This report was prepared principally by the Office of Industries 

Project Leader 

Katherine Linton 

Philip Stone and Jeremy Wise 

Special Assistance 

Alexander Bamiagis, Shannon Gaffney, Elizabeth Nesbitt, and Matthew Potts 

Primary Reviewers 

Robert Feinberg and Laura Polly 

Administrative Support 

Sharon Greenfield, Monica Reed, and Wanda Tolson 

Office of Network Services Division 

Under the direction of 

Karen Laney-Cummings, Director, Office of Industries 
i 

Abstract 

 

This study provides a profile of innovation in industrial biotechnology, an 

emerging field of biotechnology characterized by the use of enzymes, microorganisms, and other biocatalysts to create new processes and products. This 

study uses patent data, survey results, and technology and firm level data from 

emerging sectors of industrial biotechnology to provide a detailed picture of 

innovation in the field. 

This study finds substantial evidence that the field of industrial biotechnology is 

diverse and growing, with new patent owners entering at a steady rate. Different 

companies, ranging from small to large in size, are dominant in different areas of 

industrial biotechnology and patent portfolios play an important role in their 

participation by facilitating the commercialization of new products and 

processes. Moreover, according to the U.S. International Trade Commission’s 

recent report, most firms in the biofuel and chemical industries state that patent 

barriers are not creating a substantial impediment to the research and 

development (R&D) or commercialization of industrial biotechnology products. 

 

The U.S. Patent and Trademark Office (USPTO) issued 20,428 utility patents 

with a primary classification related to industrial biotechnology from January 

1975 through December 2006. The number of patents issued each year climbed 

steadily beginning in the mid-1980s, peaked in 1999, declined from 2000 through 

2005, and rebounded in 2006. The trends for industrial biotechnology patenting 

mirror those in the broader field of biotechnology and are strongly influenced by 

capacity and resource issues at the USPTO, particularly longer and more rigorous 

review periods. 

The study’s focus on two emerging areas of industrial biotechnology—cellulaserelated enzymes used in the production of cellulosic ethanol and enzymes for biobased plastics production—enables a closer look at the role patents are playing at 

the technology and firm levels. In both technology areas, leading patenting firms 

hold a relatively small number of patents. The Herfindahl-Hirschman Index 

indicates that the control of patents rights in these emerging fields is not 

concentrated; a steady stream of new owners has been entering the fields over the 

last ten years. 

Profiles of leading patenting firms in these emerging fields—Novozymes, 

Verenium, Metabolix, and Cargill—illustrate the important role that patents are 

playing in firm activities. They protect R&D investments and market share, and 

facilitate the strategic alliances with other firms and the federal government that 

provide the know-how and capital to move cellulosic ethanol and bio-based 

plastics technologies from R&D to commercialization. 

TABLE OF CONTENTS

Page

Abstract............................................................................................................................................ i

Executive summary......................................................................................................................... v

Chapter 1 Introduction ................................................................................................................. 1-1

 Scope: Biotechnology and industrial biotechnology................................................................. 1-2

 Data............................................................................................................................................. 1-3

 Report organization .................................................................................................................... 1-4

Chapter 2 Patents and Innovation................................................................................................. 2-1

 Milestones in biotechnology patent policy................................................................................. 2-1

 Biotechnology patents and the commercialization of products ................................................. 2-3

 Biotechnology patents and the anticommons theory .................................................................. 2-4

Chapter 3 Aggregate data and questionnaire results.................................................................. 3-1

 Patent search parameters ............................................................................................................ 3-1

 Patent search results ................................................................................................................... 3-2

 Commission questionnaire results .............................................................................................. 3-8

Chapter 4 Industrial biotechnology at the technology and firm level........................................ 4-1

 New enzyme technologies.......................................................................................................... 4-1

 Bio-based plastics....................................................................................................................... 4-10

Chapter 5 Conclusions.................................................................................................................... 5-1

 Conclusions ................................................................................................................................ 5-1

 Suggestions for future research .................................................................................................. 5-2

Bibliography.................................................................................................................................... Biblio-1

Appendix.......................................................................................................................................... A-1

Box

2.1 Bayh-Dole and the increase in patenting, licenses, and the formation of spin-off 

 companies ......................................................................................................................... 2-2

Tables

3.1 Industrial biotechnology: Top patent owners, 2002–06 ........................................................... 3-8

4.1 Top patent owners in classification 435/209, 1997–2007 ......................................................... 4-3

4.2 Novozymes: Financial data, 2001–07...................................................................................... 4-6

4.3 Verenium: Financial data, 2001–07.......................................................................................... 4-8

4.4 Top patent owners in classification 435/135, 1997–2007 ......................................................... 4-12

4.5 Metabolix: Financial data, 2001–07 ......................................................................................... 4-14

4.6 Top patent owners in classification 435/139, 1997–2007.......................................................... 4-18

iii
TABLE OF CONTENTS—Continued

Page

Figures

3.1 Industrial biotechnology patents granted yearly, 1975–2006 ................................................ 3-3

3.2 Biotechnology and industrial biotechnology patents granted yearly, 1993–2005 ................. 3-3

3.3 Industrial biotechnology patents granted yearly to U.S. and foreign corporations, 

 1975–2006....................................................................................................................... 3-5

3.4 Industrial biotechnology patents granted yearly to U.S. universities and U.S. 

 universities’ share of all industrial biotechnology patents, 1975–2006........................... 3-5

3-5 Industrial biotechnology patents granted yearly to the U.S. government and 

 U.S. government share of all industrial biotechnology patents, 1975–2006 ................... 3-6

3-6 Industrial biotechnology patent owners and new owners, 1975–2006................................... 3-7

4.1 Patents granted by owner type in classification 435/209, 1997–2007.................................... 4-2

4.2 Patent owners and new owners in classification 435/209, 1997–2007................................... 4-4

4.3 Novozymes: U.S. patents and applications, by application date, 1997–2007 ....................... 4-6

4.4 Verenium: U.S. patents and applications, by application date, 1997–2007........................... 4-9

4.5 Patents granted by owner type in classification 435/135, 1997–2007.................................... 4-11

4.6 Patents owners and new owners in classification 435/135, 1997–2007 ................................. 4-13

4.7 Metabolix: U.S. patents and applications, by application date, 1997–2007 .......................... 4-15

4.8 Patent granted by owner type in classification 435/139, 1997–2007 ..................................... 4-17

4.9 Cargill: U.S. patents and applications, by application date, 1997–2007................................ 4-20

iv
Executive Summary 

This study provides a profile of innovation in industrial biotechnology, an 

emerging field of biotechnology characterized by the use of enzymes, microorganisms, and other biocatalysts to create new products. Industrial 

biotechnology is used to make biofuels, chemicals, and other products in more 

sustainable and environmentally friendly ways by, for example, enabling the use 

of renewable resources rather than petroleum-based products, eliminating 

harmful byproducts created by conventional chemical processes, reducing energy 

requirements and greenhouse gas emissions, and/or lowering manufacturing 

costs. Because of these positive attributes, the demand for industrial 

biotechnology products and processes is increasing. This study uses patent data, 

survey results, and technology and firm level data from emerging sectors of 

industrial biotechnology to provide a detailed picture of innovation in the field. 

Although patents have been shown to facilitate the movement of new products 

and processes from research and development (R&D) to commercialization, the 

literature raises an important question: is there evidence that too much patenting 

stifles innovation? This could occur, for example, when firms amass huge patent 

portfolios or when there are a very large number of patents in a narrow 

technology area, making it difficult for companies entering the market to find 

patentable space. The authors found that innovation is expanding in the emerging 

field of industrial biotechnology. A diverse group of firms, large and small, is 

developing new patented products and processes, and new firms are steadily 

entering the field. Moreover, the average number of patents held by firms active 

in the field is still relatively small. These data suggest that patents are facilitating 

and not stifling innovation. 

This study profiles four firms that are leading patent owners in two emerging 

sectors of industrial biotechnology: cellulase-related enzymes used to break 

down cellulosic biomass to produce biofuels and chemicals, and the production 

of bio-based plastics using enzymatic processes. The profiles describe the firms’ 

operations, R&D efforts, and their strategic alliances with other firms and 

government, highlighting the important functions that patents play in these 

activities. 

Key Findings: Aggregate Patent Data and 

Questionnaire Results 

This study relies on a variety of data sources to identify the role of patents in 

industrial biotechnology innovation. Chapter 3 reviews aggregate data obtained 

from a search of U.S. Patent and Trademark Office (USPTO) patent records for 

the period January 1975 through December 2006, and results of a questionnaire 

sent to firms in the biofuel and chemical industries. Key findings are set forth 

below. 

v 
• The USPTO issued 20,428 utility patents with a primary classification 

related to industrial biotechnology from January 1975 through December 

2006. The number of patents issued each year climbed steadily beginning 

in the mid-1980s, peaked in 1999, declined from 2000 through 2005, and 

rebounded in 2006. The trends for industrial biotechnology patenting 

mirror those in the broader field of biotechnology and are strongly 

influenced by capacity and resource issues at the USPTO, particularly 

longer and more rigorous review periods. 

• Patents obtained by domestic universities grew substantially over the 

period, coinciding with implementation of the Bayh-Dole Act. This act 

permits universities to retain patent ownership in government-funded 

inventions and license those inventions to others. It has resulted in a 

substantial upswing in university patenting. 

• Patents in industrial biotechnology do not appear to be concentrated in 

the hands of a small number of owners and new owners are steadily 

entering the field. Even the number of patents held by industry leaders is 

relatively small, particularly when compared with the much larger patent 

portfolios of leading patenting companies in information technology and 

other high tech areas. 

• More than 70 percent of biofuel and chemical company representatives 

responding to a survey by the U.S. International Trade Commission 

(Commission) reported that “patent barriers” are one of the least 

significant impediments to the R&D and commercialization of industrial 

biotechnology products and processes. 

Key Findings: Industrial Biotechnology at the 

Technology and Firm Level 

This study next focuses on two emerging areas of industrial biotechnology—

cellulase-related enzymes and enzymes for bio-based plastics production—to 

enable a closer look at the role patents are playing at the technology level (as 

determined by particular patent classifications) and at firm levels. Key findings 

from chapter 4 are presented below. 

• Cellulase enzymes are critical to achieving the cost-effective production 

of cellulosic ethanol. A large portion of the 277 cellulase-related patents 

issued by the USPTO in classification 435/209 is held by two Danish 

companies, Novo Nordisk A/S (a related company to Novozymes) and 

Danisco A/S (the parent company of Genencor). While these companies 

are dominant in this class, a number of smaller companies also own 

multiple patents. Moreover, there is a steady stream of new owners 

entering the field. Application of the Herfindahl-Hirschman Index (HHI) 

indicates control of patent rights in the field is not concentrated. The 

existence of many patenting firms, with most having only one patent, 

lowers the index and keeps the market from being deemed concentrated. 

vi 
• The Novozymes profile highlights the important role that a strong patent 

portfolio plays in the firm’s activities. According to Novozymes, patents 

protect its R&D investments and market share, and secure the company’s 

operational freedom. Novozymes also has recently prevailed in highstakes patent litigation with its chief competitor, Genencor, over 

enzymes used in the production of biofuels. 

• Verenium, a small firm that owns numerous patents for enzyme 

technologies and has licensed foundational cellulase-related patents from 

the University of Florida, is also profiled. Patents facilitated the transfer 

of the university technology to Verenium for further development. They 

also have helped Verenium enter into strategic alliances with firms and 

the federal government, which have provided the capital needed to move 

its cellulosic ethanol technologies from R&D to commercialization. 

• Bio-based plastics, particularly poly-hydroxyalkanoates (PHA) and 

polylactides (PLA), is another emerging sector of industrial 

biotechnology where patents play a central role in innovations. The 

USPTO issued 308 patents in 435/135, the classification related to PHA. 

Most companies patenting in this class hold a small number of patents 

and the HHI indicates that the control of patent rights in the field is 

unconcentrated. 

• The firm with one of the largest patent holdings in the PHA-related 

classification, Metabolix, is a small U.S. firm. The profile of Metabolix 

highlights a strong patent portfolio, based on foundational technology 

acquired from the Massachusetts Institute of Technology (MIT). For 

Metabolix, patents have facilitated both the transfer of early-stage 

university research to the company and the strategic alliances and 

government grants that bring necessary capital for the commercialization 

of bio-based plastics. 

• The USPTO issued 69 patents in 435/139, the classification related to 

PLA, another bio-based plastic. Most corporations hold only 1 patent in 

this classification and even the top patenting companies hold less than 10 

patents. The largest patent holder is a privately held U.S. firm, Cargill. 

The profile of Cargill shows that its PLA-related patents, and those of its 

subsidiary NatureWorks, support a strong market position. NatureWorks 

operates the only world-scale PLA plant in the United States. 

