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Bar Journal - March 1, 2003

U.S. Intellectual Property Law and the Biotech Challenge


Searching for an Elusive Balance

The American intellectual property law regime has for more than two centuries struggled to keep up with rapid technological change, yet it seems always to have managed to do so in the end. The biotechnology revolution, however, will create unprecedented challenges to our intellectual property rights system, perhaps especially in the allocation of rights to balance the interests of scientists, investors and those from whom valuable genetic material is obtained. Indeed, for human DNA, some people question whether there should be any property rights at all.


"DNA" is a molecule with four chemical components symbolized as A, C, G and T. The human genome sequence is estimated to comprise roughly three billion pairs of these letters1 and would be about six feet long if stretched out2 and would fill two hundred New York City phone books.3 To "sequence" DNA is to determine the precise order of these letters along the DNA molecule. A "gene" is a length of DNA that contains all the information necessary to make a protein—the "business end"4 of the cellular process that creates cellular structure and directs certain cellular functions. The "human genome" itself is all the hereditary material in our cells—approximately 31,000 genes.5

Scientists seek to identify the comparatively few genes in the vast sea of DNA and to determine the protein each gene encodes.6 The biotechnology and pharmaceutical industries seek to find the disease-causing genes that could lead to new drug treatments.7


American intellectual property law, which includes patent law, is designed to advance knowledge and to stimulate innovation for the benefit of society.8 To encourage this goal, a patent grants to an inventor a 20-year limited monopoly with which to profit from his or her invention.9

Not everything under the sun is patentable, however. Justice Douglas wrote in 1948 that "patents cannot issue for the discovery of the phenomena of Nature" which, he asserted, "are part of the storehouse of knowledge of all men."10 18 years later, the Supreme Court expressed concern that a monopoly of knowledge granted through a patent "may confer power to block off whole areas of scientific development, without compensating benefit to the public."11

But in 1980 the Court held that a genetically engineered strain of bacteria "with markedly different characteristics from any found in nature" was patentable,12 and in 1991 the Federal Circuit upheld the patentability of human DNA sequences that are "purified and isolated" from the original object in nature.13 So although one cannot patent a fundamental scientific breakthrough, one can patent a specific technological application enabled by that breakthrough.14

A 1998 Federal Circuit decision that an abstract idea (a mathematical algorithm in that case) is patentable if it has practical utility15 presages a bioinformatics industry16 built on the creation of the genomic information that is now a key strategic and competitive business asset independent of applied products.17

Within this case law setting, an innovation or invention must also meet Patent and Trademark Office requirements to be patented.18 A key requirement in the gene patent context is that an invention must be "useful,"19 although until recently human DNA sequences and gene fragments were permitted to be patented without any knowledge of their biological function.20 In 2001, however, the Patent Office revised its guidelines to emphasize specific, substantial, and credible utility,21 that is, a "real world context for using the invention"22 as distinct from a context that requires further research to establish or verify usefulness.23

An additional key requirement is that an invention not have been previously known or described in a written publication.24 With this in mind, the 1996 "Strategy Meetings on Human Genome Sequencing" hosted in Bermuda by the Wellcome Trust resulted in an agreement among participants that all raw sequence data from human genome sequencing efforts should be "freely available and in the public domain."25 As a result, sequence data are now released daily into public databases, which destroys patentability in a raw sequence itself.26

Even without property rights, though, genomic companies seek to profit from information in the public domain by providing easier or more efficient access,27 as Lexis and Westlaw do for legal research. Celera Genomics Group, for example, derives its revenues primarily from database subscription fees rather than from patent rights.28


To treat his leukemia, John Moore was asked over a seven-year period to provide his physician at the UCLA Medical Center with certain bodily materials including DNA which, it turned out, had the unusual characteristic of overproducing proteins that regulate the immune system.29 With these materials the physician, without telling Moore, developed and patented the "Mo cell line" and granted a license to, and received stock options and a consulting arrangement from, a biotech company.30 The Mo cell line produced three billion dollars worth of drugs.31 Once he learned of the cell line and the drugs, Moore sued the physician, the University of California, the patent assignee and various biotech firms.

