Report from the Commission to the European Parliament and the Council - Development and implications of patent law in the field of biotechnology and genetic engineering
Date: 2002-10-07
Institutions: European Commission
Subjects: bio-ethics, biotechnology, genetic engineering, invention, patent, patent law, report

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 07.10.2002
COM(2002) 545 final

REPORT FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT AND THE COUNCIL

Development and implications of patent law in the field of
biotechnology and genetic engineering

REPORT FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT AND THE COUNCIL

Development and implications of patent law in the field of
biotechnology and genetic engineering

TABLE OF CONTENTS

EXECUTIVE SUMMARY .................................................................................................... 5

1.

1.1.

1.2.

1.3.

THE CURRENT SITUATION IN EUROPE ...................................................................... 7

Implementation of the Directive in the Member States.............................................. 7

Incorporation of the Directive by the European Patent Organisation ......................... 8

Annulment proceedings by the Netherlands against Directive 98/44/EC -
Decision of the Court of Justice of the European Communities of 9 October
2001 ......................................................................................................................... 9

1.4.

Review of the key provisions of the Directive......................................................... 10

2.

2.1.

THE COMPATIBILITY OF THE DIRECTIVE WITH THE RELEVANT
INTERNATIONAL AGREEMENTS .............................................................................. 10

The compatibility of the Directive with regard to certain international
agreements.............................................................................................................. 11

2.2.

The Substantive Patent Law Treaty (negotiated in the framework of the WIPO) ..... 11

3.

THE PATENTABILITY OF INVENTIONS RELATING TO PLANTS AND ANIMALS............ 12

3.1.

The patentability of inventions relating to plants..................................................... 12

3.1.1.

The relevant provisions of the Directive.................................................................. 13

3.1.2. Community action needed on cross-licences ........................................................... 14

3.2.

The patentability of inventions relating to animals .................................................. 14

3.2.1.

Application of Article 4(2) of the Directive ............................................................. 15

3.2.2.

Patent EP 0 578 653 B [Seabright Patent].............................................................. 15

3.2.3.

Exclusion under Article 6(2)(d) of the Directive...................................................... 16

3.3.

Exclusion of essentially biological processes - patentability of microorganisms ...... 16

4.

4.1.

THE PATENTABILITY OF INVENTIONS RELATING TO ELEMENTS ISOLATED FROM
THE HUMAN body: .................................................................................................. 17

Distinction to be made between simple discoveries and patentable inventions -
conditions for patentability ..................................................................................... 17

4.1.1.

The relevant provisions of Directive 98/44/EC: ...................................................... 17

2

4.1.2.

The relevant passages of the judgment of the Court: ............................................... 20

4.1.3.

Patents EP 699 754 and EP 705 903 [Myriad Genetics patents on the detection
of breast cancer]..................................................................................................... 21

4.2.

5.

5.1.

5.2.

The scope to be conferred on patents relating to elements isolated from the
human body............................................................................................................ 22

EXCLUSION FROM PATENTABILITY OF INVENTIONS WHOSE COMMERCIAL
EXPLOITATION WOULD BE CONTRARY TO ORDRE PUBLIC OR MORALITY:............... 24

The general principle of exclusion under Article 6(1).............................................. 24

The specific list of exclusions in Article 6(2): ......................................................... 25

5.2.1.

Processes for cloning human beings ....................................................................... 25

5.2.1.1. The text of the Directive.......................................................................................... 25

5.2.1.2. Patent EP 0 695 351 [so-called "Edinburgh Patent"] ............................................. 25

5.2.2.

Patentability of human stem cells and cell lines obtained from them ....................... 26

5.2.3.

Processes for modifying the germ line genetic identity of human beings.................. 27

5.2.4.

The use of human embryos for industrial or commercial purposes .......................... 27

6.

CONCLUSION.......................................................................................................... 28

ANNEX 1:

IMPLEMENTATION OF DIRECTIVE 98/44/EC ON THE LEGAL

PROTECTION OF BIOTECHNOLOGICAL INVENTIONS................................................ 30

ANNEX 2:

COHERENT STRATEGY FOR BIOTECHNOLOGY AND LIFE SCIENCES IN
EUROPE.................................................................................................................. 32

1°)

2°)

3°)

Investments in the biotechnology sector.................................................................. 32

Patenting activity in the biotechnology sector ......................................................... 33

Industrial competitiveness in biotechnology............................................................ 37

ANNEX 3:

ACCOUNT OF NEGOTIATIONS ON DIRECTIVE 98/44/EC .............................. 39

ANNEX 4:

WORK UNDERTAKEN SINCE THE ADOPTION OF THE DIRECTIVE: ............... 41

1°)

2)

3)

4°)

5°)

In the context of exchanges between the Commission and the Member States: ....... 41

Activities within the European Parliament: ............................................................. 42

The work done by the European Group on Ethics in Science and New
Technologies of the European Commission. ........................................................... 42

The activities of the high-level Group on Life Sciences........................................... 43

OECD activity on “Genetic inventions, intellectual property rights and licensing
practices”................................................................................................................ 44

ANNEX 5:

STATISTICS................................................................................................. 44

3

EXECUTIVE SUMMARY

This report is provided for by Article 16(c) of Directive 98/44/EC on the legal protection
of biotechnological inventions, which lays down that the Commission must transmit each
year to the European Parliament and the Council a report on the development and
implications of patent law in the field of biotechnology and genetic engineering.

Directive 98/44/EC was adopted after a long and constructive debate lasting about ten
years in both the Council and the European Parliament. During those negotiations, it
emerged as a fact that biotechnological inventions are a sector in full expansion: new
techniques of great promise for cures and foodstuffs are becoming established very
their
rapidly, and the European legislator considered it essential not
development. However, there was a need to establish a sound legal framework which
allowed European businesses to develop and market the products and processes deriving
from genetic engineering. The European legislator felt that this rapidly developing sector
had to be watched very closely in order to monitor its development and prevent any
malfunctions.

to hamper

The Commission Communication of 23 January 2002 entitled "Life sciences and
biotechnology" reiterates this objective clearly. It is against that background that the first
annual report provided for under Directive 98/44/EC was drawn up for submission to the
Council and the European Parliament. It is intended to highlight the key provisions of the
Directive in the light of the judgment of the Court of Justice of the European Community
of 9 October 2001.

It emerges from this analysis that the Articles relating to the patentability of plants and
animals and the patentability of elements isolated from the human body or otherwise
produced, take account of society's concerns and of the financing needed for research.
They comply strictly with the ethical rules recognised in the European Community, while
field. Since biotechnology and genetic
protecting inventions developed in that
engineering are not fixed and static sciences, it is incumbent on the Commission to
identify and assess problems which have recently appeared or which have become more
pressing.

In the light of the above, the Commission should, in particular, consider two questions
identified in this first report, viz.:

• The scope to be conferred on patents relating to sequences or part-sequences of genes

isolated from the human body;

• The patentability of human stem cells and of cell lines obtained from them.

4

INTRODUCTION

The biotechnology sector was identified by the Stockholm European Council as one of
the most promising in terms of economic development and employment. However,
positive measures need to be taken at Community level in order to derive maximum
benefit from this resource.

The conclusions of the Presidency, for instance, state that: "The ability of EU businesses
to embrace technologies will depend on factors such as research, entrepreneurship, a
regulatory framework encouraging innovation and risk-taking,
including community
wide industrial property protection at globally competitive costs, and the availability of
willing investors, particularly at an early stage"1.

The European Council gave the Commission,
in cooperation with the Council, of
examining the measures required to utilise the full potential of biotechnology and to
strengthen Europe's competitiveness in this sector in order to match its leading Japanese
and American competitors23.

On 23 January 2002, therefore, the Commission adopted a Communication entitled "Life
sciences and biotechnology – A Strategy for Europe"4. This Communication, which is
intended to summarise all
including the
patentability of inventions in this field, aims to provide an overview of the situation in
the European Community. In addition, an action plan attached to the Communication sets
out the priority guidelines for biotechnology, accompanied where appropriate with a
timetable for the measures to be taken.

the various aspects of biotechnology,

Action 5 - the most relevant for the purposes of this Report - states explicitly that the
Member States must incorporate Directive 98/44/EC into national law without delay5.
This Report can only emphasise this essential precondition. The Communication insists
on the fact that "The full implementation of Directive 98/44/EC on the legal protection of
biotechnological inventions will considerably improve legal certainty for industry. The
clarification of the legislative environment within the EC will provide innovative firms in
the various industries using biotechnology with an incentive to continue or even increase
their investments in research."6.

The Communication also points out that, in view of the rapid scientific progress to be
observed in this field of technology, close attention must be paid to the legislation on

1

2

3

4

5

6

Conclusions of the Presidency – Stockholm, 23 and 24 March 2001 –SN 100/01, point 43, p.11
Conclusions of the Presidency, op. cit., point 44, p.11
With a view to the Barcelona European Council, the Dutch and British Prime Ministers, Mr Kok
and Mr Blair, addressed a letter to the Spanish Prime Minister, Mr Aznar, entitled ‘Overcoming
the European Paradox’, in which they call upon the European Community to take the measures
needed to achieve the objectives set out at the Lisbon European Council in March 2000, aimed at
making the European Union the most competitive and dynamic economy in the world by 2010. To
do so, the Commission should deliver, in the spring of 2003, an action plan for creating an
integrated European research and innovation area.
For further details of this letter: http://www.pm.gov.uk/news.asp?newsID=3657.
COM(2002)27 final.
COM op.cit. Action 5 of the action plan p.25
COM op. cit. p.11.

5

intellectual property. Regular assessments, for instance, will be needed to determine
whether the patent system is meeting the needs of researchers and companies7.

This Report is fully in line with the foregoing.

the European legislator
When Directive 98/44/EC was adopted on 6 July 1998,
considered it useful to incorporate into it various reports to be submitted by the
Commission to the Council and the European Parliament.

Article 16(a) provides for a five-yearly report on whether the Directive has raised any
problems with regard to the international agreements on the protection of human rights to
which the Member States have acceded. Under Article 16(b), the Commission must draw
up a study assessing the implications for basic genetic engineering research of failure to
publish, or late publication of, papers on subjects which could be patentable8.

Finally, Article 16(c) of the Directive provides for an annual report on the development
and implications of patent law in the field of biotechnology and genetic engineering9.

This is the first such Report.

1.

THE CURRENT SITUATION IN EUROPE

1.1.

Implementation of the Directive in the Member States

It should be pointed out that it proved rather difficult to draw up this Report since,
according to the information available to the Commission at the time of drafting it, only
six Member States had transposed the Directive into their national
legal systems:
Denmark, Finland, Ireland, the united Kingdom, Greece and Spain10.

The other Member States are currently at varying stages of progress. In some countries
the discussions are
(Germany, Italy, Luxembourg, Netherlands, Austria, Portugal)
already taking place before the national parliaments. In Belgium, France and Sweden, a
draft law transposing Directive 98/44/EC has been given the go-ahead by the various
ministers involved, but
to the national
parliaments.

it has not yet been possible to submit

it

However, this transposal is essential in order to avoid any discrepancies between the
legislations of the Member States. If such a situation were to continue, it would have the
effect of considerably hampering the development of biotechnology in Europe.

It appears important to stress the fact that patent protection in the European Union is
currently ensured by two systems, neither of which is based on a Community legal
instrument: the European Patent System and the national patent systems.