Together the aggregate data and firm questionnaire results in chapter 3 and the 

technology and firm level data for particular sectors described in chapter 4 

highlight the central role that patents play in innovation in industrial 

biotechnology. The firms profiled rely on patents to enhance and protect their 

market share, transfer technologies from the university setting, attract technology 

and outside funding from strategic alliance partners and the federal government, 

and protect substantial R&D investments. A diverse and expanding group of 

companies, large and small, are relying on patent portfolios and strategic 

vii
alliances to move industrial biotechnology products and processes from R&D to 

commercialization. 

viii
1-1

CHAPTER 1 

Introduction 

This study provides an in-depth look at patenting in the field of industrial 

biotechnology, building on the Commission’s recent report on the 

development and adoption of industrial biotechnology by the U.S. chemical 

and biofuel industries.1

 Patenting in this sector of biotechnology has received 

little attention; this study seeks to fill that gap. 

This study fits within a rich literature on the relationship between patents and 

innovation, including the particularly important role that patents have played 

in the development of the field of biotechnology. An important question 

suggested by the literature, and to which this study is responsive, is whether 

there is evidence that patents are stifling innovation by keeping new entrants 

out of the field. This study finds substantial evidence that the field of 

industrial biotechnology is diverse and growing, with new patent owners 

entering at a steady rate. Different companies, ranging from small to large in 

size, are dominant in different areas of industrial biotechnology, and patent 

portfolios appear to play an important role in their participation. Moreover, 

as noted in the Commission’s recent report, most firms in the biofuel and 

chemical industries state that patent barriers are not creating a substantial 

impediment to the R&D or commercialization of industrial biotechnology 

products. 

This study presents patent data obtained from a custom data set provided by 

the USPTO based on search criteria developed by the authors. The data are 

used as a basis for discussing patenting trends and the characteristics of 

patent owners. Also presented are the results of the Commission’s 

questionnaire of firms in the biofuel and chemical industries, and particularly 

their responses to questions about whether patent barriers are a significant 

impediment to the R&D and commercialization of industrial biotechnology 

products. 

This study also describes patenting trends and ownership characteristics in 

two emerging areas of industrial biotechnology in the biofuel and chemical 

industries: the creation and use of enzymes that break down cellulosic 

biomass for the production of chemicals and biofuels, including cellulosic 

ethanol, and the production of bio-based plastics using enzymatic processes. 

Profiles of four of the leading patenting companies in these fields are 

provided; these profiles highlight the important role that patents play in the 

movement of new products and processes from R&D to commercialization. 

This study paints a new and detailed picture of patenting and innovation in 

industrial biotechnology in the biofuel and chemical industries. 

 1

 USITC, Industrial Biotechnology: Development and Adoption by the U.S. Chemical and 

Biofuel Industries, USITC Publication 4020, 2008. 
1-2

Scope: Biotechnology and Industrial Biotechnology 

Biotechnology is a collection of technologies that rely on the use of cellular 

and biomolecular processes to develop or make useful products.2

 Industrial 

biotechnology, or white biotechnology, is called biotechnology’s “third 

wave,” following more well-known applications in the medical sector (red 

biotechnology) and agriculture (green biotechnology).3

 Although there are 

many definitions of industrial biotechnology, for the purposes of this study 

and as defined in the Commission’s report, the touchstone is the use of 

enzymes or micro-organisms to catalyze chemical reactions.4

 These enzymes 

or micro-organisms (often referred to as “biocatalysts”) typically are used to 

manufacture intermediate and end products more efficiently, reduce 

environmental impacts of processes and products, and/or enable the creation 

of new products from renewable resources. 5

 

The use of enzymes to catalyze chemical reactions is not new; naturally 

occurring enzymes have been used for centuries in the production of cheese 

and other foods. Crude enzyme extracts were used in the industrial 

processing of textiles and leather in the late 19th and early 20th centuries.6

 

Within the past 50 years, increasingly sophisticated and functional enzymes 

have been created and integrated into chemical processes and products by the 

chemical industry. By the 1960s, for example, commercially successful 

enzyme-based detergents and cleaners had been developed.7

 The 1960s also 

saw the development of enzymes to break down starch from corn or other 

crops into its component sugars. These sugars would then be converted to 

products, such as ethanol or sweeteners. Enzymatic processes typically 

replaced the acid hydrolysis of starch and provided higher yields and greater 

purity.8

 The latest versions of these enzymes are used today in the production 

of corn-based ethanol. 

Advances in the biological sciences in the 1980s and 1990s allowed for the 

genetic manipulation of micro-organisms to produce biocatalysts with more 

targeted and specialized functions. Within the chemical industry, such 

specialized biocatalysts are being used to produce an increasingly diverse set 

of chemicals, ranging from pharmaceuticals, including vitamin B12 and 

cephalosporins, to bio-based plastics. In the biofuels industry, specialized 

biocatalysts are enabling the production of cellulosic ethanol and other 

biofuels and helping make production more cost effective.9

Today, industrial biotechnology companies like the ones profiled in this 

study—Novozymes, Verenium, Metabolix, and Cargill—typically look for 

 2

 BIO, “Biotechnology: A Collection of Technologies,” 2008. 

3

 USITC, Industrial Biotechnology, 2008, 1–3. 4

 Enzymes are organic compounds that initiate or accelerate chemical reactions. Microorganisms are simple life forms that use enzymes to consume raw materials as part of their 

metabolism. Examples of micro-organisms include bacteria (e.g., E. coli) and yeast. Ibid., 1-

4–1-5. 5

 BIO, “Industrial and Environmental Applications,” 2008. 

6

 Kirk, et al., “Enzyme Applications, Industrial,” 2004, 251. 7

 Ibid., 252. 

8

 Ibid. 

9

 BIO, “Industrial and Environmental Applications,” 2008. 
1-3

natural biocatalysts; identify and improve them for specific applications 

using screening, genetic engineering, and other high technology processes; 

and manufacture them in commercial quantities using fermentation.10

Companies active in many industry sectors, including biofuels, fine and bulk 

chemicals, pharmaceuticals, food and beverages, detergents and household 

products, and textiles use these enzymes to improve the environmental, 

technical, and economic performance of their existing products and 

processes, and to create new products and processes.11 

Data 

The data for this study were drawn from a variety of sources. The first source 

is the custom data set provided by the USPTO.12 The data set identifies 

20,418 patents granted by the USPTO during the 1975–2006 period in 

subject matter classifications identified by the authors as related to industrial 

biotechnology in the biofuel and chemical industries. A second source for 

patent data was the USPTO Patent Full-Text and Image Database (USPTO 

online database), which was used to conduct classification- and companybased searches of patent grants and applications.13 Unlike the custom data 

set, the USPTO online database permitted retrieval of information about 

published patent applications. Also presented are relevant results from the 

Commission’s questionnaire of firms in the biofuel and chemical industries. 

Firm level data, including information about firms’ finances, R&D focus 

areas, and patent portfolios, were obtained from publicly available sources 

and from the proprietary Orbis Companies Database. 

Because this study relies primarily on patent data, it is important to recognize 

the inherent advantages and limitations of this type of data. Patent data are 

readily available through the USPTO and other patent offices, and contain 

substantial detail about firms’ activities; additionally, these data are 

historical, permitting the analysis of trends. Data limitations include the fact 

that not all inventions are patented, many patents are never commercialized 

or licensed, patent applications and granted patents substantially lag 

underlying inventions, and patent applications can overstate levels of 

successful innovation because a patent ultimately may not be issued.14

Bearing in mind these limitations, patent data can provide a useful window 

into innovative activities. 

Data interpretation issues also arise from the substantial overlap between 

industrial biotechnology and other types of biotechnology. For example, 

genetically modified crops (green biotechnology) often are used to produce 

biofuels through enzymatic processes (white biotechnology), and both 

enzymatic and genetic processes are used in the production of 

pharmaceuticals (white and red biotechnology). Distinctions made by the 

 10 Ibid. 

11 Ibid. 

12 USPTO, Utility Patents, 2007. 13 USPTO, USPTO Patent Full-Text and Image Database. 

14 NAS, Industrial Research and Innovation Indicators, 1997, 24; NSB, Science and 

Engineering Indicators 2008, 2008, 6–38. 
1-4

biotechnology industry between different types of biotechnology do not fit 

neatly into the USPTO classification system. 

To identify classifications particularly relevant to industrial biotechnology in 

the biofuel and chemicals industries, the authors developed a list of “model 

patents” reflective of important discoveries identified in the Commission’s 

recent report.15 Screening of the classifications associated with these model 

patents revealed that discoveries in industrial biotechnology and in other 

types of biotechnology often fell within the same classifications. For 

example, one of the most common classifications in the model patents was 

435/69.1: “Recombinant DNA technique included in method of making a 

protein or polypeptide,” a classification that is also closely aligned with 

genetic engineering and red biotechnology. This study’s additional analysis 

of particular classifications more closely tied to industrial biotechnology, i.e., 

those for cellulase- and bio-based plastics-related enzymes, and profiles of 

top patenting firms in these fields, is intended to bring industrial 

biotechnology into sharper focus. 

Report Organization 

 

This report is divided into four chapters that together address patenting in 

industrial biotechnology. Chapter 2 provides a brief overview of the literature 

on patents and innovation, with a particular focus on the role of patents in the 

development and growth of the biotechnology industry and the question of 

whether too much patenting is stifling innovation. Chapter 3 presents the 

aggregate data obtained from the USPTO with a discussion of trends and 

characteristics of companies patenting in industrial biotechnology. It also 

includes the results of the Commission’s questionnaire regarding patent 

barriers and other impediments to R&D and commercialization. Chapter 4 

focuses on particular emerging sectors in industrial biotechnology to provide 

a clearer picture of patenting in these fields and how patent portfolios impact 

the activities of leading companies profiled. Chapter 5 brings together 

conclusions arising from the analysis of the literature, aggregate data, 

questionnaire results, and technology and firm level information, and 

provides suggestions for future research. 

 15 USITC, Industrial Biotechnology, 2008. Because this research had its inception in the 

Commission’s study of the impact of industrial biotechnology on two of the primary industries 

in which it is used, biofuels and chemicals, the findings likely overemphasize these 

applications. The USPTO classifications relied upon, however, are science- or technologybased and not industry-based; thus, the results include applications of the technologies across 

industries. See app. A for discussion of the search methodology. 
CHAPTER 2 

Patents and Innovation 

A patent is an agreement between the owner of an invention and a country that 

permits the owner to exclude others from making, using, selling, or importing the 

claimed invention for a period of time (usually 20 years) in exchange for public 

disclosure of the invention.1

 The economic view of patents is that they encourage 

innovation by offering a trade-off; in return for a period of market exclusivity, 

the inventor must disclose the details of the invention so that others can build on 

the knowledge disclosed.2

 

There is a rich literature, albeit reaching mixed conclusions, on how well the 

relationship between patents and innovation works in practice.3

 This literature 

suggests that, on the one hand, patents assist in the movement of a product or 

process from the research stage to commercialization by facilitating technology 

transfer and financing. On the other, it suggests that too many patents may thwart 

innovation particularly in industries (and biotechnology may be an example) 

where the innovation process is sequential and cumulative.4

 The advantages and 

disadvantages of patent protection in biotechnology have been addressed in the 

literature, with particular attention given to the impact of milestones in 

biotechnology patent policy.5

 This chapter briefly reviews this literature. 

Milestones in Biotechnology Patent Policy 

The Supreme Court’s 1980 decision in Diamond v. Chakrabarty, 447 U.S. 303, 

309 (1980), which overturned a ban on the patenting of life forms to uphold a 

patent on a genetically engineered, petroleum-eating bacterium, is considered a 

milestone in the development of the biotechnology industry. According to 

industry representatives interviewed by the Federal Trade Commission (FTC) for 

a study of competition and patent law policy, the biotechnology industry would 

not have emerged “but for the existence of predictable patents,” and the Supreme 

Court’s decision spurred significant industry growth.6

 

Passage of the Bayh-Dole Act in 19807

 also is believed to have spurred 

biotechnology patenting and innovative activity. The act permitted universities 

 1

 USPTO, What are Patents, Trademarks, Servicemarks, and Copyrights? May 12, 2004. 2

 Fromer, “Patent Disclosure,” 2009 (forthcoming). 

3

 For example, see Hahn, “An Overview of the Economics of Intellectual Property Protection,” 

2005, 11–44. 4

 For example, see Heller and Eisenberg, “Can Patents Deter Innovation?” May 1, 1998, 698; 

Shapiro, “Navigating the Patent Thicket,” 2001, 120; and Jaffe and Lerner, Innovation and its 

Discontents, 2004, 1–25. 5

 For example, see Barfield and Calfee, Biotechnology and the Patent System, 2007. 6

 FTC, To Promote Innovation, 2003, 3–17. 7

 Patent and Trademark Act Amendments of 1980, Pub.L.No. 96-517, 94 Stat. 3014 (1980). 

2-1
and small firms to retain title to inventions financed by the federal government. 

Prior to this, patent rights often stayed with the federal agency funding the 

research, and many inventions were not commercialized. In 1983, Bayh-Dole 

rights were extended to all government contractors as well. In 1984, Congress 

expanded the rights of universities further by removing restrictions in Bayh-Dole 

on the kinds of inventions they could own and on their rights to license those 

inventions to others.8

 

According to Henderson, Jaffe, and Trajtenberg (1998), university patenting 

“exploded” after the enactment of Bayh-Dole.9

 While the authors considered it 

difficult to assign roles of cause and effect because university patenting was on 

the rise even before the enactment, they concluded that “continued exponential 

growth probably could not have been sustained without removal of cumbersome 

barriers to patents from federal research.”10 The licensing of university 

technologies to firms and the creation of spin-off firms from university research, 

particularly in biotechnology, also grew substantially after the enactment of 

Bayh-Dole (box 2.1). 

