Strategies for Patenting in Biotechnology

Firoz Khan Pathan¹, Deepa Ailavarapu Venkata and Siva Kumar Panguluri^*

Anatomical Sciences and Neurobiology, School of Medicine , University of Louisville KY 40292 USA .

¹Nalsar Proximate Education, Nalsar University of Law , Hyderabad , India .

*For correspondence -  spanguluri@gmail.com

Current Trends in Biotechnology and Pharmacy , Volume 3 (3) July - 2009

Abbreviations

cDNA- Complementary Deoxyribonucleic acid, DNA- Deoxyribonucleic acid,

ESTs- Expressed sequence tags, HGP- Human genome project.

mRNA- Messenger ribonucleic acid, NIH- National institutes of health.

PCR- Polymerase chain reaction, rDNA- Recombinant deoxyribonucleic acid.

RNA- Ribonucleic acid, UCSF- University of California, Sanfransisco.

USPTO- United states patent and trademark office.

Abstract

Intellectual property rights (IP) is one of the major component of research in many organizations (both profit and non-profit), institutes and academics. Since 1970’s, during which a Canadian non-governmental organization (ETC group) filed two patent applications for the first time on “the world’s first-ever human-made life form”, many companies including academic institutes or universities are encouraging their researchers to protect their findings through IP’s. It is obvious for the researcher to surprise if he looks at the number of patents that were issued since 1970 on various entities over the advancement of science. Despite intense database on inventions and/or discoveries of various scientific organizations, the increasing interests of the scientists to protect their inventions/technology/discovery thorough IP is significantly reducing the accessibility of their findings and there by slowing advances in science. In this review, we are discussing on various components of patenting tools, protection and methodologies as an introductory material for scientists and students for the better understanding of intellectual property (IP) rights. We would like to promote the use of IP’s to protect the technology being theft out for biological terrorism rather than a commercial motif to “Business” the science.

Key Words: Intellectual Property Rights, Patenting DNA, Bayh-Dole Act, Stevenson-Wydler Technology Innovation Act.

Introduction

Intellectual property rights have been a recurring source of controversy in molecular biotechnology in recent years. A variety of developments have contributed to the increasing salience of intellectual property in biomedical research, including strong and growing commercial interest in the field, legal decisions that have clarified the availability of patent protection for a wide range of discoveries related to life forms, and changes in federal policy to encourage patenting of the results of government-sponsored research. Protection of intellectual property rights has helped researchers and institutions to attract research funding and has helped firms to raise investment capital and pursue product development. But it has also periodically generated complaints and concerns about its effect on the progress of science and on the dissemination and use of new knowledge (1). The concerns have been particularly pressing for scientists when intellectual property rights have threatened to restrict access to materials and techniques that are critical for future research. Controversy over intellectual property rights in biomedical research has waxed and waned over the years. The current wave of concern was triggered in 1991 when NIH filed its first patent application on partial cDNA sequences, or expressed sequence tags (ESTs). Despite the later withdrawal of the patent applications, the concern over access to DNA sequence information continued to generate debate, both in the US and internationally. Another focal point of concern has been the patenting and licensing of polymerase chain reaction (PCR) technology. In 1992, the pharmaceutical giant Hoffman-La Roche, who holds the patent on the enzyme used in PCR (Taq polymerase), sued the biotechnology company Promega for breach of contract over the distribution of enzyme. During the course of the litigation, many research scientists received a letter from Promega suggesting them they had been named as infringers against the Roche patent. Although Roche stated they had no intention of naming any scientists in the suit, the letter sent a chill throughout the research community and raised fears that patents might be blocking access to research tools. In addition to those controversies, less notorious controversies have surrounded other research tools in molecular biology.

Increasing alliances among academe, industry, and government, driven by a combination of economic and legal changes, have challenged institutions in the public and private sectors to balance their sometimes competing interests in the protection of intellectual property. Over the last two decades, public investment in research has been rewarded by a dazzling series of advances in molecular biology. At the same time, scientists have had to adapt to declines in the growth of public funding to explore these research frontiers. The commercial potential of the advances has motivated the private sector to provide additional resources, and a series of laws, beginning in 1980 with the Bayh-Dole Act (2), have encouraged the pooling of public and private research funds. This environment has been favorable for the development of small, research-intensive biotechnology companies with close links to universities. Indeed, most of the early biotechnology companies were founded by university professors, and many universities now offer "incubator space" for start-up biotechnology companies working in collaboration with university researchers. Pharmaceutical companies are also increasingly eager to establish collaborations with university researchers (3).

The pervasive intertwining of public and private interests makes molecular biotechnology a particularly useful focal point for considering the effect of intellectual property rights on the dissemination and use of research tools. The potential implications of advances in molecular biology for human health raise the stakes of getting the balance between public and private right, particularly when public attention is riveted on the rising costs of health care. In this review we will be discussing about the research methodology, patenting tools and patent protection and patenting of research tools for molecular biology and biotechnology applications.

