14Block Me Not: Genes as Essential Facilities?
Shamnad Basheer (*)

Disease gene patents are a serious and sensitive issue. Policy in this area has to be very carefully
deliberated upon-as any mistake could have severe consequences for biomedical drug discovery and humanhealth. Literature is replete with concerns that patents over gene sequences would ‘block’ biomedical drug
development. However as Walsh and others warn, before seeking solutions to this blocking impasse, we need toask ourselves if there is such ‘blocking’ in the first place.
My paper seeks to demonstrate that antitrust can offer us a good framework to study the blocking issue. By
applying the essential facilities doctrine to individual cases where access to a gene patent has been denied, one
can assess the existence and maybe extent of blocking in this industry. This data could then be used to assess as
to whether the blocking is of such a widespread nature as would warrant a substantial legal and/or institutional
response.
With the IMS Health case before the ECJ, the essential facilities doctrine has taken centre stage in Europe.
A recent report by the JFTC seems to suggest that Japan is serious about invoking this doctrine. However theparameters of this doctrine are far from settled. Antitrust authorities do not enough guidance on issues such asdetermining appropriate license fees for access, optimal number of licensees etc. In keeping with my focus onblocking and disease gene patents, I have dealt mainly with one aspect of this doctrine-namely the question of“essentiality”. Essentiality would in most cases help in a determination of ‘blocking’ i.e. if the facility is a
non-essential one, then there can possibly be no blocking. However the converse need not always be true-i.e. if the
facility is an essential one, but is widely licensed, then it is quite possible that there would be no blocking.

Introduction
The phrase ‘block me not’ is a play on thename of a highly sensitive plant, the ‘Touch Me
Not’. Known scientifically as ‘Mimosa Pudica’, thisplant, found mainly in some pacific islands literally
shrinks/folds up upon any kind of touch-hence thename. In much the same way as this plant, ‘gene
patents’ and in particular disease gene patents are ahighly sensitive issue and unless handled with theappropriate amount of delicacy, could have fatal
ramifications for biomedical drug discovery.
By disease genes, I mean not only diseases
that have their bases in genetic disorders but alsodiseases that though ‘non-genetic’ in origin, could
still have gene-based cures. As is the case with
HIV/AIDS, some of these diseases are fatal-unless
we find a cure for them quick enough, we are likely
to witness an increasing number of deaths eachyear.
The change of ‘touch’ to ‘block’ in the topic isreflective of the ‘blocking’ problems inherent in thebiomedical industry. To explain further, thebiomedical industry is characterized by the“cumulative innovation” paradigm, wherein the
discovery of a gene sequence is only the first step;
vast amounts of additional time effort and money
will have to be spent turning such sequence
information into viable products, tests and cures forgenetic conditions and diseases. Nonetheless, those

who patent such ‘raw data’ will find themselves in astrong bargaining position and will undoubtedly beable to secure for themselves significant financial
return, quite often at the cost of holding up further
downstream research. This potential “blocking” or‘lack of access” problem could adversely impact
upon drug discovery, as many diseases today are
known to be gene based.
In contrast to the prospect of an anticommonsas envisaged by Heller and Eisenberg, the“blocking” or “access” issue is not a problem ofaccessing multiple rights but one of accessing
relatively few (or perhaps even one) patents on a
key upstream invention. This paper will concern
itself with only the “blocking” or “access” issue.

1. Unblocking Gene Patents: If It Aint
Broke, Don’t Fix It
The biomedical industry seems an ideal target
for blocking problems to occur, given the fact that:i) Patents were granted at the initial stages onmere DNA sequences, with no other known
function than their mere use as probes. This has
the potential of limiting the freedom of otherresearchers, particularly those in thepharmaceutical industry from developing
further downstream products based on thesegene sequences.
ii) Genes are finite in number. It is also extremely(*) B.A. LL.B.(Hons.), B.C.L.(Oxon.)

