22 Current Situation Surrounding Patents on Genes andProteins – Protection from the Innovational Viewpoint
Research Fellow: Takeyuki Nishi
It has been suggested that the scope of rights for biotechnology-related patents are typically broad and covera high level of accumulation of technology. For gene / protein patents, however, there has been no clarification of
specifically which points have the broad scope of rights, or of the consequences of this situation. For this study theclaims were analyzed for about 600 gene / protein patents registered with the Japan Patent Office (JPO) between
1996 and 2003, and the problem points were identified and assessed. Furthermore, in order to assess the impactof current gene / protein patents on life-science research in academia and industry, an analysis was made of thecharacteristics of inventions, from the properties of the gene / proteins to the derivation. Social systems andappropriate approach for protecting intellectual property to encourage innovation are considered and proposed.

Gene / Protein Patents andProtection from the Innovational
Viewpoint
The twenty-first century may be called theCentury of Biology, as major advances in life
science research continue to be made around theworld. The majority of the attention is on genes andproteins. In particular, the release of DNA sequence
information that was decoded by the Human
Genome Project completed in June 2003 sparked aninternational explosion of gene and protein research,
as well as a rush to patent the results. However,there are many points that are not clear regarding
the effects of the current patent activities andsituation on life science innovation. This reportconsiders the current status of gene / protein
patents both from the perspective of intellectual
property and from the scientific perspective, toconsider how best to provide effective patent
protection.
The world has seen gene / protein patents
increasing every year. For example, according to
the database Derwent GENESEQ containing
information on nucleic acid and amino acid patentsfrom the patent issuing agencies in 38 countries,
the European Patent Office (EPO) and the WorldIntellectual Property Organization (WIPO), as of2001 more than 2,400,000 nucleic acid and aminoacid sequences were registered. Furthermore, thesequences added between 1999 and 2000 accounted
for about 75% of the total number registered in the
database. This illustrates the momentum of gene /protein patents. A report by the United States
Patent and Trademark Office (USPTO) stated thatabout 6000 patents related to genetic sequences
have been issued up through the year 2000, andthat through the year 2002 about 1500 full-length
gene patents are being established. How many gene/ protein patents are being established in Japan? A
search was performed at the Japan Patent Office(JPO) gazette test search page on-line using the
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keywords “gene” and “protein”, and the cumulative
number of patents in each year was investigated.
The results show that about 100 patents per year
are being established in Japan, with 627 gene /protein patents established between 1996 and 2003.
Since a gene / protein patent is a materials patent, it
is typical for a wide range of rights to be granted,
including the patents on the manufacturing method.
However, there are frequent criticisms that therange of rights granted by gene / protein patents is
too broad. Many infringement suits have been
initiated. Specifically, in the USA there was a patent
infringement suit involving Genentech andGenetics Institute over whether the range of rights
for the full-length sequence for recombinant humantissue plasminogen activator (t-PA) included
modified sequences. Another case involved the
University of California and Eli Lilly over whether
the range of rights for insulin genes obtained fromrats covered all mammals, including humans. Stillanother suit was fought between Plant Genetic
Systems N.V. and DekalbGenetics Corp. overwhether a genetically-modified plant patentobtained for dicotyledons was applicable to allplants, including monocotyledons. In Japan as well,although the number of lawsuits is much smaller
than in the USA, the same types of lawsuits are
arising. In all these cases the problems arise fromthe wide range of latent rights in the gene / protein
patents. In order to investigate the specific pointsof the gene patents for which the range of rights isbroad, and the consequences, an analysis was madeof the claims in the detailed specifications of theretrieved 627 gene / protein patents.
The results indicated that the typical gene /protein patent tends to be composed of claims thatcan be roughly categorized into the following 9
types; 1) gene sequence, 2) recombinant vectors
with the gene inserted, 3), transformants (cells)
having a recombinant vector, 4) amino acidsequence of polypeptides (proteins), 5) production
methods for the applicable protein, 6) antibodies for● 154 ●

