Report from the Commission to the Council and the European Parliament - Development and implications of patent law in the field of biotechnology and genetic engineering (SEC(2005) 943)
Date: 2005-07-14
Institutions: European Commission
Subjects: bio-ethics, biotechnology, genetic engineering, patent, patent law, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.07.2005 
COM(2005) 312 final 

REPORT FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

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

(SEC(2005) 943) 

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REPORT FROM THE COMMISSION TO THE COUNCIL AND 
THE EUROPEAN PARLIAMENT 

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

(Text with EEA relevance) 

INTRODUCTION  

This is the second report pursuant to Article 16c of the Directive 98/44/EC1 of the European 
Parliament  and  of  the  Council  of  6  July  1998  on  the  legal  protection  of  biotechnological 
inventions  and  bears  the  title  “Developments  and  implications  of  patent  law  in  the  field  of 
biotechnology and genetic engineering” (hereinafter the “second 16c Report”).  

Its purpose is to set out the key events which have occurred since publication of the first 16c 
Report2,  and  to  comment  on  two  issues  identified  in  the  latter:  the  scope  of  patents  on 
sequences or partial sequences of genes which have been isolated from the human body; and 
the patentability of human stem  cells  and cell lines obtained from them. The Commission’s 
analysis is based on the Commission staff working paper SEC(2005)943. 

1. 

LATEST DEVELOPMENTS IN THE FIELD OF BIOTECHNOLOGICAL INVENTIONS  

1.1. 

State of progress with transposition of Directive 98/44  

As of June 2005, 21 Member States of the European Union had notified the Commission of 
the  instruments  implementing  the  Directive.  Legal  proceedings  for  failure  to  transmit 
transposition measures were initiated in 2003 before the Court of Justice against the countries 
which  had  not  transposed  the  Directive3.  Infraction  procedures  have  been  opened  in 
December 2004 against two new Member States which have not completed the transposition 
of the Directive4. 

1.2. 

Group of Experts  

As announced in the first 16c report, a Group of Experts has been set up, its remit being to 
advise the Commission on the preparation of future 16c Reports through the examination of 
important  issues  relating  to  biotechnological inventions.  The  Group  comprises  specialists  in 
patent law and highly qualified persons in the field of biotechnologies5. . 

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OJ L 213, 30.7.1998, pp. 13-21. 
COM(2002) 545 final, http://europa.eu.int/eur-lex/en/com/rpt/2002/com2002_0545en01.pdf 
http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/03/991&format= 
HTML&aged=1&language=EN&guiLanguage=en 
Lithuania and Latvia. 
http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/03/127&format=HTML&aged 
=1&language=EN&guiLanguage=en 

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1.3. 

Community action on cross-licences  

The first 16c Report indicated that the provisions of Article 12 of the Directive and Article 29 
of  Regulation  2100/94  on  Community  plant  variety  rights6  were  not  compatible  with  each 
other and that Article 29 of the Regulation should be amended.  

Accordingly, on 11 December 2003, the Commission presented a draft Regulation amending 
Regulation  2100/94  on  Community  plant  variety  rights7.  The  draft  was  adopted  by  the 
Council  on  29  April  20048.  The  provisions  of  the  Regulation  and  the  Directive  are  now 
mutually compatible. 

2. 

ANALYSIS OF ISSUES RAISED IN THE FIRST REPORT  

It was stated in the conclusions of the first 16c Report that the Commission should revisit two 
questions:  

•  the scope to be attributed to patents on partial sequences or sequences of genes which have 

been isolated from the human body;  

•  the  patentability  of  human  pluripotent  embryonic  stem  cells  and  stem  cell  lines  obtained 

from them.  

The  following  analysis  is  based  on  the  articles  and  recitals  of  the  Directive,  but  also,  inter 
alia,  on  preparatory  work  and  the  decision  of  the  Court  of  Justice  of  9  October  20019,  in 
which  the  Court  rejected  an  application  for  annulment  of  the  Directive.  In  line  with  the 
intention  stated  in  the  first  16c  Report,  the  analysis  also  takes  account  of  the  contributions 
made by the informal Group of Experts mentioned under 1.2.  

2.1. 

Scope of patents on gene sequences 

The  issue  to  be  reviewed  according  to  the  first  report  under  Article  16c  is  the  question  of 
whether  patents  on  gene  sequences  (DNA  sequences)  should  be  allowed  according  to  the 
classical model of patent claim, whereby a first inventor can claim an invention which covers 
possible future uses of that sequence, or whether the patent should be restricted so that only 
the  specific  use  disclosed  in  the  patent  application  can  be  claimed  (“purpose-bound 
protection”).  