Research methodology

The research methodology adopted is of a descriptive-analytical method. The data has been collected from primary and secondary sources which include internet sources (www.nap.edu /readingroom/books/property/ ), books, online transcripts of proceedings of meetings, conferences etc. The Bayh-Dole act and the Stevenson-Wydler technology innovation acts (4) which allow government contractors, small businesses and nonprofit organizations to retain certain patent rights in government sponsored research and permitted the funded entity to transfer the technology to third parties have been detailed. Cases that involved an important research tool in molecular biotechnology were chosen to illustrate a form of protection of intellectual property and a pattern of development involving both the public and the private sector. The strategies for patenting DNA sequences and multicellular organisms and the controversies surrounding them have been covered.

Bayh -Dole Act and the Stevenson-Wydler Technology Innovation Act

In 1980, Congress passed both the Bayh-Dole Act (5) and the Stevenson-Wydler Technology Innovation Act (6). Together these Acts allowed government contractors, small businesses, and nonprofit organizations to retain certain patent rights in government-sponsored research and permitted the funded entity to transfer the technology to third parties. The stated intent of Bayh-Dole was to ensure that the patented results of federally-funded research would be broadly and rapidly available for all scientific investigation. Bayh-Dole effectively shifted federal policy from a position of putting the results of government-sponsored research directly into the public domain for use by all, to a pro-patent position that stressed the need for exclusive rights as an incentive for industry to undertake the costly investment necessary to bring new products to market. The policy was based on a belief that private entities, given the incentives of the patent system, would do a better job of commercializing inventions than federal agencies. The Act for the first time established a largely uniform government-wide policy on the treatment of inventions made during federally supported R&D. Stevenson-Wydler is the basic federal technology law. A principal policy established by that Act is that agencies should ensure the full use of the results of the nation's federal investment in R&D. Another is that the law requires federal laboratories to take an active role in the transfer of federally-owned or originated technology to both state and local governments and to the private sector. Stevenson-Wydler required agencies to establish Offices of Research and Technology Applications at their federal laboratories, and to devote a percentage of their R&D budgets to technology transfer.

Patenting research tools

Over the past 15 years, a number of legal and commercial developments have converged to make intellectual property issues particularly salient in molecular biotechnology research.   The figure 1 shows the number of patents issued in USA since 2001. A series of judicial and administrative decisions has expanded the categories of patentable subject matter in the life sciences. For many years it appeared that patents on living subject matter would violate the longstanding principle that one may not patent products or phenomena of nature (7). But in 1980 the US Supreme Court held in the case of Diamond v. Chakrabarty that a living, genetically altered organism may qualify for patent protection as a new manufacture or composition of matter under Section 101 of the US Patent Code (8). The US Supreme Court relied on this principle in Funk Brothers Seed Co. v. Kalo Inoculant Co., holding invalid a patent on a mixed culture of different strains of bacteria used to inoculate the roots of different species of plants⁹. The court reasoned that, "The qualities of these bacteria, like the heat of the sun, electricity, or the qualities of metals, are part of the storehouse of knowledge of all men. They are manifestations of laws of nature, free to all men and reserved exclusively to none".

Characterizing Chakrabarty's invention as "a new bacterium with markedly different characteristics from any found in nature" and "not nature's handiwork, but his own," the Court indicated that Congress intended the patent laws to cover "anything under the sun that is made by man." With this broad directive from the Supreme Court, the US Patent and Trademark Office (PTO) expanded the categories of living subject matter that it considered eligible for patent protection to include plants (9) and animals (10). For example, in 1985, the PTO held that plants were eligible for standard utility patents, and not merely the more limited rights provided under special statutes for the protection of plant varieties⁹ and the PTO held that oysters were patentable subject matter in Ex parte Allen (10). Shortly thereafter, the Commissioner of Patents issued a notice stating that the PTO would consider non-naturally occurring, non-human, multicellular living organisms—including animals—to be patentable subject matter (9). The notice hastened to add that PTO would not consider human beings to be patentable subject matter, citing restrictions on property rights in human beings. The first patent on a genetically altered animal was issued in April of 1988 to Harvard University for the development of a mouse bearing a human oncogene 11). The decision to extend patent protection to animals generated considerable public controversy and has been the focus of numerous hearings in the US Congress. Restrictive legislation has been proposed from time to time, including a moratorium on animal patenting, although no such legislation has been passed. During the same time period, the explosions of commercial interest in the field, and the concomitant emergence of commercial biotechnology companies, have amplified the importance of intellectual property in the biomedical sciences. Many biotechnology firms have found a market niche somewhere between the fundamental research that typifies the work of university and government laboratories and the end product development that occurs in more established commercial firms. To survive financially in this niche, biotechnology firms need intellectual property rights in discoveries that arise considerably upstream from commercial product markets. This creates pressure to patent discoveries that are closer to the work of research scientists than to ultimate consumer products.