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difficult to invent around gene patents.
iii) A single gene may have more than one
function-with the result that a patent on thegene could cover all its potential uses.
Two of the most controversial gene patents
that have raised concerns of blocking in a starkmanner are the patents on the CCR5 gene and the
BRCA genes. In 2000, the USPTO granted apatent to Human Genome Sciences (HGS) covering
the nucleotide sequence of CCR5. The utility of theinvention was defined, among other things, as a tool
for screening for receptor agonists and antagonists,
and as a diagnostic tool for detecting mutations in
the gene itself. A utility in HIV/AIDS research was
not mentioned- as admitted by HGS, no such utility
was contemplated at the time. Other researchers
subsequently discovered that the CCR5 receptor
was the “docking receptor” used by the HIV virus
to infect a cell-consequently the gene could havetremendous implications in AIDS research and thepossibility of a cure. However, the patent grantmeant that HGS could exclude all such researchers
from using the CCR5 gene in their research. It wasfeared that this patent would have a “blocking”
effect on AIDS research.
In much the same way, Myriad has beenaccused of stifling research because it has been
unwilling to widely license the diagnostic use of its
patents on the breast cancer genes, BRCA1 and 2(and their mutations).
Myriad’s exorbitant
demands for royalties put its test out of the reach ofclinics and hospitals (involved in research that
requires the test results). Consequently, it wasfeared that clinical research would be impeded,yielding long-term social costs. Myriad’s actions
could have the effect of preventing the emergenceof new and improved tests.
Various solutions have been proposed to tackle
the blocking issue. Some have recommended
patent law reform, such as ensuring that only ‘use
patents’ are granted for genetic inventions. Someothers have sought to redress this throughadministrative regulation such as antitrust andsome others have even sought to address thisthrough health related regulation. However before
weighing up the pros and cons of such proposals,
one has to take a step backward and ask thequestion: “Is there a ‘blocking’ in the biomedical
industry in the first place?
Despite initial concerns echoed by many thatthe biomedical industry would be characterised by asevere ‘blocking’ issue, till date, there has been
little concrete evidence that this has in factoccurred. For example, in 2001, Walsh et al (*1) ina report indicated that the theoretical possibility ofsuch blocking concerns may have been offset bycertain ‘working solutions’ adopted by the industry.
These working solutions combine taking
licenses, inventing around patents, infringement(often informally invoking a research exemption),going offshore, developing and using public tools,
and challenging patents in court.
One has however to bear in mind that
notwithstanding the general finding that there is noevidence of systematic or large scale blocking inthis industry, one-off instances do exist. Myriad’s
licensing practices could perhaps be considered agood example in this regard. Maybe there will arise
more such instances in future. It is therefore
important that we constantly monitor this industry
and assess individual blocking situations as theyarise to determine the need for a broader and more
systematic response to concerns of blocking.
It is in this regard that antitrust offers a goodstructural framework to help us determine theexistence and extent of blocking in each individualcase. I will show in this paper how the doctrine ofessential facilities (EFD) helps us achieve this.
Paradoxically, the very application of an antitrust
remedy would help us determine if there is a
“blocking” in the first place.

2. The Essential Facilities Doctrine
The “essential facility doctrine”, is designed todeal with the danger that a monopolist in control ofa scarce resource will extend its monopoly power
vertically from one level of production to another.
The “scarce resource”, which may range from aphysical bottleneck (such as a telecommunication
network or a port) to an Intellectual Property Right,
would qualify here as the “essential facility”. A
denial of access to this facility would then qualify as
an abuse of dominant market power, and thedominant undertaking would be forced to grant‘access’ on fair and reasonable terms. The essential
facilities doctrine has its origins in the US (*2) andhas been most widely applied in regulating accessto physical infrastructure such as transport facilities(notably, ports) or utility networks (e.g. pipelines,
energy networks).
EC position:
The concept of essential facilities (EF)becomes relevant within Art. 82 of the EC-Treaty
which prohibits the abuse of a dominant position.
Although the parameters of the ‘essential
facilities’ doctrine has still not been worked out
fully in the EU, some broad conclusions can be(*1) J. Walsh, A. Arora and W. Cohen ‘Effects of Research Tool Patenting and Licensing on Biomedical Innovation’ in W.M.
Cohen and S.A. Merrill (eds.), Patents in the Knowledge-Based Economy (Washington: National Academies Press, 2003) at287(*2) United States v. Terminal Railroad Association, 224 U.S. 383 (1912).

