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8 Patents and Trade Secrets in Biotechnology A PRIME CONCERN AMONG FIRMS throughout the biotechnology industry is the degree of protection they can obtain over the products and processes they develop. In the United States several means exist for securing such protection. An individual or organization can receive a patent for a product or process, which gives the holder the right to exclude others from making, using, or selling the invention for 17 years. Patents are also available for asexually reproducing plants, and certificates (rather than patents) are granted for sexually reproducing plants. An individual or organization may also elect to keep an invention secret, with recourse to legal proceed- ings if others acquire the secret through improper means. In 1980 the Supreme Court ruled by a vote of five to four in Diamond v. Chakrabarty that a particular genetically engineered microorganism could be patented. (The organism in question had been genetically engineered not through recombinant DNA techniques but through the transfer of naturally occurring plasmids.) This landmark decision led to a surge of patent applications and approvals in the area of biotechnology. However, the decision also left a number of important questions unresolved. For instance, it did not explicitly determine if This chapter includes material from the presentation by Roman Saliwanchik at the symposium. 91
92 BIOTECHNOLOGY higher organisms, including plants and animals, could be patented under the same provisions as microorganisms, although it does seem likely. Currently, patents for asexually reproduced plants are granted under a different system, and it is not clear which system will apply to genetically engineered plants. The court also did not specify the extent or nature of human intervention required to make an organism patentable. So far the Patent and Trademark Office has taken a very conservative approach in granting patents for genetically engineered organisms. Nevertheless, the Chakrabarty decision has sparked new interest in using the patent system to protect intellectual property resulting from biotechnology. As the ramifications of the decision continue to spread, and as new court cases and legislative initiatives arise, many of the remaining uncertainties and problems in protecting innovations in biotechnology will diminish. And if, in due course, the applicability of the patent system to biotechnology is strengthened, the result should be a stronger, more productive industry. The Patent System and Biotechnology The rationale behind a patent system is simple; the implementation of that rationale can be very complex. Essentially, a patent grants its owner a monopoly over the use of an invention for a given period of time. In this way, patent systems, which have existed in various forms since antiquity, reward the effort and risk that are required for innovation. In return for a patent, an inventor must disclose the nature of the invention so that knowledge of it will not die with the inventor and so that society can make free use of it once the patent has expired. To be patentable under U.S. law, an invention must meet several criteria. First, it must be useful, which the courts have defined broadly enough to not pose great problems to biotechnology. Second, it must be new, so that a patent is not granted for something that already belongs to the public. Third, it must be nonobvious, so that a person skilled in the field cannot take something already in the public domain, add a slight twist to it, and receive a patent for the result. Materials and knowledge already in the public domain at the time the patent application is filed are referred to as the "prior art." This is a critical concept in determining both the novelty and nonobviousness of an invention. In deciding if a claimed invention meets these criteria, a patent examiner must evaluate it from the perspective of the prior art and determine if it departs sufficiently from that domain. According to Roman Saliwanchik, a patent attorney in Richland, Michigan, who
PATENTS AND TRADE SECRETS IN BIOTECHNOLOGY 93 specializes in biotechnology, it is often particularly difficult in biotech- nology to keep from overlapping the prior art. "There have been a tremendous number of publications in the genetic engineering area," he says. "All of these publications can be used as prior art against the inventor if published prior to the filing of a patent application." The novelty requirement does not mean that things already existing in nature cannot be patented, according to Saliwanchik. "The only requirement is that the material be novel," he says. "When you purify a material and it has never existed in that form before, it is novel." This provision has been used to patent a wide variety of chemical substances in the past, including vitamins, hormones, and pure cultures of naturally occurring microorganisms, and it applies equally well to the products of biotechnology. A patent application must also contain enough information to enable a person who is skilled in the field to make and use the claimed invention