RESTRICTEDWORLD TRADE
ORGANIZATIONIP/C/W/162
29 October 1999
(99-4699)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
REVIEW OF THE PROVISIONS OF ARTICLE 27.3(b)
Communication from the United States
The following communication, dated 20 October 1999, has been received from the Permanent
Mission of the United States.
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The United States strongly supports patent eligibility for inventions in all fields of
technology, including biotechnology.  In the course of the discussions related to Article 27.3(b) in the
TRIPS Council and elsewhere, however, a number of concerns have been raised by other WTO
Members.  This paper provides the views of the United States regarding the benefits of providing
protection for biotechnological inventions and regarding the concerns that have been expressed by
others.
I. THE PROVISIONS OF ARTICLE 27.3(b)
Article 27.1 of the TRIPS Agreement requires that WTO Members make patents available for
any inventions, whether products or processes, in all fields of technology if those inventions meet the
criteria for patentability.  Article 27.3(b) provides an exception to that broad obligation.  The Article
permits WTO Members to exclude from patentability plants and animals and essentially biological
processes for the production of plants or animals.
Article 27.3(b) contains its own exception to the exception from patentability for plants and
animals.  WTO Members may not exclude micro-orga nisms from patentability.  Article 27.3(b) also
specifies that Members must make patents availabl e for non-biological and microbiological processes.
If a WTO Member chooses to exclude plant varieties from patentability, it must provide protection forplant varieties through an effective sui generis system.  WTO Members that do not exclude plant
varieties from patentability, may, in addition, provide protection through a sui generis system.
II. U.S.  VIEWS REGARDING THE PROVISIONS OF ARTICLE 27.3(b)
Regarding the patentability of life forms
The United States of America believes that an exception to patentability, authorized by
Article 27.3(b), is unnecessary and, therefore, treats plants and animals and non-biological and
microbiological processes as patentable subject matter under its patent law.  Naturally occurring
plants and animals, however, are not patentable s ubject matter under section 101 of the U.S. Patent
Law.  By the same token, naturally occurring plants and animals would not have to be granted patents
under the requirements of the TRIPS Agreement.
1
                                                     
1 The first sentence of Article 27.1 of the TRIPS Agreement requires that, subject to the provisions of
paragraphs 2 and 3, patents be available "for any inventions, whether products or processes, in all fields ofIP/C/W/162
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Prior to 1980, the U.S. Patent and Trademark Office had interpreted section 101 of the U.S.
Patent Law, with some notable exceptions, as not intended to cover living things such as laboratory
created micro-organisms, since section 101 states that utility patents are available for "any new and
useful process, machine, manufacture, or composition of matter..." On 16 June 1980, however, theUnited States Supreme Court ruled, in DIAMOND, COMMISSIONER OF PATENTS AND
TRADEMARKS v. CHAKRABARTY, (447 U.S. 303; 100 S. Ct. 2204 (1980)), that a new, man-made
micro-organism that could break down oil was patentable subject matter under section 101 of title 35
United States Code because it comprised a manufacture or composition of matter.  In the score of
years following that landmark decision, the U.S. Patent and Trademark Office has consistently
granted patents on such micro-organisms, including unicellular organisms, bacteria, yeast, fungi and
other living organisms, and on non-biological and microbiological processes.  In addition, the U.S.
Patent and Trademark Office grants patents on both plants and animals.  The United States views that
change in the interpretation of the U.S. patent law as extremely fortuitous.
III. BENEFITS OF PROVIDING PATENT PROTECTION FOR LIFE FORMS
The Supreme Court's decision in DIAMOND, COMMISSIONER OF PATENTS AND
TRADEMARKS v. CHAKRABARTY spurred the development of a new industry - the biotechnology
industry.  In addition, as the biotechnology industry matured, supporting industries have evolved to
provide researchers with tools to facilitate research and to commercialize the results successfully.  The
development of these industries has generated capital and provided jobs but, most important, that
industry has provided enormous benefits in both agriculture and medicine.
