The advent of the molecular era in biology in the 1940s and 1950s, and in particular the development of the tools of recombinant DNA in the mid-1970s, made it possible for scientists to isolate individual genes and determine their chemical composition and ultimately to sequence entire genomes. The ability to map and sequence genes has not only advanced our fundamental understanding of how genes are assembled into genomes, it also has yielded highly detailed knowledge of the structure of evolutionary trees, increased our understanding of genetics, and led to the development of new diagnostics and therapeutics for diseases such as hypertension and cancer. In recent years, research has progressed beyond creating an inventory of human genes (mapping and sequencing) to efforts aimed at elucidating gene functions, comparing the human genome with those of other species, studying the interactions between genes and the environment, analyzing the structures and functions of proteins encoded by genes, and ultimately determining the role of genes and proteins in human as well as in animal and plant biology.
The sequence of the human genome, which was nearly completed in 2003, is arguably the most powerful dataset the biomedical research community has ever known. Yet its full meaning is just beginning to be revealed. Although human beings may each possess 20,000 to 25,000 genes—far fewer than originally imagined—these genes encode millions of proteins that are responsible for their distinctiveness and that of their families.1 The challenge for the future is to under-
stand the information in the genome and to use it to benefit human health and well-being.
One important factor in the realization of the potential benefits of the Human Genome Project (HGP) that requires careful scrutiny is the practice of protecting intellectual property in the fields of genomics and its offspring—proteomics—the study of the protein products of the genome. Patents are sought not only by private sector scientists but also by scientists in universities, research institutes, and government laboratories. Whether the patent claims a gene sequence, its protein product, or a method to detect, produce, study, or manipulate the gene or protein, the freedom of others to conduct research on the role and function of a given gene or protein and their ability to employ them in health care on a reasonable basis could be constrained by the prior existence of a patent, or, more likely, an exclusive license or other restrictive license on a patent.
At the same time, intellectual property protection is essential to biotechnology and pharmaceutical firms that must invest hundreds of millions of dollars in research and development over many years to bring their products to market. To enable firms to garner the sustained investments needed for diagnostic and drug development and testing, patents provide a period of exclusivity with respect to the manufacture, use, or sale of the product. Furthermore, many biotechnology firms have established a market niche between the fundamental research of academic and government laboratories and the more applied research and development activities of large pharmaceutical firms. To remain viable, these companies also rely on intellectual property rights to discoveries that often are made early in the research and development process (i.e., closer to the basic research end of the spectrum) (Eisenberg, 1997). The scale of the rush to protect the rights to new genes is reflected in the fact that by 2001, before the HGP was even completed, just two biotechnology companies alone had filed more than 25,000 DNA-based patent applications for both full-length genes and gene fragments (Service, 2001).
Research universities, too, were spurred by federal legislation enacted in the 1980s to promote the commercial application of fundamental discoveries by their faculties by protecting intellectual property that could be licensed to companies. In a few well-publicized instances, this practice has reaped substantial financial rewards for the universities and inventors, which in turn has motivated other universities to adopt aggressive technology transfer practices. Today, as a consequence of all these activities, some fear that the public good derived from providing incentives to inventors so that they can benefit from their discoveries and from ensuring that public investments in basic research lead to effective prevention and treatment of disease is at risk of being diminished significantly by the negative potential of “thickets” of patents inhibiting future scientific discovery and development.
THE PUSH TO PATENT
The race to patent genes and their protein products in the life sciences began in the late 1970s, with the cloning of genes, the products of which had the potential to be therapeutic products themselves. In that sense, the early patenting of genes encoding proteins such as human insulin, growth hormone, and factor VIII was analogous to the patenting of chemical drugs. To distinguish DNA from a naturally occurring product, the claims of the DNA patents specified recombinant materials, the processes for producing the protein in bacterial or yeast cells, and the material in a form that was “purified and isolated.”