Box 2.1 Bayh-Dole and the increase in patenting, licenses, and the formation of spin-off companies

• In 1980, the USPTO issued only 390 patents in all technology areas to U.S. universities. In 

2005, universities obtained 2,725 patents, an increase of approximately 600 percent during a 

time when total patents issued to corporate U.S. inventors increased by approximately 150 

percent.Many university patents have been issued in biotechnology-related classes including 

class 435, which is the most common class for industrial biotechnology patents. 

 

• University licensing of patented technologies also has increased sharply. In 1991, the first year 

of licensing survey data, members of the Association for University Technology Managers 

(AUTM) reported entering into 1,278 new licenses for university-developed technologies. By 

2006, that number had grown to 4,963 new licenses entered into that year. 

• More than 5,000 spin-off companies (many of which have been in the field of biotechnology) 

have formed around university research since Bayh-Dole’s enactment. 

Sources: NSB, Science and Engineering Indicators 2008, 2008, 5-40 and 5-41; NSB, Science and 

Engineering Indicators 1993, 1993, 5-27 and 6-12; AUTM, AUTM U.S. Licensing Activity Survey: FY 

2006, 2007, 31; and AUTM, AUTM U.S. Licensing Survey: FY 1991–FY 1995, 1996, 22. 

 8

 Schacht, R&D Partnerships and Intellectual Property, 2000. 9

 Henderson, Jaffe, and Trajtenberg, “Universities as a Source of Commercial Technology,” 

February 1998, 119. 10 Ibid., 122. 

2-2
At about the same time that Bayh-Dole was enacted, Congress also passed the 

Stevenson-Wydler Technology Innovation Act of 1980,11 making technology 

transfer a priority at the federal laboratories.12 This act was followed by the 

Federal Technology Transfer Act in 1986,13 permitting government research 

facilities to enter into cooperative R&D arrangements with industry and grant 

industry title to any resulting inventions. Patenting activities and licensing of 

technologies developed at federal laboratories grew rapidly in the wake of this 

legislation.14

The impact of these judicial and legislative changes is considered to have been 

particularly strong in the field of biotechnology. Key genetic engineering 

techniques and other enabling technologies often were developed with federal 

funds at universities and research laboratories. These foundational technologies 

then were acquired by start-up firms and other new entrants to the field for 

further commercial development.15

Biotechnology Patents and the Commercialization of Products 

Patents facilitate the transfer of knowledge and technologies from the research 

setting to commercial development. For example, Jensen and Thursby have 

demonstrated, based on a survey of university technology managers, that 

university inventions often are early stage efforts—little more than a proof of 

concept or prototype.16 At this stage, technology managers stated that 

commercialization would only be possible if the inventor were able to license the 

technology to a commercial developer who could move the invention forward. 

Jensen and Thursby found that, absent the opportunity to patent and license 

university technologies, much federally funded research would never be 

transferred to industry.17 

The use of patents to facilitate the transfer of technology is particularly important 

given the increasingly collaborative nature of innovation. Based on a sample of 

innovations recognized by R&D Magazine as being among the top 100 

innovations of the year over the last 40 years, Block and Keller found that 

approximately 80 percent of award-winning innovations in the 1970s came from 

large firms acting on their own.18 By contrast, today approximately two-thirds 

come from collaborations between firms, universities, federal laboratories, and 

government agencies.19 Patents, and other types of intellectual property, facilitate 

these increasingly frequent collaborations by providing the foundation for the 

transfer of technology and knowledge between firm, university, and government 

actors. 

 11 Pub. L. No. 96-480, 94 Stat. 2311, 15 U.S.C. 3701 (1980). 

12 Jaffe and Lerner, “Reinventing Public R&D,” 2001, 170. 

13 Pub. L. No. 99-502, 100 Stat. 1785 (1986). 

14 Jaffe and Lerner, “Reinventing Public R&D,” 2001, 194. 

15 Lerner, “Small Businesses, Innovation, and Public Policy,” 1999, 159–68. 16 Jensen and Thursby, “Proofs and Prototypes for Sale,” March 2001, 240–41. 17 Ibid., 255. 

18 Block and Keller, Where Do Innovations Come From? July 2008, 2–3. 19 Ibid., 3. 

2-3
The literature further shows that patents facilitate investment in the 

biotechnology industry and provide a benchmark for potential investors to use in 

evaluating a firm’s technology and likelihood of commercial success. Lerner 

examined financing rounds for start-up biotechnology firms and found that the 

market valuation of the firms reflected the scope of their patents.20 Patent scope, 

measured by the number of classification groups to which a patent was assigned, 

reportedly had an economically and statistically significant impact on the 

valuation of start-up biotechnology firms in financing rounds. While many 

factors other than intellectual property affect the valuation of biotechnology 

firms, particularly as a firm’s product approaches the marketplace, Lerner found 

that intellectual property is the most valuable asset of the young biotechnology 

company.21 

Biotechnology Patents and the Anticommons Theory 

Not all assessments of the impact of biotechnology patents on innovation are 

positive. There is some research to suggest that biotechnology, and biomedical 

innovation in particular, are susceptible to what Heller and Eisenberg have 

labeled a “tragedy of the anticommons.” This situation arises when too many 

people own property rights in separate inputs needed for the development of a 

line of research or a product.22 Shapiro similarly posited that the patent system is 

creating a dense web of overlapping rights that a company must “hack its way 

through” to commercialize technology; “stronger patent rights can have the 

perverse effect of stifling not encouraging innovation.”23 Heller and Eisenberg 

applied these theories to biotechnology and asserted that a proliferation of rights 

in upstream technologies, such as gene fragments or the receptors used to screen 

potential pharmaceutical products, blocks downstream activities because of the 

need to negotiate and obtain multiple licenses from numerous inventors.24

The National Academies of Science (NAS) commissioned a series of studies to 

consider the question of the effects of patenting on biomedical research and, 

more particularly, whether there is an anticommons problem. In the first study, 

Walsh, Arora, and Cohen interviewed professionals in the biomedical field, 

including attorneys, scientists, business managers, and university researchers, and 

found little evidence that research had been impeded.25 An important exception 

was in the area of genetic diagnostics, where some respondents indicated that 

patents were interfering with research. However, most survey respondents 

reported no cases in which valuable projects were suspended because of patent 

restrictions. Instead, firms and universities reported that they had developed 

“working solutions” to enable research in heavily patented space, including 

 20 Lerner, “The Importance of Patent Scope,” 1994, 319. 21 Ibid., 325. 

22 Heller and Eisenberg, “Can Patents Deter Innovation?” May 1, 1998, 698. The theory is a 

mirror of the “tragedy of the commons” theory, which holds that if people hold property in 

common, with no person having the right to exclude others, the property will tend to be overused 

because there is no incentive to conserve. Conversely, the tragedy of the anticommons posits that 

when too many people own a resource it is underused because of the transaction costs inherent in 

reaching agreement with all of the owners. 23 Shapiro, “Navigating the Patent Thicket,” 2001, 120. 

24 Heller and Eisenberg, “Can Patents Deter Innovation?” May 1, 1998, 698. 25 Walsh, Arora, and Cohen, “Effects of Research Tools Patents and Licensing on Biomedical 

Innovation,” 2003, 285–86. 

2-4
licensing, inventing around patents, invoking research exemptions to 

infringement, developing and using public tools, and challenging patents in 

court.26 

In a follow-on survey, Walsh, Cho, and Cohen questioned more biomedical 

professionals and confirmed the earlier finding that only a small number of 

projects (about 1 percent) were being abandoned or delayed because of 

difficulties in accessing technology.27 Thus, the anticommons problem did not 

appear to be significant. They cautioned, however, that the patent landscape was 

likely to become considerably more complex over time and that researchers who 

were proceeding despite concerns about the possibility of patent infringement 

were likely to become more cautious if the legal environment became more 

threatening.28 

More recently, Adelman and DeAngelis conducted an empirical study of 

biotechnology patents also intended to test the anticommons hypothesis.29 They 

identified a set of more than 52,000 biotechnology patents issued during the 

January 1990–December 2004 period. They found little evidence to support an 

anticommons effect in biotechnology patents. Ownership of the patents in their 

database was diverse, with even large companies granted a relatively small 

number of patents per year, and the number of new entities obtaining patents 

increasing steadily over the time period.30 They posited that, unlike the traditional 

commons scenario, the commons for biotechnology is not finite but relatively 

unbounded. “Biotechnology methods have produced vast quantities of genetic 

data, but scientists have not been able to keep up with the explosion of new 

information”; under these circumstances they found a substantial reduction in the 

potential for anticommons problems.31 

Adelman and DeAngelis also emphasized the complexities inherent in the 

interpretation of patent data and the resulting importance of bringing together 

various types of information, including qualitative and firm level information 

about particular advances in the field, to obtain a more accurate picture.32

Following the trail suggested by Adelman and DeAngelis, this study applies a 

multifaceted approach to the consideration of patenting in industrial 

biotechnology. Aggregate data obtained from a search of patents in 

classifications related to industrial biotechnology are presented, as well as the 

results of a Commission questionnaire sent to firms in the biofuel and chemical 

industries. Moreover, patent data and qualitative information at the technology 

and firm level show the important roles that patents are playing in moving 

industrial biotechnology products and processes from R&D to 

commercialization. 

 26 Ibid. 

27 Walsh, Cho, and Cohen, “View from the Bench,” September 23, 2005, 2002–03. 28 Ibid. 

29 Adelman and DeAngelis. “Patent Metrics,” 2007, 1677–1744. 30 Ibid., 1694–95. 31 Ibid., 1699. 

32 Ibid., 1727. 

2-5

CHAPTER 3 

Aggregate Data and Questionnaire Results 

This chapter presents patent data and questionnaire results from firms active in 

industrial biotechnology. The patent data were generated by a search conducted 

by the USPTO, based on parameters set by the authors, of all patents granted 

during the January 1975–December 2006 period. The chapter begins with a 

description of the search parameters and then presents the results, focusing on 

trends and the ownership characteristics of those patenting in industrial 

biotechnology-related fields.1

 The chapter next describes results of a 

questionnaire of biofuel and chemical companies carried out by the Commission 

in the fall of 2007. The questionnaire included questions about whether patent 

barriers were impediments to firms’ R&D and commercialization of industrial 

biotechnology products and processes. 

Patent Search Parameters 

 

The search of the USPTO database was classification based, relying on a set of 

classifications in the U.S. Patent Classification System (USPC) that the authors 

found to be associated with model patents in different areas of industrial 

biotechnology.2

 The USPC contains classes and subclasses; classes generally 

delineate one technology from another, and subclasses (of which there are more 

than 150,000) delineate processes and features of the subject matter encompassed 

by the class. Each patent is assigned a single, primary classification indicative of 

the main inventive concept; patent information that is separately classifiable apart 

from the primary classification may receive a secondary classification.3

 The 

USPTO search used in this study was limited to those patents that had a primary 

classification identified in our search terms. 

Based on these model patents from different areas of industrial biotechnology, 

the following USPC classes were identified as containing potentially relevant 

subclasses: 435: “Chemistry: molecular biology and microbiology” (most 

subclasses were within this class); 536: “Organic compounds”; and 127: “Sugar, 

starch, and carbohydrates.” Most of the classifications relied upon in the search 

fell under subclass 435/41, which covers the production of a desired chemical 

using micro-organisms, tissue cultures, or enzymes; and subclass 435/183, which 

covers the production of particular enzymes and micro-organisms.4

 Emerging 

 1

 The search methodology is set forth in app. A and search results are reported in USPTO, 

Utility Patents, 2007. 2

 The patents were in the following fields of industrial biotechnology: biofuels, biopolymers, 

enzyme technologies, chemical processes, and pharmaceuticals. 3

 USPTO, Overview of the U.S. Patent Classification System (USPC), June 2008. 4

 Because the USPC is a hierarchical system, included within the search were all classifications 

that were indented under a relevant subclass (i.e., all “children” of our subclasses). The 

classification numbering system is not sequential; there are gaps in numbers and indented classes 

may fall under subclasses with very different numbers. 

3-1
technologies in industrial biotechnology, including the creation and use of 

enzymes used in the production of cellulosic ethanol and those related to biobased plastics, fall within these subclasses. The identified subclasses cover much 

of the activity in industrial biotechnology, as well as some pharmaceutical and 

agricultural biotechnology activity.5

 

Patent Search Results 

Trends in Patent Grants 

During the January 1975–December 2006 period, the USPTO granted 20,418 

invention patents with a primary classification relevant to industrial 

biotechnology. Figure 3.1 shows that the number of patents granted each year 

climbed steadily in the second half of the 1980s and throughout the 1990s, 

peaking at 1,688 patents granted in 1999. Thereafter, grants generally declined 

until they rebounded in 2006, but they did not reach the levels of the late 1990s. 