Another contemporaneous development that has contributed to the prevalence of intellectual property in biomedical research is the passage of the Bayh-Dole Act and the Stevenson-Wydler Act in 1980, and a series of subsequent acts that refine those statutes and expand their reach (12). These statutes encourage research institutions to patent discoveries made in the course of government-sponsored research.

For some institutions involved in health-related research, this represented a 180° shift in policy. A generation ago, the prevailing wisdom was that the best way to assure full utilization of publicly-sponsored research results for the public good was to make them freely available to the public. Today, federal policy reflects the opposite assumption. The current belief is that if research results are made widely available to anyone who wants them, they will languish in government and university archives, unable to generate commercial interest in picking up where the government leaves off and using the results to develop commercial products.

To make government-sponsored research discoveries attractive candidates for commercial development, institutions performing the research are encouraged to obtain patents and to offer licenses to the private sector. As a result, institutions that perform fundamental research have an incentive to patent the sorts of early stage discoveries that in an earlier era would have been dedicated to the public domain. A big part of the resulting increase in patenting activity among public sector research institutions has been in the life sciences. Taken together, these factors have created a research environment in which early stage discoveries are increasingly likely to be patented, and access to patented discoveries is increasingly likely to be significant to the ongoing work of research laboratories.

Requirements for patent protection:

The basic requirements for patent protection are novelty, utility, and non-obviousness. Novelty means that the invention did not exist before. Determining whether an invention is new requires searching through certain categories of prior art to determine the state of knowledge in the field at the time that the invention was made. Sources of prior art include prior patents, publications, and inventions that were previously in public use. If an invention was already known or used before the time that the inventor claims to have made it, the public gains nothing by conferring a patent. The patent will take something away from the public that it was previously free to use without in any way enriching the public storehouse of knowledge.

The prior art is also relevant to the standard of nonobviousness. This standard asks whether the invention constitutes a significant enough advance over what was known previously to justify patent protection. Under US law, the requirement is satisfied if, at the time the invention was made, it would not have been obvious to a person of ordinary skill in the field and who was knowledgeable about the prior art. This determination looks to the level of inventive skill of others working in the field, as well as the state of the prior art. In principle, the requirement might be justified as a means of distinguishing between trivial inventions that require no special incentive to call forth, and more elusive (and, perhaps, more costly) inventions that might not be developed without the enhanced assurance of profitability that patent protection offers. But how the standard will apply in any given case is often difficult to predict, and this uncertainty reduces the value of patents.

The utility requirement limits patent protection to inventions with practical applications, as opposed to basic knowledge. The meaning of this requirement has varied over the years from a minimal standard that the invention not to be positively harmful to people to a stricter requirement in recent years of safety and effectiveness that has sometimes approached what the FDA would require for approval of a new drug. Recent developments in the courts and in the PTO suggest that the utility requirement may be receding from its recent all-time high level as an obstacle to patent protection. The conceptual underpinnings of the utility requirement are not always clear, but in theory it can be justified as a means of distinguishing between basic research discoveries that are more likely to be effectively utilized if left in the public domain and more practical technological applications that may require a patent to ensure adequate incentives for commercial development. The Supreme Court has stated that discoveries whose only value is as an object of scientific inquiry do not satisfy the utility standard, suggesting that utility could be an important limitation on the use of the patent system to protect research tools.

Research tools in molecular biotechnology

Molecular biology provides a useful focal point for examining the effect of intellectual property on the dissemination of research tools. It is a dynamic and productive field of research that provides a wealth of new discoveries that are simultaneously inputs into further research and also candidates for commercial development. The obvious implications of discoveries in molecular biotechnology for human health raise the stakes of striking the right balance between public access and private property, particularly when public attention is riveted upon the rising costs of health care. And it profoundly affects the interests of two different types of commercial firms—young biotechnology firms and large, integrated pharmaceutical firms—both of which are sensitive to intellectual property but for different reasons.

This dichotomy between biotechnology firms and pharmaceutical firms oversimplifies the wide range of firms with interests in molecular biotechnology, but it is nonetheless a useful heuristic assumption to help sort through the interests of different sorts of firms. Young biotechnology firms typically need to raise funds to keep their research operations moving forward before they have products to sell to consumers. For these firms, an intellectual property portfolio might be critical at an early stage in their R&D to give them something to show investors as evidence of their potential for earning high returns in the future. With this purpose in mind, they are likely to seek patents on discoveries that are several stages removed from a final product that is ready to be sold to consumers.

Established pharmaceutical firms are also very sensitive to intellectual property rights, but for different reasons and at a different stage in the R&D process. Pharmaceutical firms do not need to go to the capital markets to fund their research; they typically fund new research projects out of profits on existing products. For these firms, intellectual property is not a means of raising capital, but simply a means of ensuring an effective commercial monopoly for their products. A monopoly position in a new drug will help them recoup what might amount to hundreds of millions of dollars required for FDA-mandated clinical testing before they can bring that drug to market. For this purpose, they seek patent rights that cover the downstream products that they sell to consumers, not the upstream discoveries that they may use along the road to product development.