Moore argued in part that the defendants had misappropriated his property—DNA, cells and tissue—to develop the cell line and drugs.32 The California Supreme Court rejected Moore’s possessory claims to the patented cell line because the line was "factually and legally distinct" from his own, but held that physicians do have a fiduciary duty to inform patients of any personal research or economic interest unrelated to the patient’s health.33 The court thus used the doctrine of lack of informed consent rather than property law to balance the interests of patients and researchers by protecting both scientific innovation and a patient’s right not to participate in research.34

Moore and the defendants eventually reached a settlement whereby Moore reportedly received a few hundred thousand dollars—enough to cover his legal bill.35

The Moore case is certain to figure in the pending case of Greenberg v. Miami Children’s Hospital Research Institute, Inc.36 In Greenberg, the plaintiffs claim that they helped the defendant physician collect data and bodily materials from families afflicted with Canavan disease, a rare neurological disorder that leads to brain degeneration, that the defendant received a patent on the disease-causing gene and a diagnostic test and, shortly thereafter, that the defendant’s assignees began notifying testing centers, including the plaintiffs’ testing centers, of their intention to defend their patent rights. The plaintiffs allege they assisted the defendant physician with the implicit understanding that he shared their goal of developing an affordable and accessible diagnostic test and, echoing Moore, that the physician should have disclosed his profit motives.37

Is it outrageous for physicians and scientists secretly to profit literally from the bodies of their research subjects? Surely. Is it unfair to deny to research subjects property rights in their own bodily materials? Perhaps not.

Public policy that limits donor rights is rooted in the concern that granting property rights in an individual’s own tissue will commoditize DNA38 and human beings39 and will subject poor people in particular to exploitation in "particularly vicious fashion."40 The concern is that poor people may be persuaded, induced or compelled to sell parts of their bodies to pay for, say, heating bills, food or a child’s education, or to cover the costs of needed medication or even medical care itself. A somewhat extreme, but perhaps not an entirely implausible, version of the issue was highlighted in the most recent James Bond film, Die Another Day, which involves a Cuban DNA clinic that caters to wealthy international clients who seek to improve or modify their own cell lines. The source DNA to make these improvements, the clinic director says, comes from orphans and poor people "who are not likely to be missed."


The advent of the Human Genome Project41 and greatly increased patenting opportunities for universities under the Bayh-Dole Act42 have led basic biomedical research to become intensely commercialized,43 which has created tension between investors who seek profits and scientists who want to do research.44

This tension was suggested early on in the Human Genome Project, ironically a non-profit undertaking, when J. Craig Venter, then a biologist at the National Institutes of Health, proposed patenting vast numbers of human gene fragments called expressed sequence tags, or "ESTs."45 Although an EST is unique and identifies the gene of which it is a part,46 it reveals nothing of the utility or function of the full gene. Nobel Laureate James D. Watson, then head of the NIH genome project, resigned in opposition to NIH attempts to patent ESTs,47 the NIH eventually withdrew all its EST patent applications and Venter himself eventually moved to for-profit Celera.

The biotech industry argues that without strong patent protection firms could not justify the risk, time, energy, and money necessary to create new pharmaceutical products.48 Only one in as many as 10,000 compounds screened is likely to receive Food and Drug Administration approval, which may take as long as 13 years to obtain, and a successful new product may require a half-billion dollars for development by the time it comes to market.49 It is particularly critical for start-up biotech companies whose sole asset may be their intellectual property to obtain patent protection to attract capital.50

In contrast to investors, academic and basic researchers fear that proprietary rights to basic research results will hinder scientific progress by impeding access to fundamental information or by blocking the use of experimental tools.51 The need to pay licensing fees, scientists say, will dissuade them from experimenting on patented genes.52