The trends for industrial biotechnology patents mirror those for all biotechnology 

patenting, according to studies of all biotechnology patents conducted by the 

USPTO (figure 3.2) and Adelman and DeAngelis.6

 The USPTO reported 

112,360 patents granted in all biotechnology fields for the January 1975–

December 2005 period.7

 Industrial biotechnology patents, as identified in this 

study comprised, on average, 17 percent of all biotechnology patents during this 

period. 

There are multiple explanations for the trends identified in figures 3.1 and 3.2. 

The peak in patenting in the late 1990s has been attributed primarily to a rush in 

filings prior to the June 1995 change in the U.S. patent term from 17 years from 

the date of patent issuance to 20 years from the date of application, as required by 

the Uruguay Round of the General Agreement on Tariffs and Trade.8

Biotechnology inventors reportedly perceived the 17-year term to be more 

advantageous because it ran from the date of patent issuance. The pending period 

could thus be used to comply with substantial product development and 

regulatory requirements without reducing the patent term, as would occur once 

the term ran from the date of application. The 1995 peak in applications is 

reflected in a subsequent peak in patent grants in the late 1990s because the 

review process for biotechnology patents took about three years during this 

time.9

 5

 Chap. 4 describes particular emerging technologies in industrial biotechnology in more detail. 6

 USPTO, Patent Technology Center Groups 1630–1660, 2006; Adelman and DeAngelis, 

“Patent Metrics,” 2007, 1687. 7

 USPTO, Patent Technology Center Groups 1630–1660, 2006. Adelman and DeAngelis 

identified a smaller number of biotechnology patents (52,039) granted during a shorter period, from 

January 1990 through December 2004, and excluded patents associated with agricultural 

biotechnology from their results. Adelman and DeAngelis, “Patent Metrics,” 2007, 1741. 8

 U.S. government official, e-mail message to Commission staff, November 1, 2007. 9

 Adelman and DeAngelis, “Patent Metrics,” 2007, 1691. 

3-2
0

500

1,000

1,500

2,000

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

FIGURE 3.1 Industrial biotechnology patents granted yearly, 1975–2006

Source : USPTO, Utility Patents , 2007.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1993 1996 1999 2002 2005

All biotechnology Industrial biotechnology

FIGURE 3.2 Biotechnology and industrial biotechnology patents granted yearly, 1993–2005

Source: USPTO, Utility Patents , 2007; USPTO, Patent Technology Center Groups 1630–1660 , 2006.

Note : The first year that annual data for all biotechnology patents are available is 1993. 

FIGURE 3.2 Biotechnology and industrial biotechnology patents granted yearly, 1993–2005

3-3
The general decline in patent grants since the late 1990s, with some resurgence in 

2006, can be attributed to various factors. The most important appears to be 

issues internal to the USPTO rather than declining levels of biotechnology 

innovation. Biotechnology patent applications increased by about 40 percent 

during the same period when patent grants were dropping.10 Although the 

USPTO expanded its hiring of patent examiners during this period, high 

examiner attrition rates, as well as increasingly complex claims have translated 

into longer periods of patent pendency.11 With more and more applications filed 

each year, the backlog of patent applications has continued to grow, from 

308,056 applications awaiting examination in 2000 to 760,924 in 2007.12

Adelman and DeAngelis also note that more rigorous standards of review put 

into place in 2001 may have contributed to the decreasing number of grants.13

Patent approval rates have been on the decline, from a 72 percent approval rate in 

2000 to a 49 percent approval rate in 2006 apparently because of more rigorous 

review standards.14 

Characteristics of Patent Ownership 

Industrial biotechnology-related patents are predominantly owned by domestic 

and foreign corporations.15 Such firms accounted for an average of 93 percent of 

all patents granted during the 1975–2006 period.16 While the total number of 

patent granted to domestic corporations exceeds those granted to foreign 

corporations, the trends in grants to foreign and domestic corporations have been 

closely aligned (figure 3.3). 

 10 Ibid., 1690. 

11 U.S. GAO, U.S. Patent and Trade Mark Office, September 2007. 12 USPTO, Performance and Accountability Report Fiscal Year 2007, table 3, 

December 21, 2007. 13 Adelman and DeAngeles, “Patent Metrics,” 2007, 1689–90. 14 Merritt, “Fixing the Patent Office,” September 17, 2007. 15 Patent ownership is based on identity of the first-named assignee of the patent on the date of 

the grant. While mergers and acquisitions, purchases and sales of intellectual property, and other 

corporate changes may impact ownership, these changes are not reflected in the aggregate data. See 

chapter 5 for suggestions for future research. 16 The U.S. and foreign corporations ownership categories count predominantly corporate 

patents; however, patents assigned to other organizations such as nonprofit organizations and 

universities are also included in these categories. Although a data file was obtained from the 

USPTO separating U.S. universities from U.S. corporations, this separation was not available for 

foreign universities and foreign corporations. Accordingly, the authors left U.S. universities and 

corporations combined for purposes of comparing them to foreign corporations. The separate data 

for U.S. universities are described in the following discussion of university patenting trends. 

3-4
0

200

400

600

800

1,000

1,200

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

U.S. corporation Foreign corporation

FIGURE 3.3 Industrial biotechnology patents granted yearly to U.S. and foreign corporations, 

1975–2006

Source : USPTO, Utility Patents, 2007.

Spurred by Bayh-Dole, U.S. universities have played an increasingly prominent 

role in industrial biotechnology-related patenting (figure 3.4). U.S. universities 

obtained only 5 industrial biotechnology-related patents in 1975, a high of 235 

patents in 1999, and 159 patents in 2006; an increase of more than 3,000 percent 

during the entire period. By contrast, patents issued to domestic corporations 

(excluding universities) grew by 716 percent during the period. Similarly, U.S. 

university patents, as a share of all patents, grew from 2.5 percent in 1975 to a 

peak of 15.1 percent in 1995, declining to 12.6 percent in 2006 (figure 3.4). 

0

25

50

75

100

125

150

175

200

225

250

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

Patent Count

0

5

10

15

20

25

Share of all patents

U.S. university patents U.S. university share

FIGURE 3.4 Industrial biotechnology patents granted yearly to U.S. universities and U.S. universites' 

share of all industrial biotechnology patents, 1975–2006

Source: USPTO, Utility Patents , 2007.

3-5
By contrast, patents issued to the U.S. government grew more slowly, increasing 

from 4 patents in 1975 to a high of 25 in 1999, and reaching a high of 25 again in 

2006, for an increase of 525 percent over the entire period (figure 3.5). However, 

the aggregate data have not been examined at the individual patent level to 

determine whether particular patents granted to universities or corporations were 

government funded. Thus, this increase in government-owned patents does not 

reflect the full extent of government involvement in industrial biotechnology 

discoveries. 

0

5

10

15

20

25

30

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

Patent count

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Share of all patents

U.S. government patents U.S. government share

FIGURE 3.5 Industrial biotechnology patents granted yearly to the U.S. government and 

U.S. government share of all industrial biotechnology patents, 1975–2006

Source : USPTO, Utility Patents , 2007.

A total of 2,978 owners (excluding individuals) obtained patents in industrial 

biotechnology-related classifications from 1975 through 2006.17 The number of 

owners obtaining a patent in the relevant classifications each year grew steadily 

from 103 in 1975 to a peak of 593 in 1999, and declined to 534 in 2006.18 The 

field also appears to be characterized by a steady stream of new participants. 

New owners, defined as an assignee that had not patented in any of the previous 

years in the period, grew from 103 in 1975, peaked at 200 in 1999, and declined 

to 151 new owners in 2006 (figure 3.6).19 

 17 Individual and unassigned patents—i.e., those that could not be attributed to the foreign and 

domestic corporation, government, and university categories—were excluded from the count of 

patenting entities. The USPTO data file identifies a total of 740 individual and unassigned patents 

issued during the period. USPTO, Utility Patents, 2007. 18 This calculation is based on the number of distinctly identified owners; for example, it does 

not take into account the parent-subsidiary relationship, or other legal relationships, that may exist 

between patent owners, nor does it account for errors in the way names are recorded. 19 All assignees were considered new entrants in 1975, year one of the calculation. 

3-6
0

100

200

300

400

500

600

700

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

Patent owners New owners

FIGURE 3.6 Industrial biotechnology patent owners and new owners, 1975–2006

Source : USPTO, Utility Patents , 2007.

Note : Individual and unassigned patent owners excluded from calculations.

This steady stream of new entrants is noteworthy because of the critical role that 

new entrants, and particularly start-up firms, have played in the development of 

the biotechnology industry.20 A similar phenomenon may be occurring in 

industrial biotechnology. 

Moreover, the number of patents held by each owner is relatively small; of the 

2,978 owners, about one-half (1,451) hold only one patent. The number of 

patents held by the remaining owners ranges from 2 to 375, with a median value 

of 4. Looking at the most recent five-year period, table 3.1 identifies those 

owners that obtained the most patents, the number of patents obtained, and the 

owner’s size and industry sector.21 

The number of industrial biotechnology-related patents granted to the top 10 

patenting owners in the last five years ranges from 72 to 146 (table 3.1). The 

number of patents issued during this entire five year period is far smaller than the 

number of patents issued on an annual basis to leading firms in the 

telecommunications and semiconductor fields. For example, in 2006 alone, the 

top patenting company in the United States, IBM, obtained 3,148 patents and 

number two, Samsung, obtained 2,725.22 The leading owners obtaining industrial 

biotechnology-related patents cut across industry sectors including R&D, 

enzymes, and pharmaceuticals, and include the University of California. There 

 20 See chap. 2. 

21 Information about firm size and industry sector was obtained from Bureau van Dijk, Orbis 

Companies Database, and company reports. This study defines large companies as those with 

annual revenues above $3 billion; medium are those with revenues in the range of $100 million to 

$3 billion; and small are those with revenues below $100 million. 22 Wolters Kluwer Health, “IFI Patent Intelligence Announces 2007’s Top U.S. Patent 

Assignees,” January 14, 2008; Adelman and DeAngelis. “Patent Metrics,” 2007, 1695. 

3-7
were four medium-sized companies among the top 10. Several large and small 

firms were also represented, reflecting a diversity of fields and firm sizes. 

TABLE 3.1 Industrial biotechnology: Top patent owners, 2002–06 

Name 

Patents 

Granted 

2002–06 Size Country Industry 

Applera Corporation 146 Medium United States R&D 

Novozymes A/S 103 Medium Denmark Enzymes 

Millennium Pharmaceuticals, Inc. 99 Medium United States Pharmaceutical 

Degussa Aktiengesellschaft 97 Large Germany Pharmaceutical 

E. I. Du Pont De Nemours and Company 97 Large United States Chemical 

Human Genome Sciences, Inc. 97 Small United States Pharmaceutical 

Genencor International, Inc. 93 Medium United States Enzymes 

Genentech, Inc. 86 Large United States Pharmaceutical 

University of California 81 (

a

) United States University 

Lexicon Genetics Incorporated 72 Small United States R&D 

Source: USPTO Patent Full-Text Image Database; Bureau van Dijk, Orbis Companies Database. 

Note: For purposes of this study, large companies are those with revenue above $3 billion; medium-sized companies 

are those with revenue in the range of $100 million to $3 billion; and small companies are those with revenue below 

$100 million. 

a

Not available. 

Commission Questionnaire Results 

At the request of the Senate Committee on Finance, the Commission conducted a 

study of the competitive conditions affecting firms in the liquid fuel and chemical 

industries that are developing and adopting industrial biotechnology products and 

processes.23 The study’s methodology included a written questionnaire, part of 

which sought information about impediments to R&D and commercialization of 

industrial biotechnology products and processes. The questionnaire explicitly 

identified “patent barriers” as a potential impediment to R&D and 

commercialization efforts and asked firms to indicate the significance of this 

impediment on a scale ranging from not significant to very significant. 

A total of 384 firms responded to the question about impediments to 

commercialization. Seventy-three percent of these firms rated patent barriers as a 

least significant impediment and 9 percent as very significant. Out of 28 factors 

identified by the Commission in the questionnaire as potential impediments to 

commercialization, “patent barriers” was one of the least likely factors to be rated 

 23 See USITC, Industrial Biotechnology, 2008. 

3-8
by respondents as very significant; it was ranked 25th out of 28 factors in 

descending order of importance.24 

Similarly, a total of 379 firms responded to the question about impediments to 

R&D. Seventy-one percent of these firms rated patent barriers as a least 

significant impediment and 10 percent as very significant. Out of 10 factors 

identified as potential impediments to R&D, the least likely factor to be 

identified as very significant was “difficulties accessing university technologies,” 

“patent barriers” was ranked 9th out of the 10 factors, and “inability to establish 

alliances” was ranked 8th. Thus, intellectual property-related factors were not 

considered substantial impediments to R&D in industrial biotechnology.25

 24 The most significant impediments included feedstock prices, lack of capital, and risk levels. 

USITC, Industrial Biotechnology, 2008, 3-2. 25 The most significant impediments to R&D were lack of capital, U.S. regulatory 

requirements, and the limits of available technology. Ibid., 3–18. 