Since they have different reasons for requiring intellectual property rights, these different types of firms are likely to be affected differently by different legal rules. We need to keep the interests of both of these types of firms in mind, along with the interests of researchers and the institutions that fund research, as we think about how to manage intellectual property rights in research tools. Strategies that work for some players could be disastrous for others.

Patents on research tools

"Research tools" is not a term of art in patent law. No legal consequences flow from designating a particular discovery as a research tool. Research tools are not categorically excluded from patent protection (except insofar as they lack patentable utility), nor is the use of patented inventions in research categorically exempted from infringement liability.

Nonetheless, there are reasons to be wary of patents on research tools. Although the ultimate social value of research tools is often difficult to measure in advance, it is likely to be greatest when they are widely available to all researchers who can use them. For years, we have sustained a flourishing biomedical research enterprise in which investigators have drawn heavily upon discoveries that their predecessors left in the public domain. Yet the nature of patents is that they restrict access to inventions to increase profits to patent holders. An important research project might call for access to many research tools, and the costs and administrative burden could mount quickly if it were necessary for researchers to obtain separate licenses for each of these tools.

The effects of patenting research tools will vary. For example, patents are unlikely to interfere substantially with access to such research tools as chemical reagents that are readily available on the market at reasonable prices from patent holders or licensees. Many of the tools of contemporary molecular biology research are available through catalogs under conditions that approach an anonymous market. Some are patented, but the patents are unlikely to interfere with dissemination. Indeed, it might be cheaper and easier for researchers to obtain such a tool from the patent holder or from a licensed source than it is to infringe the patent by making it themselves. But not all research tools are of that character.

Some research tools can only be obtained by approaching the patent holder directly and negotiating for licenses; in this context, patents potentially pose a far greater threat to the work of later researchers. Negotiating for access to research tools might present particularly difficult problems for would-be licensees who do not want to disclose the directions of their research in its early stages by requesting licenses. Another risk is that the holders of patents on research tools will choose to license them on an exclusive basis rather than on a nonexclusive basis; this could choke off the R&D of other firms before it gets off the ground. Such a licensing strategy might make sense for a startup company that is short on current revenues, even if it does not maximize value in the long run from a broader social perspective.

Another risk is that patent holders will use a device employed by some biotechnology firms of offering licenses that impose "reach-through" royalties on sales of products that are developed in part through use of licensed research tools, even if the patented inventions are not themselves incorporated into the final products. So far, patent holders have had limited success with reach-through royalty licenses. Firms have been willing to accept a reach-through royalty obligation for licenses under the Cohen-Boyer patents on basic recombinant DNA techniques, perhaps because those patents include broad claim language that covers products developed through the use of the patented technology. But reach-through royalties have met greater market resistance for other patents, including the patents on the Harvard onco-mouse and the polymerase chain reaction (PCR).

Licenses with reach-through royalty provisions might appear to solve the problem of placing a value on a research tool before the outcome of the research is known. One difficulty in licensing research tools is that the value of the license cannot be known in advance, so it is difficult to figure out mutually agreeable license terms. A reach-through royalty might seem like a solution to this problem, in that it imposes an obligation to share the fruits of successful research without adding to the costs of unsuccessful research. But it takes little imagination to foresee the disincentives to product development that could arise from a proliferation of reach-through royalties. Each reach-through royalty obligation becomes a prospective tax on sales of a new product, and the more research tools are used in developing a product, the higher the tax burden.

A further complication arises in the case of inventions that have substantial current value as research tools but might also be incorporated into commercial products in the future. It might be necessary to offer exclusive rights in the ultimate commercial products to innovating firms to give them adequate incentives to develop the products, but it might be impossible to preserve this option without limiting dissemination of the inventions for their present use as research tools.

For all of these reasons, exclusive rights risk inhibiting the optimal use of research tools and interfering with downstream incentives for product development. Much depends on whether the holders of exclusive rights can figure out how to disseminate research tools broadly without undermining their value as intellectual property.

These are difficult problems that defy facile solutions. One of the purposes of this workshop is to examine the solutions that different institutions have come up with and see how they have operated in practice. Which mechanisms have worked well, which have worked badly, and what can we learn from the experiences of others? We need to keep in mind that this issue implicates the interests of many different players who value intellectual property in different ways and for different purposes.

Patenting DNA sequences

On the surface, any device, process, or compound that meets the criteria of novelty, inventiveness and utility should be patentable. Since 1980, thousands of patent applications for whole genes have been approved by patent offices through out the world. The most valuable human gene patent is for the production of recombinant erythropoietin, which had sales of about $4 billion in 2001.Erythropoietin, stimulates the formation of red blood cells and is used to prevent anemia in patients with kidney failure who require dialysis. Many of the other patented gene sequences are used as biomarkers.