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drawn from case-law.
1. In order to arrive at a finding that a dominantposition relating to the ownership of an
intellectual property right has been abused,
there has to be exceptional circumstances,
beyond a mere refusal to license. Although thenature of such exceptional circumstances has
not been clearly articulated, they can be broadly
culled out from case law such as Magill and
IMS.
2. The three criteria developed in Magill (*3),
Bronner (*4) and IMS (*5) to determine whether arefusal to license or supply constitutes an abuse
may serve as a starting point:a. the refusal to access the facility is likely toeliminate all competition in the relevantmarket and/or prevent the emergence of anew product for which there is potential
consumer demand;b. the facility itself is indispensable to carrying
on business, inasmuch as there is no actual or
potential substitute in existence for thatfacility, andc. such refusal is not capable of being
objectively justified (justifications being suchof lack of creditworthiness or capacity
constraints).
Of all these factors, the one that will befocussed upon in this paper is “essentiality”.
Needless this say, this factor underpins the very
essence of the EFD i.e. if the facility is
non-essential, then presumably, a competitor needhave no access to it in order to compete effectively.
The question of essentiality becomes relevant
at two stages of the application of the essential
facilities doctrine:
1. When determining the issue of dominance; and2. When determining the issue of abuse.
To explain further:
One has to bear in mind the fact that the EFD
is not a stand-alone concept. Rather it is a subset of
the wider mandate to not abuse a dominant position.
As stressed upon earlier in this chapter, before
arriving at a finding that there has been an abuse of
a dominant position, one has to determine that theundertaking in question occupies a position of‘dominance’ in the market. In most cases, market
power (determined in turn by factors such as
market share) will determine dominance. Market
power will in turn significantly hinge upon how“essential” the facility itself is.
The doctrine becomes important at the stageof determining abuse as well. One of the threecriteria developed in Magill, Bronner and IMS todetermine whether a refusal to license or supply
constitutes an abuse is that the facility is
indispensable to carrying on business, inasmuch as
there is no actual or potential substitute inexistence for that facility.
Japanese position:
Unlike the EU, neither the antimonopoly lawof Japan nor any of the JFTC decisions seem toclearly articulate a doctrine of essential facilities.
However a recent study group report by the Japan
Fair Trade Commission (JFTC)(*6) seems to suggestthat the JFTC is now recommending the applicationof the Essential Facilities Doctrine (EFD) in a more
extensive manner.
The report however does not delineate thespecifics of the doctrine and how it would be applied.
All it does is to draw out a very broad framework

3. Essentiality and Inventing
Around: Get Creative!!
As has been stressed in the earlier chapter,one of the essential prerequisites for an applicationof EFD is a determination that the facility is in fact
an essential one. The question of “essentiality”
would in large part turn upon the availability of
substitutes available for inventing around thepatent. In the case of patents on human genes,
substitutes do exist, at least theoretically. Let’s
explore some of them:Animal genes:
Since animal genomes share a striking
similarity to the human genome, it may betheoretically possible to substitute an animal gene
for a human one. In a recent BBC report (*7) it wasstated that scientists discovered a gene, in thenematode worm, that was quite similar to thehuman breast and ovarian cancer gene BRCA1. It
was hoped that this gene could offer some clues forthe development of breast and ovarian cancer.
Given Myriads heavy-handedness in enforcing its
patents on the BRCA 1 and 2 genes, researchers
keen on working on these genes without paying the
exorbitant royalties demanded by Myriad could
consider using the nematode gene instead.

(*3) RTE v. Magill [1995] ECR 743(*4) Oscar Bronner v Media Print [1999] 4 CMLR 112(*5) IMS Health GmbH & Co OHG v NDC Health GmbH & Co KG (C418/01)(*6) Report of the Study Group on the Antimonopoly Act October 28, 2003. The Study Group on the Antimonopoly Act waschaired by Kenichi Miyazawa, Honorary Professor, Hitotsubashi University) and held a series of meetings since October
2002.
(*7) See ‘Primitive Worm Gives Cancer Clue’ (http://news.bbc.co.uk/1/hi/health/3368685.stm)