7

8

9

10

COM op. cit. p.15.
That Report was transmitted by the Commission on 14 January 2002, COM(2002)2 final.
Genetic engineering can be defined as a technique involving the introduction of changes to the
DNA molecule of a living organism without the intervention of natural means of reproduction.
Progress in transposing Directive 98/44/EC in the Member States of the European Community is
shown in a document attached to this Report (Annex 1).

6

It nevertheless remains desirable, particularly in the field of biotechnology, to be able to
obtain a Community patent of a unitary nature valid in all the Member States of the
European Community. It is with that in mind that the Commission has submitted a draft
Regulation on the Community patent11, which is currently being discussed in the
Council12. The European Parliament delivered its opinion on 10 April 200213.

In the light of the recent ruling of the Court of Justice confirming the compatibility of the
Directive with various legal principles and international obligations, the Commission will
make every effort to consider what action is appropriate to help ensure a full and speedy
transposal of the Directive into national law, where this has not already been achieved.

1.2.

Incorporation of the Directive by the European Patent Organisation

It should also be pointed out that the main provisions of Directive 98/44/EC have been
incorporated into the Implementing Regulations to the European Patent Convention
(hereinafter "the EPC") by a Decision of the Administrative Council of the European
Patent Organisation (hereinafter "the Organisation") of 16 June 199914. The new rules
23b et seq. and Rule 28(6) take over the essential provisions of the Directive, and in
particular its Articles 4, 5 and 6. Moreover, Rule 23b lays down that Directive 98/44/EC
is a supplementary means of interpreting these rules, and hence the relevant provisions of
the Convention. The Boards of Appeal, which are not bound by any instructions and
must comply only with the provisions of the Convention and its Implementing
Regulations, may profitably refer to the Articles of the Directive and the attached recitals
to back up their decisions. Certain decisions reached by the quasi-judicial bodies of the
Organisation refer explicitly to Directive 98/44/EC15.

This incorporation of Community law by the Organisation is important. The European
Patent Convention lays down a single procedure for examining applications for patents
(carried out by the European Patent Office (hereinafter "the EPO")), which makes it
possible to have a range of national patents governed by national and Community law.
Patents for biotechnological
inventions are thus granted in compliance with the
provisions of the Directive.

Moreover, the provisions of the Directive taken over into the Implementing Regulations
apply also to patents granted for Switzerland, Liechtenstein, Monaco, Cyprus, Turkey,
the Czech Republic, Slovakia, Bulgaria and Estonia16.

11

12

13

14

15

16

COM(2000)412 final, 1.8.2000.
In point 5 of the action plan adopted in the Communication on Life sciences and biotechnology,
the Commission enjoins the Council to adopt the Regulation on the Community patent.
COM, op.cit., p.25.
Not yet published in the OJ.
JO EPO 7/1999, p. 437.
Decision of an Opposition Division of the EPO of 20 June 2001, OJ EPO 6/2002, p.293; cf.
footnote 52.
The last four countries listed joined the European Patent Organisation on 1 July 2002. In addition,
following an agreement between the Organisation and Albania, Lithuania, Latvia, the Former
Yugoslav Republic of Macedonia, Romania and Slovakia, the European Patent Office grants
patents with effect in those countries.

7

1.3.

Annulment proceedings by the Netherlands against Directive 98/44/EC -
Decision of the Court of Justice of the European Communities of 9 October
2001

By application of 19 October 1998, the Kingdom of the Netherlands, with the support of
Italy and Norway (by virtue of the Agreement on the European Economic Area) brought
an action for annulment of Directive 98/44/EC.

The Council and the European Parliament were the defending parties, with the
Commission intervening in support of the Directive.

The application by the Netherlands put forward six pleas, relating respectively to the
incorrect legal basis for the Directive, breach of the principle of subsidiarity, breach of
the principle of legal certainty, breach of obligations in international law, breach of the
fundamental right to respect for human dignity and breach of procedural rules in the
adoption of the Commission's proposal.

In addition, the Kingdom of the Netherlands submitted an interim application to the
President of the Court of Justice of the European Community aimed at postponing the
implementation of Directive 98/44/EC, on the grounds of the urgent need of the Member
States not to be forced to implement Directive 98/44/EC after the expiry of the deadline
for transposal. According to the Netherlands, transposal would have had serious and
irreversible consequences which could not have been rectified in future. By an injunction
of 25 July 2000, the President of the Court rejected that application.

The pleadings took place before the Court of Justice on 13 February 2001. The
conclusions of Advocate-General Jacobs were delivered on 14 June 2001 and
recommended that the action for annulment be dismissed17.

The judgment of the Court of 9 October 200118 upheld the conclusions of the Advocate-
General and dismissed the action.

This judgment is of particular importance in that it allowed the Court to reiterate de jure
the essential principles of Directive 98/44/EC. In addition, the new light cast on the
precise provisions19 should facilitate and speed up the transposal of the Directive in
certain Member States.

The reasoning behind this judgment is dealt with later in this Report20.

17

18

19

20

http://www.curia.eu.int/jurisp/cgi-
bin/form.pl?lang=fr&Submit=Rechercher&docrequire=alldocs&numaff=C-
377%2F98&datefs=&datefe=&nomusuel=&domaine=&mots=&resmax=100
http://curia.eu.int/jurisp/cgi-
bin/form.pl?lang=en&Submit=Submit&docrequire=alldocs&numaff=C-
377%2F98&datefs=&datefe=&nomusuel=&domaine=&mots=&resmax=100
In particular, certain provisions examined in this Report (patentability of plants, of elements
isolated from the human body or otherwise produced, exceptions to patentability for reasons of
ordre public and morality).
This Report will deal only with the grounds relating to the essential provisions of the Directive,
and more specifically the arguments in support of Article 4 (patentability of plants and animals),
Article 5 (patentability of elements isolated from the human body), and Article 6 (exclusion from
patentability for reasons of ordre public and morality).

8

1.4.

Review of the key provisions of the Directive

The Commission's intention here is not necessarily to provide guidelines for interpreting
Directive 98/44/EC, because the Directive contains provisions which are sufficiently
clear to allow its implementation in the national law of the Member States.

The objective is rather to summarise the various elements emerging from the preparatory
work on the Directive, the conclusions of the Advocate-General and the judgment of the
Court. These should therefore be viewed in parallel with the relevant provisions of
Directive 98/44/EC.

It must first of all be stressed that the Court of Justice reiterated the scope of the
Directive: the Directive essentially restricts itself to laying down certain principles
applicable to the patentability of biological material and the extent of the protection
conferred by a patent for a biotechnological
invention. The conditions relating to
authorisation of the research (in particular research on human stem cells) or the
exploitation of the patented products are governed by the applicable and relevant
national, Community or international provisions21.

As an example, the Directive may not therefore regulate the free and informed consent of
the donor and recipient of biological material of human origin, which remains governed
by the substantive law applicable in compliance with the fundamental principle of human
integrity22.

This Report will focus on the following four essential topics:

• The compatibility of the Directive with the relevant international agreements.

• The patentability of inventions relating to plants and animals.

• The patentability of inventions relating to elements isolated from the human body.

• The exclusions from patentability set out in Article 6 of the Directive.

These major principles will be discussed at length in this Report.

2.

THE
INTERNATIONAL AGREEMENTS

COMPATIBILITY OF

THE DIRECTIVE WITH THE

RELEVANT

Many bodies at international level have looked into, or are currently looking into, the
question of the protection of biotechnological
inventions. The Council of TRIPS
(Agreement on Trade-Related Aspects of Intellectual Property Rights), when studying
the provisions of Article 27(3)(b) of the Agreement, has frequently had occasion to look
into this question. The discussions held in the FAO or under the CBD have also dealt
with this problem.

21

22

Point 79 of the judgment.
Points 78 to 80 of the judgment.

9

It appears incontestable that the Directive is fully compatible with the existing treaties in
the field of biotechnology.

2.1.

The compatibility of the Directive with regard to certain international
agreements

In connection with the action for annulment of Directive 98/44/EC, the Court examined
whether it was competent to assess the validity of the Directive with regard to certain
international agreements, such as the EPC, the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) of the WTO, and the Convention on Biological
Diversity (CBD).

To start with, it should be pointed out that the Directive does not set out to affect the
obligations incumbent on the Member States under international agreements. Article 1(2)
lays down, in particular, that the Directive is without prejudice to the provisions of the
TRIPS Agreement and those of the Convention on Biological Diversity.

The Court does not consider itself competent to assess the validity of the Directive with
regard to the European Patent Convention, in that the European Community is not a party
to it. Likewise, the Court declines its competence with regard to the compatibility of the
Directive with the TRIPS Agreement (to which the EC is a party for those aspects for
which it is competent), in view of the fact that that Agreement is based on a principle of
reciprocal and mutually advantageous arrangements23.

On the other hand, the Court declares itself competent with regard to the legality of the
Directive vis-à-vis the Convention on Biological Diversity24. However, it points out that
there is no provision in the CBD which requires that the conditions for the grant of a
patent for biotechnological inventions should include the consideration of the interests of
the country from which the genetic resource originates or the existence of measures for
transferring technology25. Moreover, the Court reiterates that, by virtue of Article 1(2) of
Directive 98/44/EC, the Member States are required to apply the Directive in accordance
with the obligations they have undertaken as regards biological diversity26. It is also
stipulated, in recital 55 of the Directive, that the Member States, when implementing it,
must give particular weight to Article 3 (ownership of genetic resources), Article 8(j)
(traditional know-how) and Article 16 (access to and transfer of technology) of the CBD.

2.2.

The Substantive Patent Law Treaty (negotiated in the framework of the
WIPO)

Of the work being done at
that being done in WIPO (World
Intellectual Property Organisation) on the SPLT (Substantive Patent Law Treaty) is
particularly likely to have an impact on Directive 98/44/EC.

international

level,

23

24

25

26

Point 53 of the judgment.
Point 53 of the judgment.
Point 66 of the judgment.
Point 67 of the judgment.

10

It should be reiterated first that the European Community as such is not a member of
WIPO27. Since, however, the Member States are all parties to that Organisation, they are
obliged, by virtue of Article 10 of the EC Treaty, not to compromise existing policies and
Community law. Moreover, with the advent of the future Community patent,
the
European Community is destined to become a party to that future treaty.

Work on the SPLT started after the adoption of the PLT (Patent Law Treaty) in June
200028, relating to the formal harmonisation of patent law. The governing bodies of
WIPO have decided to relaunch the process of harmonising substantive patent law to
include, in particular, inventions in the field of biotechnology29.

This new draft treaty is intended to establish, at international level, binding provisions
law. The treaty aims to dovetail with the TRIPS
applicable to substantive patent
Agreement, the PLT and the PCT (Patent Cooperation Treaty).

At the current stage in the negotiations, the provisions of the Directive which might be
affected by the negotiations are those relating to industrial application and those relating
to the deposit of a biological material with a recognised institution. The Commission
intends to keep a close eye on developments in these international negotiations.

3.

THE PATENTABILITY OF INVENTIONS RELATING TO PLANTS AND ANIMALS

The Directive distinguishes between plant and animals which are patentable and plant
and animal varieties which are not. The reason for this differentiation lies in the means of
achieving the product concerned: a plant or animal variety is generally obtained by
essentially biological processes (sexual
reproduction observable in nature), while
transgenic plants and animals are obtained through non-biological processes forming part
of genetic engineering.