With the advent of HGP and, in particular, with the undertaking of the partial sequencing of thousands of human cDNA molecules from different tissues and organs, the patenting of these sequences became extremely contentious¹³. In 1991, the issue of patenting gene fragments was broached when the U.S. NIH filed for the patent rights for 315 partially sequenced human cDNAs. Two additional filings brought the total number of sequences to 6869. In 1994, in a preliminary ruling, the US PTO notified the NIH that it would reject the patent application on the grounds that the functions of the sequences were not known. In other words, partial sequences by themselves did not fulfill the requirement of utility and were not patentable. How ever, by 1997, over 350 patent applications for more than 500,000partial DNA sequences had been filed mostly by private companies, which purportedly met the standard for usefulness. One of these patent proposals sought protection for about 18,500 ESTs.Consequently; serious concerns were raised about granting patents for large numbers of sequenced genes and partially sequenced DNA fragments with broadly based applications.

Individuals who opposed the patenting of DNA fragments of unknown or loosely defined function contended that genes and partial DNA sequences are discoveries or, more likely, products of nature and definitely not inventions. Others conceded that, although some of these inventions might be useful, it was premature and speculative to award patents with out additional information about the functions of the sequences. In addition, it was argued that granting of such patents would not only give the patent holders too much control but would act as a constraint against the development of various diagnostic and therapeutic agents. In this context, thousands of ESTs are considered to be “means to ends” and not the actual end points (16). On the other hand, those who favored the patenting of ESTs maintained  that these collections novel because they defined the normal mRNA complement of various tissues and organs and consequently had utility because each collection could be used as a diagnostic assay to determine the extent to which a disease alters the normal complement of mRNAs in various organs.  In addition, these individuals asserted that, historically, the existence of patents had not deterred the development of new products and but, to the contrary, stimulated the process.

After developing some ad hoc rules, the U.S.   PTO examined in more detail a full range of issues and concluded that genes and partial DNA sequences were patentable (16). On January 5, 2001 a set of guide lines for gene patenting was released. The key requirement for this type of application was that each DNA sequence must have “specific and substantial credible utility.” Moreover, the written specifications and claims for each sequence must be thorough and demonstrate the actual use of each sequence and not merely a potential function. The guidelines have established the criteria for patenting incomplete DNA sequences in the United States , although there is still opposition against granting patents for any human DNA sequence.

Patenting multicellular organisms

The patenting of multicellular organisms continues to raise ethical and social concerns. However, there is nothing intrinsically new about the exclusive ownership of living material¹⁴. In the past, microorganisms were routinely patented and specific laws were promulgated to give plant breeders the right to own various plant varieties. The transgenic mouse that carries a gene that makes it susceptible to tumor formation has been the precedent-setting case in many jurisdictions to determine whether genetically modified animals are patentable. Currently, patenting of genetically modified animals is sanctioned in most developed countries, including the United States, members of the European union, Japan, Australia and New Zealand and others.

Vigorous challenges to patenting transgenic animals have been put forward on moral grounds (15). In other words, the issue is whether society considers this form of patenting acceptable. From a historical perspective, it is unlikely that a position based on ethical considerations will be completely successful in preventing the patenting of transgenic animals. For example, if an invention purports to facilitate a new treatment for human disease, the currently prevalent view is that human rights and needs supersede those of animals .However, patenting is not an absolute right, and governments, by passing specific laws, can what can or cannot be patented. If an invention is considered by various special interest groups to have a potentially negative impact on an existing agricultural practice, for example, then it is quite possible that a law preventing the implementation of the new technology could be passed

Experimental use exemption

In some cases, the courts have recognized what has come to be known as an experimental use exemption, or research exemption, from infringement liability. On its face, the patent statute does not appear to permit any unlicensed use of a patented invention, in research or otherwise, but language in some judicial opinions nonetheless suggests that use of a patented invention solely for research or experimentation is, in principle, exempt from infringement liability. The experimental-use doctrine was first expounded in 1813 by Justice Story in dictum in the case of Whittemore v. Cutter¹⁶. Here the legal term dictum refers to something said in a judicial opinion that was not necessary to resolve the case before the court, and therefore does not create binding precedent in subsequent cases.

He observed "that it could never have been the intention of the legislature to punish a man who constructed [a patented] machine merely for philosophical experiments or for the purpose of ascertaining the sufficiency of the machine to produce its described effects". It is difficult to discern the scope of this exception with any precision, inasmuch as experimental use becomes an issue only in patent infringement actions, and patent holders are unlikely to file a lawsuit against an academic researcher whose use of the invention is commercially insignificant. Judicial pronouncements on the scope of the experimental use exemption address situations in which a patent holder has found a defendant's activities sufficiently annoying to be worth the trouble of pursuing a lawsuit; this factor has undoubtedly skewed the distribution of cases in which the defense arises toward cases with high commercial stakes. Within this universe, the experimental use defense has been frequently raised, but almost never sustained. Nonetheless, courts have consistently recognized the existence of an experimental use defense in theory, although the defense has almost never succeeded in practice.

