked to produce a compound, the utility
requirement was satisfied.
The Supreme Court, however, reversed. The Court took issue with Justice
Story’s understanding that the utility requirement is fulfilled so long as the claimed
invention is not socially undesirable. At least within the context of scientific research
tools, the Court imposed a requirement that an invention may not be patentable until
it has been developed to a point where “specific benefit exists in currently available
form.”145 Chief among the Court’s concerns was the breadth of the proprietary
interest that could result from claims such as those in Manson’s application. “Until
the process claim has been reduced to production of a product shown to be useful, the
metes and bounds of that monopoly are not capable of precise delineation. . . . . Such
a patent may confer power to block whole areas of scientific development, without
compensating benefit to the public.”146 The Court closed by noting that “a patent is
not a hunting license. It is not a reward for the search, but compensation for its
successful conclusion. ‘A patent system must be related to the world of commerce
rather than to the realm of philosophy.’”147
Although Brenner v. Manson appears to take a strict view of the utility
requirement, a more recent Federal Circuit opinion on utility, In re Brana,148 suggests
a more limited role. Like Manson, Brana claimed chemical compounds and stated
they were useful as antitumor substances. The scientific community knew that
structurally similar compounds had shown antitumor activity during both in vitro
testing, done in the laboratory using tissue samples, and in vivo testing using mice as
test subjects. The latter tests had been conducted using cell lines known to cause
lymphocytic tumors in mice.
The PTO Board rejected the application for lack of utility, and on appeal the
Federal Circuit reversed. Among the objections of the PTO was that the tests cited
by Brana were conducted upon lymphomas induced in laboratory animals, rather than
real diseases. The Federal Circuit responded that an inventor need not wait until an
145 Ibid at 534-35.
146 Ibid at 535.
147 Ibid at 536 (quoting Application of Ruschig, 343 F.2d 965, 970 (CCPA 1965)).
148 51 F.3d 1560 (Fed. Cir. 1995).
animal or human develops a disease naturally before finding a cure.149 The PTO
further stated that Brana cited no clinical testing, and therefore had no proof of actual
treatment of the disease in live animals. The Federal Circuit found that proof of utility
did not demand tests for the full safety and effectiveness of the compound, but only
acceptable evidence of medical effects in a standard experimental animal.150
The holding of Brana, along with its failure to discuss or even cite Brenner v.
Manson, suggests that the Federal Circuit has adopted a more liberal approach to the
utility requirement than did the Supreme Court.151 The Federal Circuit did indicate
that, in cases where the invention lacks a well-established use in the art, the applicant
must disclose a specific, credible use within the patent’s specification.152
Brenner v. Manson and Brana were chemical cases. The PTO applies the utility
requirement to the analogous discipline of biotechnology as well. Inventors often
seek patent protection on biological compounds soon after they have been
synthesized. Such compounds include complementary DNA (“cDNA”), which
corresponds to proteins used by human cells, and expressed sequence tags (“ESTs”),
DNA sequences that correspond to a small portion of each cDNA. Because this
nascent field is highly unpredictable, the functions of cDNA fragments and ESTs are
usually unknown at the time they are discovered. Yet they remain extraordinarily
valuable for their potential uses, and scientists from private industry, government
facilities and university laboratories alike have marketed these research tools for
commercial sale. The patentability of these genetic materials has proven
controversial. While Brenner v. Manson holds that serious scientific interest alone
does not fulfill the utility requirement, Brana and other Federal Circuit opinions
suggest a more lenient posture.
In an attempt to address cDNA, ESTs, and other biotechnology patents, the
PTO published “Revised Interim Utility Examination Guidelines” in the Federal
Register on December 21, 1999.153 The 1999 utility guidelines require all patent
applicants to identify explicitly a specific, substantial and credible utility for their
inventions, unless such a utility is already well-established. According to PTO
Director Q. Todd Dickinson, “the Patent Office has raised the bar to ensure that
patent applicants demonstrate a ‘real world’ utility. One simply cannot patent a gene
itself without also clearly disclosing a use to which that gene can be put. As a result,
we believe that hundreds of genomic patent applications may be rejected by the
USPTO, particularly those that only disclose theoretical utilities.”154
149 Ibid at 1565.
150 Ibid at 1568.
151 Machin, Nathan, “Prospective Utility: A New Interpretation of the Utility Requirement of
Section 101 of the Patent Act,” 87 California Law Review (1999), 421, 432.
152 51 F.3d at 1564-68.
153 United States Patent & Trademark Office, “Revised Utility Guidelines,” 64 Federal
Register (22 Dec. 1999), 71440.