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Muteins:
Another interesting area that could throw up
potential substitutes is protein engineering-thisinvolves the artificial modification of genes to yield
new proteins or ‘muteins’. Examples of successful
muteins include Betaseron, an analog of humanbeta interferon differing from the natural sequence
by only a single amino acid.
Unnatural Base Pairs:
The revolutionary concept of ‘unnatural basepairs’ is quite similar to the concept of ‘muteins’ but
goes one step further. As the name itself suggests,‘artificial’ base pairs or ‘unnatural’ base pairs areadded on to the natural base pairs (AT-GC) in a
DNA sequence. The design of such novel base pairs
is being exploited to add functionality to the nucleic
acid and is only limited by the creativity of thechemist.
However the above ‘substitution’ possibilities
are easier said than done. What one has to bear inmind that it is not a mere theoretical possibility thatwould qualify something as a substitute. Rather, theconcerned substitute has to be a viable
alternative-technologically, financially and legally.
Technologically, an assessment has to be made as towhether one could expect broadly similar/accurate
results when researching on the substitute (be it an
animal gene, a mutein or an unnatural base pair) as
opposed to patented human gene.
Given the fact that this paper focuses on ahighly sensitive area such as human disease genes,
one has to bear in mind that a slight difference ingenetic structures could result in fundamental
alteration in function. Consequently, one would
need to seriously question as to whether research
on an animal gene could yield similar results.
One would also have to assess whether suchresearch would be financially viable one, given thehigh R&D costs inherent in any biomedical
research. In terms of legal feasibility, the doctrine ofequivalents could kick in to prevent research on an
animal gene (or any substitute) that is similar to thepatented human gene in question.
However, at the same time, it has also to beborne in mind that a ‘mere competitive
disadvantage’ would not suffice to invoke this
doctrine. Rather it has to be shown that
‘duplication’ of the facility is impossible orextremely difficult owing to physical, geographicalor legal constraints.
Offshore Research:
Another strategy that is increasingly coming to
be deployed in the biomedical industry today is toconduct
research
involving
patented
products/processes in offshore jurisdictions where
the patentee has failed to procure a patentregistration. This strategy received a boost with therecent ruling in Bayer AG v Housey Pharmaceuticals
that stated that if the results of research using‘patented products/processes’ is ‘information’ andnot a ‘product’, then importing such information to
the US would not amount to a patent infringement.
To illustrate this point, consider the exampleof NimbleGen, which uses the patented processesof Affymatrix to produces custom microarrays froma facility in Iceland. Since Affymatrix has failed topatent its technology in Iceland, NimbleGen canconduct its research unhindered in this jurisdiction.
NimbleGen conducts research on behalf of selectcustomers and then ships the resulting data back tothose customers in areas where the technology inquestion is patent protected. Under the Bayerruling, since the result of this patented process is‘information’ rather than a physical product, it
would not tantamount to patent infringement.
As suggested earlier, one of the key dilemmas
in applying the EFD to intellectual property is thefact that blocking is the very essence of an
intellectual property grant. This has been reiterated
in almost all the ‘essential facility’ cases, beginningwith Volvo vs Veng. (*8) Consequently, one has to be
extremely cautious about over-extending theapplication of this doctrine in a manner that would
destroy the incentive to create the essential facility
in the first place.
Further an extensive application of EFD may
not only destroy the incentive to create for theprospective patentee, it may also do so for acompetitor. To elaborate, a liberal application of the
EFD would translate to easy access to the patented
technology for the competitor-this in turn would
mean a reduction in the incentive to ‘invent around’.
The necessity to ‘invent around’ the patent is often
the mother of future inventions.