Recent case law suggests that the experimental use defense may be available only for pure research with no commercial implications, if such a thing exists. In Roche Products v. Bolar Pharmaceutical Company (17), 1984 decision of the US Court of Appeals for the Federal Circuit,the court rejected the arguments of a generic drug manufacturer that the experimental use defense should apply to its use of a patented drug to conduct clinical trials during the patent term. The purpose of the trials was to gather data necessary to obtain FDA approval to market a generic version of the drug as soon as the patent expired. The court characterized the defense as "truly narrow", noting that the defendant's use of the drug was "no dilettante affair such as Justice Story envisioned”.

“The court held that the defense does not permit unlicensed experiments conducted with a view to the adoption of a patented invention for use in an experimenter's business, as opposed to experiments conducted for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry. Although it is not entirely clear what sort of research the court would exclude from infringement liability as a mere "dilettante affair", the language of the decision offers little hope of an exemption for research scientists who use patented inventions with an aim to discover something of potential usefulness. It certainly suggests that the defense would be unavailable whenever the defendant's research is motivated by a commercial purpose. As a practical matter, this parsimonious approach could seriously limit the availability of the defense in fields of research with commercial significance, in which even academic researchers are often motivated, at least in part, by commercial interests. For example, the Bayh-Dole Act in effect directs academic institutions to be alert to potential commercial implications of their research so that they can obtain patents as appropriate.

Congress has partially abrogated the decision of the Federal Circuit in Roche v. Bolar in the specific context of clinical trials of patented drugs by an amendment to the patent statute¹⁸. As amended, the statute explicitly permits the use of patented inventions for the purpose of developing and submitting information under laws regulating the manufacture, use, or sale of drugs. But the amendment did not address the broader question of when the experimental use defense would be available outside of that very narrow setting.

Other countries have more broadly available experimental use defenses than the US, often explicitly included in the text of foreign patent statutes. But even these defenses typically distinguish between experimenting on a patented invention—that is, using it to study its underlying technology and invent around the patent, which is what the exemption covers—and experimenting with a patented invention to study something else, which is not covered by the exemption.

In other words, even outside the US, the defense is not available for researchers who make use of patented research tools in their own work, as opposed to those who study the research tools themselves. It is difficult to imagine how a broader experimental use defense could be formulated that would exempt the use of research tools from infringement liability without effectively eviscerating the value of patents on research tools. The problem is that researchers are ordinary consumers of patented research tools, and that if these consumers were exempt from infringement liability; patent holders would have nowhere else to turn to collect patent royalties. Another way of looking at the problem is that one firm's research tool may be another firm's end product.

This is particularly likely in contemporary molecular biology, in which research is big business and there is money to be made by developing and marketing research tools for use by other firms. An excessively broad research exemption could eliminate incentives for private firms to develop and disseminate new research tools, which could on balance, do more harm than good to the research enterprise.

Case studies

Each of the following cases involves an important research tool in molecular biology, and each was chosen to illustrate a form of protection of intellectual property and a pattern of development involving both the public and the private sector. The ideal strategies for the handling of intellectual property in molecular biology are not always immediately obvious, as these case studies illustrate. For most, final decisions have not been made about how access to these research tools will be controlled. Such decisions might be modified in response to both scientific and legal developments.

Recombinant DNA

The Cohen-Boyer technology for recombinant DNA, often cited as the most-successful patent in university licensing, is actually three patents. One is a process patent for making molecular chimeras and two are product patents—one for proteins produced using recombinant prokaryote DNA and another for proteins from recombinant eukaryote DNA. Recombinant DNA, arguably the defining technique of modern molecular biology, is the founding technology of the biotechnology industry (19). In 1976, Genentech became the first company to be based on this new technology and the first of the wave of biotechnology companies, which in fifteen years has grown from one to over 2000.

The first patent application was filed by Stanford University in November 1974 in the midst of much soul-searching on the part of the scientific community. Stanley Cohen and Herbert Boyer, who developed the technique together at Stanford and the University ofCalifornia, San Francisco (UCSF), respectively, were initially hesitant to file the patent. Several years of discussion involving the National Institutes of Health (NIH) and Congress followed. By 1978, NIH decided to support the patenting of recombinant DNA inventions by universities; in December 1980, the process patent for making molecular chimeras was issued. The product patent for prokaryotic DNA was issued in 1984. The patents were jointly awarded to Stanford and UCSF and shared with Herbert Boyer and Stanley Cohen. The first licensee signed agreements with Stanford on December 15, 1981. As of February 13, 1995, licensing agreements had generated $139 million in royalties, which have shown an exponential increase in value since their beginning. In 1990-1995 alone, the licensing fees earned $102 million.

This case has three key elements. First, the technology was inexpensive and easy to use from a purely technical standpoint and there were only minimal impediments to widespread dissemination. Second, there were no alternative technologies. Third, the technology was critical and of broad importance to research in molecular biology.

