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Europe Can Do Better on Gene Patenting

LONDON - The European Council has identified the biotechnology sector as one of the most promising in terms of economic development and employment. Indeed, current estimates indicate that the European biotechnology market could be worth in excess of €100 billion by 2005. 


For this to become a reality, it is widely acknowledged that beside high-quality research and a pool of willing investors, there must be an appropriate regulatory framework in which the market can operate with the necessary degree of legal certainty. Looked at another way, the relatively high levels of investment required by genomics and proteomics projects makes effective patent protection a critical factor in encouraging research and innovation.


It appears that Europe's position can be greatly improved. Though patenting activity at the European Patent Office in the biotechnology and genetic-engineering sectors over the past decade has increased by more than 200 percent, the largest number of applications made between 1996 and 2000--some 45 percent of them--were from US inventors. By comparison, just 38 percent of patents filed with the EPO in that time were from European inventors. 


US inventors exhibit a much greater dominance of patents in the genetic-engineering sector of the United States Patent and Trademark Office. Between 1993 and 1997, for example, three out of every four patents granted by the USPTO were awarded to US inventors, compared with the nearly 15 percent granted to European inventors.


What's more, looking strictly at growth rates, the EPO saw a 17.7-percent increase between 1996 and 2000 in patent applications in the genetic-engineering sector, while the USPTO reported a 31 percent jump between 1993 and 1997.


These statistics suggest that European countries are falling behind the US--and not only at protecting their own market, but they also have a comparatively small market share in the US technology market.


The regulation game


A key piece of legislation within Europe's existing regulatory framework is the Biotech Directive. Adopted in July 1998 after 10 years of debate in the European Parliament and the Council, the Directive outlines a number of principles about the patentability of biological material and the extent of that patent's protection. 


As biotechnology is such a rapidly developing science, the Directive requires the European Commission to prepare an annual report on the development and implications of patent law in the field of biotechnology and genetic engineering in order for the EC to identify and assess problem areas as they arise. The first such report, published Oct. 7, highlighted a number of concerns about progress.


The Directive should have been incorporated into the national legal systems of all 15 European Union countries by July 2000. However, at the time the first report was made available, only Denmark, Finland, Ireland, the UK, Greece, and Spain had done so. This is far from ideal and could lead to inconsistencies developing between the laws of European countries. 


The report concludes that the remaining countries must implement the Directive without further delay. The report noted a judgment of the European Court of Justice in October 2001 that dismissed an application by The Netherlands to annul the Directive. As the judgment contains guidance on the interpretation of the Directive it should be of assistance for implementing countries.


The Biotech Directive was incorporated into the European Patent Convention in June 1999.  As the EPO applies the procedure laid down by the EPC when it examines patent applications, all patents granted by the EPO after June 1999 have been granted in compliance with the Directive. The EPO boards of appeal must also comply with the EPC when considering the validity of patents in opposition proceedings.


The Directive states that it does not prejudge the obligations of EU countries under international agreements, including the Convention on Biological Diversity and the TRIPs Agreement. However, the Commission is less certain about the compatibility of the Directive with the Substantive Patent Law Treaty that is currently being negotiated in the World Intellectual Property Organisation. The Commission intends to keep the SPLT negotiations under review and it is likely that this compatibility issue will be addressed in future annual reports.

The Directive distinguishes between plants and animals (which are patentable) and plant and animal varieties (which are not). The reason plants and animals can be patented is that, unlike plant and animal varieties, they can be formed by non-biological (genetic engineering) processes. In a similar manner, the non-biological processes used to obtain transgenic plants and animals are patentable, whereas essentially biological processes for obtaining plants and animals are not.


The human body at the various stages of its formation and development (including the embryo) is not patentable as this is a discovery not an invention. This exclusion from patentability extends to the sequence or partial sequence of a gene and falls in line with the UNESCO Declaration on the human genome, in that it does not provide for any financial gain relating to the genome in its natural state. 


However, an element that has been isolated from the human body or otherwise by means of a technical process, including the sequence or partial sequence of a gene, may be patented even if the structure of the element is identical to that of a natural element. The isolated element can be classed as an invention rather than a mere discovery, as it must be isolated by a man made technique(s) that does not exist in nature.


It is worth remembering that in order to qualify as a patentable invention, the isolated element must still satisfy the standard criteria for patentable inventions--i.e., the invention must be novel, involve an inventive step, and be capable of industrial application. In the case of a gene sequence, the industrial application requirement will not be satisfied unless the encoded protein, part of protein, or its function is disclosed in the patent application. In addition, the utilization of the sequence must not be speculative but must be specific, substantial, and credible. 


Despite the increasing amount of guidance on the patentability of gene sequences, the Report recommends further consideration of the scope of patents involving DNA sequences and proteins deriving from those sequences, as well as patents based on expressed sequence tags and SNPs.


The Directive establishes a general principle of excluding the patentability of inventions whose commercial exploitation would be contrary to law and order or morality and contains the following non-exhaustive list of exclusions:


--processes for cloning human beings;

--processes for modifying the germ line genetic identity of human beings;

--the use of human embryos for industrial or commercial purposes; and

--processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial benefit to man or animal (together with the animals resulting from such processes).


Bearing in mind these exclusions, the report comments on the progress that has been made with human stem cell research and the potential for cures, particularly in the treatment of degenerative diseases. The need to encourage work in this area is acknowledged and the grant of patents for human stem cells and cell lines obtained from them is suggested as a possible incentive. The Report concludes that further discussions are needed to determine whether patents should be allowed for human stem cell research and, if so, the conditions and limits that should be applied.


The main conclusion of the Report is that the Biotech Directive must be implemented in all European member states as soon as possible. This is necessary to provide the legal certainty in which innovative research can be carried out and to prevent Europe falling behind its competitors in this crucial sector. The Report also identifies as two areas requiring further consideration the scope of patents related to sequences or partial sequences of genes isolated from the human body and the potential patenting of human stem cells and cell lines obtained from them. These two areas are to be reviewed by independent experts from science and law, beginning this month, and their conclusions will be presented in 2003.



Penny Gilbert is a partner and Robert Burrows is an assistant in the BioPharma group of the UK law firm Bristows.

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