Agricultural biotechnology is improving upon the long tradition of plant breeding to design
new plants that have improved characteristics (e.g., improved yield and viability) by tapping the
potential to transfer traits through direct manipu lation of the genome of a plant, instead of only by
trial and error through conventional plant breeding techniques.  It also has allowed for development ofnew technological solutions in the field of agricu lture, for example, frost-inhibiting bacteria, the
transfer of genetic traits that impart pesticide resistance, or immunological enhancement of livestock.
The agricultural biotechnology industry is helping farmers reduce their dependence on chemical
pesticides and herbicides that have adverse environmental effects and, along with plant breeders, is
helping to develop new crops with higher productivity and yields.
Pharmaceutical biotechnology is helping to improve human and animal health by developing
new pharmaceutical agents and new methods for treating or curing disorders.  Over 350 new
biotechnological pharmaceuticals and vaccines are in clinical trials today and there are hundreds more
in the early developmental stage.  Pharmaceutical biotechnology also is developing new processes of
diagnosing illness, such as test kits for performing more accurate and informative diagnoses.  The
biotechnology industry has already produced hundreds of highly accurate tools for diagnosing andtreating diseases and other physical afflictions.
To appreciate the character of the biotechnology industry in the United States, one must
understand the pattern of development that is common.  A significant portion of the research is
conducted by universities and Federal laboratories, often with significant private capital support fromcorporations and venture capitalists.  Many established businesses also fund and conduct basic
research or conduct joint research under arrangements with universities.  As a result of this
public/private cooperation, innovations that appear promising in the research laboratory move quickly
to a commercial development path because commercial partners are better equipped to evaluate the
                                                                                                                                                                    
technology, provided that they are new, involve an inventive step, and are capable of industrial application."
(Emphasis added.)IP/C/W/162
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commercial prospects of an innovation, develop it into a marketable product, and guide it through the
time consuming and costly marketing approval process.
A breakthrough in research that is undisclosed and undeveloped brings no benefit to society
and contributes nothing to the advancement of k nowledge.  To have an impact on society, the
technology behind the breakthrough must be disclosed and the breakthrough itself must be applied to
some useful purpose.  Some have argued that a patent system encourages secrecy.  Nothing could be
further from the truth.
A strong patent system encourages the investment of time and money in the development of
the results of research into products and processes that benefit society.  A strong patent system also
brings about the early disclosure of the latest developments in technology, allowing others to learn ofthat technology and to build on it.  Modern technology, in the form of the Internet, has also made the
information disclosed in patent applications and granted patents in many countries available
worldwide to anyone with access to the Internet.  The United States Patent and Trademark Office, for
example, makes available publicly and without charge the database of all patents granted by the
Office since 1976.  The database can be searched either through the full text or through patentabstracts.  Other patent and trademark offices around the world make their databases available and
searchable on the Internet as well.  Such wide disclosure ensures that duplication of research effort
can be minimized while the value of investment in further research and development can be
maximized.  Commercialization of patented products and processes that results from this research and
development provides economic growth and employment and creates capital that can be invested infurther research and development of more advanced products and processes.
In the field of biotechnology, patent systems in particular, but also trade secret protection and
plant variety protection, bridge the gap between invention and commercialization.  In the United
States, universities and Federal laboratories are major users of the patent system, not only in theUnited States but abroad.  They obtain a significant portion of the total number of U.S. patents
granted in the field of biotechnology.  For example, nearly 5% of all patents granted by the U.S.
Patent and Trademark Office last year were granted to universities.  A disproportionate percentage of
those patents were for biotechnological inventions.  Once a patent is granted to a university, a
university's technology transfer manager and the research team that made the invention can work
closely with the private sector to commercialize the technology.  This is usually done by granting a
license to a private sector partner that pays royalt ies to the university and ensures that third parties
cannot exploit the invention commercially in comp etition with the licensee.  This formula has
produced an efficient innovation and commercialization process within the United States.  With
appropriate changes in laws, the same formula could succeed in other countries with significant
research capacity in their universities but whic h have lacked the incentives for commercialization
provided by a strong patent, trade secret and plant variety protection systems.