The technology was developed in universities through publicly funded research. The strategy used to protect the value of the intellectual property was to make licenses inexpensive and attach minimal riders. The tremendous volume of sales made the patent very lucrative. Every molecular biologist uses this technology. However, not all inventions are as universally critical. Only a few university patents in the life sciences, such as warfarin and Vitamin D, have been even nearly as profitable as the Cohen-Boyer patent. Clearly, had this technology not been so pivotal for molecular biology or had an equally useful technology been available, the licenses would not have been sold so widely and the decision to license the technology might have met with more resistance.

The Cohen-Boyer patent is considered by many to be the classic model of technology transfer envisaged by supporters of the Bayh-Dole Act, which was intended to stimulate transfer of university-developed technology into the commercial sector. Ironically, it presents a different model of technology than that presumed by advocates of the Bayh-Dole act.

The biotechnology boom that followed the widespread dissemination of recombinant DNA techniques transformed the way universities manage intellectual property. It also fundamentally changed the financial environment and culture of biological research.

The decision to negotiate nonexclusive, rather than exclusive, licenses was critical to the industry. If the technology had been licensed exclusively to one company and the entire recombinant DNA industry had been controlled by one company, the industry might never have developed. Alternatively, major pharmaceutical firms might have been motivated to commit their resources to challenging the validity of the patent.

PCR and Taq polymerases

Polymerase chain reaction (PCR) technology presents an interesting counterpoint to the Cohen-Boyer technology. Both are widely used innovations seen by many as critical for research in molecular biology. However, the licensing strategies for the two technologies have been quite different, and they were developed in different contexts.

PCR allows the specific and rapid amplification of targeted DNA or RNA sequences. Taq polymerase is the heat-stable DNA polymerase enzyme used in the amplification. PCR technology has had a profound impact on basic research not only because it makes many research tasks more efficient, in time and direct cost, but also because it has made feasible some experimental approaches that were not possible before the development of PCR. PCR allows the previously impossible analysis of genes in biological samples, such as assays of gene expression in individual cells, in specimens from ancient organisms, or in minute quantities of blood in forensic analysis.

In less than a decade, PCR has become a standard technique in almost every molecular biology laboratory, and its versatility as a research tool continues to expand. In 1989, Science chose Taq polymerase for its first "Molecule of The Year" award. Kary Mullis was the primary inventor of PCR, which he did when he worked at the Cetus Corporation. He won a Nobel Prize for his contributions merely 8 years after the first paper was published in 1985 (20), which attests to its immediate and widely recognized impact.

Whereas recombinant DNA technology resulted from collaboration between university researchers whose immediate goal was to insert foreign genes into bacteria to study basic processes of gene replication, PCR was invented in a corporate environment with a specific application in mind—to improve diagnostics for human genetics. No one anticipated that it would so quickly become such a critical tool with such broad utility for basic research.

Molecular biology underwent considerable change during the decade between the development of recombinant DNA and PCR technologies. The biotechnology industry emerged, laws governing intellectual property changed, there was a substantial increase in university-industry-government alliances, and university patenting in the life sciences increased tenfold. There was virtually no controversy over whether such an important research tool should be patented and no quarrel with the principle of charging licensing fees to researchers. The controversy has been primarily over the amount of the royalty fees.

Cetus Corporation sold the PCR patent to Hoffman-LaRoche for $300 million in 1991. In setting the licensing terms for research use of PCR, Roche found itself in a very different position from Stanford with respect to the Cohen-Boyer patent. First, it was a business, selling products for use in the technology. That made it possible to provide rights to use the technology with the purchase of the products, rather than under direct license agreements, such as Stanford's. This product-license policy was instituted by Cetus, the original owner of the PCR patents. An initial proposal to the scientific community by the president of Cetus for reach-through royalties—royalties on second-generation products derived through use of PCR—was met with strong criticism. Ellen Daniell, director of licensing at Roche Molecular Systems, noted that the dismay caused by the proposal has continued to influence the scientific community's impression of Roche's policy.

Roche's licensing fees have met with cries of foul play from some scientists who claim that public welfare is jeopardized by Roche's goals. Nevertheless, most scientists recognize that Roche has the right to make business decisions about licensing its patents. The fact that Roche had paid Cetus $300 million for the portfolio of PCR patents led some observers to think that Roche intended to recoup its investment through licensing revenues, a point that Daniell disputed. She pointed out that Roche's business is the sale of products and that licensing revenues are far less than what would be needed to recoup the $300 million over a time period that would be relevant from a business viewpoint. Daniell listed Roche's three primary objectives in licensing technology:

• Expand and encourage the use of the technology.

• Derive financial return from use of the technology by others.

• Preserve the value of the intellectual property and the patents that were issued on it.

Roche has established different categories of licenses related to PCR, depending on the application and the users. They include research applications, such as the Human Genome Project, the discovery of new genes, and studies of gene expression; diagnostic applications, such as human in vitro diagnostics and the detection of disease-linked mutations; the production of large quantities of DNA; and the most extensive PCR licensing program, human diagnostic testing services. Licenses in the last-named category are very broad; there are no up-front fees or annual minimum royalties, and the licensees have options to obtain reagents outside Roche.