without undue experimentation. This provision, which is known as the enablement requirement, clarifies the nature of the invention so that others will not infringe on it and ensures that the public will eventually receive full benefit from the patented knowledge. The enablement requirement raises certain difficulties in biotechnol- ogy. It is generally impossible to explain in writing how a microorgan- ism performs a given task in such a way that others will be able to recreate that microorganism. Some courts have therefore ruled that to meet the enablement requirement the patent applicant must usually deposit a culture of the microorganism in a public repository. These repositories are in turn required to provide samples of the culture on request to members of the public after a patent has been issued. In biotechnology, this means that a competitor has access to the very heart of an industrial processâthe microorganism that performs a biological function. An unscrupulous competitor could acquire that microorganism and exploit it secretly, or change it slightly and put it to work performing the same task. Such possibilities have made some entrepreneurs in biotechnology selective in seeking patent protection. A patent application generally concludes with a series of claims that define the invention with varying degrees of specificity. These claims establish differing boundaries for what the patent covers. In its examination of the application, the Patent and Trademark Office decides which claims it will allow, and those establish the scope of the patent. This measure of a patent's applicability can be crucial in biotechnol- ogy. "Just getting a patent may not be enough," explains Saliwanchik. "If you don't get the right scope on your claims, you can have a weak
94 BIOTECHNOLOGY A researcher withdraws a cell line sample from a freezing device at the American Culture Type Collection in Rockville, Maryland. Under U.S. patent law, samples of patented microorganisms must generally be provided to independent repositories, which then furnish the cell lines to members of the public on request. patent." For instance, if the scope is not properly denned in a patent, a competitor may be able to use and possibly patent a protein with a different combination of amino acids that has essentially the same biological function. "I think these kinds of things are going to be bounced around a bit," he says. "It is what is called 'scoping.' We have gone through a long history of scoping in the chemical arts, and we pretty well know our limits. But in the biological arts there is an element of unpredictability that sometimes makes scoping more difficult." Despite the remaining uncertainties, Saliwanchik believes that the patent system is well equipped to deal with the onslaught of applica-
PATENTS AND TRADE SECRETS IN BIOTECHNOLOGY 95 tions coining from biotechnology. For one thing, it can draw on its extensive past experience in issuing patents on metabolites, proteins, vaccines, and even some processes using naturally occurring microor- ganisms. As an example, he cites the patenting of antibiotics. "The antibiotic industry itself would probably not have prospered to the extent that it has but for a strong patent system. We have to have that same strong patent system for the genetic engineering industry." Already the Patent and Trademark Office has issued patents for a wide range of products resulting from biotechnology, including altered genes, DNA probes, vectors, and microorganisms. As for processes, it has issued patents covering such diverse procedures as the enhanced expression of a protein, the alteration of gene components, the prepa- ration of vectors, the synthesis of proteins, the production of hybrid bacteria, and the purification of DNA sequences. "We are getting a broad range of patents issued to cover genetic engineering processes," Saliwanchik says. Monoclonal antibodies and the hybridoma cell lines that produce them have also been patented. "This subject matter can be covered very well by patents," notes Saliwanchik. "You can cover the antibodies themselves by having the proper characteristics defined in the specifi- cation of the application for the patent. You can also claim the cell line. Certain procedures must be followed in doing this, but the procedures are known to patent attorneys." Thus, Saliwanchik contends that the patent system has been re- sponding well to biotechnology. "Some people have expressed doubts as to whether or not the system is viable enough to cover genetic engineering technology. I think it is." Trade Secrecy and Biotechnology If an individual or company decides not to pursue patent protection for a product or process, it may rely on trade secrecy instead. Trade secrets can theoretically be held indefinitely, they don't have to meet the criteria for patentability, and they may be less expensive to maintain and enforce than patents. They are enforced through state laws, with the holder of a trade secret able to obtain either an injunction or monetary damages against an unauthorized user of the secret when it has been acquired through improper means. An individual or organization must consider a number of factors in deciding whether to patent an invention or to keep it secret. Because biotechnology is developing so rapidly, a given invention may be outdated before a patent can be issued (typically the process takes two