4. Essentiality- A Sliding Scale
Underlying the very essence of the “Essential
Facilities Doctrine’ is the concept of ‘essentiality’.
However this concept is not a uniform one-rather, it
is a variable one, depending on several factors. I
will focus on two of these factors, namely the levelof technological sophistication (‘technology’) andthe extent of legal protection (‘law’). I call this the‘techno-legal lever’. To explain further, consider thefollowing:
The level of technological sophistication ishigh in the United States. Consequently, it
could be argued that it may be comparatively
easier to invent around in the US than it would
be in a relatively less technologically(*8) Case 238/87, 1988 ECR 6211
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sophisticated country such as India. Therefore
a patent may be more of an essential facility inIndia than it is in the United States.
Essentiality would also depend on the legal
regime and the extent of patent protection
conferred on an invention in such jurisdiction.
Thus for example, the Indian patent regime
protects inventions to a far lesser degree than
the regimes in the United States or even Japan.
In fact, as of today, the Indian patent regime
does not grant product patents for genetic
inventions-rather one can only avail of aprocess patent here.
Similarly, the doctrine of equivalents is not aswell developed in India as it is in the US or
Japan. Consequently, an invention may be lessessential in India than it is in the US-as thelegal regime offers considerably more
flexibility to invent around.
In much the same way, if the patent grant is anarrow one, the scope for inventing around is
far greater. Indeed in some cases, a strict
application of patenting pre-requisites could
result in the patent not being granted at all.
This is what happened in the case of the patentapplication by HGS claiming the CCR5 receptor
gene. Although this patent was granted by the
USPTO (*9) the JPO rejected this patent on the
ground that it lacked utility and inventiveness.
(*10)
As noted earlier, the grant of this patent by
the USPTO was severely criticised as theutility cited was a highly speculative one (HGS
had freely admitted that it did not know thegene's role in the HIV virus at the time it filed
its patent application). The rejection by the
JPO seems therefore to reflect better patent
policy. Consequently, one could surmise that it
may be easier to invent around in Japan than it
is in the US as the patent grant is a stricter
one.

Conclusion
Disease gene patents are a serious andsensitive issue. Policy in this area has to be very
carefully deliberated upon-as any mistake could
have severe consequences for biomedical drug
discovery and human health. Academic literature is
replete with concerns that patents over genesequences would ‘block’ biomedical drug
development. However as Walsh and others warn,
before seeking solutions to this blocking impasse,
we need to ask ourselves if there is such ‘blocking’in the first place.
I have sought to demonstrate in this paper that
antitrust can offer us a good framework to study theblocking issue. By applying the essential facilities
doctrine to individual cases where access to a genepatent has been denied, one can assess theexistence and maybe extent of blocking in thisindustry. This data could then be used to assess as
to whether the blocking is of such a widespreadnature as would warrant a substantial legal and/or
institutional response.
I suspect that one of the main obstacles
hampering a full-fledged analysis of the biomedical
industry as would enable one to assess ‘blocking’ ina more comprehensive manner is the lack of
information (pertaining to issues such as licensing).
For example, some licensing agreements may evenprohibit the disclosure of the very existence of thelicense. This need for more data could perhaps offer
one of the strongest justifications for antitrustintervention. Antitrust authorities have greater
powers to call for information in comparison totheir counterparts from other institutions such as
the patent office.
With the IMS Health case before the ECJ, theEssential Facilities Doctrine (EFD) has taken
centre stage in Europe. A recent report by the
JFTC seems to suggest that Japan is serious about
invoking this doctrine. However the parameters of
this doctrine are far from settled. Antitrust
authorities do not have enough guidance on issues
such as determining appropriate license fees foraccess, optimal number of licensees etc. In keepingwith my focus on blocking and disease gene patents,
I have dealt mainly with one aspect of this
doctrine-namely the question of “essentiality”.
Essentiality would in most cases help in a
determination of ‘blocking’ i.e. if the facility is a
non-essential one, then there can possibly be noblocking. However the converse need not always
be true-i.e. if the facility is an essential one, but iswidely licensed, then it is quite possible that there
would be no blocking.
I have also sought to demonstrate thatessentiality is a local concept and not a universal
one; thus it would depend on factors such as thelevel of technological sophistication and the extent
of patent protection in the concerned jurisdiction.
It is impossible to predict at this stage whether
the working solutions referred to by Walsh would
continue to offset a blocking impasse. As a wise
man once said “We tend to overestimate what
would happen in a year and underestimate what canhappen in 10 years.” Therefore the need forconstant vigil over this industry cannot be
overstated.

(*9) U.S. Patent No. 6,025,154 (2000).
(*10) The application filed in Japan was rejected in October 2003 (See Application Number 2000-171338)

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