In the early 1980s, a series of judicial and administrative decisions clarified patent law, although the statute describing patentable subject matter did not change. In Diamond v. Chakrabarty, the Supreme Court by a 5-to-4 vote confirmed:
that Congress intended patentable subject matter to “include anything under the sun that is made by man” (here the Court quoted from the legislative history of the 1952 Patent Act, the current basic patent law);
that “the laws of nature, physical phenomena, and abstract ideas have been held not patentable”; and
that “the patentee has produced a new bacterium with markedly different characteristics from any found in nature and one having the potential for significant utility. His discovery is not nature’s handiwork, but his own; accordingly it is patentable subject matter under §101 [of the Patent Act].”
Thus, the Supreme Court ruled that a living, genetically altered organism may qualify for patent protection as a new manufacture or composition of matter. In fact, in spelling out its 1980 decision in Chakrabarty, the U.S. Supreme Court used much the same definition of patentable subject matter that had been in place since Thomas Jefferson wrote the Patent Act of 1793.
The United States and many other countries already allowed the patenting of products of nature in an isolated and purified state, when their purification led to a new use for that material. Domestic and international patent policies treated DNA sequences as “compositions of matter,” much like any other chemical formulae. Thus, the areas of biological discovery emerging from the HGP and related efforts—from gene sequences to proteins—are potentially patentable subject matter as long as the invention meets the standard criteria of novelty, utility, and nonobviousness, describes the invention (“written description”), and provides sufficient detail to enable others “skilled in the art” to make and use the invention (“enabling disclosure”). The “enabling disclosure” requirement mandates the creation of an instructional map that a practitioner in the inventor’s field can follow to create and use the invention.
The Chakrabarty decision, coming as it did at a time when the cloning and sequencing of genes was becoming increasingly accessible to molecular biology laboratories, further encouraged the patenting of genes and their protein products that were not likely to be therapeutic agents themselves but that could be useful in the development of drugs, research tools, and even genetically altered animals (see Box A). Typically, patents on such basic technology had been considered “upstream” inventions, meaning that a commercial product might not be immediately anticipated and that much further refinement and investment had to occur to reach that point. Such upstream inventions fell into many classes; for example, membrane receptors that could be used to identify agonists and antagonists, proteins involved in biochemical pathways implicated in a disease, and potential extracellular ligands with homology to proteins of known function. Awarding patents for these inventions may offer the possibility for the inventor to participate in any financial benefit that might result from the use of his or her discovery in the development of a drug or other useful product. On the other hand, such upstream patents could be broadly enabling in many different areas of basic research, and, if kept as a trade secret by a single company or exclusively licensed to one or very few companies, they could stymie scientists more broadly in their pursuit of basic knowledge. Patenting these upstream inventions has the advantage, therefore, of assuring universal access if licensed broadly. However, given the unique nature of human genes and the crystalline structures of human proteins, scientists may find it difficult or impossible to “invent around” the subject matter if patented and if the patent can be enforced (i.e., to develop a substitute that allows them to continue working in the art without infringing the patent). If nature provides only one code or structure for a gene or protein, and someone is granted a patent on the discovery and the description of that code or architecture, then other scientists are, at the same time, given access to the new science, and possibly prevented from making certain uses of the patented invention in research.
One class of patents that affects the field of genomics and proteomics describes laboratory methods or procedures and is generally referred to as process patents. Prominent examples include the now-expired Boyer-Cohen patents on the techniques of recombinant DNA, held by the University of California, San Francisco, and Stanford University, and the Axel-Wigler patent on introducing DNA into eukaryotic cells, held by Columbia University (both Stanford University and Columbia University allowed nonprofits to practice their patented technology without licenses). These universities licensed the use of the technology widely and nonexclusively to private companies for relatively modest fees, and freely to universities and nonprofit research organizations; thus, the existence of the patents is not believed to have impeded research materially.2 However, not
After the Chakrabarty ruling, several critics insisted that the decision appeared to leave no legal obstacle to the patenting of higher forms of life—plants, animals, and possibly human beings—or, by implication, to the genetic engineering of such life forms. Harvard University and Philip Leder moved to take advantage of the legal opening presented by Chakrabarty. A distinguished biomedical scientist, Leder was appointed in 1981 to the faculty of the Harvard University Medical School. In conjunction with his recruitment, the DuPont Corporation gave Harvard $6 million for support of Leder’s research. The principal quid pro quo was simple: Although Harvard would own any patents that might arise from Leder’s research, DuPont would be entitled to an exclusive license on any and all such patents.