96 BIOTECHNOLOGY years or longer). Companies are also more likely to patent a pioneering invention, one with the potential to change the direction of the field, than they are a less dramatic development or an improvement in the state of the art. There are also a number of drawbacks associated with trade secrets that may dissuade a company from pursuing that option. Some states are less protective of the results of research, as opposed to trade secrets of obvious commercial value. A trade secret can also be inferred through reverse engineering. If this reveals the secret or if it is independently discovered, the new discoverer may patent the secret and prohibit the original discoverer from using it. Furthermore, it is often difficult to prove in court that a competitor has improperly acquired a trade secret. Trade secrecy also runs counter to widely held tenets within the scientific community. It requires, for instance, that researchers not publish their findings in the open literature or discuss them at scientific conferences. "Once you file a patent application, you can publish on what you have done," says Saliwanchik. "Once you start thinking about trade secrets, you can forget about publishing, because that would destroy the trade secret." In biotechnology, trade secrecy may also conflict with requirements to release information in public forums. To build public trust in the new techniques, it may be necessary to release to regulatory or public groups information that a company would rather keep secret. Developments in the Patent System The patent system is continually evolving and can be expected to adapt both to developments in biotechnology and to more general influences. With regard to the former, biotechnology is forcing a reevaluation of the applicability of the enablement requirement to living organisms. One possible modification of this requirement would be to deposit the original organism and file an enabling description of how it has been genetically altered. Another option may be to restrict the use of microorganisms by third parties in a way that prevents patent infringement without limiting the public's access to the pat- ented information. "I think this issue will have to be resolved," says Saliwanchik. "I would hope that it is resolved in a way that strength- ens the patent system." Another prominent issue involves patents on processes. A foreign competitor can use a process that is patented in the United States and then legally ship products made through that process into the United
PATENTS AND TRADE SECRETS IN BIOTECHNOLOGY 97 States for sale. Legislation has been introduced that would define this practice as patent infringement, but it has not yet been passed. Because the manufacture of a product with genetically engineered organisms is a process, such legislation is strongly supported by American biotechnology firms. Meanwhile, changes are occurring within the Patent and Trademark Office in response to biotechnology. According to Saliwanchik, that office has been hiring new staff and training its examiners to deal with the flood of patent applications in biotechnology. But he warns that companies must realize that even with an expanded staff the granting of a patent takes time. "People think that if the Patent Office doesn't function rapidly to get a patent out in two years, then the system is defective. That is not true." The Patent and Trademark Office will also have to work through several uncertainties in its treatment of biotechnology, such as its assessment of the prior art and how to resolve conflicting claims. These problems will undoubtedly diminish as examiners and patent attor- neys become more knowledgeable about the field and as precedents are established. But "it takes time," says Saliwanchik, "upwards of ten years or so in conflict situations." Finally, the cost of seeking a patent has to be kept within bounds so that individuals and organizations will take advantage of the system. "The system has to be affordable for everyone," says Saliwanchik. "There is a tendency for prices to go up, and I think we have to try to keep those prices down." Despite these several deficiencies in the patent system, Saliwanchik does not foresee any great difficulties in applying for and receiving patents for products and processes in biotechnology. "I think the patent system in the United States is in pretty good shape," he says. "There may be some problems along the way, but I think we have reason to believe that the protection will be strong." Additional Readings Reid G. Adler. 1984. "Biotechnology as an Intellectual Property." Science 224 (April 27):357-363. D. W. Plant, N. Reimers, and N. D. Zinder, eds. 1982. Patenting of Life Forms. Banbury Report 10. Cold Spring Harbor, N.Y.: Cold Spring Harbor Laboratory. Roman Saliwanchik. 1982. Legal Protection for Microbiological and Genetic Engi- neering Inventions. Reading, Mass.: Addison-Wesley.