Patents on Living Organisms

1
Patents on Living Organisms

• In 1972, Ananda Chakrabarty, microbiologist at
  the University of Illinois at Chicago, applied
  for a patent on a genetically modified bacterium
  that enabled the breakdown of crude oil. His idea
  was to license the bacterium to groups
  responsible for cleaning oiled beaches after a
  spill.
• The Patent Trademark Office (PTO) rejected the
  application on the grounds that living things
  could not be patented.

2
Diamond v. Chakrabarty Seminal Case

• The case reached the Supreme Court in 1980 after
  an appeals court reversed PTO's decision.
• The Supreme Court found that "everything under
  the sun that is made by man is eligible for
  patenting" and awarded Chakrabarty a patent on
  the bacterium.
• In the years that followed, PTO issued hundreds
  of patents on plants and animals that as of 1985
  resembled standard utility patents on
  pharmaceuticals or electronic devices.
• Seminal Highly influential in an original way
  constituting or providing a basis for further
  development a seminal idea in the creation of a
  new theory.

3
Plant Utility Patents

• Utility patents cover the plants themselves,
  seeds, breeding methods, and plant biotechnology
  (Janis Kesan, 2001).
• The Chakrabarty decision, in addition to
  accommodating the high-tech direction of
  agricultural RD, provided fairly strong patent
  protection for important aspects of agricultural
  innovation.
• Ex parte Hibberd (1985) extended patent
  protection to new plant varieties

4
Plant Patents Before Chakrabarty

• In 1930, Congress protected the nursery industry
  from competing firms that could take cuttings
  from plants to produce identical asexually
  reproduced competing products
• Duplication of protected varieties from seeds of
  sexually reproduced plants was protected in 1970
  by the Plant Variety Protection Act (PVPA), which
  was extended to include tuber-reproduced
  varieties in 1996.
• PVPA protection is limited by a research
  exemption and farmers' right to save seed "for
  use on the farm"

5
How Many Kinds of Patents Are There?

• Utility patents for the invention or discovery of
  a new process, machine, article/manufacture,
  compositions/matters, or improvements.
• Design patents for the invention of
  new/ornamental/original manufactured article.
• Plant patents for the invention or discovery for
  the asexual reproduction a distinct/new plant
  variety.

6
U.S. Eases Standard for Process Patents

• In re Durden (1985) Prevented biotech inventors
  from receiving U.S. patents on many processes
• Process utilizing a conventional manipulation or
  reaction is not patentable merely because the
  starting material employed, or the product
  obtained, or both, were novel and non-obvious
• Even though the inventor used a new starting
  material to produce a new end product, his
  process was standard and known from prior art

7
Biotechnological Process Patent Act of 1995

• After the Durden case, the biotech industry
  argued it had no effective protection if they
  could not patent the process
• That would mean competitor outside the U.S. were
  unrestrained in using patented starting
  materialsthey could use them and use the
  inventors unpatented process and export the
  finished product to the U.S.
• The BPPA is an exception It allows the
  patenting of claims to processes that use or
  produce patentable compositions of matter
• This is an unusual act in that it is
  industry-specific The only process inventions
  protected are those which genetically alter an
  organism

8
Timeline for Plant Biotechnology

• 1982 First transgenic plant produced (tobacco
  plant resistant to an antibiotic)
• 1985 Field trials for biotech plants resistant
  to insects, viruses, bacteria (in the U.S.)
• 1994 Transgenic FlavrSavr tomato approved for
  sale in U.S. groceries
• 1995-96 GM soybeans and corn approved for sale,
  and GM cotton and canola is commercialized in
  U.S. (Bt, HR, root worm resistance)
• 1996 GM tomato paste approved in the UK, and
  the EU approves GM herbicide tolerant soybeans
  and insect protected corn
• 1999 Golden Rice developed by German and Swiss
  scientists
• Today GM wheat, rice, potatoes, cranberries not
  yet commercialized due to concerns about consumer
  acceptance

9
J.E.M. Ag Supply 2001 Case

• J.E.M. Ag Supply tested the validity of Pioneer
  Hi-Bred's overlapping patents on seed corn, i.e.,
  whether the three forms of plant patent
  protection could co-exist
• Pioneer sells seeds in Iowa and elsewhere through
  authorized dealers.
• Each bag of seed has a license label printed on
  it stating that the seed can only be used for
  crop production.
• Pioneer has patents on both the inbred and hybrid
  corn lines that are produced by seed growers from
  the inbred lines.