By virtue of the leeway provided by Article 27(3)(b) of the TRIPS Agreement, the
Directive did not make use of the possibility afforded to the Members to exclude plants
and animals from protection through patents.

3.1.

The patentability of inventions relating to plants

The Directive reiterates that, while plants are patentable, plant varieties are excluded
from patentability and are protected by plant variety rights. This right complies with the
sui generis protection provided for by the TRIPS Agreement30.

27

28

29

30

The work on the SPLT is taking place in the Standing Committee on the Law of Patents. The
it has delegation status in other
European Community has observer status only. However,
committees, e.g. the Standing Committee on the Law of Trademarks, Industrial Designs and
Geographical Indications.
http://www.wipo.org/treaties/ip/plt/index.html
It should be borne in mind that a similar exercise had already been embarked upon in the 1980s
and had ended in failure at the Diplomatic Conference in The Hague in 1991.
The TRIPS Agreement offers its Members three possible ways of protecting plant varieties:
- protection by patents;
- protection by an effective sui generis system. In western countries, it is generally accepted that
the system that should serve as a basis for this type of protection is that offered by the UPOV
Convention, particularly as last amended in 1991. However, some Members of the WTO consider

11

Article 5(2) of Council Regulation (EC) 2100/94 of 27 July 1994 defines a plant variety
as a plant grouping within a single botanical taxon of the lowest known rank31.

3.1.1.

The relevant provisions of the Directive

The relevant provisions of the Directive are to be found in Article 4 and recitals 29 to 32.

In the action for annulment of Directive 98/44/EC, the applicants considered that the
provisions relating to the patentability of plants and animals were unclear and
ambiguous, and hence a source of legal uncertainty which justified an annulment of the
Directive.

The Court rejected those arguments. It referred to the substance of Article 4 of the
Directive, which lays down that a patent cannot be granted for a plant variety, but may be
for an invention if its technical feasibility is not confined to a particular plant variety32.

On the basis of recitals 29 to 32 of the Directive, therefore, it reiterated that plant
varieties are defined by their whole genome and are protected by plant variety rights.
However, plant groupings of a higher taxonomic level than the variety, defined by a
single gene and not by the whole genome, may be protected by patent if the relevant
invention incorporates only one gene and concerns a grouping wider than a single plant
variety.

The Court concluded that a genetic modification of a specific plant variety is not
patentable but a modification of wider scope, concerning, for example, a species, may be
protected by a patent33 34.

It should be noted that this distinction does not apply in the United States. The Supreme
Court, in a Decision of 10 December 2001, judged that a patent could be granted for an
invention relating to a plant variety if it met the conditions required (novelty, non-

31

32

33

34

that protection models organised within the framework of the Convention on Biological Diversity
can also serve as the basis for the sui generis protection referred to in the TRIPS Agreement;
- a combination of those two means. This is particularly the case with the situation in the United
States, where protection by patent or by plant variety right is possible for one and the same plant
variety.
The taxon represents a group of organisms forming a clearly defined unit at each of the different
hierarchical levels of classification.
Point 43 of the judgment.
Points 44 and 45 of the judgment.
The Enlarged Board of Appeal of the European Patent Organisation was seised of a dispute
involving this very question. Its Decision of 20 December 1999 is based mutatis mutandis on the
same considerations as contained in Directive 98/44/EC, viz.:
- A claim wherein specific plant varieties are not individually claimed is not excluded from
patentability under Article 53(b) EPC even though it may embrace plant varieties.
- If the subject of a patent relates, for example, to a process for obtaining a plant variety, the rights
conferred by that patent do not extend to the plant variety obtained directly by that process.
- The exception to patentability in Article 53(b), first half-sentence, EPC applies to plant varieties
irrespective of the way in which they were produced. Therefore, plant varieties containing genes
introduced into an ancestral plant by recombinant gene technology are excluded from patentability
OJ EPO 3/2000, p.111.

12

obvious subject matter, utility, sufficient description and deposit of biological material
accessible to the public)35.

3.1.2. Community action needed on cross-licences

Article 12 of the Directive establishes a system of cross-licences between plant variety
rights and patents where a breeder cannot obtain or exploit a plant variety right without
infringing a prior patent, and vice versa.

Applicants for licences must demonstrate that they have applied unsuccessfully to the
holder of the patent or of the plant variety right to obtain a contractual licence, and that
the plant variety or
technical progress of
the invention constitutes significant
considerable economic interest compared with the invention claimed in the patent or the
protected plant variety.

Paragraph 4 of that Article lays down that, where a licence for a plant variety can be
granted only by the Community Plant Variety Office, Article 29 of Regulation (EC) No
2100/94 shall apply.

Member States cannot be expected not to transpose into national law a provision which
would have to be amended by the Commission under the Regulation cited above.

Article 29 lays down that the Community Plant Variety Office shall grant such licences
only on grounds of public interest.

Moreover, pursuant to Article 29(7) of Regulation (EC) 2100/94, only the Community
Plant Variety Office is authorised to grant compulsory licences. However, under the
that Office cannot be responsible for granting compulsory
applicable national law,
licences for national patents.

The Commission has examined the impact of Article 12 of the Directive on Article 29 of
Regulation 2100/94. It has already taken the necessary steps to submit to the Council any
suitable proposal for overcoming this difficulty.

3.2.

The patentability of inventions relating to animals

This question was not broached in the judgment of the Court36. There is no legal
definition of an animal variety. This can be defined as a taxonomical grouping ranking
next below a sub-species (where present) or species, whose members differ from others
of the same species37 or sub-species in minor but permanent or heritable characters38.

35

36

37

JEM AG Supply, Inc./Pioneer Hi-Bred International, Inc., 10 December 2001, BNA’s 14-12-01
(Vol. 63, No 1552), p.144. This Decision is based on the very broad field of protection established
by the Diamond/Chakrabarty judgment, 447 US 303 (1980).
It is important to note that one judge did not take part in the vote and that two others expressed a
dissenting opinion.
However, Advocate-General Jacobs touched on it in his conclusions.
A "species" is taken to mean a grouping of individuals with common morphological, anatomical,
ecological, ethological, biochemical and physiological characteristics … the individuals in which
resemble each other more than they resemble other equivalent groupings. To belong the same
species, the individuals must together have fertile common descendants in natural conditions.

13

The relevant provisions of the Directive are essentially Articles 4 and 6(2)(d). It should
also be noted that there is no protection of animal varieties in Community law.

3.2.1.

Application of Article 4(2) of the Directive

Under Article 4(1)(a), animal varieties are not patentable. However, inventions relating
to animals are patentable if the technical feasibility of the invention is not confined to a
particular plant or animal variety39. If an animal can be obtained only through genetic
engineering, to the exclusion of any natural breeding, the invention relating to such an
animal may be protected by patent40.

This question has been debated many times in the context of the patent for the Harvard
oncomouse. This patent relates to a mammal modified by genetic transfer. Thanks to this
manipulation, the animal may, under certain conditions, develop tumours which can be
used for cancer research41.

After more than 16 years of proceedings, the Opposition Division of the EPO responsible
for this case decided on 7 November 2001 to limit this patent to transgenic rodents with
the cancerous gene, and hence not to authorise its extension to all mammals with the
introduced gene. In the United States, this patent was granted in its initial form, i.e. it
covers any non-human transgenic mammal42.

It should also be noted that, in a judgment of 3 August 2000, the Canadian Federal Court
of Appeal accepted that this patent had the same scope as that granted by the American
Patent Office (USPTO)43.

3.2.2.

Patent EP 0 578 653 B [Seabright Patent]

Since the adoption of Directive 98/44/EC in July 1998, amongst the many patents
granted in the field of biotechnology and genetic engineering, some of the patents
granted by the European Patent Office have raised public concern. One particular case is
a patent granted to the Seabright company.

European Patent EP 0 578 653, granted on 18 July 2001, relates to the creation of a
transgenic fish characterised by the incorporation of a chimeric gene44 of non-human
origin. This patent also covers the tests for determining transgenic fish.

38

39

40

41

42

43

44

Definition taken from the Shorter Oxford English Dictionary, cf. the conclusions of Advocate-
General Jacobs, point 131.
It should be noted that, under Article 4(3) of the Directive, it is also possible to obtain a patent for
technical processes which make it possible to obtain a new animal, or for the animal obtained by
such processes.
The reasoning put forward for plants applies mutatis mutandis to animals.
For further information, consult the EPO website:
http://www.european-patent-office.org/news/pressrel/2001_11_05_e.htmm
US Patent 4.736.866.
President and Fellows of Harvard College/Canada, FCJ No 1213. For more information on this
case, see Mark Perry and Priti Krishna 'Making Sense of Mouse Tales: Canada Lifeform Patents
Topsy-Turvy', EIPR [2001] 4, p. 196
Chimera: organism having developed from an embryo formed of cells originating in two different
individuals, and hence made up of cells possessing two different genotypes.

14

EMP Jaime Valdivielso de Cué submitted a written question to the Commission on the
compatibility of granting such a patent with the exclusion from patentability of animal
varieties. On behalf of the Commission, Mr Bolkestein replied to this question on 21
December 2001. He pointed out that Rule 23b of the Implementing Regulations to the
European Patent Convention, which takes over the substance of Article 4 of Directive
98/44/EC, lays down that a patent for an invention relating to an animal may be obtained
if the technical contribution involved in the claimed invention is not confined to a
particular animal variety. This would appear to be the case here.

It should be noted that the chimeric gene behind the creation of this transgenic fish is not
intended to produce a hybrid being formed from germ or totipotent human and animal
cells. If that were the case, this invention would involve the cloning of a chimeric being
(of partly human origin) and would hence be excluded from patentabiity.

3.2.3.

Exclusion under Article 6(2)(d) of the Directive

Article 6(2)(d) lays down that processes for modifying the genetic identity of animals
which are likely to cause them suffering, without any substantial medical benefit to man
or animal, and also animals resulting from such processes, are excluded from
patentability.

This exception is in line with the general exclusion concept laid down for invention
whose commercial exploitation would be contrary to ordre public or morality.

Recital 45 states that the substantial medical benefit for man and animal referred to in
Article 6(2)(d) must be present in the field of research, prevention, diagnosis and therapy.

The European Group on Ethics in Science and New Technologies delivered an Opinion
on 21 May 199645 on the ethical aspects of the genetic modification of animals.
According to that Opinion, such modifications are admissible and can be parented, but in
view of the consequences which the techniques used might have for human and animal
health, as well as for the environment and society, extreme care is called for. This care
must apply to both the obtaining of genetically modified animals and to their use and
welfare.

3.3.

Exclusion
microorganisms

of

essentially

biological

processes

-

patentability

of

To be exhaustive on this question, it should be pointed out that essentially biological
processes for obtaining animals and plants are not patentable. A contrario, an essentially
non-biological process will be patentable. It is for the courts to assess this difference.

Article 27(1)of the TRIPS Agreement lays down a general principle of patentability in all
fields of technology. However, under Article 27(3)(b), Members may exclude plants and
animals from patentability even when the inventions relating to them meet the classic
conditions for patentability. However, the same Article states that its Members must
provide for patent protection of non-biological processes.

45

Opinion No 7 available at the following website:
http://europa.eu.int/comm/european_group_ethics

15

The same applies to microbiological processes. Moreover, again according to the TRIPS
Agreement, microorganisms must be patentable if the patentability conditions are met.

That is why Article 4(3) lays down that inventions which concern a microbiological or
other technical process or a product obtained by means of such a process are not per se
excluded from patentability.