On religious or philosophical grounds, many people regard the human genome as a common birthright of humanity53 and an intimate part of human life54 and believe that granting any rights in it violates a moral code.55

To others, however, the morality of patenting human DNA sequences lies in its promise of medical innovations that will benefit humanity56 and, to them, the question would be not whether to prohibit all patenting, but whether to permit "fair patenting."57


Notwithstanding conflicting industrial, scientific, moral, philosophical and religious interests, biotech research and commercialization are of rapidly growing importance to the U.S. economy.58 Yet the intellectual property law system, and especially the patent system, may inadequately address challenges created by biotechnological inventions,59 including the need to determine how proprietary rights should be allocated to encourage investment,60 the extent to which a patent monopoly should be granted on basic biochemistry,61 and the rights a research subject may have in a patent derived from his or her genetic material.62

Where genomics research creates overlapping property rights that require a developer to secure several licenses and, potentially, to incur high transaction costs,63 it has been proposed as one possible solution that Congress enact a compulsory licensing statute coupled with an experimental use exemption to ensure that researchers have access to DNA sequence data they require for experimentation.64

Still in its infancy, the genetic revolution is a "scientific, technical and cultural phenomenon" that promises "a discourse tangled in false expectations and misguided, ill-informed denunciations."65 In this charged and exceedingly complicated environment, American intellectual property law will seek, as it always has, a tenable balance of interests and allocation of rights.



E-mail correspondence from Robert H. Gross, Associate Professor of Biological Sciences and Director of the Center for Biological and Biomedical Computing, Dartmouth College, Hanover, N.H., to the author (Nov. 18, 2002) (on file with the author).


Dr. Kathy Hudson of the National Human Genome Institute at the National Institutes of Health, commenting in The Human Genome Project, DNA Science and the Law: The American Legal System’s Response to Breakthroughs in Genetic Science, 51 Am. U.L. Rev. 431, 433 (2002) (footnote omitted).


Charles Vorndran and Robert L. Florence, Bioinformatics: Patenting the Bridge Between Information and the Life Sciences, 42 J.L. & Tech. 93 (2002) (citing Elizabeth Pennisi, The Human Genome: News, 291 Sci. 1177, 1178 (2001)).


Donna M. Gitter, International Conflicts Over Patenting Human DNA Sequences in the United States and the European Union: An Argument for Compulsory Licensing and a Fair-Use Exemption, 76 N.Y.U.L. Rev. 623, 1633 (2001) (citing R. Scott Hawley & Catherine A. Mori, The Human Genome: A User’s Guide 7-8 (1999)).


Dr. Kathy Hudson, supra note 2, at 436 (footnote omitted).


Allen C. Nunnally, Note: Commercialized Genetic Testing: The Role of Corporate Biotechnology in the New Genetic Age, 8 B.U. J. Sci. & Tech. L. 306, 314-315 (2002).


Mary Breen Smith, Comment: An End to Gene Patents? The Human Genome Project Versus the United States Patent and Trademark Office’s 1999 Utility Guidelines, 73 U. Colo. L. Rev. 747, 755 (2002) (citing Andrew Pollack, Double Helix With a Twist, N.Y. Times, Feb. 13, 2001, at C1).


Linda R. Cohen and Roger G. Noll, Intellectual Property, Antitrust and the New Economy, 62 U. Pitt. L. Rev. 453 (2001).


Lawrence M. Sung, Collegiality and Collaboration in the Age of Exclusivity, 3 DePaul J. Health Care L. 411, 412-413 (2000) (citing U.S. Const. art. I, § 8, cl. 8 (Congress shall have power "To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.")). See also Linda R. Cohen and Roger G. Noll, supra note 8 (the benefit of a rights regime is the inducement effect: if creators derive personal gain from their work, they are likely to produce a more creative product).


Funk Brothers Seed Company v. Kalo Inoculant, 333 U.S. 127, 130 (1948) (quoted by Rebecca Eisenberg commenting in Molecules vs. Information: Should Patents Protect Both?, 8 B.U. J. Sci. & Tech. L. 190, 194 (2002)).