the applicable protein, 7) animals lacking the geneencoding for the applicable protein, or
partially-modified animal, 8) methods for producing
an animal lacking the gene encoding for theapplicable protein, or partially-modified animal, and
9) a screening method for the applicable
polypeptide, or for an antagonist, agonist, or ligandof the applicable polypeptide making use of an
applicable portion of a peptide, or for a function
modulator. This makes it clear that gene / protein
patents are generally composed of many claims,
including manufacturing patents for items otherthan the sequence, gene vectors, cells and animals
with the insertion/modification/lack of the gene, andscreening methods. It can be said that, perhaps, as amaterials patent, the properties are well presented.
However, upon close analysis of the individual
claims, it is apparent that for some claims there is apotential for an excessively broad range of rights
being granted, depending on how they are stated. In
particular, it became clear that vague functionaldescriptions in the two types of claims regarding 1)
gene sequences and 4) amino acid sequence ofproteins have a high probability of allowing a single
patent to cover many groups of genes, including
gene families and alternative splicing gene products.
Furthermore, with regard to 6) claims of antibodies
recognizing
proteins,
highly-progressive
monoclonal antibodies are being including within
the range of rights, as well as methods that makeuse of antibodies, suggesting that the existence ofthe claims may greatly exceed the original conceptof the invention. In addition, it is claimed that gene/ protein patents are likely to grant a broader rangeof rights as a result of particular properties derived
from the sequence information. This is notoccurring only in Japan, but seems to be common
throughout the world. One possible reason for thisis that is it easy to specify a range of rights thatexceeds the inventor’s concept because of vague
function specifications caused by inadequate claim
descriptions and deficiencies in the prior art andknowledge at the time the patent application is
submitted. In the past it has been pointed out thatthe claims for bio-related inventions are
significantly broader than for other fields. It is
expected that this tendency will become
increasingly apparent as a result of the increases ingene / protein patents.
What kind of effect will these broad ranges ofrights for gene protein patents have on innovationin the life sciences? To date there have been
several reports on the relationship between therange of patent rights and innovation. Some of the
topics that are still being debated include Kitch’s“Prospect Theory”, and Merges & Nelson’s“Innovation Competition Theory”. According to theProspect Theory, the patent system is based on aprospecting system that resembles a mining
method, rather than on incentives of financial

reward. If broad intellectual property rights are
granted to the basic patent holder, this has theadvantage of allowing the original inventor to avoid
redundant investment to promote further
improvement of the invention in order to createbusiness applications, and efficient innovation canbe performed. In comparison, the Innovation
Competition Theory is based on the premise that“for innovation, faster is better”. This argument
states that basic patents should not be granted awide range of rights because incentive for later
inventors to make improvements is eliminatedwhen a broad patent is granted in a field withmulti-layer technologies. However, there arecertainly patterns of technological innovation ineach technical field, and there should also be
differences in the effect that the breadth of therange of rights will have on the innovation. Here,we will first analyze the characteristics andproperties of research and development in the life
sciences field, and discuss what effects there will be
on innovation when a broad range of rights is
granted in a gene / protein patent.
A point that is important when considering life
science innovation is the fact that most of the
progress in life science research is being carriedout in 2 sectors, academia and industry. In academia,
basic research is being advanced with the goal of
uncovering truth and knowledge. In industry,
application research is being conducted with thegoal of creating products based on the results of thebasic research. What is important here is that thelife science industry has a structure based on
scientific research-driven innovation. Therefore,
when considering innovation in the field of life
sciences, an understanding of the structure ofscientific research itself is important. The key pointis that the subject of scientific research in the fieldof life science is “life”. Life consists of extensive
chemical reactions. At the heart of thesecomplicated chemical reactions are the proteinsthat are the main units of the gene functions.
Understanding these functions has become theultimate goal of life science research. Along with
this, there is currently a major shift in life science
research from genes to proteins. When considering
the structure of scientific research, it has become
important to have an understanding of the special
characteristics of the research process and theproperties of the proteins.
The most characteristic feature of proteins isthat they are multifunctional. A protein is a large
chemical substance with a complex tertiary
structure made up of 23 different types of aminoacids. There are large variations in the properties
through interactions with various factors, such as
metallic ions, small-compound bonding, andpost-translational modification, and many functions
are obtained. In this way, many proteins typicallyhave multiple functions. From the viewpoint of an● 155 ●IIP Bulletin 2004