3-9

4-1

CHAPTER 4 

Industrial Biotechnology at the Technology and Firm 

Level 

 

This chapter looks at two emerging sectors of industrial biotechnology at the 

technology and firm level: cellulase-related enzymes, which are used to break 

down cellulosic biomass as part of the production of biofuels and bio-based 

chemicals, and enzyme technologies that enable the production of bio-based 

plastics such as polyhydroxyalkenoates (PHA) and polylactides (PLA). 

At the technology level, USPC classifications that appeared to match well with 

these sectors were selected and patents issued in these classifications in the last 

10 years were identified through USPTO’s online database.1

 Foreign and 

domestic corporations are the dominant patent owners in all classifications, most 

owners hold a relatively small number of patents, and new owners are steadily 

entering these emerging fields. At the firm level, top companies patenting in 

these classifications were selected to profile. Profiles are provided for two 

companies developing and/or using cellulase-related enzymes, Novozymes and 

Verenium, and two companies focused on the production of bio-based plastics, 

Metabolix and Cargill (through its NatureWorks LLC subsidiary). 

New Enzyme Technologies 

The use of enzymes in an industrial process is a marker of industrial 

biotechnology.2

 The development of new enzymes, including through the 

production and purification of enzymes from genetically modified organisms, is a 

major driving force in the commercialization of industrial biotechnology 

products and processes. In addition to the production of novel products, enzymes 

can be used to make fuels and chemical intermediates in more sustainable, 

environmentally friendly ways. For example, cellulosic ethanol is believed to 

have environmental and food security advantages over corn-based ethanol 

because it can be made from a variety of nonfood feedstocks and involves the use 

of the entire crop rather than just the kernel.3

 

Cellulases, enzymes that break down the cellulose and hemicellulose that make 

up cellulosic biomass and convert them into sugars, are considered critical to the 

cost-effective production of cellulosic ethanol.4

 Many cellulase-related patents 

are classified under USPC class 435: “Chemistry: molecular biology and 

microbiology” and subclass 209: “Acting on a beta-1,4-glucosidic bond (e.g., 

 1

 The USPTO’s online database was used instead of the aggregate data provided in the Utility 

Patents report to profile these emerging fields because the online database provides access to 

application data. 2

 USITC, Industrial Biotechnology, 2008, 1–3. 3

 Verenium, “Next Generation Cellulosic Ethanol,” undated (accessed October 1, 2008). 4

 Knauf and Moniruzzaman, “Lignocellulosic Biomass Processing,” 2004, 148. Cellulases also 

have applications in textiles and food production, as well as other industries. 
cellulase).”5

 Cellulase-related patents classified under 435/209, and the activities 

of new enzyme technology companies, are profiled below. 

Cellulase-related Patents 

The USPTO issued 277 patents with 435/209 as their primary or secondary 

classification during the 1997–2007 period. Foreign corporations are the 

dominant patent owners in this classification, with 63 percent of all issued 

patents compared to 15 percent for domestic corporations, followed by U.S. and 

foreign educational institutions and governments (figure 4.1). 

Total patents: 277

Domestic 

corporation

15%

U.S. educational 

institute

8% Foreign 

educational 

institute

5%

Foreign 

government

3%

Individual inventor

3%

U.S. government

3%

Foreign 

corporation

63%

Source: USPTO, USPTO Patent Full-Text and Image Database.

FIGURE 4.1 Patents granted by owner type in classification 435/209, 1997–2007

Danish owners hold the largest share of patents in this classification, 41 percent 

of issued patents. U.S. owners hold 27 percent, followed by Japan (6 percent), 

Canada (6 percent), Germany (4 percent), and the Netherlands (4 percent). The 

Danish-owned patents are held predominantly by two companies, Novo Nordisk 

A/S and Danisco A/S.6

 Most of the other owners hold a small number of patents; 

of the 109 different entities granted patents in this classification, 80 of them 

obtained only one patent during the 1997–2007 period. For the other 29 entities, 

the number of patents received ranges between 2 and 68, with a median value of 

3.7

 5

 In the USPC classification hierarchy, this subclass falls below 183: “enzyme (e.g., liases, 

etc.), proenzyme; compositions thereof; process for preparing, activating, inhibiting, separating, or 

purifying enzymes,” and indented subclasses 195: “hydrolases” and 200: “acting on glycosyl 

compound.” USPTO Web Site “Main Classification Menu,” undated (accessed August 11, 2008). 6

 Until 2000, Novo Nordisk A/S included enzyme producer Novozymes (the two companies 

“demerged” in 2000); see Novo Nordisk, “Demerger Document.” Danisco A/S, a producer of food 

products, owns enzyme producer Genencor. 

4-2

7

 These calculations exclude individual inventors and count only corporations, educational 

institutions, and governments. 
4-3

The top patent owners in the class, and their country of origin and size, are 

identified in table 4.1.8

 While this class is dominated by large companies Novo 

Nordisk A/S and Danisco A/S, smaller companies also own multiple patents. One 

such small company, Verenium, is the third largest patent holder in the class (see 

profile in the next section). Two of the top companies are education-related, the 

University of Georgia Research Foundation and the University of British 

Columbia. 

TABLE 4.1 Top patent owners in classification 435/209, 1997–2007

Company Name # of patents Company size Country 

Novo Nordisk A/S 68 Large Denmark 

Danisco A/S 42 Large Denmark 

Verenium Corporation 7 Small United States 

University of Georgia Research Foundation, Inc. 7 Small United States 

Lockheed Martin Corporation 6 Large United States 

Iogen Corporation 6 Small Canada 

Novartis AG 5 Large Switzerland 

Koninklijke DSM N.V. 4 Large Netherlands 

Meiji Seika Kaisha Ltd. 4 Medium Japan 

University of British Columbia 4 Medium Canada 

Source: USPTO, USPTO Patent Full-Text and Image Database; Bureau van Dijk, Orbis Companies 

Database. 

Note: For purposes of this study, large companies are those with revenue above $3 billion; medium-sized 

companies are those with revenue in the range of $100 million to $3 billion; and small companies are 

those with revenue below $100 million. 

 

Moreover, the number of “new” owners—that is, owners receiving their first 

patent in this time period—is more than one-half of the total number of owners. 

New owners have been steadily entering the field (figure 4.2). The HerfindahlHirschman Index (HHI), a measure of market concentration, can be used to 

assess whether patenting in this technology area is controlled by a small number 

of firms or is open to new entrants. 9

 Here, an HHI of 0.09 suggests that control 

of the cellulase-related patent field is unconcentrated, despite two companies 

having a large presence. The existence of many firms patenting in this class, with 

most having only one patent, lowers the index and keeps the market from being 

deemed highly, or even moderately controlled.

 8

 For purposes of this study, large companies are those with revenue above $3 billion; mediumsized companies are those with revenue in the range of $100 million to $3 billion; and small 

companies are those with revenue below $100 million. Company revenue data was obtained from 

the Orbis Companies Database and corporate Web sites. 9

 The index is constructed by taking the sum of the squares of each company’s share in the 

market. The HHI approaches zero when a market consists of a large number of firms of relatively 

equal size and increases as the number of firms in the market decreases and as the disparity in their 

shares increases. Ranges for the HHI depend on how the share is calculated; here, a range of 0 to 1 

was used. An index below 0.1 indicates the market is unconcentrated, an index between 0.1 and 

0.18 indicates moderate concentration, and an index above 0.18 indicates the market is highly 

concentrated. U.S. Department of Justice, “The Herfindahl-Hirschman Index,” undated (accessed 

June 26, 2008). 
0

5

10

15

20

25

30

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Number of owners New owners

FIGURE 4.2 Patent owners and new owners in classification 435/209, 1997–2007

Source: USPTO, USPTO Patent Full-Text and Image Database.

Note: "New owners" counts the number of assignees in that year that are receiving 

their first patent in 435/209 in the 1997–2007 period.

The use of the HHI as an indicator of control over patent rights relies upon a 

number of assumptions that merit caution in the interpretation of the results. 

First, it assumes that the control or ownership of patents in the group does not 

change significantly after the patent is issued. The Commission’s recent report on 

industrial biotechnology, however, indicates that purchase, sale, and licensing 

transactions are increasing.10 This use of the HHI also assumes that each of the 

patents in the group is of equal value; however, empirical research suggests that 

large firm patents are more valuable than those of small firms.11 Moreover, some 

of the patents in the group likely are not relevant because they have been 

abandoned or invalidated by legal challenge or because of misclassification. 

These caveats suggest areas in which further research is warranted to reduce the 

“noise” associated with patent data.12 

Enzyme Technologies Profile: Novozymes 

Novozymes, a leader in the development of new enzyme technologies, relies on a 

strong patent portfolio to protect R&D investments, secure the freedom to 

operate in a particular patented space, and protect and increase market share.13

Novozymes continues to develop new and improved products through growth in 

 10 USITC, Industrial Biotechnology, 2008, 3-28. 11 Bessen and Meurer, for example, find that small entities realize substantially less value for 

their patents than large ones. They posit that small firms do not have the resources that large firms 

have for appropriating value from new technologies and that markets for patents and technology 

transfer often do not function well thus making it difficult for small firms to license or transfer their 

technologies to larger ones. Bessen and Meurer, Patent Failure, 2008, 165–86. 12 Chap. 5 provides suggestions for further research. 

4-4

13 Lambiris, Novozymes, “The Importance of Patents,” February 11, 2007. 
4-5

 

the company’s R&D expenditures, participation in U.S. government research 

projects, and collaborations with other firms. 

Company Overview 

Novozymes is a producer of enzymes and micro-organisms for pharmaceutical 

and industrial uses.14 The company was founded in Denmark as a medical firm in 

1925 and began producing enzymes for industrial use (for the softening of 

leather) in 1941.15 Novozymes has production and research facilities in Australia, 

Brazil, China, Denmark, Sweden, the United States, and the United Kingdom, 

and research facilities in India.16 While the largest share of Novozymes’ revenue 

currently comes from detergent enzymes, in the last few years, sales of technical 

enzymes, such as those that convert starch to sugars for the production of 

ethanol, have grown at a faster pace and are now almost equal to the company’s 

sales of detergent enzymes.17 

In 2007, Novozymes had revenue of $1.54 billion, net income of $213 million, 

and about 4,700 employees (table 4.2).18 Novozymes’ strong revenue and net 

income growth over the period have enabled growing R&D expenditures, which 

increased from $138.0 million in 2001 to $202.6 million in 2007. The strategy for 

the future growth of the company is to expand the market for enzymes by 

producing new products, and new applications for current products, through 

substantial R&D efforts.19

Novozymes also is involved in strategic alliances with government and industry 

that focus on industrial biotechnology and cellulosic ethanol. For example, in 

2001, Novozymes received a multi-year U.S. Department of Energy (DOE) 

contract for $17.8 million in matching funds with the goal of achieving a 

substantial cost reduction in cellulase enzymes. More recently, in 2008, 

Novozymes obtained an additional DOE award to improve the performance of its 

most advanced enzyme system for the production of cellulosic ethanol.20

Novozymes has also partnered with China Resources Alcohol Corp. to produce 

biofuels from cellulose for the Chinese market.21

14 Novozymes Company Web site. http://www.novozymes.com/ (accessed August 29, 2008). 15 Novozymes, “The Novozymes History,” undated (accessed August 28, 2008). 16 Novozymes, “Novozymes Facts,” July 2007. 17 Ibid. 

18 The exchange rate of $1 = 4.9120 krone from March 31, 2008, was used to convert 

currencies. U.S. Department of Treasury Web site. http://www.fms.treas.gov/intn.html#rates

(accessed August 29, 2008). 19 Novozymes, “Novozymes Facts,” July 2007. 20 Novozymes, “Novozymes and Biomass," undated (accessed September 15, 2008). 21 ICIS Chemical Business, “CRAC Gives Biomass Fuel the Thumbs-Up,” July 3, 2006. 
TABLE 4.2 Novozymes: Financial data, 2001–07

2001 2002 2003 2004 2005 2006 2007

 Revenues (million $) 1,081 1,160 1,190 1,225 1,286 1,398 1,539

 R&D expenditures (million $) 138.0 145.2 152.5 158.8 161.4 179.2 202.6

 Government grants (million $) 7.7 9.0 8.3 4.1 1.8 1.8 1.6

 Net income (million $) 112.6 131.1 147.8 155.5 174.7 185.1 213.3

 Employees (number) 3,349 3,629 3,814 3,928 4,023 4,272 4,684

Source: Bureau van Dijk, Orbis Companies Database. 

Note: Detailed financial information available from Orbis beginning in 2001. 

Novozymes’ Patent Portfolio 

Novozymes has obtained an estimated 334 patents, and has pending an estimated 

447 patent applications with the USPTO for the 1997–2007 period (figure 4.3).22 

Novozymes’ patent filings increased sharply from 1997 to a peak in 2001 and 

declined thereafter. 

0

20

40

60

80

100

120

140

160

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Applications Patents

FIGURE 4.3 Novozymes: U.S. patents and applications, by application date, 1997–2007

Source: USPTO, USPTO Patent Full-Text and Imgage Database.

Note : The USPTO began publishing patent applications in 2001.