On examination of the detailed provisions of the Directive, it can be seen that Articles 8, 9, 10 
and 11 make up Chapter 2 of the Directive which is entitled “Scope of protection”. However 
none of these articles addresses the concept of a restricted scope of protection relating to the 
specific use identified for the gene sequence concerned. Indeed Articles 8 and 9 establish that 
the  protection  conferred  by  a  patent  extends  to  any  biological  material  obtained  from  the 
claimed  product  or  in  which  the  claimed  product  is  incorporated  and  the  same  genetic 

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Council  Regulation  (EC)  N°  2100/94  of  27  July  1994  on  Community  plant  variety  rights, 
OJ L 227, 1.9.1994, pp. 1-30.  
COM(2003)  456  final.  The  draft  Regulation  can  be  consulted  on  the  Council’s  web  site: 
http://register.consilium.eu.int/pdf/en/03/st14/st14215.en03.pdf  
Council  Regulation  (EC)  N°  873/2004  of  29  April  2004  amending  Regulation  (EC)  N°  2100/94  on 
Community plant variety rights, OJ L 162, 30.4.2004, p. 38. 
Judgement  of  the  Court  of  Justice,  9  October  2001,  Case  C-377/98,  Kingdom  of  the  Netherlands 
supported  by  Italian  Republic  and  by  Kingdom  of  Norway  v.  European  Parliament  and  Council  of 
the European Union, supported by Commission of the European Communities. 

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information  expresses  its  function.  This  might  be  seen  as  arguing  for  a  broad  scope  of 
protection rather than a restricted one, subject of course to the exclusion under Article 5(1) of 
claims to the human body in its entirety. 

On  the  other  hand,  it  might  be  thought  from  Article  5(3)  and  Recitals  23  and  25  that  the 
Community  legislator  had  intended  to  at  least  raise  the  possibility  of  a  limited  scope  of 
protection  covering  only  the  specific  industrial  application  identified  in  the  patent,  as  far  as 
this  particular  type  of  invention  is  concerned.  Otherwise  Article  5(3),  which  requires  the 
industrial  application  of  a  gene  sequence  to  be  disclosed  in  the  patent  application,  merely 
repeats a standard requirement of general patent law, as can be seen from Recital 22. 

The  informal  Group  of  Experts  met  in  March  2003  to  discuss  this  issue.  A  majority  of  the 
Group felt that there were no objective reasons to create a specific regime of purpose-bound 
protection  in  this  area  differing  from  the  classic  patent  protection.  In  particular,  legal  and 
technical  experts  felt  there  were  no  differences  between  DNA  sequences  and  chemical 
substances which would justify different treatment as regards the scope of patent protection. 

Since these discussions other arguments have been brought to the table.  

First, there is the question of whether the fact that human gene sequences have been isolated 
from  the  human  body  implies  that  they  should  be  given  different  treatment  to  chemical 
substances on ethical grounds. This reasoning would seem to be behind the transposition of 
the  Directive  contained  in  French  national  law  and  in  Germany  where  purpose-bound 
protection  is  provided  for  inventions  concerning  material  isolated  from  the  human  body 
(France) and human/primate gene sequences (Germany). 

A second argument is an economic question: is it more valuable to society to allow the first 
inventor a broad scope of protection so others which build on this invention should have to 
seek a licence, or should a patent on a gene sequence be limited in scope to allow future uses 
of  such  sequences  to  be  patented  freely?  This  issue  has  been  linked  to  the  freedom  of 
research, although certain research exemptions already exist in patent law. More generally it 
relates to the balance between investment and potential reward for the first innovator in a field 
compared to subsequent innovators. Economic evidence is however hard to come by and the 
arguments  do  not  relate  solely  to  gene  sequence  patents  as  distinct  from  any  other  field  of 
technology.  The  Commission  has  launched  a  study10  that  is  analysing  the  extent  of  human 
DNA  patenting  in  Europe  and  its  potential  consequences  on  research  and  innovation.  The 
Group of Experts could be asked to consider further the impact of the research exemption. 

Moreover,  as  a  specific  field  of  technology  becomes  mature,  the  application  of  the  normal 
patent criteria of novelty, inventive step and industrial applicability means that future patents 
are  necessarily  limited  in  scope  because  the  invention  claimed  has  to  be  distinguished  from 
the  vast  array  of  what  is  already  known  in  the  field11.  As  it  is  now  seventeen  years  since  a 

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The Patenting of Human DNA: Global trends in commercial and public sector activity 
http://www.sussex.ac.uk/spru/1-4-14-1.html 
The case of the European patents on BRCA1 gene (related to the predispositions to ovary and/or breast 
cancer)  is  an  example.  Indeed  for  the  three  European  patents  exploited  by  the  Myriad  Genetics 
company,  the  procedures  of  opposition  carried  out  at  the  European  Patent  Office  (EPO)  led  in  May 
2004 to the revocation of the first patent (EP0699754), then in January 2005 to a substantial limitation 
of the protection conferred by the second and third patents (EP0705902 and EP0705903) for the reason 
that these patents were not in conformity with the European Patent Convention (EPC) because they do 

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Directive was first proposed, it may be questionable whether attempting to further refine the 
scope  of  protection  of  gene  sequence  patents  in  the  light  of  divergences  between  national 
legislations will have any significant effect on actors in the field. 