invention, there is a high probability of many
application and improvement inventions being
discovered. In addition, proteins form complexes
through interactions with other proteins, and avariety of functions are derived throughcombinations of proteins consisting of thesecomplexes. As a result, proteins are even more
likely to have properties leading to the discovery ofmany application and improvement inventions.
Proteins also have distinctive characteristics withregard to the research process. As previously
mentioned, it is rare for a protein to have a single
function, and many functions are exploited throughthe formation of complexes. This is why complex
analysis is becoming important for understanding
protein functions. In the past, there have been
many technical problems, and complex research andanalysis has been difficult. Recently, however, there
is vigorous advancement due to remarkabletechnological progress. When the function of aprotein complex is analyzed, it is usual to first
identify each of the individual proteins in thecomplex, and form a hypothesis about the functionof the complex based on the known functions of theidentified component proteins. This is why theverification research requires the use of the many
proteins that form the complex, and, of course, theopportunities to use the material increase. The
cumulative nature of the information also plays animportant role in protein functional research. As aresult of the shift in the functional analysis ofproteins to complex analysis, and the fact that
biological phenomena comprise enormous signaltransduction pathways, protein research is
becoming a research field with a higher dependence
than before on the accumulation of information,technology and the materials used.
In light of these characteristics, what kind ofeffect does a broad range of rights for a patent haveon life sciences research? First, since a protein
typically has multiple functions there are many
opportunities for many inventions. Therefore, thegrant of a broad range of patent rights is likely tosuppress progress on many applications andimprovements derived from the patented gene /protein. Furthermore, since the research process
has a high reliance on the accumulated materials,
technology and information, if each individual
protein is patented with a broad range of rights,
subsequent researchers will be required to obtainmany licenses. This will create unreasonableobstacles for subsequent inventors, including
increases in research and development costs due tothe cumulative licensing fees, and complete
blocking of research and development because oflicensing refusals. What is the impact of thissituation on academia? In academia there is a“research freedom” that is assured, and there has
not been a large effect from patents. This is largely
due to Article 69, Paragraph 1 of the Patent Law in

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Japan, which states “The validity of the patentrights shall not extend to implementations for the
purposes of testing or research”. Specifically, theuse of patents for the purpose of improvement ordevelopment by universities has been considered to
be exempt. In addition, if a company sued auniversity for conducting research that did not havea goal of making a profit, there would be criticism
from academia and a negative image created for thecompany. This is probably one of the main reasonsfor the tendency for companies to tacitly consent tothe use of patented technology by universities.
However, in recent years the situation has beenchanging. This is due, in part, to the fact that genes
and proteins are used as research tools. The use asa research tool is not for the purpose of
improvement or development, so it falls outside thescope of Article 69, Paragraph 1, meaning that there
is no testing exemption, and that the patent is being
infringed. Furthermore, in many cases it is difficult
to differentiate use of a gene or protein as a
research tool from use for the purpose of
improvement or development. If there is adifference in the interpretation of the user and thepatent holder there are likely to be various
problems with licensing, contracts and lawsuits. As
a result, the use of many genes / proteins as
research tools for a lot of scientific research has
become a serious issue, in which research advances
are being delayed by restrictions on the use ofgenes / proteins due to the patents. A factor that isexacerbating this situation is the strengthening ofcollaborations between academia and industry inJapan. Since there is a transfer of many inventions
created at universities to businesses through thesecollaborations, there is a growing connection
between the basic research and the applications
research, and research that can be consideredpurely academic is become rare. On top of this,since the national universities are being converted
to independent administrative entities starting in
April 2004, the patents are reverting to theuniversities. This means each university willcollect royalties and conduct licensing activities attheir own responsibility, as part of the university
operations. Furthermore, there will be an increasein joint research between universities andcompanies as a means of raising funds, which willfurther blur the boundaries between profit andnon-profit activities. Under such circumstances, it
is anticipated that businesses that were previously
hesitant to initiate lawsuits against universities willprobably be more likely to sue for patent
infringements. A good example of this is the case of
the patent infringement suit brought by a U.S.
company regarding some joint research by the
Hamamatsu University School of Medicine and acompany. Since universities will be required tocarefully handle patented gene proteins in the
future, it will become difficult to maintain the● 156 ●