10
J.E.M. Case (continued)

• J.E.M. contended that its distributor, Farm
  Advantage, had not violated Pioneer's patents
  when they sold unauthorized bags of seed corn in
  north central Iowa.
• J.E.M Ag Supply (J.E.M.) bought patented seeds in
  bags bearing the license agreement. When J.E.M
  resold the bags, Pioneer sued for patent
  infringement.

11
J.E.Ms Arguments

• J.E.M.'s defense was a broad argument that
  Pioneer's patents were not valid because the
  seeds themselves were already protected by PVPA.
• J.E.M. moved for summary judgment on the basis
  that Pioneer's patents were invalid because
  plants are not patentable subject matter within
  the scope of 35 U.S.C. 101, and that the Plant
  Patent Act (PPA) and the Plant Variety Protection
  Act (PVPA) set forth the only statutory
  protection for intellectual property rights in
  plants.

12

• The crux of J.E.M.'s position was that the
  Congress, in enacting the PPA and the PVPA,
  provided the exclusive statutory means for
  protecting plant life because both Acts are more
  specific than 35 U.S.C. 101 and thereby carve
  out plants from utility patent law for special
  treatment.
• However, the Court noted that the PPA did not
  contain any statutory language indicating that
  the Congress intended the PPA to serve as sole
  means of protection for asexually reproduced
  plants.

13

• J.E.M. also maintained that the Congress intended
  the PPA as the sole means of protection for
  intellectual property rights in plants because
  existing general utility patent laws (as of 1930)
  did not allow for patents on plants, and that
  there would have been no reason to enact the PPA
  had general utility patent law allowed plant
  patents.
• The Court disagreed, reasoning instead that
  J.E.M.'s argument failed to account for the state
  of patent law and plant breeding as of 1930,
  which involved a general presumption that plants
  were products of nature and were not amenable to
  the written description requirement of utility
  patent law.

14

• The Court also rejected J.E.M.'s argument that
  the PVPA was the exclusive mechanism for
  protecting intellectual property rights in
  plants. The Court noted that the language of the
  PVPA did not restrict the scope of patentable
  subject matter under 35 U.S.C. 101, and did not
  contain any statement of exclusivity.
• The Court took particular note that, at the time
  of the PVPA's enactment in 1970, the PTO had
  already issued numerous utility patents for
  hybrid plant processes, and had assigned utility
  patents for plants since 1985 with no indication
  from the Congress that such action was
  inconsistent with the PVPA or the PPA.

15
Implications of the J.E.M. case

• J.E.M. lost this argument in trial court, in the
  Court of Appeals, and in a Supreme Court review
  that upheld the lower court rulings
• In the J.E.M. case, the Supreme Court had
  addressed only the narrow question of whether
  plants were eligible for utility patent
  protectionleaving many questions for future
  trial courts to decide.
• Included were non-obviousness of the innovation
  and full disclosure of its details that are also
  required for utility patent protection.

16
Seed-Saving by Farmers Caution after J.E.M.

• Seed companies have been taking legal action
  against farmers for saving seed protected by a
  utility patent.
• It is now expected that the litigation will
  resume and intensify.
• An important point is that conventional seed as
  well as genetically modified seed may be
  patented.
• Farmers using such seed do not have the right to
  save any of the seed for replanting.

17
Seed-Saving OK Yesterday, but likely a Crime
Today

• Saving soybeans harvested in 2008 for use as seed
  in 2009 is unlawful except for a very few
  varieties, most of which are old and lower
  yielding than the more modern varieties.
• The Federal Seed Laws and Utility Patents
  prohibit saving the grain of varieties they
  protect.
• PVPA Farmers exemption allows for saving a
  quantity of seed for the sole use of replanting
  on the farmers land an area no larger than the
  area that was planted to the original seed
  purchased. Sale of any quantity of seed protected
  under the amended act is prohibited

18
Where To From J.E.M.?

• Congress bears the burden to modify the existing
  statutory language of 35 U.S.C.101, the PPA or
  the PVPA if it is desired that plants not be
  patentable, or the projected impacts of the
  Court's opinion be avoided.
• J.E.M. will accelerate the amount of germplasm
  that is held privately rather than in the public
  domain as seed companies devote additional
  resources to patent any seed that is economically
  worth planting, whether genetically modified or
  conventional.
• Could lead to increased concentration of
  germplasm in private hands, reduced competition
  and innovation in plant breeding, increased
  concentration due to small seed companies being
  unable to find new breeding material, and greater
  control by the firm holding the patent over the
  crops grown from patented seed