IV. ETHICAL QUESTIONS
Some WTO Members have referred to unspecified moral and ethical consequences of
patenting life forms.  As Article 28 of the TRIPS Agreement makes clear, a patent gives its owner the
right to prevent others from taking certain actions.  A patent does not provide the owner with the rightto take those actions itself.  As an example, the grant of a patent on a pharmaceutical product or
process does not, in most countries, give its owner the right to produce and market the patented
pharmaceutical or the pharmaceutical produced using the patented process.  A separate process is used
to determine the safety and efficacy of the pharmaceutical in question before approval for production,
sale and use is given.  Similar approval processes are used in many countries to review the safety andefficacy of agricultural and industrial chemicals, cosmetics, and foodstuffs before they can be
marketed.  Concerns a country might have about the safety and efficacy of microbiological products
or non-biological or microbiological processes are addressed in that way.IP/C/W/162
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Some have suggested that holding a patent on an  isolated, identified and modified gene might,
in some way, amount to ownership of the source of that gene.  This fear is unfounded.  As noted
above, the patent on the isolated, identified, and modified gene would provide the patentee only with
the ability to prevent others from producing, marketing and using the modified gene.  The source fromwhich the gene was taken would be unaffected by the patent.  Ownership of the gene-source, to the
degree that ownership applies, would be determined under the general legal principles in the country
granting the patent.
While those WTO Members that have expressed concern regarding moral and ethical
consequences of patenting life forms have not expressly identified those concerns, it is likely that
those concerns relate more to the consequences of conducting research on life forms.  Such concernsare better dealt with directly.  As the representative of Australia sagely noted during the July 1999
meeting of the TRIPS Council, countries do not address concerns related to arms control by
discussing whether weapons should be patented, th ey address arms control by controlling armaments.
Dealing with moral and ethical concerns regarding research on life forms likewise is better dealt with
directly.
V. EFFECTIVE SUI GENERIS PROTECTION FOR PLANT VARIETIES
The question of the most appropriate form of legal protection for new plant varieties has been
raised by certain WTO Members.  It is the view of the United States that plant variety protection
consistent with the substantive obligations of UPOV, if provided for all plant varieties, would be aneffective system.  The review to date has shown that most WTO Members that have implemented
plant variety protection systems have relied upon the model defined by one of the two acts of UPOV.
While other systems might be devised by individual WTO Members to protect plant varieties, those
systems will have to be judge on their merits, case by case.
The United States believes that the protection provided by UPOV 1991 works to the benefit
of all Contracting Parties.  The 1991 Act of UPOV does not permit Contracting Parties to limit the
eligibility of varieties by species of the plant.  That means that newly developed varieties of species of
plant that would not have been eligible for protection under the 1978 Act now are eligible.  The term
of protection can not be less than twenty years from the filing date of the application for all varieties
except trees and vines, for which protection must be no less than 25 years. UPOV 1991 Contracting
Parties can limit rights, however, to permit farmers to save seed they harvest from their own plantingsin order to replant it in subsequent years on their own holdings.  The rights and obligations are
balanced and work to the benefit of all countries.
VI. THE RELATIONSHIP BETWEEN THE TRIPS AGREEMENT AND THE
CONVENTION ON BIOLOGICAL DIVERSITY
A number of WTO Members have referred to the possibility of inconsistencies between the
obligations of the TRIPS Agreement and the Convention on Biological Diversity.  The two
agreements have coexisted for five years with overlapping, but not coextensive, membership.  During
that time there have been extensive discussions in the WTO's Committee on Trade and Environment
and in the CBD's Convention of the Parties and va rious subsidiary bodies regarding the relationship
between the two agreements. In addition, the secr etariats of the two bodies have provided papers
regarding the relationship between the two agreements.
2
                                                     
2 See, for example, The Convention of Biological Diversity and the Agreement on the Trade Related
Aspects of  Intellectual Property Rights (WT/CTE/W/50) and The Convention on Biological Diversity and the
Agreement on Trade Related Intellectual Property Rights (TRIPS): Relationship and Synergies
(UNEP/CBD/COP/3/23).IP/C/W/162
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As has been frequently noted in discussions in both organizations and in papers by both
secretariats, each of the two agreements was negotiated to serve a significantly different purpose.3
During the discussions and in the papers, various provisions of the two agreements have beenidentified as being related.