4.

THE PATENTABILITY OF INVENTIONS RELATING TO ELEMENTS ISOLATED FROM
THE HUMAN BODY:

the various stages of its formation and development,

The human body, at
is not
patentable, as it involves a simple discovery. The same applies to the simple decoding of
one of its elements. This exclusion also covers the discovery of a sequence or partial
sequence of a gene.

However, an element isolated from the human body, including a sequence or partial
sequence of a gene, by techniques of identification, purification, characterisation and
multiplication, may constitute a patentable invention, even if the structure of that element
is identical to that of a natural element. The same reasoning can obviously be applied to
any element produced otherwise synthetically by a technical process.

This type of invention, which is eligible for patent protection, must nevertheless fulfil the
classic conditions for patentability, i.e. novelty, inventive step and industrial application.

The Directive allows a degree of flexibility as to the extent of the protection to be
conferred on inventions relating to elements isolated from the human body.

4.1.

Distinction to be made between simple discoveries and patentable
inventions - conditions for patentability

4.1.1.

The relevant provisions of Directive 98/44/EC:

In the context of its scope, the Directive considers the conditions to be met for patent
protection of inventions relating to biological material. For instance,
the Directive
reiterates the basic principles of patent law, i.e. that inventions which are new, which
involve an inventive step and which are susceptible of industrial application are
patentable.

In the case of the human body, elements isolated from it or otherwise produced by a
technical process, the Directive provides guidelines in addition to the classic conditions
for patentability.

Articles 5(1) and 5(2), in conjunction with recitals 16, 20 and 21, strive to make the
distinction between non-patentable discoveries and patentable inventions. In the first
place, they lay down that the human body, at the various stages of its formation and
development, including germ cells, and the simple discovery of one of its elements,
including the sequence or partial sequence of a gene, cannot constitute patentable
inventions.

It also emerges from the explanatory memorandum to the common position adopted by
the Council on 26 February with a view to the adoption of Directive 98/44/EC that the

16

terms "the human body, at the various stages of its formation and development" cover the
embryo46.

It follows that neither the human genome in its natural state nor the crude fundamental
data relating to the human genome constitute patentable inventions. The Directive is thus
in line with Article 4 of the UNESCO Declaration on the human genome, in that it does
not provide for any financial gain relating to the human genome in its natural state47. The
Directive in line with the Joint Declaration on the human genome made in 2000 by
President Clinton and Prime Minister Blair48.

Nevertheless, Article 5(2) of the Directive lays down that an element isolated from the
human body or otherwise produced by means of a technical process, including the
sequence or partial sequence of a gene, may constitute a patentable invention, even if the
structure of that element is identical to that of a natural element.

It should be noted from the outset that, contrary to what is sometimes affirmed, the
Directive is not intended to jeopardise respect for the integrity of the human body. A
valid patent cannot be obtained for an invention aimed at isolating from its natural state
an organ of the human body, for instance a kidney, in order to sell it. Such an invention
would undoubtedly run counter to non-ownership of the human body, an essential
principle of the European Community, and would have to be excluded from patentability
on the basis of Article 6(2) of the Directive49.

Some people nevertheless consider that this second paragraph amounts to a denial of the
general principle of non-patentability set out in the first paragraph and thus makes a
nonsense of the non-patentability of the human body. This is not so. As set out in recital
21, the reasoning is that, to qualify for patentability, an element from the human body,
including a sequence or partial sequence of a gene, must, for instance, be the result of
technical processes which have identified, purified, characterised and multiplied it
outside of the human body. Such techniques cannot be found in nature. Taken out of their
natural context, elements isolated from the human body cannot be exploited on an
industrial basis. They would show only natural properties which man alone, through
genetic engineering, is capable of exploiting and inserting into a technical process. The
well-known distinction in patent law between a discovery and an invention thus applies
fully in the field of biotechnology50.

In the context of Directive 98/44/EC, Article 5(2) confines itself to laying down that an
isolated from the human body may constitute a patentable invention. That
element

46

47

48

49

50

OJ C 110, 8 April 1998, p.28, point 20.
http://www.unesco.org/ibc/en/genome/projet/index.htm.
Joint Declaration made by videoconference from the White House. The relevant passages of the
Declaration are as follows:
"As with the greatest scientific achievements, the ethical and the moral questions raised by the
astonishing breakthrough are profound. We, all of us, share a duty to ensure that the common
property of the human genome is used freely for the common good of the whole human race, to
ensure that the powerful information now at our disposal is used to transform medicine, not
abused to make man his own creator or invade individual privacy."
See the passages devoted to this question in Section 5 of this Report.
In the United States, the Supreme Court affirmed in its Diamond/Chakrabarty judgment (op.cit.)
that the scope of patentability included absolutely everything produced by mankind. The exact
implications of this judgment appear open to interpretation.

17

invention would still have to meet the standard criteria for patentability, with particular
reference to its inventive nature and its industrial applicability. It should be noted that
American law also requires compliance with similar criteria (novelty, non-obviousness,
utility51).

It is sometimes countered that the process of isolating a particular gene by cloning has
become so routine that it does not involve any inventive step. If that is the case, that
particular gene might nevertheless represent an invention, although it would not be
patentable as it did not meet the standard criterion of an inventive step. The Directive
does not modify the well-established criterion allowing determination of whether an
invention fulfils the requirement of an inventive step.

is nowadays possible to deduce the function of a gene by making computer
It
comparisons with other genes whose functions are already known. In such cases, the
patentability of the gene can be refused on the grounds of the absence of an inventive
step.

Whereas the Directive did not need to provide additional guidelines on the question of
the inventive step, this did not appear to be the case with industrial applicability. Here, it
was judged necessary to provide guidelines to help to determine whether a gene sequence
meets the requirement of industrial applicability. Recital 23 lays down that a mere DNA
sequence without indication of a function does not contain any technical information and
is therefore not a patentable invention.

Recital 24 adds that, in cases where a sequence or partial sequence of a gene is used to
produce a protein or part of a protein, it is necessary, in order to meet the requirement of
industrial application, to specify which protein or part of a protein is produced or what
function it performs: the level of description required as to the specific utility may vary
from case to case, depend on the knowledge available, and vary as the use of genes for
therapeutic and diagnostic purposes spreads.

In a very recent decision, an Opposition Division of the EPO laid down what was to be
understood by industrial application in the context of a gene sequence. The potential
utilisation of a sequence disclosed in an application must not be speculative, i.e. it must
be specific, substantial and credible52.

Finally, meeting the criterion of industrial applicability is only one of the obstacles on the
road to obtaining a patent. The fact is that the general rules on assessing the patentability
of an invention relating to a gene or partial gene sequence continue to apply. Recital 8 of
the Directive reiterates this unambiguously. It is necessary, for instance, to meet in
particular the requirement to describe the invention sufficiently clearly and fully for it to
be possible for it to be reproduced by a person skilled in the art. The examiner assessing

51

52

The concept of non-obviousness overlaps more or less with that of inventive step. On the other
hand, the concept of utility may sometimes diverge from that of industrial application.
Decision of the Opposition Division of 20 June 2001, ICOS/SmithKline Beecham and Duphar
International Research, OJ EPO 6/02, p.293. An appeal has been lodged against this Decision.
It should be pointed out that the guidelines published by the USPTO adopt more or less the same
approach. For instance, an application relating to an invention involving an isolated and purified
gene for which a specific, substantial and credible utility has been claimed, may lead to the
granting of a patent.
Federal Register/Vol. 66, N°4/ Friday January 5, 2001/Notices, p. 1093

18

the patent application must be in a position theoretically to reproduce the invention on
the basis of the elements provided to him in the application. According to Article 13 of
the Directive, where an invention involves the use of or concerns biological material
which is not available to the public and which cannot be described in a patent application
in such a manner as to enable the invention to be reproduced by a person skilled in the
art, the description shall be considered adequate for the purposes of patent law only if the
biological material has been deposited no later than the date on which the patent
application was filed with a recognised depository institution53. This Article also lays
down that the application as filed must contain such relevant information as is available
to the applicant on the characteristics of the biological material to which the invention
relates or which is used in the context of the invention.

In its Opinion No 8 of 25 September 199654, on "The ethical aspects of patenting
inventions involving elements of human origin",
the European Group on Ethics
considered that:

– The traditional distinction between discovery (not patentable) and invention
(patentable) involves, in the field of biotechnology, a particular ethical dimension.

– The simple knowledge of the complete or partial structure of a gene cannot be

patented.

– Concerning the inventions issued from the knowledge of a human gene or a partial
human gene sequence, the granting of a patent is acceptable only if, on the one hand,
the identification of the function attached to a human gene, or a partial human gene
sequence allows new possibilities (for instance the production of new drugs), and, on
the other hand, if the intended use of the patent is sufficiently specific and identified.

4.1.2.

The relevant passages of the judgment of the Court:

The Court was called upon to rule on the grounds adduced for an annulment of the
Directive in the framework of its adoption, and in particular on the failure to comply with
the fundamental rights relating to the respect of human dignity and human integrity with
regard to Article 5 of the Directive, and to call for the annulment of that Directive.

As regards human dignity, the Court points out that that principle is clearly taken into
account in the Directive in so far as Article 5(1) of the Directive provides that the human
body at
the various stages of its formation and development cannot constitute a
patentable invention55.

53

54

55

The same Article 13 lays down that: "At least the international depositary authorities which
acquired this status by virtue of Article 7 of the Budapest Treaty of 28 April 1977 on the
international recognition of the deposit of micro-organisms for the purposes of patent procedure,
hereinafter referred to as the 'Budapest Treaty`, shall be recognised."
Opinion available at the following address:
http://www.europa.eu.int/comm/european_group_ethics
Point 71 of the judgment.

19

The Court affirms that respect for individual integrity is also respected by the Directive.
It points out that an element of the human body may not, in its natural environment, be
appropriated. The mere fact of discovery does not confer any right56.

On the other hand, only inventions which combine a natural element with a technical
process enabling it to be isolated or produced for an industrial application can be the
subject of an application for a patent57.

The Court goes on to affirm that the same applies to sequences or partial sequences of
human genes. It states that the result of such work can give rise to the grant of a patent
only if the application is accompanied by both a description of the original method of
sequencing which led to the invention and an explanation of the industrial application to
which the work is to lead. If these two conditions are not met, the patent could not be
granted, as it would involve a mere discovery58.

4.1.3.

Patents EP 699 754 and EP 705 903 [Myriad Genetics patents on the detection
of breast cancer]

These two patents granted to the company Myriad Genetics are based on an invention
which allows screening for cancer of the breast and ovaries in women (these tests are
based on the two genes BRCA1 and BRCA2). The patents granted to Myriad Genetics
relate to methods and material used to isolate and screen for the mutation of certain
alleles of the BRCA1 and BRCA2 genes which may cause breast or ovarian cancer. The
tests planned by the company appear to be more comprehensive than those previously
available. Moreover, unlike the tests previously available, these tests do not require
samples taken from relatives who have themselves contracted breast or ovarian cancer.

Numerous questions on these patents have been put to the Commission, e.g. by the MEPs
Raffaele Costa59, Dorette Corbey and Ria Oomen-Ruijten60, Astrid Thors61, Nelly Maes62
and Bart Staes63. These questions focused principally on the danger which granting the
patents might pose for the freedom of research in the European Community, as well as on
the high costs to European patients of access to the technology contained in the patents.