19
Courts Reasoning in J.E.M.

• In Diamond v. Chakrabarty, the Supreme Court
  concluded that the Congress drafted 35 U.S.C.
  101 broadly with the intent that the patent laws
  be given wide scope, and held that a manmade
  micro-organism fell within the statute's scope.
• The Court noted that the Congress made a
  statutory distinction between products of nature
  and manmade inventions, rather than between
  living and inanimate things.
• The Court's language in Diamond v. Chakrabarty
  was generally believed to be sufficiently broad
  to suggest that even plants that could be
  protected under the PPA or the PVPA could be the
  object of a general utility patent.
• Indeed, this position was confirmed in a 1985
  case involving genetically engineered corn, and
  since that time the U.S. Patent and Trademark
  Office has issued nearly 2,000 utility patents
  for plants, plant parts, and seeds under 35
  U.S.C. 101.
• Consequently, the Pioneer Court had no trouble
  holding that newly developed plant breeds fall
  within the scope of 35 U.S.C. 101.

20
Surge in Biotechnology Patenting Since 1990

• Stronger patents, broad coverage, and consistent
  application
• Competitors then learn what they cannot copy and
  may even attempt to negotiate a use license from
  the patent holder
• Learning how the innovation was made, however,
  may help to create other innovationssome of
  which may compete with the patented product

21
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22
Number of plant biotechnology patents by
technology category, 1976-2000
23
Biotech patents by institutional type
24

• Using patent data is difficult. The US Patent and
  Trademark Office (USPTO) makes available the text
  of all patent applications that are granted. From
  1976 to 2000, about two million applications are
  in this database.
• Although the USPTO classifies patents by
  category, agricultural biotechnology patents can
  appear in at least eight extant and one defunct
  category. The complexity of patent applications
  creates further difficulties.
• For example, a word search of patent applications
  for the phrase bacillus thuringiensis (Bt)
  reveals more than 3,100 patents, including
  several hundred patents seemingly related to the
  development and application of Bt sprays with no
  apparent connection to biotechnology or
  genetically modified plants.

25
New AgriculturalBiotechnology Patent Dataset

• A consortium of University and USDA researchers
  has filtered the USPTO database to create a
  database of agricultural biotechnology patents
• http//www.ers.usda.gov/data/agbiotechip/

26
Patents Have Social Tradeoffs

• The social benefit of learning the details of an
  innovation (and some of how it was created) has
  to be weighed against the social cost of keeping
  that innovation locked up (if the innovator
  chooses not to license it) during the patent term
  (minus what is learned about creating new ones).
• Less-than-full disclosure is how some innovators
  protect against the use of their secrets by
  others

27
Avoiding Patent Lock-Ups

• Nonexclusive Licensing
• Although exclusive licenses are common and are
  more marketable, they simply transfer patent
  lock-up from one owner to another.
• There is limited popularity for any licensing,
  even after the Bayh-Dole Act of 1980 began to
  allow universities and small businesses to seek
  patents on their federally funded research.

28
Overly-Broad Patents Strategic Hold-Ups

• A factor constraining widespread use of licenses
  is that some broad patents have been issued on a
  spectrum of technologies that may be the most
  likely sources of new gene transfer platform and
  enabling technologies.
• Broad patents may lead to expensive licenses or
  patent hold-ups where the inventor acts
  strategically to cut off the efforts of other
  developers.
• Patent holders might do this to gain time for
  their own research or to maintain exclusivity.
• Hold-ups are like lock-ups in that no licensing
  takes place.

29
Avenues of Research May Be Closed Off

• It is difficult to "invent around" broad patents
  in biology
• In medical biological research, DuPont holds an
  exclusive license on the Harvard Oncomouse few
  firms have paid the licensing fee
• Scientists have also reported problems with
  access to the few stem cell lines "acceptable"
  for research funded from federal sources

30
Hold-Ups in Biotech Patents

• Only a few enabling technologies have been used
  in ag biotechnologythis might also indicate an
  innovation bottleneck.
• The two most common methods for transformation of
  plants are the gene gun and Agrobacterium.
• The gene gun involves firing an air-driven
  shotgun at the plant to be transformed.
  Microscopic shotgun pellets are coated with
  genetic material and the scientist sifts through
  remnants of the plant for cells that have the
  inserted genes.
• The more sophisticated technology uses
  Agrobacterium tumefaciens, a common soil
  bacterium that causes tumors near the junction of
  the root and stem of numerous dicots (plants that
  have seeds with two halves).
• Tumorous plant cells containing genetic material
  from the bacterium are used to infect genetic
  material into plants.