research freedom achieved in academia. In addition,
there is also the fear that the research results thathave been published and distributed by universities
in the past will now be delayed until the patentapplications have been filed, eliminating the prompt
sharing of information. If patents cause this loss of
research freedom and prompt sharing of
information, it is very likely to obstruct scientificresearch activities and stifle the progress of scienceand technology.
What is the impact on the industrial world?
First, the most important difference between
research in industry and research in academia isthat the basis of the existence of research inindustry is the pursuit of profit. Since the research
results created by a company are closely related tothe profits of the company, rather than quickly
publishing research results companies have strong
incentives to maintain the secrecy of the research
results until the products are developed, or to
obtain a monopoly. Therefore, if patents are notgranted for genes / proteins, since the company will
make it a business secret, this perpetuates
exclusive use. The patenting of a gene / protein
grants exclusive rights for a specified period of time,in return for which the inventor publishes thesecret information. This has the important
industrial strategy function of promoting further
research and development by others. In theindustrial world the recognition of gene / protein
patents as an effective means of recovering thehuge investment in research and development
costs is also important. For this reason the grantingof patents for gene and proteins is a major incentive
for research and development in the industrial
world. In this way there are large advantages forindustry as a whole from gene / protein patents,
resulting from the cycle of [Return on investment
due to broad range of rights] → [Stimulate
incentive to perform research & development] →[Patent application] →[Stimulate improved
inventions through publication of information]. The
question then becomes, however, are there any
disadvantages? When considering this question, theimportant point becomes the large differences in
the return on investment depending on the type ofgene.
The most representative industry making use
of gene / protein patents is probably thepharmaceutical industry. The ultimate goal of thepharmaceutical industry is to create technology andmedications to treat disease. Therefore, genes /proteins can be roughly classified into two types
according to the relationship to the disease. The
first category is the type of gene / protein for whicha disease occurs when the function of that gene /protein is lacking. Examples of this type are insulin,
t-PA, and erythropoietin. For this reason these geneproteins are effective as a means of rapidly
recovering investment costs, because the geneproteins can be commercialized as direct
medications. However, this type is relatively rare,
as is clear from the fact that few examples of thiskind of gene protein have appeared on the market.
The other category includes the genes / proteinsthat cause a disease through activation or
expression. In these cases the gene / protein itself
cannot be used as a medication. In order toestablish treatment methods for these kinds ofdiseases the relevant complex signal transduction
pathways for the gene protein must be analyzed,
and the protein functional domain and tertiary
structure must be studied so that an inhibitor canbe developed to block the activity of the gene /protein. In addition, it is generally rare for a disease
to be caused by a single gene, and in many cases
diseases are multifactor, resulting from theinteractions of several genes. This means that for acompany to establish a disease treatment method
the researchers must analyze the functions ofmultiple genes as well as the multiple relevant
signal transduction pathways. This means that the
research and development in the pharmaceuticalindustry can be said to have many of thecharacteristics of academic research. Under thesecircumstances, if several of the genes / proteins are
already patented and excluded from being used, thiscan create a situation in which the research anddevelopment must be abandoned. At present thesignal transduction pathway networks contributing
to diseases are basically unknown. Monopolizationof gene proteins through patents has the potential
to greatly suppress the progress of disease research.
In particular, this effect is likely to be especiallylarge in fields such as diabetes, cancer and AIDS
where the competition in research anddevelopment is very keen.
Thus far we have surveyed the current
situation for genes and proteins and the impact.
The area most likely to be affected by patents is thescientific research conducted in academia andindustry. Especially in recent years there have been
many opinion papers issued throughout the worldon the problems of gene / protein patents andresearch freedom, raising questions about fears oflimitations on scientific freedom due to theinterference of gene / protein patents on thescientific research sector. Let us now consider thekinds of patent protection that will be demanded in
the future. First, when considering the relationshipbetween the range of patent rights and innovation it
is important to be aware of the 2 types ofcompetition that exist with regard to the creation of
new technology. In order to promote creative
activity, it is good to provide incentives throughpatent protection (pre-invention competition). On
the other hand, it is also good for new knowledge
and technology to be utilized once it has beencreated (post-invention competition). If there isstagnation in either the pre- or post- competition,● 157 ●IIP Bulletin 2004

innovation cannot be sustained. An excessively
broad range of rights in gene / protein patents
promotes the pre-invention competition, but also
suppresses the post-invention competition, causing
progress on improved inventions to be stifled. For
the fields of life science, from which improvement
inventions are especially dependent on the
cumulative advances, it is even more important topromote post-invention competition. Based on this,even if a broad range of rights is recognized forgene / protein patents and pre-inventioncompetition is promoted, it is still important tostimulate post-invention competition by limiting
excessively broad ranges of rights. As an
adjustment mechanism for these kinds of ranges ofrights, the examination department of the patentoffices has such a function before the patents are
granted. Therefore, there must be clearer
examination criteria for inventions related to genes/ proteins, which address the various problems.
Specifically, with regard to antibody claims, it isimportant to set more limited descriptive criteria tosupport the development of antibody research andantibody medical treatment. With regard to genesequence and amino acid sequence claims, there
should probably be a requirement for more specificfunctional descriptions. However, since it isanticipated that there will be difficulties in making
the correct judgments on functions at theexamination stage due to the lack of prior literature,
it is also important to devise a rapid and qualified
review system that can restrict a broad range ofrights even after a patent is granted. In addition,clarification of government guidelines to partiallylimit the range of patent rights is also an effective
method. It is also important to make sure that not
only the range of rights, but also the validity of thepatent does not extend to academic research. In
particular, since limitations on the use of genes /proteins as research tools may significantly
obstruct the progress of scientific research, it isnecessary to devise some means of handling this.
Therefore, there is a need to clarify the definition of“testing and research” in Article 69 Paragraph 1 of
the Patent Law. It is considered to be especially
important to ensure that patent validity not extend
to purely scientific research. Furthermore, in orderto prevent unnecessary limitations on the use of
research tools at universities after they become
independent entities, it is important for the national
universities to create clear patent and licensing
policies with regard to research tools. In particular,
for the use of research tool patents with many
opportunities for use in scientific research, if it isestablished that there will be “freedom fornon-profit research by non-profit researchorganizations”, this will help release the scientificworld from use restrictions on many genes /proteins. Furthermore, when the use is for the
purpose of profit, considering the substitutability of