Over the next two years, Leder and his collaborator Tim Stewart developed a so-called oncomouse—a mouse genetically engineered to be highly susceptible to certain types of cancer. They accomplished this feat by exploiting the then-recently developed transgenic technology to insert the myc oncogene, tied to a mammary-specific promoter, into the new embryo of a normal mouse. Leder wondered whether his mice might be eligible for patent protection because they formed a man-made model system for the study of cancer, including the testing of its causes and therapies. Given the Chakrabarty decision, Harvard’s lawyers saw no legal basis for excluding claims on animals, and on June 22, 1984, on behalf of Harvard University, filed an application for a patent on Leder and Stewart’s invention. The main utilities claimed were straightforward, including the use of such animals as sources of malignant or proto-malignant tissue for cell culture and as living systems on which to test compounds for carcinogenicity or—in the case of substances such as Vitamin E—for the ability to prevent cancer. The claims extended to any transgenic mammal, excluding human beings, containing in all its cells an activated oncogene that had been introduced into it, or an ancestor, at an embryonic stage. In April 1988, a U.S. patent was awarded to Harvard University on any nonhuman mammal transgenically engineered to incorporate in its genome an oncogene tied to a specific promoter. It was the first patent on a living animal in the history of the world’s patent systems.
all method-of-use patents have been handled in this manner. For example, in the United States, Myriad Genetics holds a patent for diagnostic testing for breast cancer susceptibility based on the BRCA genes. Myriad chose to exercise its patent rights by remaining the sole provider of the test, which indicates whether a person carries a mutation in BRCA genes. In 1997, cancer genetics laborato-
ries—many of which also are research and teaching laboratories linked to major cancer treatment centers—were told to cease providing the tests, which infringed upon the patent. As a result, patients diagnosed by Myriad as positive for one of the two known BRCA genes find it difficult, if not impossible, to turn elsewhere for independent verification of the test results.
SCIENCE AND COMMERCE
Many research scientists who work in public institutions are troubled by the concept of intellectual property protection for DNA-based information, because it seems to be in conflict with scientific norms that dictate that science will advance more rapidly if researchers enjoy free access to knowledge. However, use of the patent system means that there will be less of an incentive to resort to protecting knowledge by making it a trade secret. Patenting entails making public a complete description and a full enabling disclosure of the new technology. The law of intellectual property rests on the assumption that exclusive rights create the ability to attract the investments to fund the research and development required to bring a novel product to market.
The federal government, which supports the vast majority of fundamental biomedical research in the United States, has adopted policies over the past 25 years that are intended to promote the commercialization of research conducted with federal funding as a means to speed the development of benefits to the public good. The Stevenson-Wydler Technology Innovation Act (P.L. 96-480) enables the National Institutes of Health (NIH) and other federal agencies to enter into license agreements with commercial entities that promote the development of technologies developed by government scientists. The act also provides a financial return to the public in the form of royalty payments and related fees. The Patent and Trademark Amendments of 1980 (P.L. 96-517, also known as the Bayh-Dole Act) cede to universities and small businesses the right to claim intellectual property protection for discoveries that result from federally funded research and permit universities and the faculty inventors to derive financial benefit from licensing and royalty payments. Partly as a result of these statutes, a large share of issued DNA-based patents is held by the U.S. government and by universities (Pressman et al., 2005; Michelsohn, 2004).
It is important in addressing scientists’ concerns about access to information to recognize not only that patent exclusivity is limited in duration but also that it provides a means of protecting inventions without secrecy. A patent grants the right to exclude others from making, using, and selling the invention for a limited term, typically 20 years from the application filing date. But to get a patent, an inventor must disclose the invention fully to enable others to improve upon it. All patents are published upon issuance, and as a result of legislation enacted in 1999, a large majority of patent applications in the United States are published after 18
months.3 The patent system promotes more disclosure than might occur otherwise if secrecy were the only means of excluding competitors. It is less clear how valid this argument is in public sector research, where publication has long been considered the currency of success and professional advancement.