31
Roadblocks to Biotech Research

• Much of the research on Agrobacterium-mediated
  transformation occurred at public institutions,
  but the private sector now holds the key patents
  on the technology.
• Companies gained control of this important
  transformation method through licensing and
  incremental internal research.
• The limited availability of methods for
  transforming plants might indicate some degree of
  patent hold-up on plant transformation
  technologies.

32
Patent Thickets

• When licenses are available but a technology
  requires use rights from multiple institutions
  covering several patents, it is known as a patent
  thicket.
• The recent development of Vitamin A "Golden Rice"
  required hacking through a patent thicket and
  negotiating licenses on 70 patents originally
  held by about 30 different institutions.
• This technology to improve nutrition in
  developing countries has not yet made it to
  market.

33
Ag Patents in Other Countries

• Other industrialized countries have been slower
  than the United States to grant patent protection
  on living organisms.
• A breakthrough occurred in 1999 when the
  European Patent Office began to grant patents on
  genetically engineered crops.

34
Soybeans and Corn in Argentina

• A vivid example of the economic effects of weak
  intellectual property rights.
• Corn's intellectual property is protected whereas
  soybean's is not.
• The volume of the soybean seed market is three
  times the corn market, yet little or no money is
  made by the leading branded soybean seed
  companies. The corn market, in contrast, is
  highly profitable.
• The protection differences exist because corn is
  a hybrid and soybeans are not

35
Argentina and GM Soybeans

• Argentina is the third leading soybean-producing
  country in the world, producing 33 of US output
  (2001)
• Since the release of Roundup Ready soybeans in
  1996, the rate of annual increase in soybean
  hectares has tripled to over 850 thousand
  additional hectares per year
• Roundup Ready soybeans allowed dramatic growth
  in farmer-saved seed (legal in Argentina) and
  brown-bagged seed (illegal in Argentina)

36
Seed-Saving vs. Brown-Bagging

• Seed-Saving Traditional farming practice of
  saving seed for self-use
• Originally and still permitted under the Plant
  Variety Protection Act
• Farmers can save and replant seed of protected
  varieties but only for use on their own holdings,
  either rented, leased, or owned acreage
• BUT the 1991 J.E.M. case makes seed-saving
  illegal if there is a valid utility patent on the
  seed
• Brown-Bagging Traditional farming practice of
  farmer-to-farmer selling crop seed or exchanging
  crop seed
• Originally (1970) permitted under the Plant
  Variety Protection Act
• Amended PVPA (1994) makes this illegal

37
Brazil and GM Soybeans

• GM soybeans were illegal by statute and court
  decisions
• Roundup-Ready soybeans invaded (illegal usage)
  Brazilian soybean production
• Farmers favored GM soybeans
• Consumers/general public opposed GM soybeans
• Situation Today Brazil was unable to prevent GM
  soybeans

38
WTO and Ag Patents TRIPS

• Similar to utility patents and PVPA certificates
  in the United States, international IP is
  protected by the World Trade Organization's (WTO)
  Trade-Related Aspects of Intellectual Property
  (TRIPS) agreement and the International Union for
  the Protection of New Varieties of Plants (UPOV).
  
• TRIPS establishes a timetable for WTO members to
  harmonize their patent systems without requiring
  adherence to one set of patent laws (?? What
  does this really mean?)
• Harmonization even occurs at different rates,
  with developed countries expected to comply in
  one year, developing countries in five years and
  least developed countries in 11 years.

39
Challenges to Ag Patents in Developing Countries

• Many countries lack the bureaucratic
  infrastructure to maintain the records and staff
  necessary for a functional IP system
• Budget constraints and high staff turnover
• TRIPS strengthens farmers' rights to save seeds,
  extends protection to landraces, and provides
  other benefits to indigenous people

40
Efforts to Lessen Patent Thickets

• Chakrabarty, who won the first patent on a living
  organism, is chief scientific advisor on a
  project to develop an international science court
  for biotechnology and other rapidly developing
  scientific areas.
• Web-based, searchable database of PTO utility
  patents issued on biotechnology and other
  biological processes in food and agriculture
  between 1976 and 2000 (http//ers.usda.gov/Data/bi
  otechpatents )
• IP Clearinghouse PIPRA (Public IP Resource for
  Agriculture) at UC-Berkeley
• Objective Create industry-specific collective
  rights organizations that can free up
  agricultural research for industry, academia, and
  international development.