Brenner v. Manson, 383 U.S. 519, 534 (1966) (quoted in Donna M. Gitter, supra note 4, at 1664).


Diamond v. Chakrabarty, 447 U.S. 303, 305, 310 (1980) (quoted in Donna M. Gitter, supra note 4, at 1640-41).


Donna M. Gitter, supra note 4, at 1642 (citing Amgen v. Chugai, 927 F.2d 1200, 1206 (Fed. Cir. 1991)). See also Mary Breen Smith, supra note 7, at 760 (footnote omitted) (as a legal matter, DNA is a chemical compound that satisfies the patentable subject matter requirement).


Rebecca Eisenberg, supra note 10, at 196.


State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368, 1375 (Fed. Cir. 1998) ("The question of whether a claim encompasses statutory subject matter should not focus on which of the four categories of subject matter a claim is directed to . . . but rather on the essential characteristics of the subject matter, in particular, its practical utility.") (quoted in Stephen G. Kunin, Mark Nagumo, Brian Stanton, Linda S. Therkorn, and Stephen Walsh, Reach-Through Claims in the Age of Biotechnology, 51 Am. U.L. Rev. 609, 623 (2002)).


Scott D. Locke and David A. Kalow, Preparing For Bioinformatics Litigation: How Will the Courts Confront the Next Generation of Biotechnology Patents, 1 Buff. Intell. Prop. L.J. 76, 91-92 (2001) (footnote omitted).


Clarisa Long, Re-engineering Patent Law: The Challenge of New Technologies: Part II: Judicial Issues: Patents and Cumulative Innovation, 2 Wash. U. J.L. & Pol’y 229, 233 (2000) (footnote omitted). See also Rebecca Eisenberg, supra note 10, at 192 (most DNA sequence information identified today will have its primary value as an information resource for future research).


Alexander K. Haas, The Wellcome Trust’s Disclosures of Gene Sequence Data into the Public Domain & the Potential for Proprietary Rights in the Human Genome, 16 Berkeley Tech. L.J. 145, 153 (2001) (the requirements for patentability established in 35 U.S.C. 101 et seq. (1994) are patentable subject matter, novelty, nonobviousness, utility, and enablement).


35 U.S.C. 101 (1994).


Alexander K. Haas, supra note 18, at 160 (citing American Society of Human Genetics Position Paper on Patenting of Expressed Sequence Tags (Nov. 1991)).


Scott D. Locke and David A. Kalow, supra note 16, at 93 (citing 66 Fed. Reg. 1092) (Jan. 6, 2001). See also Mary Breen Smith, supra note 7, at 765 (the utility requirement compels applicants to specify and demonstrate a specific commercial utility to obtain a patent for a chemical compound).


Stephen G. Kunin, Mark Nagumo, Brian Stanton, Linda S. Therkorn, and Stephen Walsh, supra note 15, at 623 (citing U.S. Patent and Trademark Office, Manual of Patent Examining Procedure 2107.01 (8th ed. Aug. 2001)).


Id. at 624 (citing U.S. Patent and Trademark Office, Manual of Patent Examining Procedure 2107.01 (8th ed. Aug. 2001)).


35 U.S.C. 102(a) (1994).


Alexander K. Haas, supra note 18, at 152 (citing The Human Genome Organisation, Summary of Principles Agreed at the International Strategy Meeting on Human Genome Sequencing (Feb. 25-28, 1996) (the purpose of such disclosures is to "encourage research and development and to maximize [the] benefit to society").


Rebecca Eisenberg, supra note 10, at 201 ("We are seeing a lot of free disclosure of unpatented DNA sequence information into the public domain, much of it coming from the private sector. Some of these private sector benefactors of the public domain are explicitly trying to create prior art that will defeat the patent claims of others.").


Alexander K. Haas, supra note 18, at 162 (explaining that legal databases such as Lexis-Nexis profit because their publicly accessible records would be too difficult for many people to use or access without their services).