The principal argument for patenting public sector inventions is the fact that typically, post-invention development costs far exceed pre-invention research expenditures, and firms are unable to make this substantial investment without protection from competition. Patents therefore facilitate transfer of technology to the private sector by providing exclusive rights to preserve the profit incentives of innovating firms. Although many observers have raised questions about the effects on the direction of academic research and the behavior of scientists, in the case of DNA-based patent activities, it is the scope of claims that has generated particular concern among some members of the scientific community. The proliferation of broad claims, including many of dubious validity, raises the prospect that current patent and technology policies, combined with rapidly developing science, might lead to a situation in which technology critical to the development of new diagnostics and therapies could be controlled for commercial gain in ways that threaten to impede unduly such development. For some, this trend stands in contrast to a long-standing norm of the life sciences—to ensure the full access to and use of publicly sponsored research results by making them freely available to the public.
This is not the first time that the goals and language of science have the potential to clash with the goals and language of commerce, but the nature of the “property” in dispute (patents on genomic or proteomic inventions) has generated controversy that creates new challenges for reaching the appropriate balance between the two realms.
In recent years, the controversy has shifted from debates about whether patents on genes, gene fragments or sequences, single nucleotide polymorphisms, haplotypes, or proteins are fundamentally inconsistent with the norms of research science—that is, whether patents on such inventions should be allowed at all—to more nuanced questions about what types of research discoveries should be patented and how proprietary research tools should be disseminated to preserve the benefits of intellectual property, while at the same time minimizing interference with the progress of science and the delivery of medical services (NRC, 1997). Concerns also have been raised about gene patenting, for which the goals are to
identify new genes, attempt to identify their function through computerized searches of the genomic database, and then seek utility patents covering these genes based on the resulting insight into the gene’s potential function.
In addition to concerns about the openness of science, challenges are being mounted to the validity of the claims made in some patent applications, particularly those that involve proteins and protein fragments and that concern the value of protein structures in function/utility determinations, as well as the value of computational models versus experimentally deduced structures (Berg, 2004; Vinarov, 2003). If the inventor has a full description and an enabling disclosure adequate to support broad claims, licensing issues become more complex, and the possibility for litigation increases. This has the potential to impede research and raise the costs of commercial development.
With regard to utility, in response to substantial pressure from the scientific community, the United States Patent and Trademark Office (USPTO) in 2001 published a set of examiner guidelines that specify that utility should be “credible, specific, and substantial.”4 One question that has been raised regarding obviousness is whether advances in characterization and purification technologies, computation, and instrumentation have rendered routine a discovery process that was formerly laborious and dependent upon human ingenuity. However, patent examiners are not permitted by the law to take into account the manner by which the inventors themselves arrive at an invention in determining patentability. They are permitted only to reference how a person skilled in the technology might have used routine tools in a routine manner to produce a routine result.
In addition, confusion and delays may ensue when the intellectual property rights necessary to arrive at a commercial end product are held by patentees too numerous or heterogeneous to agree on licensing terms—an “anti-commons” (Heller and Eisenberg, 1998). USPTO suggested in a white paper in 2000 that the solution to some gene patent problems might be the use of patent pools.5 Pooling related patents could reduce the transaction costs of assembling the patent-protected elements of a research platform. Traditionally, this approach has not been used in biomedical research, but collaborative arrangements designed to yield some of the benefits of pooling are being pursued in certain areas of agricultural research (for example, by members of the Public Intellectual Property for Research in Agriculture [PIPRA] initiative) (Atkinson, et al., 2003).
Another way of containing transaction costs is to ensure that only valid patents are issued and come into play. As new technologies have become subject to patenting and applications and issued patents have grown exponentially in recent years, concerns about deteriorating patent quality—the extent to which patents genuinely represent novel, useful, nonobvious inventions that are described adequately—have come to the fore and have led to proposals for expanding the resources of USPTO, tightening the interpretation of the statutory standards, and instituting a more robust system of expedited post-grant challenges within USPTO rather than the courts. These considerations were the subject of the 2004 National Academies’ report, A Patent System for the 21st Century, (NRC, 2004) and since then have led to some actions. For example, for the past two fiscal years, USPTO’s appropriations have been roughly equivalent to its fee receipts, enabling the hiring of more patent examiners. Legislation (H.R. 2795) introduced in the 109th Congress and the subject of hearings in the House and Senate provides for a post-grant opposition procedure, encourages third parties to submit prior art during an application’s examination, and reinforces the applicant’s duty of candor.