 

4-6

22 Patents and applications are accounted for based on the filing date of the application. With a 

few minor exceptions, applications that have not resulted in a granted patent do not appear in the 

data until 2001, when the USPTO first began publishing applications. The numbers presented from 

the USPTO online database are estimates because they do not include, for example, filings by 

related companies, filings that contain inventor information only and cannot be attributed to an 

assignee, and patents or applications that have been licensed or transferred to or from other 

companies. 
4-7

 

The most common class for patents granted to Novozymes in these years was 

435: “Chemistry: molecular biology and microbiology”; nearly 69 percent of all 

U.S. patents granted to Novozymes were in this class. The next most common 

classes were 426: “Food or edible material: processes, compositions, and 

products” (10 percent), and 424: “Drug, bio-affecting and body treating 

compositions” (6 percent). The most common subclass under class 435 for 

Novozymes’ patents was 435/69.1: “Recombinant DNA techniques included in 

method of making a protein or polypeptide.” This classification is important to 

industrial biotechnology because the activities include genetic engineering to 

produce enzymes with new functionality or to produce existing enzymes more 

efficiently.23 

Novozymes and Genencor (and their parent companies) are leading patent 

owners in enzyme technologies, and have been involved in intellectual property 

disputes relating to industrial biotechnology. In March 2005, Novozymes sued 

Genencor for patent infringement over alpha amylase enzymes used in the 

production of ethanol. Novozymes prevailed and obtained a settlement that 

included a $15 million cash payment by Genencor.24 Not surprisingly, 

Novozymes considers patent rights to be extremely important to the company 

because they protect investment in R&D, secure the freedom to operate in 

patented technology areas, reduce the operational freedom of competitors, and 

help maintain and sometimes increase market share.25 

Cellulosic Ethanol Profile: Verenium 

The Verenium profile highlights the importance of patents to the transfer of 

technology from the university to the small firm setting for further development, 

and then to larger firms with the resources needed to move the technology toward 

commercialization. Patents enable the strategic alliances and government grants 

necessary to continue R&D and innovative activities during the precommercialization phases when revenues from product sales are limited. 

Company Overview 

Verenium was formed in 2007 through the merger of Diversa, a company 

developing and producing specialty enzymes, and Celunol, a company focused 

on cellulosic ethanol technology.26 A key asset of the merged business is 

patented technology which was first discovered by Dr. Lonnie Ingram and 

colleagues at the University of Florida for breaking down cellulosic biomass to 

produce cellulosic ethanol.27 Verenium has two separate business units: the 

biofuels business unit, which is developing integrated cellulosic ethanol 

production capabilities at a pilot 

23 Classification 435/69.1 was one of the classifications with the largest number of patents in 

the data set provided by the USPTO; however, because it is also a common classification for 

pharmaceutical, or “red,” biotechnology, it is not profiled here. 24 Daily, “Novozymes and Genencor Settle Dispute,” April 19, 2007. 25 Lambiris, Novozymes, “The Importance of Patents,” February 11, 2007. 26 Verenium Corp, “Form 10-K,” March 17, 2008, 2. 27 Ibid., 11. 
4-8

and demonstration plant in Jennings, Louisiana, and the specialty enzymes unit, 

which focuses on alternative fuels, industrial processes, and animal nutrition and 

health.28

Verenium (and its predecessor companies) have continuously been in a negative 

cash flow position. R&D expenditures increased by nearly 20 percent from 2001 

through 2007 while revenues declined (table 4.3). Verenium was in a particularly 

precarious financial position at the end of 2007, with mounting losses and 

“substantial doubts” about its ability to continue.29 In August 2008, however, the 

company’s fortunes improved with the announcement of a new strategic alliance 

with BP. 

TABLE 4.3 Verenium: Financial data, 2001–07 

2001 2002 2003 2004 2005 2006 2007

Revenues (thousand $) 9,858 3,927 2,286 1,767 2,011 2,307 3,877 

R&D expenditures (thousand $) 48,228 50,096 70,695 73,405 72,751 50,033 57,727 

Government grants (thousand $) 910 1,047 3,923 10,241 10,079 3,317 2,717

Net loss (thousand $) -15,664 -29,633 -57,696 -33,425 -89,718 -39,271 -107,585

Employees (number) 276 279 360 322 287 287 280

Source: Bureau van Dijk, Orbis Companies Database. 

 

Note: Detailed financial information available from Orbis beginning in 2001. 

The BP alliance focuses on accelerating the development and commercialization 

of cellulosic ethanol technologies. During the first phase, BP will provide 

$90 million over 18 months for participation rights in a 50/50 partnership and the 

co-funding of technology development. Intellectual property plays a central role 

in the alliance. Verenium and BP have formed a special purpose entity into which 

each company’s current technologies will be licensed, and which will own the 

new technologies that the companies plan to jointly develop to move cellulosic 

ethanol into commercialization.30 

Government grants have also fueled Verenium’s operations. Since 2005, the 

company has received government contracts and grants totaling $45 million from 

the U.S. Departments of Defense and Energy, and the National Institutes of 

Health. In March 2007, for example, Verenium was awarded up to $5.3 million 

by the DOE to continue enhancement of the organisms used in the cellulose-toethanol process, including improvements to the fermentation technologies 

licensed to Verenium from the University of Florida.31

Verenium’s Patent Portfolio 

Verenium reports that it owns 347 patents worldwide, has over 400 patent 

applications pending, and has licensed technologies from over 100 patents and 

applications. Verenium also holds exclusive worldwide licenses to use, develop, 

 28 Ibid., 2. 

29 Ibid., 36. 

30 Verenium Corp., “Verenium Reports Financial Results for the Second Quarter 2008,” 

August 7, 2008. 31 Verenium Corp., “Form 10-K,” March 17, 2008, 19. 
and commercially exploit the ethanol production patent estate of the University 

of Florida Research Foundation, including 15 U.S. and 54 foreign patents, 7 

pending U.S. and 52 pending foreign patent applications, and other related 

intellectual property.32 The University of Florida technologies include the 

seminal discovery of genetically modified E. coli bacteria that can convert the 

pentoses and hexoses (C5 and C6 sugars that result from the breakdown of 

hemicelluloses) into ethanol.33

The USPTO online database identifies 104 patents and 87 pending applications 

filed by Verenium, or its predecessors Diversa and Celunol, during the 1997–

2007 period. Patent activity grew steadily to a peak in 2002, and has been on the 

decline since then (figure 4.4.). 

0

10

20

30

40

50

60

70

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Applications Patents

FIGURE 4.4 Verenium: U.S. patents and application, by application date, 1997–2007

Source: USPTO, USPTO Patent Full-Text and Image Database.

Note: The USPTO began publishing patent applications in 2001.

Most of the patents granted to Verenium were in class 435: “Chemistry: 

molecular biology and microbiology,” and nearly 50 percent of these were in 

subclasses 4, 6, and 69.1, with about one-half classified in subclass 6. Subclass 4 

covers measuring or testing processes involving enzymes or micro-organisms 

and 6, which falls under this subclass, covers testing processes that include 

nucleic acid. Verenium reports that its proprietary technologies include 

capabilities for sample collections from microbial populations, generation of 

DNA libraries, screening of the libraries using high-throughput methods, and 

optimization based on gene evolution technologies; these screening technologies 

fall within the subclasses 4 and 6.34 

 32 Ibid., 11. 

33 St. Petersburg Times, “Fuel Breakthrough Still Sputters,” December 5, 2005. 

4-9

34 Verenium Corp., “Form 10-K,” March 17, 2008, 3. 
4-10

 

Bio-based Plastics 

Bio-based plastics are another emerging sector of industrial biotechnology in 

which patents play a central role. Polymers made from renewable resources and 

produced using enzymes and micro-organisms are increasing in prominence as 

technological advances and rising crude petroleum prices make them more 

technically and economically competitive with petroleum-based plastics. Many 

bio-based plastics also offer environmental benefits, such as the ability to 

biodegrade, that increase their appeal to consumers.35 Some of the most 

innovative industrial biotechnology R&D is focused on bioplastics synthesized 

through fermentation of polysaccharides to create PHA and PLA.36 

PHA is produced via bacterial fermentation of sugars or lipids. PHA can be used 

in a wide variety of applications including coated paper, film or bags, 

thermoformed and molded goods, and as building blocks for applications such as 

solvents and chemical intermediates.37 Many patents related to PHA are 

classified under class 435: “Chemistry: molecular biology and microbiology,” 

and subclass 135: “Carboxylic acid ester: processes wherein the product 

synthesized contains an ester group.”38 

PHA-Related Patents 

The USPTO issued 308 patents with 435/135 as their primary or secondary 

classification during the 1997–2007 period. As with cellulase-related patents, 

foreign corporations own most of the patents in this class, followed by domestic 

corporations and U.S. educational institutions (figure 4.5). The single country 

with the largest share of patents in this classification is the United States; 

41 percent of all patents in this classification were issued to U.S. owners 

(corporations, universities, and government). Japan holds the second largest 

country share with 25 percent, followed by Germany (9 percent), Switzerland 

(4 percent), and India (3 percent). 

35 Stewart, “Biopolymers,” June 2007. 

36 Liu, “Bioplastics in Food Packaging,” February 2006, 7. 

37 Schill, “Building Better Bioplastics,” June 2007. 38 In the USPC classification hierarchy, this subclass falls below that of “Micro-organism, 

tissue cell culture or enzyme using process to synthesize a desired chemical compound or 

composition (41),” and “Preparing oxygen-containing organic compound (132).” USPTO, “Main 

Classification Menu,” undated (accessed August 11, 2008). 
Foreign 

government

4%

U.S. educational 

institute

6%

U.S. government

3%

Individual inventor

2%

Foreign 

corporation

56%

Foreign 

educational 

institute

2%

Domestic 

corporation

27%

Total patents: 308

FIGURE 4.5 Patents granted by owner type in classification 435/135, 1997–2007

Source : USPTO, USPTO Patent Full-Text and Image Database.

The top patent owners in the class and the size and location of the company are 

identified in table 4.4. The patents held by second-ranked Metabolix, a small 

U.S. firm, likely exceed those of the first-ranked company, Canon. In addition to 

the 18 patents identified in table 4.4, Metabolix acquired the PHA-related patents 

of Monsanto, the next largest patent holder in the class, in 2001.39 While more 

than one-half of the largest patent owners in this classification are large 

companies (6 of 11), both small and medium-sized entities are well represented. 

The companies patenting in this class hold a relatively small number of patents. 

Of the 253 patents held by foreign and domestic corporations, 72 entities held 

1 patent. The median for the remaining companies was 3 patents, with a range 

between 2 and 22 patents. 

 

4-11

39 Metabolix, Inc., “Annual Report Form 10-K,” 2008, 8. 
4-12

TABLE 4.4 Top patent owners in classification 435/135, 1997–2007

Assignee Name # of patents Company size Country 

Canon Kabushiki Kaisha 22 Large Japan 

Metabolix Inc. 18 Small United States 

Monsanto Company 10 Large United States 

Council of Scientific and Industrial Research 9 (

a

) India 

U.S. government 8 (

a

) United States 

E. I. du Pont de Nemours and Company 7 Large United States 

Suntory Limited 6 Large Japan 

The Procter & Gamble Company 6 Large United States 

Novo Nordisk A/S 6 Large Denmark 

Daicel Chemical Industries, Ltd. 6 Medium Japan 

HENKEL FAMILY 6 Medium United States 

Source: USPTO, USPTO Patent Full-Text and Image Database; Bureau van Dijk, Orbis Companies 

Database. 

Note: For purposes of this study, large companies are those with revenue above $3 billion; medium-sized 

companies are those with revenue in the range of $100 million to $3 billion; and small companies are those 

with revenue below $100 million. 

a

Not available. 

 

From 1997 through 2007, the number of entities (corporations, governments, and 

universities) obtaining patents peaked at 31 in 2002. The number of new entities 

granted a patent for the first time during this period followed a sporadic trend, 

peaking with 19 new owners entering the field in 1998 and declining in recent 

years (figure 4.6). The HHI of 0.02 indicates that control of the patent rights in 

the PHA-related technology is unconcentrated.40

 40 As discussed infra., the HHI calculation does not account for changes in patent ownership 

after patents are issued, an important caveat as a substantial number of patents were transferred 

during the period to Metabolix from another leading patent owner, Monsanto. See Chap. 5 for a 

discussion of issues for future research. 
0

5

10

15

20

25

30

35

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Number of owners New owners

FIGURE 4.6 Patent owners and new owners in classification 435/135, 1997–2007

Source : USPTO, USPTO Patent Full-Text and Image Database.

Note : "New owners" counts the number of assignees in that year who are receiving their first 

patent in 435/135 in the 1997–2007 period.

PHA Profile: Metabolix 

Metabolix has its PHA roots in technology patented by scientists at the 

Massachusetts Institute of Technology (MIT). The company has used its strong 

patent portfolio to attract strategic alliance partners from government and 

industry that bring the capital necessary to move from R&D to 

commercialization of PHA bio-based plastics. 