4 These discussions and papers, however, have not identified a single
inconsistency between the two agreements.  Those countries that are members of both agreements and
that have implemented their obligations under each have done so without claims that their
implementation violates the provisions of either agreem ent.  It is time, therefore, to lay to rest the
allegation that the obligations of the two agreements are inconsistent and concentrate on addressing
any specific concerns that WTO Members that are also Member States of the CBD might have about
the manner in which they might implement particular  obligations of either agreement so that they
avoid any question of conflict with obligations under the other agreement.
VII. PROTECTION FOR GENETIC RESOURCES AND TRADITIONAL KNOWLEDGE
Some have suggested that patent applicants be required to identify in their applications the
source of any genetic materials or traditional knowledge used in developing their claimed invention as
a means of ensuring benefit sharing. Such a syst em would be impractical and would not ensure that
those contributing such resources or knowledge w ould share in the benefits that might flow from
commercialization of the invention.
It is a longstanding principle of international law, reaffirmed in the Preamble to the CBD that
countries have sovereign rights over the biological resources within their territories.  Among thoserights is the right to determine who will be given access to those resources, on what terms, and for
what purposes.  Nothing in the TRIPS Agreement alters those rights.  Obligations, such as national
and most-favoured-nation treatment, contained in ot her multilateral and bilateral agreements to which
the party granting access to genetic resources or knowledge would, of course, have to be considered in
establishing a legal regime for granting access to such resources and knowledge.
The most effective means for exercising those rights would appear to be to require that parties
seeking access to genetic resources or traditional knowledge enter into a contract with the sovereign
entity that grants that access.  Such contracts s hould spell out in detail the terms and conditions under
which the access is granted.  Obviously, questions of jurisdiction of courts, conditions to be included
in contracts with any third parties licensed to make use of resources or knowledge obtained should be
spelled out.  A contract granting access also should define expressly terms that are not clear on theirface, such as genetic resources and traditional knowledge.
Those seeking access to genetic resources and traditional knowledge likely would welcome
such a regime, because it would clarify rights and obligations on both sides at the outset.  Such clear
rules help to avoid misunderstanding and confusion.  Where genetic resources or traditionalknowledge can be obtained from a number of sources, of course, the party seeking access likely will
seek the resources or knowledge from the territory that provides the most favorable terms.
A number of suggestions have been made in various fora to add to national patent laws a
requirement to include in all patent applications  information regarding the source of any genetic
resources or traditional knowledge that might have been used in making an invention.  Such a system
                                                     
3 The TRIPS Agreement establishes minimum standards of protection for various forms of intellectual
property rights and specifies means that must be available for their enforcement. The CBD provides for theconservation and sustainable use of biol ogical diversity and for the sharing of benefits from the use of genetic
resources.
4 Primarily Article 27.3(b) of the TRIPS Agreement and Articles 8(j), 15.1  and .2, 16, and 19 of the
CBD.IP/C/W/162
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would be an extremely ineffective way for countries that are the source of genetic resources or
traditional knowledge.  Monitoring copies of publications from patent offices around the world in
search of notices of genetic resources or traditional knowledge would an onerous task.  If the secrecy
of results of research using particular resources or knowledge can be maintained while those results
are commercialized, parties might be encouraged to protect their rights through trade secrets ratherthan patents, in which case, no information would be available at all.  In addition, imposing additional
requirements on all patent applicants only increases the cost of obtaining patents that would have a
greater adverse effect on individual inventors, nonprofit entities, and small and medium sized
businesses, including those in developing countries.  Those disadvantages are avoided if contracts are
entered into at the time a country grants access to its genetic resources or traditional knowledge.
To make contract law most effective, an education programme should be conducted with
those who have control of genetic resources and traditional knowledge.  Such a programme should
inform them about the various forms of intellectual property that might be used to protect and develop
further their own genetic resources and traditional knowledge.  Over time, such a programme might
enable them to develop their own patentable inventions or to otherwise commercialize their resources
and knowledge in a manner that can improve their standard of living, if that is what they choose to do.
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