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technology in the market in the future,
non-exclusive licenses or exclusive licenses(priority non-exclusive licenses) should be granted.
In this way it will be possible for venture
enterprises or large companies to embody thetechnology developed in academia, and promote a
return to society. However, since there are often
new functions discovered later for genes / proteins,
if an exclusive license is granted, there is somelikelihood that it will significantly hinder research
to analyze the other functions. For this reason, forthe licenses of gene / protein patents toprofit-making organizations, it will probably beeffective to grant exclusive rights with limitations
on the function or field of application.
The sharing of intangible assets in the form ofpatent rights as a means of achieving the research
freedom currently found in academia wasmentioned previously. In the bio-fields, thedistribution of tangible assets, such as genes,
proteins, cells, animals, etc. is also an importantfactor. For gene / protein patents, even if thesequence information is published and can be usedfreely, preparation of the gene / protein from cells
and tissue requires a lot of time and effort. In thecase of a gene / protein that only appears in patientswith a specific disease, obtaining the gene / protein
itself can be difficult. MT (material transfer)systems to rapidly distribute such researchresources and reduce the burden on researchers
are expected to make a large contribution to thepromotion of life science research, which requires a
great deal of time for research and development.
However, if each university develops their own MT
system, since the user will have to investigate
whether there are fees and enter agreements withseveral different research organizations, this could
become a complicated and troublesome system.
Therefore, as each research organization develops
an MT system, it will be important to build asystem that allows all the information to be
searched at one time, and contracts to be madeeasily. In 1996 the US National Institute of Health(NIH) began negotiating agreements called
Material CRADA (Cooperative Research andDevelopment Agreements). Under this system inexchange for allowing the NIH to use samples(genes, proteins, cell stock, genetically-modified
animals) that they own, businesses are given
priority in the licensing of patent inventions thatare created from the research using the samples. As
a result, since the scientific research agencies canfreely use the research samples held by business, it
is possible to achieve a greater research freedom
for public research agencies. Furthermore, since
this increases the opportunities to promptly return
the patents arising at the scientific research
agencies to industry, it is possible to achieve an
efficient cycle of basic and application research.
However, the effectiveness of the Material CRADA● 158 ●

in the U.S. is largely due to the fact that the host
NIH is an enormous research agency. When abusiness enters an agreement with the NIH, theresearch samples owned by the business are freely
utilized by the 27 research organizations thatcompose the NIH, and there is no need for thebusiness to make agreements with multiple
research organizations. In comparison to the U.S.,
the scale of one research organization in Japan issmall. Even if the Material CRADA was introduced,
there would be limitations and only some researchorganizations would be able to use the researchsamples from business. The distribution of theresearch samples of business to the academic world
is an important factor related to the advancement ofresearch and development. A future MT system forJapan is an issue that should be carefully considered,including promotion of cooperation with several
universities.
We have discussed the effect of a broad rangeof rights for a gene / protein patent, and policies toresolve the problems. Since the life science field isparticularly susceptible to the impact of patents, it
is probably necessary to establish a newupper-level agency to coordinate policy research /establishment and to deal with the issues from botha scientific technology and an intellectual property
perspective. The Council for Science andTechnology Policy established within the Cabinet in
January 2001 is expected to be instrumental infilling this role. Their current focus is on the design
and planning of science and technology policy. In
the future there are expected to be specialty
divisions created to handle the overall coordination,
including intellectual property, such as license
agreements for academia and industry, theformation of patent pools, technology transfer
policies for universities, and how to handle
arbitration, which should promote and facilitate theutilization of patent technology for scientificresearch.

● 159 ●IIP Bulletin 2004