Company Overview 

Metabolix is a small company focused on the development and 

commercialization of environmentally sustainable alternatives to petrochemicalbased plastics, fuels, and chemicals.41 The company was formed in 1992 by 

scientists from MIT who identified the key genes required for the biosynthesis of 

PHA and invented and patented the first transgenic system for its production. To 

fully capture the PHA opportunity, Metabolix later acquired a patent estate 

related to the production of PHA from a wild-type bacterial strain that had been 

owned by Monsanto. Metabolix also has an active R&D program focused on the 

development of a biomass refinery system using switchgrass to co-produce both 

PHA and biomass to be used for fuel power production.42 

Metabolix is currently developing a proprietary, large-scale, microbial 

fermentation system for the production of PHA (which Metabolix brands as 

Natural Plastic). The company has formed a joint venture with Archer Daniels 

Midland (ADM), one of the largest U.S. producers of biofuels and agricultural 

products, under the name of Telles that will operate the first commercial plant to 

 41 Metabolix, Inc., “Annual Report Form 10-K,” 2008, 3. 

4-13

42 Ibid., 8. 
4-14

produce PHA. The new plant will be located in Clinton, Iowa, next to an ADM 

ethanol production facility, and is scheduled to come online in 2009. The plant is 

expected to produce up to 110 million pounds of bioplastics annually.43 Telles 

will reportedly employ a “systems approach” to bioplastic production, integrating 

sophisticated biotechnology with advanced industrial practice from the initial 

genetic engineering to end product.44 

Metabolix has made substantial R&D investments in its PHA products and its 

biomass refinery system. One of the primary goals of the R&D program is to 

“develop and acquire competitive intellectual property and know-how in biobased plastics, fuels, and chemicals that define [the company] as the leader in the 

field.”45 To carry out its R&D program, expenditures have increased by 221 

percent from $6.2 million in 2003 to $19.9 million in 2007 (table 4.5). Revenues, 

while growing from essentially zero to $5.9 million in 2007, are far from 

covering R&D expenses. 

TABLE 4.5 Metabolix: Financial data, 2001–07 

2001 2002 2003 2004 2005 2006 2007

Revenues (thousand $) (

a

) (

a

) 6 14 -591 1,467 5,941 

R&D expenditures (thousand $) 6,309 4,409 6,204 5,427 5,980 11,235 19,901 

Government grants (thousand $) (

a

) (

a

) (

a

) 3,189 2,433 1,828 879

Net loss (thousand $) -8,936 -5,188 -6,641 -5,055 -7,625 -16,062 -27,875

Employees (number) (

a

) (

a

) (

a

) (

a

) 43 59 77 

Source: Bureau van Dijk, Orbis Companies Database. 

 

Note: Detailed financial information available from Orbis beginning in 2001. 

a

Not available. 

Metabolix receives funding from the U.S. government and its alliance partners, 

enabling it to maintain and even expand its research and commercialization 

efforts, notwithstanding its negative cash flow position. For example, in 2001 the 

DOE awarded Metabolix $7.5 million to develop a co-production process for 

Natural Plastic with energy crops and in 2003, the U.S. Department of 

Agriculture awarded Metabolix an additional $2 million for this program. Then 

in 2007, the U.S. Department of Commerce awarded Metabolix $2 million for 

the ongoing development of a commercially viable platform for producing biobased chemicals from agricultural products.46

Metabolix’s Patent Portfolio 

Metabolix reports that its “continued success depends in large part on its 

proprietary technologies,” and that it relies on patent, copyright, trademark and 

 43 Metabolix, Inc., “Quarterly Report Form 10-Q,” August 11, 2008, 9. 44 Mirel Company Web site. http://www.mirelplastics.com/discover/index.html (accessed July 

15, 2008). 45 Metabolix, Inc., “Annual Report Form 10-K,” 2008, 18, 20. 

46 Metabolix, “Quarterly Report Form 10-Q.” August 11, 2008, 15–16. 
trade secret laws, and confidentiality agreements to establish and protect its 

intellectual property rights.47 Metabolix reportedly owns over 340 issued patents 

and 120 patent applications worldwide, and holds licenses to use technologies in 

another 60 issued patents and 30 patent applications worldwide. Licensed patents 

and applications include 13 U.S. patents and their foreign counterparts issued to 

MIT scientists and exclusively licensed to Metabolix.48

The USPTO online database identifies 50 patents and 32 pending applications 

filed by Metabolix during the 1997–2007 period. Patent activity peaked in 2003 

and has been trending downward since then, with a small rebound in 2007 

(figure 4.7). 

0

5

10

15

20

25

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Applications Patents

FIGURE 4.7 Metabolix: U.S. patents and applications, by application date, 1997–2007

Source: USPTO, USPTO Patent Full-Text and Image Database.

Note: The USPTO began publishing patent applications in 2001.

Metabolix patents cover polymers, genes, vectors, expression systems in plants 

and microbes, devices, coatings, films, as well as methods of manufacture and 

use.49 They are grouped around a small number of technology areas in class 435: 

“Chemistry, molecular biology and microbiology,” with the most active subclass 

being the PHA-related classification 435/135. The combination of patents owned 

and exclusively licensed by Metabolix gives it a powerful position in the PHA 

market. The patents protect methods of PHA isolation, purification, and 

processing, preferred metabolic pathways for copolymer production, and several 

novel compositions and applications. Most fundamentally, according to 

researchers for the Environmental Protection Agency, they give Metabolix 

 47 Metabolix, Inc., “Annual Report Form 10-K,” 2008, 18. 

48 Ibid., 21–22. 

4-15

49 Ibid., 22. 
4-16

 

“exclusive rights to the genes within the PHA biosynthesis pathway, as well as 

the use of the genes in any combination for the preparation of PHA.” 50

Given the strong position that the Metabolix patents provide, it is perhaps not 

surprising that one of the company’s competitors, Procter & Gamble—which has 

developed its own PHA polymers and licensed them to Kaneka Corporation—is 

challenging the validity of one of the foundational MIT patents licensed to 

Metabolix. The action is pending in the federal patent court in Munich, Germany. 

Metabolix maintains that the action is without merit but notes that the ability to 

obtain and successfully enforce its intellectual property in the United States and 

abroad is critical to the company’s future success.51 

PLA-Related Patents 

Another bio-based plastic, PLA, is a compostable polyester derived from lactic 

acid, which is made from agricultural byproducts through the processes of 

fermentation, distillation, and polymerization of plant sugars. A number of 

finished products can be made from PLA, including structural supports and drug 

delivery systems in medical devices, tough fibers, and molded or extruded 

consumer products such as food packaging.52 Many PLA-related patents are 

classified under class 435: “Chemistry: molecular biology and microbiology,” 

and subclass 139: “Lactic acid: processes wherein the product synthesized is an 

acid or salt form of alpha-hydroxy propanoic acid.”53 

The USPTO issued 69 patents with 435/139 as their primary or secondary 

classification during the January 1997–December 2007 period. Foreign and 

domestic corporations hold similar numbers of patents and together account for 

85 percent of the total patents classified under 435/139 (figure 4.8). The United 

States holds the largest country share of patents with 51 percent, followed by 

Japan with 11 percent, Denmark with 8 percent, and France, Germany, and the 

Netherlands all with 6 percent. 

50 Ahmann and Dorgan, Bioengineering for Pollution Prevention, 2007, 84. 51 Metabolix, Inc., “Annual Report Form 10-K,” 2008, 39. 

52 Ibid., 8. 

53 In the classification hierarchy, this subclass falls under 41: “Micro-organism, tissue cell 

culture or enzyme using process to synthesize a desired chemical compound or composition”; 132: 

“Preparing oxygen-containing organic compound”; and 136: “Containing a carboxyl group.” 

USPTO, “Main Classification Menu,” undated (accessed August 11, 2008). 
Domestic 

Corporation

41%

US Government

3%

US Educational 

Institute

4%

Individual Inventor

6%

Foreign Government

1%

Foreign Educational 

Institute

1%

Foreign Corporation

44%

FIGURE 4.8 Patents granted by owner type in classification 435/139, 1997–2007

Source: USPTO, USPTO Patent Full-Text and Image Database.

Total patents: 

 

The top patent owners in the class, and the size and location of the patenting 

companies are identified in table 4.6. A large, privately held U.S. company, 

Cargill, is the top patent holder in the class. Three of the top patent holders are 

located in the United States with the remaining companies in Japan and Europe. 

Most of the top patent owners (8 of 12) are large businesses. Most entities with 

patents in this class hold only one patent. The median for the remaining entities is 

two patents, with a range between two and seven patents. The HHI, estimated at 

0.04, suggests that control of the patent rights in this technology area is 

unconcentrated. Overall, the class is characterized by a small number of patents 

spread over a small number of participants.54

 

4-17

54 See discussion of the applicability of the HHI calculation to patent control infra. 
4-18

TABLE 4.6 Top patent owners in classification 435/139, 1997–2007 

Assignee Name # of patents Company size Country 

Cargill & MacMillan Families 7 Large United States 

A. E. Staley Manufacturing Co. 4 Small United States 

Archer Daniels Midland Co. 4 Large United States 

CSM NV 3 Large Netherlands 

Bayer AG 2 Large Germany 

Canon Inc 2 Large Japan 

Chr. Hansen Holding A/S 2 Medium Denmark 

Danisco A/S 2 Large Denmark 

Mitsubishi Rayon Co., Ltd. 2 Large Japan 

Roquette Freres 2 (

a

) France 

Tate & Lyle Public Limit Company 2 Large United Kingdom 

Source: USPTO, USPTO Patent Full-Text and Image Database; Bureau van Dijk, Orbis Companies 

Database. 

Note: For purposes of this study, large companies are those with revenue above $3 billion; mediumsized companies are those with revenue in the range of $100 million to $3 billion; and small 

companies are those with revenue below $100 million. 

a

Roquette Freres is a family-owned, privately held company. No financial information is publicly 

available. 

PLA Profile: Cargill 

The PLA-related patent portfolio of Cargill and its subsidiary, NatureWorks, has 

attracted strategic alliances and government funding to advance the development 

and commercialization of bio-based plastics. NatureWorks has a strong 

competitive position with the only world-scale PLA plant in the United States, 

due, at least in part, to the strength of patent portfolios.55

Company Overview 

Cargill is a large, privately held business with roots dating back to the 1800s in 

grain storage and trading.56 Today, Cargill has about 158,000 employees in 66 

countries and provides food, agricultural, and risk management products and 

services. Cargill reported total revenue of $88.2 billion for 2007, an increase of 

about 17 percent over 2006. The company operates under five business segments: 

agricultural services; food ingredients and applications; industrial; origination 

and processing; and risk management and financial. The company’s subsidiaries 

 55 USDA, U.S. Biobased Products, 2008, 100; ETEPS NET, “Consequences, Opportunities and 

Challenges of Modern Biotechnology,” 2007, 41. 56 Because Cargill is a privately held company, detailed financial data like that provided in the 

other company profiles are not publicly available. 
4-19

 

include NatureWorks, LLC.57 NatureWorks arose out of Cargill’s 1989 patented 

discovery of a way to more efficiently make PLA from corn.58 Cargill formed a 

joint venture with Dow in 1997 to further develop PLA, and in 2002 Cargill 

opened a PLA production facility in Blair, Nebraska. Dow exited the venture in 

2004, and until 2007, the facility was operated solely by NatureWorks as a 

wholly owned Cargill subsidiary.59 In 2007, Cargill and the Japanese company 

Teijin formed a 50/50 joint venture to operate NatureWorks. With more than 200 

employees, NatureWorks has the capacity to produce 300 million pounds of 

polymer annually.60

Cargill has made substantial R&D investments in PLA, investing as much as 

$200 million during the 1990s alone.61 These efforts have been supported by 

government funding in several programs. For example, in 1994, Cargill received 

an Advanced Technology Program award from the National Institute of 

Standards and Technology to develop the methodology for improving the 

performance characteristics of PLA to make it more competitive with petroleumbased plastics.62 In 2000, Cargill Dow received additional funding from DOE to 

continue its R&D related to PLA.63 According to Cargill, government funding 

accelerated commercialization and enabled the PLA project to “stay alive” at 

critical times.64

Cargill’s Patent Portfolio 

Cargill holds an estimated 217 patents and 175 pending applications at the 

USPTO for the 1997–2007 period. Cargill’s patent filings increased steadily until 

2002 and have been declining since then (figure 4.9). Cargill’s USPTO patent 

holdings are spread across 44 discrete classes; these holdings reflect the diversity 

of products and services in which the company is active. Cargill’s portfolio 

differs from those of the other profiled companies, which are more focused on 

enzyme technologies. Patents related to industrial biotechnology account for a 

relatively small portion of Cargill’s total patent portfolio.65 

57 Datamonitor, “Cargill, Incorporated,” November 19, 2007; Cargill, Incorporated Web site, 

http://www.cargill.com/about/financial/financialhighlights.htm (accessed August 2, 2008). 58 Schill, “Building Better Bioplastics.” June 2007. 59 Ahmann and Dorgan, Bioengineering for Pollution Prevention, 2007, 50. 