Against this background, the Commission does not at present intend to take a position on the 
validity  of  transposition  according  to  the  choice  between  classical  and  limited  scope  of 
protection  for  gene  sequences.  The  Commission  will,  nonetheless,  continue  to  monitor 
whether  there  are  any  economic  consequences  of  possible  divergences  between  Member 
States’ legislation. 

2.2. 

Patentability of human embryonic stem cells and cell lines obtained from them 

Human embryonic and somatic stem cells (the latter isolated from foetal or adult tissue) each 
have  advantages  and  limitations  regarding  their  potential  uses  for  basic  research  and  novel 
stem  cell  based  therapies.  Currently,  human  embryonic  stem  cells  are  of  particular  interest 
because  they  have  the  potential  to  differentiate  into  all  cell  types  in  the  body  (they  are 
pluripotent) and are at present the only pluripotent stem cell that can be readily isolated and 
grown in culture in sufficient numbers to be useful. 

A  distinction  can  be  drawn  between  totipotent  stem  cells,  which  are  capable  of  developing 
into  a  human  being,  and  pluripotent  stem  cells,  which  are  not  so  capable.  The  debate  has 
gained  greater  profile  since  the  beginning  of  2004  when  Korean  researchers  announced  the 
results  of  experiments  leading  to  the  development  of  a  cell  line  of  pluripotent  stem  cells12 
using  the  technique  of  “therapeutic  cloning”,  by  which  cells  are  developed  with  the  same 
genetic information as a particular patient and used to treat that patient’s disease, essentially 
without the risk of rejection by the patient’s immune system. 

The  question  of  whether  the  Directive  specifically  addressed  the  patentability  of  stem  cells 
was raised in the first 16c Report, and referred to the Group of experts for discussion in May 
2003. 

The European Group of Ethics considered (in its opinion No 1613) that there was no ethical 
reason for a complete ban on patenting of inventions relating to stem cells or stem cell lines, 
although the normal requirements of patentability would have to be met.  

The  provisions  of  the  Directive  are  clear  in  relation  to  totipotent  stem  cells,  since  each  cell 
could develop into a human being on its own and under Article 5(1) the human body at the 
various stages of its formation and development cannot constitute a patentable invention. This 
principle  has  been  reiterated  in  the  practice  notice  issued  by  the  UK  patent  office  in  April 
200314. 

For  pluripotent  embryonic  stem  cells  the  situation  is  more  complex.  The  Group  of  Experts 
considered  that  the  question  of  patenting  was  closely  linked  to  the  definition  of  what 
constitutes  an  embryo,  and  the  scope  of  research  allowed,  which  is  determined  by  national 
legislation.  As  regards  research  funding  under  the  European  framework  programmes,  such 

not respect in particular the criterion of novelty. The first decision of the EPO is the subject of an appeal 
(T 80/05-338). 
http://www.nature.com/nsu/040209/040209-12.html 
http://europa.eu.int/comm/european_group_ethics/docs/avis16_en.pdf 
http://www.patent.gov.uk/patent/notices/practice/stemcells.htm  

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funding  may  be  available  for  projects  involving  human  embryonic  stem  cell  research  on  a 
case by case basis.  

In the light of the clear divergences which currently exist between Member States as regards 
the  acceptability  of  research  relating  to  embryonic  stem  cells15,  the  continuing  and  rapid 
developments in this field, and the fact that the Directive itself provides for Member States to 
refuse  patents  on  grounds  of  ordre  public  or  morality  under  Article  6(1),  the  Commission 
considers that it is premature to give further definition or provide for further harmonisation in 
this  area.  At  the  same  time  the  Commission  will  monitor  developments  taking  into  account 
both the ethical aspects and the potential impact on competitiveness. It has launched a study16 
looking at the ethical and legal aspects of stem cell patenting. 

3. 

CONCLUSIONS  

The first 16c Report stated that the main provisions of the Directive were clear and precise; 
that uncertainty could not be permitted where the patentability of plants, animals and micro-
organisms  was  concerned;  and  that  there  was  no  ambiguity  regarding  the  patentability  of 
material isolated from the human body.  

This Report introduces some new, fundamental considerations. While it can be argued from a 
plain reading of the provisions of the Directive that there are no objective grounds for limiting 
the traditional protection granted by patent law to inventions relating to sequences or partial 
sequences of genes isolated from the human body, other issues have also been raised relating 
to  ethics,  to  research  and  to  economics.  The  Commission  will  continue  to  monitor  whether 
there  are  any  economic  consequences  of  possible  divergences  between  Member  States’ 
legislation. 

In the light of the Commission’s analysis, it appears that totipotent stem cells should not be 
patentable, on grounds of human dignity.  

There  is  no  immediate  answer  to  the  question  of  the  patentability  of  embryonic  pluripotent 
stem  cells  and  indeed  at  this  stage  it  would  appear  premature  to  come  to  a  definitive 
conclusion. The Commission will continue to monitor developments in this area. 

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http://europa.eu.int/comm/research/biosociety/pdf/mb_states_230804.pdf 
Stem Cell Patents: European Patent Law and Ethics 
http://www.nottingham.ac.uk/law/StemCellProject/summary.htm 

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