154 Dickinson, supra note 63, at 4.
Director Dickinson explained the meaning of terms “specific, substantial and
credible” in the context of the utility requirement as follows:
A An asserted utility is credible unless the logic underlying the assertion is
seriously flawed, or the facts upon which the assertion is based are
inconsistent with the logic underlying the assertion. For example, at least
some nucleic acids might be used as probes, chromosome markers, or
diagnostic markers. Therefore, the per se credibility of assertions regarding
the use of nucleic acids is not usually questioned. However, even if
credible, at least one asserted utility must also be both specific and
substantial.
A A utility is specific when it is particular to the subject matter claimed. For
example, a polynucleotide said to be useful simply as a “gene probe” or
“chromosome marker” does not have specific utility in the absence of a
disclosure of a particular gene or chromosome target. Similarly, a general
statement of diagnostic utility would ordinarily be insufficient to meet the
requirement for a specific utility in the absence of an identification of what
condition can be diagnosed.
A A substantial utility is one that defines a “real world” use. Utilities that
require or constitute carrying out further research to identify or reasonably
confirm a “real world” context of use are not substantial utilities. For
example, basic research that uses a claimed nucleic acid simply for studying
the properties of the nucleic acid itself does not constitute a substantial
utility. 155
Many observers have greeted the new PTO Guidelines favorably. The former
Director of the National Institutes of Health (NIH), Dr. Harold Varmus, stated that
he was “very pleased with the way [the PTO] has come closer to [the NIH’s] position
about the need to define specific utility.”156 Dr. Francis Collins, Director of the
National Human Genome Research Institute, has said that the new utility guidelines
are “quite reassuring in terms of making sure that we end up with an outcome where
the patent system is used to provide an incentive for research and not a
disincentive.”157 In addition, Dr. Craig Venter, the President and Chief Scientific
Officer of Celera Genomics Corporation, recently stated that he was “pleased to see
[the PTO] is raising the bar” on gene patents.158
An interesting aspect of the new PTO Utility Guidelines is their compatability
with the governing case law. Although each application must be considered on its
own merits, the Guidelines appear to be closer to the holding of Brenner v. Manson
than Brana. It is unclear how the Federal Circuit would rule on a utility-based
155 Ibid at 4-5.
156 Ibid at 5.
157 Ibid.
158 Ibid.
rejection under the PTO Guidelines in light of its holding in Brana.159 In this vein,
PTO Deputy Assistant Commissioner for Patent Policy Stephen G. Kunin has
expressed his view that “it may remain for the Board of Patent Appeals and
Interferences and the federal courts to determine the true scope of the substantiality
criterion of the utility requirement on a case-by-case basis.”160
Proponents of a Strict Utility Standard
Some legal and scientific commentators have expressed concern that proprietary
interests in scientific knowledge will impede research efforts overall. Following the
lead of Brenner v. Manson, Professors Heller and Eisenberg have invoked the
“tragedy of the anticommons” to argue against the patenting of genetic materials.161
The “tragedy of commons” is a familiar metaphor for many economists, lawyers and
scientists. A resource is prone to overuse in a tragedy of the commons when too
many owners each have a privilege to use a given resource and no one has a right to
exclude another. Overpopulation, air pollution, and species extinction result from
tragedies of the commons.
In a mirror image of the tragedy of the commons, a resource may be prone to
underuse in a “tragedy of the anticommons.” In this circumstance, multiple owners
each have a right to exclude others from a scarce resource and no one has an effective
privilege of use. Transaction costs, strategic behaviors, and the cognitive biases of
participants often prevent individuals from reaching a socially optimal agreement
allocating property rights. Use of the resource then becomes difficult or impossible.
Professors Heller and Eisenberg argue the granting of intellectual property rights
to early research results holds the potential to create a tragedy of the anticommons
in biomedical research. They specifically identify two mechanisms through which
patents on gene fragments may hinder innovation. First, too many concurrent
fragments of intellectual property rights may hinder the exploitation of potential future
products. In a spiral of overlapping patent claims held by different individuals, one
enterprise may own a patent on a raw genomic DNA fragment, another on the
corresponding protein, and yet another on a diagnostic test for a genetic disease.
Professors Heller and Eisenberg explain that each upstream patent allows its owner
to set up another tollbooth on the road to product development, adding to the cost
and slowing the pace of downstream biomedical innovation.
Second, upstream patent owners may be able to stack licenses on top of the
future discoveries of downstream users. The use of reach-through license agreements
on patented research tools is exemplary. These covenants give the owner of a
patented invention, used in upstream stages of research, rights in subsequent
downstream discoveries. Such rights may take the form of a royalty on sales that
159 Kunin, Stephen G., “Written Description Guidelines and Utility Guidelines,” 82 Journal
of the Patent and Trademark Office Society (2000), 77.