The Commission pointed out that Directive 98/44/EC is not intended to call into question
the freedom of research in Europe64. Under that principle, acts undertaken done privately
and for non-commercial purposes, as well as acts done for experimental purposes, do not
constitute acts of infringement.

What is more, the Commission reiterated that, if research results are commercialised and
these results use a technique which has already been patented, a sub-licence should be

56

57

58

59

60

61

62

63

64

Points 72 and 73 of the judgment.
Point 72 of the judgment.
Point 74 of the judgment.
Written Question E-01/2676
Written Question E-3472/01
Oral Question H-0939/01
Written Question E-3399/01
Oral Question H-0061/02
See below, Section 4.2. Directive 98/44/EC on the legal protection of biotechnological inventions
did not derogate from that principle. Likewise, the proposal for a Regulation on the Community
patent reiterates unambiguously the concept of the freedom of research.

20

obtained from the holder of the patent. If the latter refuses to grant this licence on
reasonable grounds, a compulsory licence could be granted against equitable
remuneration in accordance with the applicable national provisions in the Member States'
legislation65.

Finally, the Commission reiterated that all national legislation in the Member States of
the European Community contains the principle of exempting prior use, which allows
anyone who had already used the invention in the European Community, or had made
effective and serious preparations for such use, before the patent was filed66, to continue
such use or to use the invention as envisaged in the preparations. Here again, the proposal
for a Regulation on the Community patent restates this principle unambiguously.

The European Parliament has adopted a Resolution67 in which it calls upon the European
Patent Office to give public account of the exercise of its duties of granting patents. It
also asks for the European Patent Convention to be amended to allow the Office to
revoke patents which it has granted at its own initiative.

The European Parliament calls upon the Council, the Commission and the Member
States to take adequate measures to ensure that the human genetic code remains free of
access and that the medical applications of certain human genes are not hampered by
patents.

In a Declaration dates 17 October 2001, the EPO reiterates that it applies rules identical
to those contained in Directive 98/44/EC when dealing with applications relating to
biotechnological inventions. Furthermore, the Office is accountable for such acts to the
Administrative Council of the European Patent Organisation. Finally, the Office draws
attention to the existence of opposition procedures which can be invoked by any
individual without his needing to prove a legitimate interest68.

The problem raised by these patents appears to derive mainly from the field of patent
law, in that it relates more to the extent of the protection to be conferred on these
inventions.

4.2.

The scope to be conferred on patents relating to elements isolated from the
human body

Recital 8 of Directive 98/44/EC reiterates unambiguously that the general rules for
assessing the patentability of an invention involving a gene or a partial gene sequence
remain applicable.

Recital 28 reiterates that the Directive does not in any way affect the basis of current
patent law, according to which a patent may be granted for any new application of a
product already patented. If any new application of a sequence or partial sequence is
patentable, the question arises as to what its status will be in relation to an initial patent

65

66

67

68

In so far as the conditions laid down in the national legislation for the granting of compulsory
licences (which are based on Article 31 of the TRIPS Agreement) are fulfilled.
Or, where priority is claimed, before the date of priority of the application on the basis of which
the patent is granted.
B5-0633, 0641, 0651 and 0663/2001.
AC/145/01.

21

granted to that same sequence or partial sequence. Article 83 of the European Patent
Convention lays down that the European patent application must disclose the invention in
a manner sufficiently clear and complete for it to be carried out by a person skilled in the
art. Further more, Article 84 adds that the claims must be clear and concise and be
supported by the description69.

On the basis of these Articles, the patent examiner will have the possibility of rejecting
applications whose claims are too broad or,
in discussions with the applicant, of
obtaining a limitation of the claims to what is actually described in the patent.

The national offices can therefore grant patents relating only to the gene sequence which
is essential for the function described, and excluding those that are not indispensable for
that function.

Moreover, recital 13 of the Directive states that details must be provided of the extent of
the protection conferred by a patent in the field of biotechnology.

Article 9 of the Directive lays down that the protection conferred by a patent on a product
containing or consisting of genetic information shall extend to all material, save as
provided in Article 5(1), in which the product in incorporated and in which the genetic
information is contained and performs its function.

The explicit exclusion in Article 5(1) of the Directive clearly avoids any extension of the
patent protection for an element isolated from the human body to the human body itself.

Moreover, recital 25 lays down that, for the purposes of interpreting rights conferred by a
patent, when sequences overlap only in parts which are not essential to the invention,
each sequence will be considered as an independent sequence in patent law terms.

A reading of Article 9 and the corresponding recital 25 would indicate that the Directive
might provide some degree of flexibility as regards the scope of an invention involving a
gene sequence. In fact, the use of the provisions contained in the Articles, in conjunction
with certain recitals, gives a better picture of the scope to be conferred on patents for
genes or partial gene sequences.

The judgment of the Court, for its part, indicates that the protection to be conferred on
such inventions extends to biological data existing in their natural state in human beings
only where necessary for the achievement and exploitation of a particular industrial
application70.

In view of the rapid advances in the field of biotechnology,
the extent of patent
protection for genes or gene sequences could be a matter for review in the context of the
reports provided for in Article 16(c) of the Directive, with a view to assessing whether
various fields of patent protection involving elements isolated or otherwise produced
from the human body could be accepted. If so, thought should be given to the measures
required.

69

70

It should be pointed out that national law on the granting of patents contains numerous provisions
identical to those contained in the European Patent Convention.
Point 75 of the judgment.

22

In particular, consideration should be given to the scope to be conferred on patents
involving DNA sequences and proteins deriving from those sequences, as well as those
based on expressed sequence tags71 (ESTs) and on single nucleotide polymorphisms72
(SNPs).

5.

EXCLUSION FROM PATENTABILITY OF INVENTIONS WHOSE COMMERCIAL
EXPLOITATION WOULD BE CONTRARY TO ORDRE PUBLIC AND MORALITY:

The European legislator wished to exclude the patentability of inventions whose
commercial exploitation would be contrary to ordre public and morality. To this end,
processes for cloning human beings were recognised as being contrary to the principles
of respect for human dignity. The legislator also wished to explicitly exclude processes
for modifying the genetic identity of the human being and the use of human embryos for
industrial or commercial purposes.

5.1.

The general principle of exclusion under Article 6(1)

Article 6(1) of the Directive establishes a general principle of exclusion for inventions
whose commercial exploitation would be contrary to ordre public or morality.

This Article is modelled on Article 27(2) of the TRIPS Agreement, which offers
Members the possibility of including such an exclusion in their legislation. Under the
TRIPS Agreement, this exclusion relates in particular to the protection of human life and
health73.

It was argued that the Directive was insufficiently precise and that there might therefore
leading to legal
be wide differences of
uncertainty. The judgment of the Court rejected that argument. It reiterated in this context
that the mere prohibition by law or regulation does not make the commercial exploitation
of an invention contrary to ordre public or morality74.

interpretation between Member States,

It appeared necessary to leave the Member States with some margin of manoeuvre in
assessing whether, on their territory, a biotechnological invention could be considered
valid in the ethical, sociological or philosophical context of each country.

The Court therefore considered that the national legislative, administrative and court
authorities are best placed to understand the particular difficulties to which the use of
certain patents may give rise in the social and cultural context of each Member State75.

Moreover, the Directive included four explicit exclusions from patentability, which was
not the case in the body of law applicable to patents. This is thus in fact a clear source of
legal certainty76.

71

72

73

74

75

ESTs are short fragments of DNA.
SNPs are genome sites at which there is a variation in the population of a particular base within a
DNA sequence.
Under the TRIPS Agreement, other possible cases of exclusion are the protection of the life and
health of animals, the preservation of plants and the need to avoid serious prejudice to the
environment.
Point 39 of the judgment.
Point 38 of the judgment.

23

Similarly, the Court considers that the difference in wording between the exclusion
provided for under Article 53 of the EPC and that provided for in Article 6 of the
Directive is not such as to give rise to differences in assessing whether one and the same
invention is contrary to ordre public or morality77.

5.2.

The specific list of exclusions in Article 6(2):

Article 6(2) of
the Directive lays down an illustrative list of exclusions from
patentability. Moreover, recital 38 states that this list is not exhaustive and that any
process whose application offends against human dignity must also be excluded from
patentability78.

The aforementioned judgment of the Court thus reiterates that respect for human dignity,
in particular as regards human embryos, is fully assured. Article 6(2) lays down that
processes for cloning human beings, processes for modifying the germ line genetic
identity of human beings and uses of human embryos for industrial or commercial
purposes are excluded from patentability.

5.2.1.

Processes for cloning human beings

5.2.1.1. The text of the Directive

Processes for cloning human beings are defined in recital 41 as any process, including
techniques of embryo splitting, designed to create a human being with the same nuclear
genetic information as another human being. The Common Position adopted by the
Council with a view to the adoption of the Directive set out to exclude any form of
cloning of human beings. In agreement with the Parliament, therefore, the Council
preferred to replace the words "procedures for human reproductive cloning" with the
words "procedure for cloning human beings" because it considered that the adjective
"reproductive" could be too restrictive.
it stated in the Explanatory
Memorandum that the words "human beings" referred to the human being from the
embryonic stage79.

In addition,

5.2.1.2. Patent EP 0 695 351 [so-called "Edinburgh Patent"]

A European patent was granted by the European Patent Office on 8 December 1999 for
an invention entitled "isolation, selection and propagation of animal transgenic stem
cells".

In scientific English, the term "animal" covers not just animals but also human beings,
which might indicate that that the patent could cover the cloning of human beings.
Oppositions were filed by various parties within the period allowed (nine months from
the date of publication of the grant of the patent in the Official Bulletin).

By letter of 29 March 2000, the Commission enjoined the President of the European
Patent Office to take all the necessary steps to amend the patent granted to ensure that

76

77

78

79

Points 39 and 40 of the judgment.
Point 62 of the judgment.
Points 76 and 77 of the judgment.
OJ C 110, 8.4.1998, p.30, point 35.

24

was in compliance with the law in force in Europe. On 12 April 2000, the President of
the Office pointed out that the Office was not in a position to amend ex officio the patent
granted, but that an Opposition Division had already been entrusted with the case in order
to assess the oppositions filed.

At the same time, the European Parliament expressed its unambiguous opposition to the
grant of this patent in a Resolution adopted on 30 March 2000.

The Opposition Division of the European Patent Organisation handed down an initial
preliminary judgment on 19 April 2000. Its opinion was based on the amendment of the
set of claims by the proprietor of the patent, the University of Edinburgh, which added to
claims 47 and 48 the adjective "non-human". The new set of claims now appeared to be
in compliance with both the European Patent Convention and its Implementing
Regulations and Directive 98/44/EC on the legal protection of biotechnological
inventions.

The criticisms of this point expressed at the time of the grant of the patent were largely
taken into account by the Opposition Division of the EPO. The opposition procedure is
continuing on the basis of other grounds for annulment (in particular the concept of
adequate description).

5.2.2.

Patentability of human stem cells and cell lines obtained from them

It emerges clearly from the discussions when Directive 98/44/EC was being negotiated
that the European legislator wished to avoid an instrumentalisation of humans and the
creation of viable genetically modified human beings.

Furthermore, recent developments in the field of biotechnology and human stem cells
show great promise for cures, particularly in the treatment of degenerative diseases, and
European companies must be encouraged to work in these promising fields. Granting
patents could, in particular, play this role.

