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BIOTECHNOLOGY, RESEARCH AND INTELLECTUAL PROPERTY LAW
II. International Context
III. Biotechnology and New Zealand
IV. Biotechnology: A Scientific Discipline and a Rapidly Growing Industry
V. Scientific Tradition and Research Norms
Vi. The Importance Of Intellectual Property Rights For Biotechnology
VII. Plant Variety Rights
VIII. Patents: A Social Contract
IX. Formal Requirements for Obtaining a Patent
X. Exclusion from Patent Infringement for bona fide Research
Scope of research exclusion
XII. Scope of the Patent Claim
Andrew J Allen[*]
Genetic engineering is the most important tool for experimental biologist to come out of the twentieth century.[1]
The tool of genetic engineering is now widely used in biological sciences in New Zealand and is a key aspect of a knowledge economy.[2] This paper is a discussion of the relationship between biotechnology, including genetic engineering and intellectual property law. It will be asserted that the promotion of biotechnological research is important for New Zealand and that a strong system of intellectual property protection for the results of biotechnological innovation is a key means of doing so. The key intellectual property rights available in New Zealand for biotechnological innovation are plant variety rights and patents. Patent law will be discussed with reference to the social contract that underpins the granting of a patent. In achieving the aim of encouraging research, two aspects of patent law are particularly relevant: the scope of an experimental use exclusion from patent infringement and the nature of an inventive step. The scope of a patent monopoly and the requirement of public disclosure will also be discussed.
The term 'knowledge economy' refers to three features which characterise the current age and distinguish it from the earlier industrial era.[3] First, intellectual property now makes up a greater part of industrial capital. Raw materials and machinery have given way to skills and knowledge as the primary source of sustainable long-term competitive advantage. Secondly, more research and development funding is originating in the private sector while public funding of research is dwindling. In New Zealand government funding of science peaked in 1981 and has declined since.[4] Thirdly, new technologies have emerged which challenge the accepted notions about intellectual property:' [i]t is clear that the invention of a new gene cannot be handled in the same way as the invention of a new gearbox'.[5]
International trade creates a demand for strong intellectual property rights that are enforceable in foreign markets. The monopoly that China enjoyed in the silk trade lasted for three thousand years, protected by the promise of a painful death to anyone who revealed the secret of the silk worms.[6] By AD550 the value of silk was so great the Roman Emperor Justinian persuaded a pair of Nestorian monks to smuggle some silkworm eggs out of China in a hollow bamboo cane. The venture was successful and the monopoly was broken. China is also the origin of the plant that became the kiwifruit. Kiwifruit seeds were obtained from China and bred, in New Zealand, into commercially successful varieties. No intellectual property rights were sought for the results of this research and development.[7] Plant variety rights were not available in New Zealand at that time. The selling of kiwifruit on international markets led to the commercial production of the fruit in other countries on a scale that was detrimental to the New Zealand growers. Thus, the developmental effort made by New Zealand breeders was compensated for by only a very short period of market exclusivity.
In 1999 about 65,000 apple trees of the varieties Pacific Rose and Southern Snap, bred and developed in New Zealand, were found growing in Chile.[8] These apple varieties had been developed, at a cost of considerable time, money and effort, to have improved characteristics giving an advantage over other apple varieties in the international markets. Strong intellectual property rights enable New Zealand right holders to control the exploitation of technology developed here and ensure the benefits of research investment are protected. To be effective in an international market, these intellectual property rights must be able to be asserted in foreign countries such as Chile.
International agreements have sought to facilitate trade and protect intellectual property rights. Two of these are particularly relevant to New Zealand's biotechnology-based industries. The International Convention for the Protection of New Varieties of Plants 1961 (UPOV)[9] now has a membership of over fifty countries in which plant variety rights conferred by member states will be recognised. Under the GATT Treaty, the Agreement on Trade Related aspects of Intellectual Property Rights (TRIPS) aims to promote international consistency in the recognition of all forms of intellectual property rights. This agreement sets out minimum standards on the strength, form, duration and enforcement of intellectual property rights for all members of the World Trade Organisation. New Zealand is a signatory to both instruments.
The international standardisation of intellectual property rights brought about by the TRIPS agreement, the historical linkage between New Zealand's legislation, and earlier United Kingdom statutes, mean that case law from other jurisdictions is relevant to many patent issues in this country. Few biotechnology patent issues have come before the New Zealand courts, so it is worthwhile to examine foreign case law. In particular, the House of Lords' decision in Biogen v Medeva[10] may be of significant persuasive authority.