160 Ibid at 100.
161 Heller, Michael A. & Eisenberg, Rebecca S., “Can patents deter innovation? The
anitcommons in biomedical research,” 280 Science (1 May 1998).
result from use of the upstream research tool, an exclusive or nonexclusive license on
future discoveries, or an option to acquire such a license. Professors Heller and
Eisenberg contend that reach-through license agreements may lead to an anticommons
as upstream owners stack overlapping and inconsistent claims on potential
downstream products.
Proponents of a Lenient Utility Standard
Others have urged that originators of research tools too require a return on
investment, and that allowing patents only on final products would further industry162
concentration. If independent researchers and research enterprises were unable to
patent their discoveries, then they might have no option but to join large companies
capable of seeing this earlier research through to a completed product. This trend
might chill the market for preliminary genetic materials and ultimately diminish
research.
Commentators further note that research tools are subject to a lively market
within the biotechnology industry. Many enterprises are interested in purchasing
research tools, and as a result many enterprises are engaged in making them.
Attorney Scott A. Chambers says that describing these products as preliminary and
arising within the “realm of philosophy” is simply inaccurate.163
Those in favor or a more porous utility standard also argue that research
products do not present a special case. They observe that patented products and
processes often are later found to possess additional, more valuable uses than those
named in the original patent. In such cases advance knowledge of one particular use
does not somehow restrain the patentee’s proprietary interest in those additional
applications. For example, the chemical compound nitroglycerine, originally
developed as an explosive, was later found to be useful as a heart medication. If an
inventor had obtained a patent on the nitroglycerine compound itself, then he would
continue to possess a proprietary interest in that compound no matter what
applications were discovered for it. Whether characterized as a basic research tool
or an applied technology, any invention potentially serves as the basis for later
developments. 164
Finally, observers have noted that arguments similar to those of Professors Heller
and Eisenberg have been made in the past. The techniques of polymer chemistry, for
example, involve the use of long chains of basic compounds. During the emergence
162 See generally Eisenberg, Rebecca S., “Intellectual Property at the Public-Private Divide:
The Case of Large-Scale cDNA Sequencing,” 3 University of Chicago Law School
Roundtable (1996), 560.
163 Chambers, Scott A., “Comments on the Patentability of Certain Inventions Associated
With the Identification of Partial cDNA Sequences,” 23 American Intellectual Property Law
Association Quarterly Journal (1995), 59.
164 Jaffe, Adam B., The U.S. Patent System in Transition: Policy Innovation and the
Innovation Process (Cambridge, Massachusetts: National Bureau of Economic Research,
Aug. 1999), 27.
of polymer chemistry several decades ago, some critics argued that granting broad
generic claims on basic polymers would allow a few enterprises to own the building
blocks of the industry. These critics claimed that this monopolization by a few would
slow progress. According to some contemporary commentators, these perceived
concerns never materialized with regard to polymers, and are unlikely to occur in the
contemporary biotechnology industry.165
Legislative Issues and Options
Patents play an important role within the modern biotechnology industry. Some
observers believe that, particularly for entrepreneurs and small, entrepreneurial
biotechnology firms, patents facilitate capitalization and therefore support166
technological advance. Experience also suggests that legal uncertainties regarding
biotechnology patents may impact the ability of enterprises to acquire funding for their
research and development efforts. However, other commentators remain deeply
concerned over the implications of patenting living inventions, genetic materials and
other biotechnologies, as well as the patenting of biotechnological inventions with
unknown or speculative utilities. Patent reform legislation holds the possibility for
resolving these concerns. Should Congress choose to review the progress of
biotechnology, there are at least two patent issues it could consider: patent eligibility
and the utility requirement.
Patent Eligibility
The potential for limiting the patentability of living inventions is moderated by
several factors. One source of restraints consists of international agreements to which
the United States is a signatory. Two international agreements that speak towards
intellectual property rights, the North American Free Trade Agreement (NAFTA)167
and the Trade-Related Aspects of Intellectual Property Rights of the World Trade168
Organiziation (“TRIPS Agreement”), are worthy of note here. Article 1709(1) of
NAFTA provides that signatory states “shall make patents available for any
inventions, whether products or processes, in all fields of technology.” Article 27(1)
165 Dickinson, supra note 63, at 6.
166 Biotechnology Industry Organization, Legislative Issues: Intellectual Property Protection,
available at [http://www.bio.org/aboutbio/guide2000/guide_legislative.html#intellectual
property protection] (“Because biotech companies depend on private investments, patents are
among the first and most important benchmarks of progress in developing a new
biotechnology product.”).
167 See North American Free Trade Agreement, Dec. 17, 1992, Can.-Mex.- U.S., 32 I.L.M.
182, 107 Stat. 2057 (1993) (implementing necessary changes in U.S. law to comply with
NAFTA and reprinting the agreement).