The prospect of being able to devise cells created by the technique known as
parthenogenesis80 appears to open up new and as yet unknown paths which may well cut
short the controversy about "therapeutic cloning".

The status of the cell lines obtained from multipotent cells which were or were not
themselves created by "therapeutic cloning"81 appears controversial. However, these cell
lines are therapeutically promising, and European companies should be encouraged to
develop them. As things stand, it would appear that Article 5(2) of the Directive on the
patentability of elements isolated from the human body could be applied.

Discussions should therefore continue on this question and on measures which might be
taken to encourage this type of research.

80

81

Parthenogenesis is defined as the development of an ovule without there having been any
fertilisation by a spermatozoid. Parthenogenesis is a uniparental sexual reproduction.
This involves transferring the nucleus of a somatic cell to the interior of asexual cell. This
technique is known by its English abbreviation: SCNT (Somatic Cell Nuclear Transfer). It should
be noted that this technique may be used in the context of both reproductive cloning and
therapeutic cloning. Only the objective of the two types of cloning differs.

25

At the same time, the European Group on Ethics was asked by the President of the
Commission to look into the ethical aspects of the patentability of inventions involving
human stem cells. The Group issued its Opinion No 16 on 7 May 200282.

In this Opinion,
the Group recognises the importance of patents as a means of
encouraging innovation by granting monetary compensation to the inventor in return for
the transparency and publication of his results.

The Group insists on the importance of ensuring an equitable balance between the
interests of the inventor and those of society, and hence of defining the conditions and
limits for the patentability of stem cells. The Group underlines the need to avoid
excessively broad patents on cell lines of stem cells. The protection conferred by a patent
should relate to precisely described industrial applications, and not to a wide range of
potential applications which cannot be described.

Human stem cells may be cells of adult, foetal or embryonic origin. The ethical issues
vary according to the source of the cells, which is why the Group is of the view that any
application for a patent involving human stem cells should specify their origin.

5.2.3.

Processes for modifying the germ line genetic identity of human beings

the physical

This prohibition unambiguously prevents the patentability of processes for gene therapy
on human germ cells83,
integrity of
in particular in order to respect
descendants. On the other hand, this prohibition cannot by itself prevent techniques for
gene therapy on somatic cells84, such techniques being very valuable for the treatment of
genetic diseases. In his conclusions, Advocate-General Jacobs queried the status of
recital 38, and particularly whether the exclusion of processes to produce chimeras from
germ cells or totipotent cells of humans and animals, as set out in that recital, could be
covered by the exclusion provided for in Article 6(2)(b)85. He pointed out that a chimera
is an organism or recombinant DNA molecule created by joining DNA fragments from
two or more different organisms. According to the Advocate-General, the production of
chimeras from germ cells or from totipotent cells of humans and animals would
inevitably modify the germ line genetic identity of human beings. In conclusion, he
considered that, at all events, if the exclusion provided for in recital 38 could not be
covered by this explicit exclusion, it could be covered by the general conclusion provided
for in Article 6(1). The Commission cannot but share this view.

5.2.4.

The use of human embryos for industrial or commercial purposes

In the Common Position adopted by the Council, the latter stated that the exclusion from
patentability of the use of human embryos applied only when such use was for industrial
or commercial purposes86. It can be seen from recital 42 that it was the wish of the
Council, as well as of Parliament, that inventions for therapeutic or diagnostic purposes

82

83

84

85

86

Opinion available at the following address:
http://www.europa.eu.int/comm/european_group_ethics
Male and female reproductive cells (sperm and eggs).
Already differentiated non-germ cells from the human body.
Points 110 to 112 of the conclusions.
OJ C110, 8.4.1998, p.30, point 37.

26

which are applied to the human embryo and are useful to it should not be affected by this
exclusion.

6.

CONCLUSION

The information given in this Report allows one to conclude that the European legislator
wished to lay down provisions which took account of the diverging interests of society in
this field of technology. It should be noted that some of them leave the Member States
with some room for manoeuvre in transposal.

The Directive appears to comply with the international agreements in force relating to
biotechnological inventions. The Commission will follow with the greatest interest the
treaties currently being negotiated which might have a bearing on this field (SPLT) and
those to come.

As regards the actual provisions of the Directive, the European legislator has succeeded
in creating a functional system which respects the major ethical principles recognised
within the European Community. In this context, the European Group on Ethics is an
important element in the ethical debate on these questions at Community level.

A clear distinction is drawn between animals and plants, on the one hand, which are
patentable, and plant and animal varieties on the other, which are not. Similarly, while
essentially biological processes cannot be covered by a patent, that is not the case with
processes devised by genetic engineering which make it possible to obtain transgenic
animals and plants.

In the highly sensitive field of the patentability of elements isolated from the human
body, the Directive reiterates the distinction to be made between what is patentable and
what is not. The principles of the dignity, integrity and non-ownership of the human body
must be adhered to scrupulously, and the Directive reiterates this unambiguously. On the
other hand, elements isolated from the human body or otherwise obtained by genetic
engineering must be eligible for patent protection if the conditions for patentability are
met.

is to be understood by this concept

inventions whose
The Directive lays down a general principle of exclusion for
commercial exploitation would be contrary to ordre public or morality. The illustrative
list of what
indicates unambiguously certain
processes judged ethically unacceptable (cloning, modification of the germ line genetic
identity of human beings, use of human embryos for industrial or commercial purposes).
These exclusions allow society to protect itself against inventions which might have
negative repercussions.

Certain provisions of the Directive appear to give the Member States some leeway in its
transposal into national law. In the light of the developments set out in this Report, it
appears that the scope to be conferred on sequences or partial sequences of genes remains
a topical subject which may give rise to differing interpretations.

Similarly, the recent and irresistible advances in the culture of stem cells of human origin
has raised some questions as to the possibilities for obtaining patents on the inventions
developed around them.

27

It is undoubtedly for the Commission to monitor and assess the scientific and legal
developments visible in this field of technology and to report on them to the interested
parties within the European Community. In this respect, the Commission will stimulate
an exchange between scientists, lawyers and patent administrators to analyse and discuss
the interplay between scientific advances and legal developments, in particular by setting
up a group of experts.

These assessments comply fully with the line set out by the Commission in its
Communication of 23 January 2002 entitled "Life sciences and biotechnology", which
stresses that the interpretation of key concepts in the field of patents must not be left
exclusively to courts and national patent offices87.

In view of the above, the Commission will therefore have to investigate the following:

• The scope to be conferred to patents on sequences or partial sequences of genes

isolated from the human body.

• The patentability of human stem cells and of cell lines obtained from them.

The results of these deliberations will be communicated to the public in the next reports
provided for under Article 16(c) of the Directive.

87

COM, op. cit., p.17.

28

ANNEX 1:

IMPLEMENTATION OF DIRECTIVE 98/44/EC ON THE LEGAL PROTECTION

OF BIOTECHNOLOGICAL INVENTIONS

COUNTRY

STATE OF PLAY OF THE IMPLEMENTATION
16/07/2002

IMPLEMENTATION DATE

AT

AUSTRIA

Bill of law submitted to the Parliament

BE

BELGIUM

1st Bill of law submitted to inter-ministerial
discussion during autumn 2000

DE

GERMANY

18-10-2000 : Bill of
Government and submitted to the Parliament

law adopted by the

Debates ongoing at the Parliament

DK

DENMARK

ES

SPAIN

FIN

FINLAND

/

/

FR

FRANCE

Bill of law adopted by the Government on 31-
10-2001

GR

GREECE

Decree on 15-10-2001

IRL

IRELAND

/

Not clear

Not clear

Not clear

May 2000

30 April 2002

30 June 2000

Delayed

22 October 2001 :
Communication to the
Commission

30 July 2000 : Regulations

Notification to the Commission
done

IT

ITALY

LU

LUXEMBOURG

19-10-1999 : Bill of law submitted to the
Parliament

Committee created in the Senate

Bill of law submitted to the Parliament
June 2000

in

Parliamentary Committee on Ethics in charge
of the file (last meeting on 23 January with
experts from EPO)

Not clear

Not clear

29

NL NETHERLANDS

the 2nd Chamber
Report of
(7-6-2000)
providing for several amendments to draft law
submitted on 28-05-1999

Not clear

Debate in Plenary on 02-10-2000

PT

PORTUGAL

Bill of law submitted to the Parliament

SE

SWEDEN

A bill of a law should be adopted during
Spring (debates at
the Parliament during
Spring session)

UK

UNITED
KINGDOM

•

•

Implementation of Art 12. Entered into
force on 1 march 2002

Implementation of Art. 13 and 14 on July
6th 2001

Expected during the first
semester 2002

July 2002

(date indicated in the
memorandum of the bill of law)

28 July 2000: Implementation on
time for articles 1-11

6 July 2001: Implementation of
Articles 13 and 14

1 March 2002: implementation
of Article 12

30

ANNEX 2: COHERENT STRATEGY FOR BIOTECHNOLOGY AND LIFE SCIENCES IN

EUROPE

Life sciences and biotechnology are widely recognised as one of the most promising
frontier technologies in the new knowledge-based economy. As explained above, this has
been recognised by the Stockholm European Council88 in March 2001.

the Commission’s communication.

Regulatory principles, such as those set down in intellectual property law, are an
important part of
In particular biotechnology
inventions typically require high capital investments and it is generally recognised that
effective patent protection is a crucial incentive to R&D and innovation. For this reason
and in view of rapid scientific progress, the strategy paper recognises that the intellectual
property system needs to be closely monitored.

1°)

Investments in the biotechnology sector

€

The total world market potential for applications of the life sciences and biotechnology,
excluding agriculture, is estimated to surpass
2 000 billion in 2010. About one quarter
of this is attributed to the pharma sector and three-quarters to the sustainable industrial
and environmental technology sector. A major part of these technologies would come
from biotechnology companies, which are a crucial success factor
industrial
competitiveness in biotechnology, in addition to a sound knowledge base and availability
of private capital, in particular venture capital investment.

for

The knowledge base in biotechnology and life sciences has seen an explosion in recent
years. The number of scientific publications of OECD countries in biotechnology and
applied microbiology journals increased from 1574 in 1986 to 3261 in 1998, of which
EU Member States hold 34% while the US holds 23.9%89.

As regards the status of biotechnology companies, the EU has overtaken the US in the
total number of companies (EU: 1570 compared to US: 1273). Although EU figures
related to average size, revenues and RTD expenses of the total sector are on average a
factor of 2.5 smaller than the corresponding US figures, the EU figures per employee are
comparable or even better than US figures. This is an encouraging demonstration of
entrepreneurial potential in Europe.

Venture capital investment in the EU biotechnology sector has steadily increased in the
1 billion in the year
second half of the last decade and reached a value of more than
2000. However, total public funding (including buy-outs and IPOs) is still a factor of 5
higher in the US (

30 billion) than in the EU (

6 billion).

€

€

€

88

89

Stockholm European Council - 23 and 24 March 2001; Presidency conclusions available at
http://ue.eu.int/en/Info/eurocouncil/index.htm
Source: OECD DSTI/EAS/STP/NESTI (2001)2

31

1200

1000

800

600

400

200

0

1994

1995

1996

1997

1998

1999

2000

Fig. 1: Venture capital investments in the EU biotechnology sector

2°)

Patenting activity in the biotechnology sector

Patenting activity of EU Member States, Japan and the US in the biotechnology and
genetic engineering sectors at the European Patent Office has increased drastically in the
last decade90. Table 1, which displays the total filing figures for the periods 1996-2000
and 1986-1990 in both the biotechnology and genetic engineering sectors, shows an
overall increase of 226% and 287%, respectively, for the two sectors.