60 NatureWorks LLC, “Welcome to the Blair Manufacturing Operations,” March 24, 2007. 61 Cargill Dow LLC, Agriculture, Nutrition, and Forestry Committee testimony, March 29, 

2001. 62 ATP, “Improving Biodgradable Plastics,” undated (accessed August 6, 2008). 63 Businesswire, “New Corn to Plastic Technology,” March 14, 2001. 64 Cargill Dow LLC, Agriculture, Nutrition, and Forestry Committee testimony, March 29, 

2001. 65 Foundational discoveries related to PLA were patented prior to the 1997–2007 period and 

thus do not appear in the totals reported in Table 4.6. Moreover, as with the other USPTO 

classifications profiled, all discoveries in a technology area are not exclusively classified to a 

particular classification. See chapter 5 for suggestions for further research. 
0

10

20

30

40

50

60

70

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Applications Patents

Source: USPTO, USPTO Patent Full-Text and Image Database.

Note: The USPTO began publishing applications in 2001.

FIGURE 4.9 Cargill: U.S. patents and applications, by application date, 1997–2007

 

Cargill’s R&D has, however, yielded a valuable patent portfolio protecting its 

PLA-based polymer synthesis processes in the United States and other major 

markets.66 Continuous production processes and technologies have been 

important to achieving cost-effective production. Recent Cargill patent 

applications covering the fermentation of lactic acid focus on making PLA 

production more efficient and sustainable by identifying processes in which the 

culture is capable of growing at lower pH levels and with enhanced recovery of 

lactic acid.67 NatureWorks also holds a suite of patents and applications covering 

PLA processes and product discoveries.68 With the only world-scale PLA plant 

in the United States, NatureWorks has a strong competitive position due, at least 

in part, to the strength of the Cargill and NatureWorks patent portfolios.69

 66 For example see Cargill, “Continuous process for manufacture of lactide polymers with 

controlled optical purity,” U.S. Patent 5,247,058 (September 21, 1993); Cargill, “Melt-stable semicrystalline lactide polymer film and process for manufacture thereof,” U.S. Patent 6,093,791 

(July 25, 2000); Cargill, “Degradable polymer fibers; preparation product; and, methods of use,” 

U.S. Patent 6,506,873 (January 14, 2003); and Cargill, “Paper having a melt-stable lactide polymer 

coating and process for manufacture thereof,” U.S. Patent 6,197,380 (March 6, 2001). U.S. Patents 

and Pre-grant Publications may be accessed through the USPTO online database. 67 USDA, U.S. Biobased Products, 2008, 77. See also Cargill, “Low pH lactic acid 

fermentation,” U.S. Pre-grant Publication US20030129715 (July 10, 2003); and Cargill, “Low pH 

lactic acid fermentation,” U.S. Pre-grant Publication US20060094093 (October 14, 2005). 68 For example see NatureWorks, “Fermentation process using specific oxygen uptake rates as 

a process control,” U.S. Patent 7,232,664 (June 19, 2007); NatureWorks, “Methods and materials 

for the production organic products in cells of Candida species,” U.S. Patent 7,141,410 

(November 28, 2006); NatureWorks, “Injection stretch blow molding process using polylactide 

resins,” U.S. Pre-grant Publication 20070187876 (December 15, 2006). 

4-20

69 USDA, U.S. Biobased Products, 2008, 100; ETEPS NET, “Consequences, Opportunities and 

Challenges of Modern Biotechnology,” 2007, 41. 
CHAPTER 5 

Conclusions 

This study relies on patent data, questionnaire results, and technology and firm 

level data from emerging sectors of industrial biotechnology to provide a detailed 

picture of innovation in the field. A diverse group of firms, large and small in 

size, is developing new patented products and processes in industrial 

biotechnology. The average number of patents held by firms in particular 

technology areas is small; unlike in other technology areas, leading patenting 

companies do not hold enormous patent portfolios. Moreover, a steady stream of 

new firms are patenting each year, suggesting that the field is open to new 

players, especially the small firms and start-ups that historically have been 

associated with biotechnology innovation. Moreover, when surveyed by the 

Commission, firms reported that “patent barriers” were one of the least 

significant impediments to industrial biotechnology R&D and commercialization 

efforts. 

Profiles of four firms active in particular emerging sectors of industrial 

biotechnology support these conclusions and further suggest that 

collaborations—between firms, universities, and government—have become 

increasingly important in terms of funding, moving technologies from R&D to 

commercialization, and creating synergies from a combination of different 

strengths. Patents facilitate these collaborations. 

Small firms, like Verenium and Metabolix, hold strong patent portfolios that 

arise from foundational discoveries made in the university setting and supported 

by government funding. Bayh-Dole has assisted in this transfer of technologies 

by permitting universities and firms to retain ownership and license their 

government-funded discoveries. Verenium and Metabolix also rely on their 

patent portfolios to attract large firm partners with the capital necessary to 

develop and commercialize early stage discoveries. Intellectual property is 

carefully protected in these alliances. Patent portfolios also play an important role 

in larger firms, like Novozymes and Cargill, which rely on their patents to protect 

their substantial R&D investments and market share. Thus, patents are playing a 

fundamental role in the development of the industrial biotechnology field, much 

as they have in the larger biotechnology sector. 

Whether the patenting environment will become more burdensome over time is 

hard to predict. This study does not consider the impact of the USPTO’s 

substantial backlog of pending applications on firms seeking to patent in the 

field, nor does it account for the fact that the field of industrial biotechnology is 

in relatively early stages of development. As more products and processes are 

commercialized, it is inevitable that the patenting space will become more 

crowded and contentious. The patent litigation already seen in some leading 

firms may be a harbinger of more challenging times ahead. 

5-1
Suggestions for Future Research 

This study has relied on patent data, supplemented with qualitative information, 

to illustrate the ongoing relationship between patents and innovation in industrial 

biotechnology. Patent data, however, are imperfect measures of innovation. 

Many inventions are never patented and many patents are never exploited. 

Researchers have used various methods to identify those patents that are good 

measures of innovation and thereby reduce the “noise” inherent in patent data. 

One method is to use patent renewal data to identify those patents that have been 

abandoned for failure to pay renewal fees. Presumably if the owner does not 

consider the patent worth the fee, it is not a particularly important one. The 

USPTO requires that patent owners pay fees that increase over the life of the 

patents at various intervals (3.5, 7.5, and 11.5 years).1

 Bessen found that 60 

percent of U.S. patents granted in 1991 were not renewed for the full term 

because of failure to pay fees; small firm patents were particularly likely not to 

be renewed.2

 The authors of this study did not obtain renewal data for all patents 

identified; consideration of these data would enhance the results.3

 

Researchers also have considered the question of whether valuable patents can be 

identified on their face based on the number of citations to other works and 

claims that they contain, with more citations and claims suggesting greater value. 

Some assert that these factors can be used to identify valuable patents based on 

the patent documents; others are skeptical.4

 The question has not been addressed 

in this study but merits further attention. 

Industrial biotechnology patenting also could be further explored by taking into 

account patent assignments, transfers, and licenses to obtain a clearer picture of 

the actual control of patents rights. Patent assignment data is reported by the 

USPTO; however, licensing information is more difficult to acquire and may be 

treated as proprietary information by the involved firms. The Metabolix profile 

demonstrates that the transfer of patent rights may substantially impact a firm’s 

control of a technology area; this issue warrants attention in future research. 

Another important caveat to this study was the recognition that industrial 

biotechnology is an extremely difficult field to identify because of substantial 

overlap with other sectors and because distinctions drawn by the industry are not 

reflected in the patent classification system. This study relied on classifications 

identified in model patents and publicly available data from the USPTO. 

Proprietary search engines, however, may enable key word searching and other 

techniques that would yield a more focused picture of industrial biotechnology. 

 1

 USPTO, “FY 2009 Patent and Fee Schedule,” October 1, 2008. 2

 Bessen, “The Value of U.S. Patents,” 2006, 27; Bessen and Meurer, Patent Failure, 2008, 

100. 3

 Many of the patents identified are relatively new and thus have only come up for renewal 

once or twice. The authors did not locate any nonrenewed patents in spot checks; however, renewal 

data were not consulted for all identified patents. 4

 For more information, compare Allison, et al., “Valuable Patents,” 2004, 435, and Allison and 

Sager, “Valuable Patents Redux,” 2007, 1769, with Adelman and DeAngelis, “Patent Metrics,” 

2007, 1716–29.

5-2
The USPTO will also soon have better searching capabilities available for use 

with published patent applications; the classification-based search structured for 

this analysis could be carried out for grant data only and not published 

application data. Because of the substantial time lag required to obtain a patent 

grant, improved capabilities for more fully accessing published application data 

would be extremely useful to researchers and, more importantly, to firms that are 

attempting to understand their operational freedom in the face of substantial 

patenting activity in industrial biotechnology. 

 

5-3

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A-1

Appendix A 

Patent Search Methodology 

The custom data set provided by the USPTO consists of 20,418 patents granted 

during the 1975–2006 period in USPC classifications identified by the authors as 

relevant to industrial biotechnology. The authors employed the following 

methodology to obtain a list of USPC classifications relevant to industrial 

biotechnology. First, and based on research conducted in connection with the 

Commission’s report on industrial biotechnology, model industrial biotechnology 

patents were identified in the following areas: biofuels, biopolymers, chemical 

processes, micro-organisms, enzymes, and pharmaceuticals. All primary and 

secondary classifications appearing in these model patents were also identified. 

The USPC classifications are technology and science based rather than industry 

based, and thus responsive search results included patents for the identified 

technologies regardless of the industry where they were applied. 

Next, the USPTO’s online database was used to test these classifications and 

identify those that seemed to produce the most patents relevant to industrial 

biotechnology using random sampling techniques. In addition to the 

classifications identified in this manner, and to account for the fact that the USPC 

is a hierarchical system, the list of classifications was expanded to include all 

“children,” i.e., those that fell below the identified classifications in the 

hierarchy. The USPTO then ran the requested search of all patents with a primary 

classification equivalent to one of the identified classifications. 
The identified classifications were the following: 

127/037 435/070.500 435/101 435/144 435/205 435/254.600 

435/041 435/071.100 435/102 435/145 435/206 435/254.700 

435/042 435/071.200 435/103 435/146 435/207 435/254.900 

435/043 435/071.300 435/104 435/147 435/208 435/255.100 

435/044 435/072 435/105 435/148 435/209 435/255.200 

435/045 435/073 435/105 435/149 435/210 435/255.210 

435/046 435/074 435/105 435/150 435/211 435/255.300 

435/047 435/075 435/106 435/155 435/212 435/255.400 

435/048 435/076 435/107 435/156 435/213 435/255.500 

435/049 435/077 435/108 435/157 435/214 435/255.600 

435/050 435/078 435/109 435/158 435/215 435/255.700 

435/051 435/079 435/110 435/159 435/216 435/256.100 

435/052 435/080 435/111 435/160 435/217 435/256.300 

435/053 435/081 435/112 435/161 435/218 435/256.500 

435/054 435/082 435/113 435/162 435/219 435/256.600 

435/055 435/083 435/114 435/163 435/220 435/256.700 

435/056 435/084 435/115 435/165 435/221 435/256.800 

435/057 435/085 435/116 435/166 435/222 435/280 

435/058 435/086 435/117 435/167 435/223 435/320.100 

435/059 435/087 435/118 435/168 435/224 435/410 

435/060 435/088 435/119 435/169 435/225 435/411 

435/061 435/089 435/120 435/170 435/226 435/412 

435/062 435/090 435/121 435/171 435/227 435/414 

435/063 435/091.100 435/122 435/183 435/228 435/415 

435/064 435/091.200 435/123 435/184 435/229 435/417 

435/065 435/091.210 435/124 435/185 435/230 435/418 

435/066 435/091.300 435/125 435/186 435/231 435/419 

435/067 435/091.310 435/126 435/187 435/232 435/420 

435/068.100 435/091.320 435/127 435/188 435/233 435/421 

435/069.100 435/091.330 435/128 435/188.500 435/234 435/422 

435/069.200 435/091.400 435/129 435/189 435/252.300 435/423 

435/069.300 435/091.410 435/130 435/190 435/252.310 435/424 

435/069.400 435/091.500 435/131 435/191 435/252.320 435/425 

435/069.500 435/091.510 435/132 435/192 435/252.330 435/426 

435/069.510 435/091.520 435/133 435/193 435/252.340 435/427 

435/069.520 435/091.530 435/134 435/194 435/252.350 435/428 

435/069.600 435/092 435/135 435/195 435/254.100 435/429 

435/069.700 435/093 435/136 435/196 435/254.110 435/430 

435/069.800 435/094 435/137 435/197 435/254.200 435/430.100 

435/069.900 435/095 435/138 435/198 435/254.210 435/431 

435/070.100 435/096 435/139 435/199 435/254.220 536/023.200 

435/070.200 435/097 435/140 435/200 435/254.230 536/023.700 

435/070.210 435/098 435/141 435/201 435/254.300 536/023.710 

435/070.300 435/099 435/142 435/203 435/254.400 536/023.720 

435/070.400 435/100 435/143 435/204 435/254.500 536/023.740 

The search results are reported in USPTO, Utility Patents in USITC-Identified 

Subclasses Based on Primary Patent Classification, 2007. Access to the search 

results are available via the following link: Utility Patents In USITC Identified 

Subclasses.xls. 

A-2