SECRECY VERSUS OPENNESS
At the inception of the HGP, the public co-funders (NIH and the U.S. Department of Energy) emphasized that, in order to reap the maximum benefit from the program, the human DNA sequence data that it develops should be freely available in the public domain. The National Research Council report that set the stage for the HGP in 1988 stated that “… access to all sequences and material generated by these publicly funded projects should and even must be made freely available…” (NRC, 1988). This principle was reinforced in 1988 by the NIH Ad Hoc Program Advisory Committee on Complex Genomes, which stated the following: “Distribution of and free access to the databases (containing the sequence data) must be fully encouraged. Thus, the data must be in the public domain, and the redistribution of the data should remain free of royalties.” In 1996 an international group of public and private sector scientists who were engaged in genomic DNA sequencing passed a unanimous resolution—commonly referred to as the “Bermuda rules”—that “all human genomic DNA sequence information, generated by centers funded for large-scale human sequencing, should be freely available and in the public domain in order to encourage research and development and to maximize its benefit to society.” Thus the publicly funded HGP established norms of behavior for the genome community that promoted openness. These principles discouraged the patenting of DNA sequences, even though patents on gene sequences guarantee they will be published. Although patent rights themselves do not necessarily prevent the knowledge or information in the patent from being disseminated freely, they can prevent the information from being used freely.
An early and laudable example of a patent holder adopting practices that
promoted the dissemination of a critical research tool was the decision by Stanford University and the University of California to make the recombinant DNA technology developed by Cohen and Boyer available free to all university researchers and to corporate researchers for relatively modest fees, rather than licensing the patent exclusively to a single company (Hughes, 2001). This practice has been endorsed by NIH, which issued guidelines for grantees in handling the dissemination of proprietary research tools (NIH, 1998). Although these guidelines are nonbinding, NIH has the option (for example, when the public health is at risk or whenever the policy and objectives of the statute are better promoted by restricting patents) of intervening with an agency declaration of exceptional circumstances, obviating the statutory patent rights provided to recipients of federal research funding.
Although a laudable and apparently successful goal, such openness is—in and of itself—raising some unexpected challenges with regard to intellectual property. Openness can have the unintended consequence of allowing noninventors to exploit the availability of information. This phenomenon is being referred to in some quarters as “parasitic intellectual property claims” (Collins, 2004) and has led to creative licensing mechanisms aimed at ensuring that the data remain publicly available (that is, the data may be used for any purpose as long as access is not obstructed).
THE ILLUSORY EXPERIMENTAL USE EXEMPTION
Adding to the debates about current patenting and licensing strategies in genomics and proteomics is the prevalence in many research institutions of patent infringement resulting from the erroneous assumption that pre-commercial research is shielded from liability for patent or other intellectual property infringement (NRC, 1997). A recent decision by the Court of Appeals for the Federal Circuit (Federal Circuit) in a suit against Duke University has undermined that presumption, finding that research is part of the “legitimate business” of the university and is not protected “regardless of commercial implications” or lack thereof.6 It would appear that researchers and their institutions now must pay closer attention to the intellectual property issues involved in their current and future work.
This “experimental use exception” litigation indicates that many aspects of the law governing patent rights to biological materials remain unsettled. Although the United States and other countries have unitary patent systems that ostensibly do not discriminate among technologies, in fact accommodations in USPTO practice and in court decisions have arisen from the needs of differing technologies.
For example, in response to concerns raised by the biomedical community regarding patent applications involving Expressed Sequence Tags (ESTs) and other gene fragments, USPTO in 2001 issued examination guidelines clarifying the utility standard and written description requirements. The Court of Appeals for the Federal Circuit recently affirmed a USPTO rejection of patent claims to ESTs, noting that the USPTO utility guidelines comport with the court’s own interpretation of the utility requirement. Meanwhile, some important differences remain between the European and Japanese patent offices regarding the standards applied to biological material applications; and these differences, too, are likely to have effects on the conduct and possibly the location of research. The most important of these differences relates to the lower threshold for nonobviousness of sequence-based claims in the United States, compared to the inventive step criteria used in Europe and Japan.