Germany is the largest applicant within the EU Member States, followed by the UK.
France and Netherlands are close together on third place, as are the followers Belgium
and Denmark. Statistically significant above average increases of filing activities
between the two periods are observed for DK, UK, NL in both technology sectors, while
Italy shows below average figures. The figures for Germany are close to the total average
figure in both sectors, while France is close to average in the biotechnology sector and
above average in the genetic engineering sector.

Total US filing figures are above the total EU Member States periods in all sectors, and
US filing figures between the two periods have increased more strongly than EU average
figures. For Japan, the increase in filing figures is very low at 52% and 90% respectively.

Table 2 shows the shares between the EU, Japan, the US and other countries for patent
the classes C12N (biotechnology) and C12N15 (genetic
filings at
engineering) for two time periods. The share of US patents for these countries in the
genetic engineering sector is given for comparison.

the EPO for

In the 1996-2000 period US filed the largest number of patents at the EPO in the
biotechnology sector (around 45.4% of total), followed by the EU Member States
(around 38.8%). Japan filed only around 9% of patents in this period, down from around
19.6% in the 1986-1990 period. Both EU Member States and the US increased their
patent shares from the 1986-1990 period to the 1996-2000 period, with somewhat larger
increases by the US.

90

Sources: OECD, USPTO, EPO

32

EPO applications

Biotechnology (C12N)

Genetic Engineering (C12N15)

1986 to
1990

1996 to
2000

%
increase

1986 to
1990

1996 to
2000

%
increase

DE

UK

NL

FR

DK

BE

IT

SE

AT

FI

ES

IE

GR

EU

US

JP

326

161

140

170

46

73

44

35

15

8

7

5

1

1031

1058

539

970

713

549

547

235

220

80

73

42

30

22

11

5

3497

4129

198%

343%

292%

222%

411%

201%

82%

109%

180%

275%

214%

120%

400%

239%

290%

817

52%

189

107

92

107

20

57

32

22

9

7

5

3

1

651

732

312

762

593

422

457

88

141

53

50

33

17

17

7

5

2645

3251

303%

454%

359%

327%

340%

147%

66%

127%

267%

143%

240%

133%

400%

306%

344%

594

90%

Total

2881

9398

226%

1872

7249

287%

Table 1: Patent applications of EU Member States, Japan and the US at the EPO in the
biotechnology/genetic engineering sectors in the period 1986 to 1990 compared to 1996-
2000

33

EPO applications

US grants

Biotechnology

Genetic Engineering

Genetic Engineering

(C12N)

(C12N15)

(USPTO definition)

1996-2000 1986-1990 1996-2000 1986-1990 1994-1997 1984-1987

EU

38.8%

Japan

9.0%

US

45.4%

Others

6.8%

37.4%

19.6%

38.4%

4.6%

38.3%

8.5%

46.3%

7.0%

36.6%

17.5%

41.1%

4.7%

14.5%

7.5%

72.5%

5.4%

11.0%

10.8%

75.4%

2.8%

Table 2: Country shares of patent applications in the biotechnology/genetic engineering
sectors at the EPO compared to patent grants at the USPTO

At the US Patent and Trademark Office, the large majority of patents granted in the
to US inventors (72.5%). EU
genetic engineering sector between 1994-1997 went
Member States reached a 14.5% share and Japan a 7.5% share. While the US and JP
shares both dropped by about 3 percentage points from the 1984-1987 period, the EU
Member States increased their share by 3.5 percentage points.

The growth rate in patent applications at the EPO and patent grants at the USPTO in the
genetic engineering sector is depicted in Table 3 for different time periods. USPTO
growth rates in the 1993-1997 period have been 31%, almost double the EPO growth rate
of 17.7% for the period 1996-2000.

34

EPO applications

US grants

1996-2000

1990-1995

1993-1997

1988-1982

17.7%

15.8%

31%

21.4%

Table 3: Average growth rates of patent applications in the genetic engineering sector91
at the EPO compared to granting figures at the USPTO

The previous data show that EU Member States clearly lag behind the US in patenting
activity. Not only are EU Member States behind the US in protecting their European
markets, but they also have a comparatively small share of patents in the more dynamic
US technology market. The significant increase of the EU shares of granted patents at the
USPTO from 11% in the 1984-1987 period to 14.5% in the 1994-1997 period may
indicate an increased RTD activity of EU actors in the US and/or an increase in
collaborative activity between EU and US actors.

2500

2000

1500

1000

500

0

EPO grants (C12N15)

EPO filings (C12N15)

4
8
9
1

5
8
9
1

6
8
9
1

7
8
9
1

8
8
9
1

9
8
9
1

0
9
9
1

1
9
9
1

2
9
9
1

3
9
9
1

4
9
9
1

5
9
9
1

6
9
9
1

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

Fig. 2: Number of patent applications and number of granted patents at the EPO in the
genetic engineering sector

Patent protection in the EU Member States is also hampered by the long delay in granting
procedures at the EPO. Fig. 2 compares the number of patent applications at the EPO in
the genetic engineering sector to the number of granted patents in this sector for the 1984
to 2000 period. It shows that the number of granted patents per year is stagnating and
even slightly decreasing since 1995. The major reason for this is the large amount of
searches that has to be handled by the EPO in the framework of PCT applications. Under
the terms of the Patent Co-operation Treaty (PCT), the more than 100 countries that have
adhered to this treaty can choose one out of nine international patent offices to perform

91

Definitions of “genetic engineering” differ between the USPTO and EPO due to different
classification systems

35

the search and/or preliminary examination. Currently, the EPO is handling about 60% of
all international applications, 50% of those coming from the US. To ease the situation,
the EPO has decided not
to accept from US residents under the PCT treaty any
application directed to biotechnology, business methods and telecommunication as from
1 March 2002.

As we will see in the next paragraph, a specific characteristic of research and innovation
in biotechnology is the strong collaboration and technology transfer between large
industry, biotech companies and the public research sector. The strategic use of
intellectual property rights by all these actors plays a vital role for the development of a
functioning technology market. This fact
is demonstrated by data for USPTO
biotechnology patents92 granted to UK, German and French assignees for 2001. It shows
that 30% of the assignees came from the public research sector, 22% from biotech
companies and 48% from large industry.

3°)

Industrial competitiveness in biotechnology

A report issued by Directorate General Enterprise on the competitiveness of European
biotechnology has
that contribute to industrial
competitiveness in this sector93:

identified some crucial

factors

• A strong knowledge base offering potential for new developments and applications in
health care, agriculture and food production, environmental protection as well as new
scientific discoveries.

• The transformation of fundamental knowledge created in universities and public
research organisations into commercially useful techniques and products through
collaboration between scientists and professional managers in start-ups, backed by
venture capital.

• An effective division of labour between smaller and larger companies having different
comparative advantages in technology/product development and product marketing.

• Clearly defined and effective property rights, which have a crucial role in the
functioning of markets for technologies, i.e. technology transfer and collaboration
between different players (universities, small and large companies). Strong intellectual
property rights are also necessary for securing venture capital for start-up companies.

The contribution of the intellectual property regime to competitiveness of the biotech
sector in the US as compared to the EU cannot be quantified exactly. However, some
facts indicate that the US has a number of comparative advantages:

92

93

Data obtained from the USPTO database http://www.uspto.gov/patft/index.html for section
C12N15/00 and the period 1.1.2001 to 31.12.2001
See chapter 5 of the “European competitiveness report 2001” on “The competitiveness of
European Biotechnology: a case study of innovation”. This chapter can be downloaded from
http://europa.eu.int/comm/enterprise/enterprise_policy/competitiveness/doc/competitiveness_repo
rt_2001/chapter_5.pdf

36

• Patenting activity in the biotechnology sector in the US has been slightly more
dynamic in recent years than in the EU (16% increase in US compared to 13%
increase in the EU) and much more dynamic in the genetic engineering sector.

• The recent USPTO guidelines have provided legal certainty by giving a clear
definition of what can be considered a biotechnological invention and what is eligible
for patent protection, albeit not having touched upon “ordre public” issues, in contrast
to most other patent legislation in the developed countries.

• The development of technology markets between technology producers and users is

clearly supported by low transaction costs, e.g. a cost-effective patent system.

The Commission communication on “Life sciences and biotechnology: A strategy for
Europe” has pointed out that the competitive position depends on the availability of an
effective, harmonised and affordable European IP (intellectual property) system,
providing an incentive for R&D and innovation. In order to close the competitive gap
between the US and the EU the following actions, among others, are proposed in the
communication:

• implementation of

the directive on the Legal Protection of Biotechnological

Inventions EC/98/44/EC by the Member States;

• Council adopting the Community patent regulation94;

• clarification of rules of ownership of IP stemming from public research;

• training academics in the strategic use of the IP system and raising awareness for the
commercial potential of the research, encouraging entrepreneurship and movement
between academia and companies;

• taking steps to harmonise patent protection in industrialised countries to ensure a level

playing field.

94

Op. cit., Introduction.

37

ANNEX 3: ACCOUNT OF NEGOTIATIONS ON DIRECTIVE 98/44/EC

Subsequent to the intensification of scientific research and the major discoveries made
over the last 40 years in the field of molecular biology, biotechnology emerged as one of
the most important and promising technologies. The impact of the processes, techniques
and biotechnological material is felt in many sectors: health, agriculture, foodstuffs and
industry.

In the mid-1980s, however, the diversity, or rather the absence, of national legislation in
the field was proving harmful for research and development and for the competitiveness
of European undertakings compared with the Japanese or American companies active in
this sector.

It therefore seemed essential for the European Community to take measures in this field
to harmonise national legislation within the Internal Market.

As early as 1985, the Commission's White Paper on completing the Internal Market had
noted this situation.

There was a need for clarification with a view to establishing clear and legally sound
rules allowing for the harmonious development of this type of industry.

To that end, the Commission presented an initial proposal for a Directive on 21 October
198895.

That proposal was rejected on 1 March 199596 by the European Parliament after a
conciliation procedure, in particular because of the lack of distinction, in the field of
DNA sequences, between discoveries which are not eligible for patent protection and
genuine inventions which can be covered by an intellectual property right.

A new and amended proposal was presented at the end of 199697.

The Opinion of the European Group on Ethics, which had been requested by the
President of the Commission, was issued on 25 September 199698: it recognised that, in
the field of biotechnology, the traditional distinction between discoveries and inventions
had an important ethical dimension. However, the Opinion stresses that the Directive
establishes adequate guarantees in this field.

The Directive was finally adopted on 6 July 199899. The Netherlands Government voted
against the Directive, while Italy and Belgium abstained. The Directive was published in
the Official Journal on 30 July 1998100.

95

96

97

98

99

100

COM(88)496 final/SYN 159 of 21 October 1988, OJ C 10 of 13.1.1989.
C4-0042/95 – 94/0159(COD), Doc. PE-CONS 3606/1/95 of 21.2.95, OJ C 68 of 20.3.95, p26.
OJ C 296 of 8.10.1996, p. 4, OJ C 311 of 11.10.1997, p. 12.
http://www.europa.eu.int/comm/european_group_ethics/gaieb/en/avis8.pdf
Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal
protection of biotechnological inventions.
OJ L 213 of 30 July 1998, p. 13.

38

Article 15 lays down that the Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this Directive not later than 30
July 2000.