168 See Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994,
Marakesh Agreement Establishing the World Trade Organization, Annex 1C, art. 66, para.
of the TRIPS Agreement reads similarly. This language confirms the broad sense of
patent eligibility under current U.S. law.
Both NAFTA and the TRIPS Agreement do allow signatory states to exempt
higher life forms from the patent system. As further stated in Article 1709(3) of
NAFTA, a signatory may exclude from patentability “plants and animals other than
microorganisms” and “essentially biological processes for the production of plants or
animals, other than non-biological and microbiological processes for such
production.” Article 27(3) of the TRIPS Agreement reads almost identically.
The impact of these exceptions is that a signatory may disallow patents from
issuing on living entities other than microorganisms. Thus, microscopic organisms
such as bacteria, viruses and protozoa must be classified as patentable. Signatories
may, but need not, issue patents on higher life forms ranging from genetically
modified rice to the Harvard mouse.
Signatories to NAFTA and the TRIPS Agreement may also deny patents to
processes that are deemed “essentially biological” in character. Whether a particular
process is “essentially biological” depends upon the degree of artificial activity
required to perform the process. A method of selectively breeding animals by
selecting particular animals and bringing them together would likely be deemed
“essentially biological” and therefore may be held unpatentable. However, a method
of treating a plant to improve its yield, such as a method of pruning a tree, would not
be judged “essentially biological” due to the more significant degree of human
intervention.169 Excluding this later sort of process from patentability would not
comport with NAFTA or TRIPS Agreement. U.S. law arguably includes this
exception already, given case law requiring that biotechnological inventions be subject170
to artificial invention in order to be patentable.
Should Congress choose, it could take an approach other than that suggested by
case law and PTO practice by making certain biotechnologies unpatentable.
Numerous patent applications have been filed on a variety of biotechnological
inventions. These applications have resulted in many issued patents, and some of
these patents have been litigated in the courts. Legislation affecting these patents
would prompt concerns over governmental takings under the Fifth Amendment.171
Limiting biotechnology patenting would counter prevailing trends within the
patent community both domestically and abroad. As suggested by the recent
patenting of methods of doing business, many patent systems are tending towards an
increasingly broad scope of patentable subject matter.172 Biotechnologies are
169 European Patent Office, Guidelines for Examination, Part C, Chapter IV (1995), 39.
170 See supra notes 92-95 and accompanying text.
171 U.S. Constitution, Amendment V (“[N]or shall private property be taken for public use,
without just compensation.”). See James v. Campbell, 104 U.S. 356, 358 (1881) (stating that
a patent “confers upon the patentee an exclusive property in the patented invention which
cannot be appropriated or used by the government itself, without just compensation”).
172 U.S. Library of Congress, Congressional Research Service, Patents on Methods of Doing
(continued...)
generally patentable in Japan, and after several years of debate the European
Parliament issued a Directive approving biotechnology patents.173
The Utility Requirement
The utility requirement is judge-made law. Its only statutory mooring is the term
“useful” recited in § 101 of the Patent Act. Although the PTO has issued Utility
Guidelines, Congress has never elaborated on the utility requirement. The concern
of many actors within the biotechnological industry that the utility requirement be
calibrated appropriately,174 concern within the research community that some patents
could provide a disincentive for further research, and arguable inconsistencies within
the case law,175 suggest that these issues may draw congressional interest.
Congress could examine whether the definition of patentable utility should be
legislatively specified. For example, the Patent Act could list the pertinent factors
suitable for demonstrating the utility of expressed sequence tags (“ESTs”). PTO
Deputy Assistant Commissioner for Patent Policy Stephen G. Kunin has suggested
that pertinent factors include knowledge of the corresponding mRNA sequence,
protein coding sequence or genomic sequence; whether there are sequence
polymorphisms linked to the corresponding genomic location; the function of the
protein encoded by the corresponding messenger Rnucleic acid (“mRNA”); the
phenotype of a mutation in the corresponding gene; the tissue distribution of the
corresponding mRNA and tissue-specific expression levels; and the map location of
its corresponding genomic sequence.176 A recurring complaint is that patent
applicants specify minimal and rather abstract utilities, such as the possible use of an
EST merely as a probe or marker.177 Congress could resolve whether these uses fulfill
the patentable utility requirement. Some caution, however, that specifying such
technical detail in law has drawbacks to the extent the law would need to be amended
in order to reflect changes in rapidly evolving technologies.
172 (...continued)
Business, by John R. Thomas, Report RL30572, 1 June 2000, 1-3.
173 See Dotson, Darrell G., “The European Controversy Over Genetic-Engineering Patents,”
174 See supra notes 156-58 and accompanying text.
175 See supra notes 151-52 and accompanying text.
176 Kunin, supra note 159, at 99.
177 Ibid.