Discussion about access to PCR technology centered on the costs of Taq polymerase, rather than on the distribution of intellectual property rights. Tom Caskey's view was that "the company has behaved fantastically" with regard to allowing access to PCR technology for research purposes. Bernard Poiesz, professor of medicine at the State University of New York in Syracuse and director of theCentralNew YorkRegionalOncology Center, agreed that he knew of no other company that had done as well as Roche in making material available for research purposes. But he also argued that the price of Taq polymerase is too high and has slowed the progress of PCR products from the research laboratory to the marketplace. Poiesz stated that the diagnostic service licenses "are some of the highest royalty rates I have personally experienced". He cited the example of highly sensitive diagnostic tests for HIV RNA, which he said are too expensive for widespread use, largely because of the licensing fees charged by Roche. Caskey felt that Roche should have expanded the market by licensing more companies to sell PCR-based diagnostic products and profited from the expansion of the market, rather than from the semi exclusivity that it has maintained.

Ron Sederoff commented that—in contrast to the human genomics field, in which funding levels are much higher than for other fields of molecular biology—many academic researchers do not find easy access to the technology. What is the effect of the Cetus-Roche licensing policy on small companies? Tom Gallegos, intellectual property counsel for OncoPharm, a small biotechnology company, stated that most small companies cannot afford the fees charged by Roche. He noted that the entry fee for a company that wants to sell PCR-based products for certain fields other than diagnostics ranges from $100,000 to $500,000, with a royalty rate of 15%. By comparison, a company pays about $10,000 per year and a royalty fee of 0.5-10% for the Cohen-Boyer license. The effect is an inhibition of the development of PCR-related research tools, with consequent reductions or delays in the total royalty stream and possibly litigation.

In the case of PCR, the research tool is both a commercial product and a discovery tool. As such, it raises questions. Are the PCR patents an example of valuable property that would have been widely disseminated in the absence of patent rights? Is PCR an example of a technology that has been more fully developed because of the existence of patent rights? Daniell stated that Roche has added considerable value to the technology, in part through the mechanism of patent rights. There was vigorous discussion and disagreement as to whether the licensing fees justify the value added by Roche.

Conclusions

Not everyone believes that patenting is worthwhile. Some opponents argue that awarding a monopoly restricts competition, leads to higher prices, curtails new inventions, and favors large corporations at the expense of individual inventors and small firms. Notwithstanding these concerns the patent system is well established and is here to stay. Moreover, patent ownership does not appear to prevent significant research and development by other researchers and companies. Indeed, it might be argued that if patents were serious impediments to innovation, then U.S. patent 4,237,224 which was granted to Stanley Cohen and Herbert Boyer in 1980 for recombinant DNA technology for both the use of viral and plasmid vectors and the cloning of foreign genes, should have seriously constrained the development of rDNA technology. Obviously no such hindrance has occurred.

In the past, patenting and patent enforcement were rarely of interest to researchers working in the biological sciences. Now, however, there is a view in the academic scientific community that patents and the consequences of patenting may be detrimental to establish scientific values .Traditionally, science, especially university- based research, has been an open system with a free exchange of ideas and materials through publications and personal communications. The ideas of others have been respected, and contribution to the technical development of an area of study has, in many instances, been a shared enterprise. However, more recently, some scientists begun to feel that the integrity of traditional scientific enquiry has become secondary to self-interest, in that public recognition and financial gain from innovations are the prime motivations for conducting scientific research. It is argued that research is often carried out secretly and has created elite, non-cooperating research groups. In the past, there was a tendency to avoid secrecy in basic research. The belief was that scientific knowledge would grow if research results were published as articles in journals that could be read by anyone, there by enabling researchers to direct their studies in appropriate direction s and to benefit from the discoveries of the others. With secrecy, time and effort may be wasted on repeating experiments that, unbeknownst to the researcher, have already been done. Now scientists are advised by their patent attorneys to keep their work secret until a patent is filed. Consequently, the lure of patenting has made a large number of scientists reluctant to talk about their work, at least until after the patent application has been filed.

In sum, the enthusiasm for patenting and patent protection has elicited the perception that traditional science may become hostage to patent holders and that research will become less fruitful. Others feel that the traditional way of doing science is an outmoded, inefficient, and indulgent exercise and that patent ownership and the drive for ownership will spur new discoveries. This controversy will not be readily resolved. It is clear that the emergence of molecular biotechnology has raised far-reaching considerations, even including how scientific inquiries ought to be conducted.

Acknowledgements

Authors are thankful to the National Academy of Sciences, and other web sites for providing the valuable information on intellectual property rights and research tools in molecular biology. Most part of the text in this review has the information taken from many source other than scientific journals, which were not cited or referenced.

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Figure legend:

Fig.1: A comparative bar diagram of number of patents issued and number of patents published in USA since 2001.