These and other concerns are forcing questions about current practices in the protection of intellectual property. Patents undeniably have led to the stimulation and promotion of the development of new health care products. However, has this development come at the cost of increased out-of-pocket and opportunity costs, delays, and possibly even the obstruction of some research?
CHARGE TO THE COMMITTEE
NIH asked the National Academies (NAS) to study the granting of intellectual property rights and the licensing of discoveries relating to genetics and proteomics and the effects of these practices on research and innovation. Specifically, NIH asked NAS to study and report on:
trends in the number and nature of U.S.-issued patents granted for technologies related to genomics and proteomics;
the standards that USPTO and other patent offices (specifically in Europe and Japan) are applying in acting on these applications;
the effects of patenting genomic and proteomic inventions and/or licensing practices for inventions on research and innovation; and
steps that NIH and others might take to ensure the productivity of research and innovation involving genes and proteins.
Under the auspices of the Academies’ Science, Technology, and Economic Policy Board and the Committee on Science, Technology, and Law, a study committee was formed to respond to this charge. The study committee was composed of individuals with a broad range of expertise and practical experience, as well as in-depth knowledge of biomedical sciences and the U.S. patent system. Members include basic and clinical researchers, legal scholars and practitioners, economists specializing in conditions of innovation, biotechnology entrepreneurs, managers of pharmaceutical companies, early-stage investors, medical practitioners,
specialists in technology licensing, and specialists in the philosophy and ethics of science and medicine.
The committee met 6 times over a 14-month period. During five of these meetings, the committee invited experts to speak about issues under consideration. In addition, the committee held two workshops, one in Washington, D.C., and one in Bellagio, Italy. The committee also sponsored a survey of research scientists (described in Chapter 4) and conducted its own research on the patent landscape and licensing practices in biomedical research.
Several groups have examined the patent system in great depth (e.g., Federal Trade Commission, 2003; NRC, 2004). This current report does not aim to repeat such an analysis but rather focuses on the unique considerations that arise within the context of genomics and proteomics research.
The committee recognizes that there has been no comprehensive analysis of the impact of intellectual property on genomic and proteomic research involving plants and animals. This was not part of NIH’s charge to the committee, which was not composed to address it (although it did include an agricultural economist specializing in intellectual property to provide a perspective on that field). The survey conducted for the panel was limited to biomedical researchers, although the patent data presented in Chapter 4 do not distinguish between human and plant and animal-related material because of the lack of consistent discriminating terms in patent claims.
Some grounds exist for hypothesizing that freedom-to-operate issues are more pronounced in agriculture than they are in biomedical research. The field is not nearly as generously funded; prime research targets are much narrower (focusing on a few high-value crops and animal species); patent ownership is much more concentrated in a few public and private hands. The fact that a few cooperative intellectual property management schemes have emerged in agricultural biotechnology—the Public-Sector Intellectual Property Resource for Agriculture (PIPRA)and CAMBIO, Inc., for example—suggests that some obstacles are perceived, at least for public nonprofit researchers working on applications for nonaffluent markets (Wright and Pardey, 2005).7 The issues addressed by this committee may merit separate study in the agricultural research context.
In a survey of 90 plant biology researchers at four public land grant institutions (U.C. Berkeley, U.C. Davis, U.C. Riverside, and the University of Arizona) Zhen and Wright (2005) found that concern with freedom to operate is focused on a lack of easy and quick access to materials held by others. This is similar to the findings from the survey of biomedical researchers reported in Chapter 4.
ORGANIZATION OF THE REPORT
Following this chapter, the committee provides an overview of the science of genomics and proteomics and discusses policy developments in these fields. Chapter 3 addresses the specific intellectual property issues raised by genomics and proteomics and their interpretation by USPTO and the courts. Chapter 4 presents the results of data collection and analysis activities conducted by the committee. The committee’s conclusions and recommendations are provided in Chapter 5.