Clarisa Long, supra note 17, at 234 (citing Celera Up Close (visited Feb. 15, 2000) <>.


Larry I. Palmer, Disease Management and Liability in the Human Genome Era, 47 Vill. L. Rev. 1, 21 (2002) (citing Moore v. Regents of California, 51 Cal.3d 120 (Cal. 1990)).


Id. (footnote omitted).


Id. at 22 (citing Michael Baram et al., Patent Rights and Licensing, 6 B.U. J. Sci. & Tech. L. 3, 38 (2002) (patent rights for Mo cell line yielded fifteen million dollars for Sandoz Pharmaceutical Corporation and an estimated three billion dollars worth of drugs that followed from it)).


Id. (footnote omitted).


Anne Nichols Hill, Note: One Man’s Trash is Another Man’s Treasure, Bioprospecting: Protecting the Rights and Interests of Human Donors of Genetic Material, 5 J. Health Care L. & Pol’y 259, 264, 266 (2002) (citing Moore, at 142).


Larry I. Palmer, supra note 29, at 22-23.


Moore is reported to have settled for between $200,000 and $400,000. Richard Cairney, Venting His Spleen (Doctor Patented Quirk in Patient’s Unusual Genetic Code), Can. Med. Ass’n J., Dec. 15, 1998, at 1451.


No. 00C6779 (N.D. Ill. filed Oct. 30, 2000).


Larry I. Palmer, supra note 29, at 8-13 (footnotes omitted).


Shira Pridan-Frank, Human-Genomics: A Challenge to the Rules of the Game of International Law, 40 Colum. J. Transnat’l L. 619, 653 (2002) (citing Bartha Maria Knoppers, Marie Hirtle and Kathleen Cranley Glass, Commercialisation of Genetic Research and Public Policy, 286 Sci. 2277-78 (Dec. 17, 1999)).


Daniel J. Kevles & Ari Berkowitz, The Gene Patenting Controversy: A Convergence of Law, Economic Interests, and Ethics, 67 Brooklyn L. Rev. 233, 242 (2001) (citing Richard D. Land & C. Ben Mitchell, Patenting Life: No, 63 First Things 20, 20-22 (1996)).


George Annas commenting in Molecules vs. Information: Should Patents Protect Both?, 8 B.U. J. Sci. & Tech. L. 190, 209 (2002).


The Human Genome Project is a joint effort by the National Institutes of Health and Department of Energy to sequence the entire human genome.


35 U.S.C. §§ 200-11 (1994). The Bayh-Dole Act permits research institutions to obtain intellectual property rights on government-funded research.


Clarisa Long, supra note 17, at 240 (citing Tiffany Ayers ed., Science and Technology Leaders Discuss Innovations for the Future, 286 Sci. 1753 (1999)).


Anne Nichols Hill, supra note 33, at 259 (citing Sheldon Krimsky, The Profit of Scientific Discovery and Its Normative Implications, 75 Chi.-Kent L. Rev. 15 (1999). See also Clarisa Long, supra note 17, at 229-301 (the shift from a scientific research to a business focus has created a tension between the desire to maximize profits from a patented invention on the one hand and allowing research to be conducted on the invention on the other).


ESTs are sections of DNA that code for proteins with as yet undetermined biological functions.


Daniel J. Kevles & Ari Berkowitz, supra note 39, at 235-36 (citing Mark D. Adams et al., Complementary DNA Sequencing: Expressed Sequence Tags and Human Genome Project, 252 Sci. 1651, 1651 (1991)).


Id. at 237 (citing Michael Waldholz & Hilary Stout, A New Debate Rages Over the Patenting of Gene Discoveries, The Wall St. J., Apr. 17, 1992, at 1).


Donna M. Gitter, supra note 4, at 1626.


Stephen G. Kunin, Mark Nagumo, Brian Stanton, Linda S. Therkorn, and Stephen Walsh, supra note 15, at 610, 614 (footnotes omitted).