The New Zealand economy is heavily dependent on primary industries. Biotechnological research is an essential factor in maximising the returns from these industries.[11] In many areas of biotechnology, New Zealand is at the forefront of international research efforts. It is in the national interest to encourage these research efforts. One way of encouraging research is to have a strong system of intellectual property protection for the products of innovative research. Basic research produces the building blocks of innovation. It is therefore necessary to fund basic research adequately. The participation of the private sector can supplement public investment in research and development. However, increasing the involvement of the private sector requires the provision of incentives to invest in research and development. Intellectual property rights can provide this incentive.
Biotechnology involves the harnessing of the productive capacities of living organisms. It is defined as the industrial use of living organisms or biological techniques developed through basic research.[12] The term 'basic research' is used to describe pure research as distinct from applied research. The power to exploit these capacities lies in the genetic information locked up in the genome of every living cell. Biotechnological innovations can carry this information with them. Fragments of DNA can be extremely useful and valuable both as research tools and as building blocks for further innovations. DNA sequences are both useful chemical molecules and carriers of information.
The traditional system of publicly funded research, conducted in universities and public research centres, created a pool of knowledge which was free for all to use. Basic or upstream research was paid for by the government and the results were disseminated widely. The role of the private sector was to take this knowledge and develop downstream commodities. Two trends in the conduct of biotechnological research in the USA over the past two decades have been noted.[13] First, private sector involvement in research has increased. Commercial biotechnology firms have engaged in basic research because the distance between a new discovery and a vendible product can be very short. Secondly, public funding of research has declined.
There is evidence that similar trends are occurring in New Zealand. Crown Research Institutes are encouraged to seek commercial clients for their research services. Universities now encourage the securing of intellectual property rights for industrial applications arising from research conducted in campus laboratories. As a result of these changes, the sorts of research results that, in an earlier era, would have been made freely available in the public domain are being claimed as intellectual property. As knowledge becomes more central to industry, private property rights in knowledge assume a prominent role. The most profitable companies are those with property rights in some form of knowledge.[14] It has been asserted that patent claims to information locked up in genetic material may restrict the availability of that information to the public.[15] A particular concern is whether patent rights over genetic information carriers inhibit future innovation based upon that genetic information.[16] However, the traditional patent bargain has always called for a free disclosure of information to the public.[17]
Basic research today is likely to be funded by private money and patents sought for the results. It has been suggested that the capture of upstream research as intellectual property can inhibit downstream product development.[18] An example is the patenting of gene fragments. Early gene patents were granted for specific genes that had a known function such as encoding therapeutic proteins. Patent applications for newly identified DNA sequences such as expressed sequence tags (ESTs) — for which no physiological function is yet known — extend private ownership of research to a position further upstream in the process of product development.[19] The privatisation of research brings the prospect of substantial investment of private funds into basic research to supplement dwindling public funding, but it also brings challenges to the traditional approaches to the conduct of research. Intellectual property rights will be a necessary enticement to the private sector to make the investment. But the scope of these rights must be carefully defined to ensure that they do not hinder research.
It has long been held that scientific advancement is a result of building on what has gone before. This belief is epitomised in the famous quote attributed to Sir Isaac Newton: 'If I have seen farther it is by standing on the shoulders of giants'.[20] It is believed the public interest is served by making new knowledge as widely available as possible in order to promote advancement.[21] The accepted tradition has been that additions to the stock of human knowledge belong to all members of the research community in consideration for the contributor's use of all previous knowledge. The idealised picture of information available to all as the model for the successful transmission and growth of knowledge is not entirely accurate.[22] Early empiricists such as Newton and Boyle were keen to share their discoveries with each other, but strove to keep the new knowledge out of the public domain. Secret codes used in patent applications perhaps point to a patent rationale that had more to do with promoting commercial activity than with the dissemination of new ideas.
Traditionally, basic scientific discoveries have been distinguished from inventions: 'Research is a mechanism for converting money into knowledge. Innovation is a mechanism for converting knowledge into money'.[23] The latter qualifies for patent protection while the former does not. Patent law does not protect mere discoveries of how the world works, but as soon as someone applies a natural product or process to a commercial use they can get a patent for the end product or process: 'The giant's reward should be the satisfaction of discovery and fame while the mechanical pygmy is an inventor who contributes a practical benefit to society and is rewarded with a patent' .[24] The inventor does not have to pay the discoverer for the use of the discovery.