39

ANNEX 4 : WORK UNDERTAKEN SINCE THE ADOPTION OF THE DIRECTIVE:

1°)

In the context of exchanges between the Commission and the Member
States:

1-1) Meeting organised by the Commission with the experts from the Member States
in January 1999:

An initial meeting with the Member States was organised even before the expiry of the
period for transposal of Directive 98/44/EC with a view to helping the latter to
implement the Directive. On that occasion, a dialogue was established between the
various participants on the provisions of the Directive whose transposal was most
sensitive (Articles 5 and 6). Moreover,
the difficulties encountered in the specific
implementation of Article 12 of the Directive concerning cross-licences between patents
and plant variety rights were raised by various delegations.

1-2) Meeting organised by the Commission with the experts from the Member States
on 23 January 2001:

The purpose of the meeting organised by the Commission was to review the situation
after the expiry of period for transposal of Directive 98/44/EC and progress in
implementing in the national law of the Member States.

The proceedings were divided into two parts: the first was devoted to a tour de table on
progress in transposing the Directive in the Member States. The second was devoted to
an exchange of views on the provisions of the Directive which are facing difficulties in
their implementation.

By the day of the meeting, only four countries had formally notified the Commission of
the implementation of the Directive: Denmark, Finland, Ireland and the United Kingdom.

During the meeting, the Member States were asked whether any of them wished a
renegotiation of the Directive. No Member State expressed such an intention.

Some delegations wished the Commission to publish guidelines for implementing the
Directive. The Commission does not favour this approach, since all the information
needed to implement the Directive is already contained in it. The Commission considered
that the publication of this Report would make it possible to review the measures which
needed to be taken.

Finally, the Commission indicated that it intended to monitor the implementation of the
Directive closely and proposed its assistance to any Member State which wished it.

Letter of formal notice from the Commission to the Member States which had not

1-3)
transposed Directive 98/44/EC.

By letter of 30 November 2000,
transpose Directive 98/44/EC as soon as possible.
communicate to it their observations within 30 working days.

the Commission enjoined the Member States to
It also called upon them to

1-4°) Dialogue with the Member States:

40

The Commission has embarked on a dialogue with those Member States which asked for
its intervention, essentially on the basis of an exchange of correspondence (France,
Germany, Italy, Belgium and the Netherlands).

In addition, other Member States informed the Commission of the situation as regards
transposing the Directive in their countries (Luxembourg, Greece, Austria).

The gist of the correspondence could be divided into two main topics:

• requests for clarification concerning the distinction made in Article 5 of the Directive
between discoveries and inventions eligible for protection by a patent on elements
isolated from the human body.

• questions about the scope to be conferred on inventions involving elements isolated

from the human body.

The Commission replied to each of these letters point by point.

It should be noted that closer collaboration between the Commission and the Member
States was widely desired. This Report should make it possible to embark on a fruitful
dialogue between the Member States and the Commission and to provide further
information in reply to the questions raised.

Alongside this correspondence, working meetings were held with delegations from the
Member States in order to facilitate the transposal of the Directive in their legislation.

2)

Activities within the European Parliament:

By Decision of 13 September 2000,
committee on human genetics and other new technologies of modern medicine.

the European Parliament set up a temporary

Its mandate was to examine the latest developments in the field of human genetics and
the possibilities opened up by this progress. In the context of that examination, particular
attention was devoted to the patentability of elements isolated from the human body, and
in particular patent protection for DNA sequences.

For the purpose of drawing up its report, the temporary committee heard a series of
experts in the field in question.

A report was drafted and adopted by the temporary Committee on Human Genetics on 8
November 2001101. However, the report was rejected by the vote in plenary session.
Discussions on D 98/44/EC should nevertheless continue in a restricted committee.

3)

The work done by the European Group on Ethics in Science and New
Technologies of the European Commission.

The European Group on Ethics in Science and New Technologies is an independent,
pluralist and multidisciplinary body set up in 1992 by the Commission to advise it on

101

Draft report by the Temporary Committee on Human Genetics and Other New Technologies of
Modern Medicine on the ethical, legal, economic and social implications of human genetics.
PR\445704EN.Doc. PE 300.127.

41

ethical aspects of new technologies raised in connection with the establishment of
Community policies or the drafting of legislation.

The Group has submitted 16 Opinions, including Opinion No 3 of 30 September 1993 on
ethical questions arising from the Commission proposal for a Council directive for legal
protection of biotechnological inventions, and Opinion No 8 of 25 September 1996 on the
ethical aspects of patenting inventions involving elements of human origin.

This Group, which is attached to the President of the European Commission, is entrusted
by Article 7 of Directive 98/44/EC with evaluating all ethical aspects of biotechnology.
By virtue of recital 44 to the Directive, consultation of this Group, including consultation
concerning patent law, is confined to assessing the basic principles of biotechnology.

It is against this background, and at the request of President Prodi, that the Group was
asked to deliver an Opinion on the "ethical aspects of human stem cell research and use"
(Opinion No 15 published on 14 November 2000), and an Opinion on the "ethical
aspects of patenting inventions involving human stem cells" (Opinion No 16 published on
7 May 2002).

4°)

The activities of the high-level Group on Life Sciences.

The European Group on Life Sciences (EGLS), composed of 11 European biologists
recognised for their scientific excellence and their commitment to communicate with the
public on the stakes of research in genetics, has been set up on April 26 2000 to inform
the European Commissioner responsible for Research on the prospects of Life Sciences
Research. Having recognised the important role of intellectual property for research and
development, some members of the group, together with experts from research, industry,
law and the European Patent Office discussed the issues related to “Patenting of Genes”
in a workshop on July 5th 2001. Among other issues, the meeting addressed:

• the use and management of intellectual property rights related to biotechnological

inventions in academia and industry;

• the legal environment regarding patenting of biotechnological inventions in the EU, in

particular directive 98/44/EC, and a comparison to the US system; and

• the challenges introduced by the impact of patent law on research and, vice versa, the
interplay between advances in science and the interpretation and development of
patent law.

As a result of extensive and constructive discussion at the workshop and subsequent
consultation of all EGLS members, the EGLS formulated a statement that identified
important research policy issues related to the patenting of genes and proposed possible
policy measures. The major conclusions of the statement are:

• The EGLS highlighted the important role of patenting of biotechnological inventions

to support research and innovation.

• The group pointed out that genes as such are not patentable, but only in connection

with a particular inventive step and a proven industrial application.

42

• There is a need for a broader communication of the objectives of patent law and its

potential socio-economic benefits to scientist and the general public.

• Overly broad patents may lead to potential dependency problems. This issue should be
closely monitored in the framework of the reporting requirements, e.g. article 16 of
the directive.

• The group recommends the establishment of an expert group involving legal expert,
scientist and patent administrators (EPO) to discuss the interplay between scientific
progress and the development and implication of patent
law in the area of
biotechnology and genetic engineering.

5°)

OECD activity on “Genetic inventions, intellectual property rights and
licensing practices”

In February 2001 the OECD Working Party on Biotechnology (WPB) agreed on a
proposal from the German Ministry of Research and Education (BMBF) to start a project
on “Genetic inventions,
Intellectual Property Rights and Licensing Practices”. A
workshop was held in Berlin on 24-25 January 2002, with over 100 experts from the
public and private sector. Participants reviewed empirical evidence demonstrating the
impact of patenting and licensing of genetic inventions on access to technology by
researchers, companies and within healthcare systems.

A large study funded by the US National Academy of Science revealed that patents in
biotechnology generally stimulate research and the entry of new technology into
markets102. The growth in number and complexity of biotechnology patents did not cause
a breakdown of the patent system, in contrast to some expectations and fears. The study
shows that users and providers of technology were able to develop “working solutions”,
such as taking licenses, inventing around patents, using the research exemptions in a
flexible way and developing public databases (SNIPs consortium)103.

In the US, rapid advances in science and technology were accounted for through changes
in the institutional environment, such as the new USPTO guidelines or the courts' view
towards research tool patents. The authors of the study do not rule out future problems
that may arise from patents currently under review or new scientific developments and
court decisions. However, they remain optimistic that a system can be found that
provides strong incentives to conduct research as well as to maintain a free space for
research and discovery.

The workshop also identified difficulties that sometimes occur around patents related to
genetic tests and discussed ways to improve access and market penetration without
undermining the patent system and respecting limited public health budgets. In this
respect, improved international harmonisation of patent and licensing practises would
seem necessary as well as clarifying the scope and function of research exemptions in
different countries.

102

103

A preliminary draft report can be downloaded from
http://www4.nationalacademies.org/PD/step.nsf/files/walsh2.pdf/$file/walsh2.pdf
Similar results were obtained by the Max-Planck-Institute for Foreign Patent Law in a limited
survey among German research institutions and small and large companies.

43

ANNEX 5:

STATISTICS

Biotechnology

Medical/Health

Agriculture

3000

2500

2000

1500

1000

500

0

1992

1993

1994

1995

1996

1997

1998

1999

2000

H1
2001

Fig. 1 : EU VC investments in the Life Sciences sectors in millions of Euros
(Source: EVCA)

US VC (mio US $)

EU TOT (mio

€
)

14,8 % increase

86,1 % increase

1400

1200

1000

800

600

400

200

0

1999

1998

Fig. 2: VC investments in Biotechnology - US vs EU

EU data includes replacement and buy-out investments, for which no separate
information is available. It is likely that for the biotechnology sector, these investments
are much lower than the average of 58% over all sectors.

44

3 0 0 0

2 5 0 0

2 0 0 0

1 5 0 0

1 0 0 0

5 0 0

0

1 9 9 2

1 9 9 3

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

H 1
2 0 0 1

Fig. 3 : EU VC investments in the Medical/Health sector in millions of Euros
(Source: EVCA)

% a g r i

% b io t e c h

% m e d ic a l

9 %

8 %

7 %

6 %

5 %

4 %

3 %

2 %

1 %

0 %

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001
H1

Fig. 4 : Investments in Life Sciences sectors as % of total VC investments in EU (Source:
EVCA)

45

US

Japan

US

2500

2000

1500

1000

500

0

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

Fig. 5 : USPTO patents granted in the genetic engineering sector per country –
1984-1997

80%

70%

60%

50%

40%

30%

20%

10%

0%

EU

Japan

US

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

Fig. 6 : Genetic engineering - % of granted USPTO patents per country

E U

J a pa n

US

7 0 ,0 %

6 0 ,0 %

5 0 ,0 %

4 0 ,0 %

3 0 ,0 %

2 0 ,0 %

1 0 ,0 %

0 ,0 %

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Fig. 7 : EPO filings in genetic engineering - percentage per country

46

filed

granted

2500

2000

1500

1000

500

0

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Fig. 8 : EPO patent applications and grants in genetic engineering

EU

Japan

US

1200

1000

800

600

400

200

0

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Fig. 9 : EPO filings in the biotechnology sector

EU

Japa n

U S

7 0 ,0%

6 0 ,0%

5 0 ,0%

4 0 ,0%

3 0 ,0%

2 0 ,0%

1 0 ,0%

0,0%

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Fig. 10 : EPO filings in biotechnology

47

1996 to 2000

1986 to 1990

DE

GB

NL

FR

DK

BE

IT

SE

1200

1000

800

600

400

200

0

45

40

35

30

25

20

15

10

5

0

AT

FI

ES

IE

GR

Fig. 11 and 12 : EU Member States application at the EPO in genetic engineering

48