Id. at 615 (citing Rebecca Eisenberg, Patenting Research Tools and the Law, in Intellectual Property Rights and Research Tools, in Molecular Biology 6 (Nat’l Academy Press 1997)). See also Mary Breen Smith, supra note 7, at 758 (citing David Malakoff & Robert F. Service, Genomania Meets the Bottom Line, 291 Sci. 1193, 1193 (2001) (funds are required "not only for the initial research and development, but also to go through the regulatory approval process necessary to get a product—particularly a pharmaceutical product—on to the market.")).


Lawrence M. Sung, supra note 9 (citing Ronald Kotulak,Taking license with your genes: Patenting human genes threatens to hamstring research and boost the price of some diagnostic tests, Chi. Trib., Sept. 12, 1999, at C1 ("The controversial practice of patenting human genes and profiting from them has begun to impede medical research, interfere with clinical practice and raise healthcare costs, doctors warn.")). See also Linda R. Cohen and Roger G. Noll, supra note 8 (excessively strong IP protection can reduce economic welfare by inhibiting technological change); Arti K. Rai, The Human Genome Project, DNA Science and the Law: The American Legal System’s Response to Breakthroughs in Genetic Science, 51 Am. U.L. Rev. 371, 386-87 (2002) (expressing concern about property rights that may unduly hinder access to basic research that enables a broad variety of further research).


Donna M. Gitter, supra note 4, at 1626.


Daniel J. Kevles & Ari Berkowitz, supra note 39, at 248.


George Annas, supra note 40, at 211.


Daniel J. Kevles & Ari Berkowitz, supra note 39, at 233-34.


Donna M. Gitter, supra note 4, at 1659 (footnote omitted).


George Annas, supra note 40, at 209.


Donna M. Gitter, supra note 4, at 1660, 1690-91 (citing Peter Drahos, Biotechnology Patents, Markets and Morality, 21 Eur. Intell. Prop. Rev. 441, 442-43 (1999) and Alison Abbott & Ulrike Hellerer, Politicians Seek to Block Human-Gene Patents in Europe, 404 Nature 802, 802 (2000)).


Kojo Yelpaala, Biotechnology and the Law: Owning the Secret of Life: Biotechnology and Property Rights Revisited, 32 McGeorge L. Rev. 111, 218 (2000).


Alexander K. Haas, supra note 18, at 147 (citing The Pharmaceutical Industry Profile: R&D The Key to Innovation (Pharmaceutical Research and Manufacturers of America) (visited Feb. 1, 2001) <> (a typical drug averages half a billion dollars to reach the market)).


Josh Sarnoff commenting in The Human Genome Project, DNA Science and the Law: The American Legal System’s Response to Breakthroughs in Genetic Science, 51 Am. U.L. Rev. 371, 374 (2002).


John Kilyk, Jr. commenting in The Human Genome Project, DNA Science and the Law: The American Legal System’s Response to Breakthroughs in Genetic Science, 51 Am. U.L. Rev. 371, 384 (2002).


Arti K. Rai, supra note 51, at 387-88.


Donna M. Gitter, supra note 4, at 1679 (footnote omitted). "Congress should codify an experimental-use exemption for public-sector researchers at the federal level and nonprofit researchers to permit scientists to pursue research on patented DNA sequences for noncommercial purposes free of any licensing fee and without facing liability in an infringement action." Id. at 1684-85 (footnotes omitted).


Timothy Caulfield, Underwhelmed: Hyperbole, Regulatory Policy, and the Genetic Revolution, 45 McGill L.J. 437, 440-444 (2000).

The Author

Peter J. Gardner is an attorney with the firm of Stebbins Bradley Harvey & Miller in Hanover, N.H., a Research Fellow at Vermont Law School and a Visiting Scholar at the Tuck Business School at Dartmouth College. He received a J.D. and Master of Studies in Environmental Law degree from Vermont Law School and a Master in Intellectual Property degree from Franklin Pierce Law Center.



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