The publication of research findings serves two purposes. First, it enables other researchers to verify the claims through reproducing the experiments. This acts as a check on fraudulent claims. Secondly, new knowledge is able to be generated through the putting together of the clues provided by prior work. One of the classic examples of this approach is the discovery of the structure of DNA by Watson and Crick.[25] This work pulled together a mosaic of clues from the work of many others, including the work of New Zealander Maurice Wilkins, to identify the double helix structure of DNA.
These purposes are encouraged by a reward system that accords recognition and esteem to the first person to publish new information. A strong publication record is still regarded as a measure of status in the research community. However, the rights of the discoverer are limited to a right to have his or her authorship recognised.
There are significant parallels between the patent system and the norms of scientific research. Both aim to encourage innovation by offering incentives. The addition of new knowledge to the public domain is also common to both systems. It has been questioned whether the increased involvement of the private sector, and private property rights in the products of research, will alter the traditional ways in which research has been conducted.[26] These concerns are clearly illustrated in the field of biotechnology where the raw material of research, genetic information, may be vulnerable to being locked up as the subject of private property rights. Some scientists have raised concerns over how the change in funding source — from the public purse to the private sector — will impact upon the scientific traditions of open communication and free flow of information.[27] A concern raised by the Royal Commission on Genetic Modification was the potential for intellectual property rights in biotechnological inventions to lock up in private ownership information carried by genetic material. It was argued that the scientific tradition of free communication and exchange of information and ideas was undermined by gene patents.[28] There are two ways in which gene patents may impact adversely on the progress of biotechnological research. Firstly, a researcher may delay the publication of research findings while patent applications are being processed. This delay is to ensure that publication does not jeopardise the grant, by constituting a prior publication of the invention, and to prevent
other researchers from using the published information to overtake him or her in the race to arrive at the patentable innovation. It is common for many research teams to be simultaneously working towards the same goal, yet the patent system only rewards the first inventor. This means that there is an incentive to secure patent protection before disclosing the results of research to other scientists. Secondly, the right conferred upon the patentee allows him or her to control the use of the invention by others. Where others may wish to use the invention in further research, such use may require a licence from the patent holder. This is subject to the scope of an experimental use exclusion from patent infringement, which is discussed below.[29]
Intellectual property rights aim to promote innovation while facilitating the free dissemination of new knowledge. There are two incentives operating within the patent regime. First, the opportunity to enjoy a market monopoly for an innovative product is an incentive to develop new products. For a new product to qualify for a patent monopoly it must involve an inventive step; that is, a contribution to the existing stock of public knowledge. Thus, a patent is an incentive to develop new knowledge, and an incentive to invest the necessary funds to pay forthe research needed to do so. Evidence from the USA suggests that significant private investment in biotechnological research is lured by biotechnology companies' stocks of patents.[30]
Secondly, the patent system is an incentive to publish information about new inventions. Publication of the details of anew invention is compulsory in order to obtain a patent. The incentive to do so arises because patents are not the only option available to an inventor to protect his or her intellectual achievement. The law of confidentiality offers some protection for trade secrets, but this is reliant on secrecy being maintained. Maintenance of the secret of invention is very difficult for biological materials which carry their own genetic blueprints within them. Seeds, plants, animals and microbes can all self replicate. Copying of these innovations is easily achieved; therefore, strong intellectual property rights are important to protect these innovations. Patents offer a certain term of market exclusivity, compared to the uncertainty of trade secret protection. Thus, there is an incentive for inventors to avail themselves of the patent system and make a full public disclosure of the new invention. Disclosure of the information relating to new inventions benefits biotechnology by adding to the stock of existing knowledge upon which further new discoveries are based. An example may be illustrative: a patent on a cloned gene encoding atherapeutically useful protein offers exclusivity in the market for that protein. The patent will be granted when the applicant makes a full specification revealing the details of the invention available to the public. This information is then in the public domain. However, during the term of the patent monopoly, only the patent holder may commercially exploit the invention.
A strong system of intellectual property rights has encouraged the investing of significant amounts of money in the biomedical sciences in the USA, where the term biotechnology is synonymous with both a scientific discipline and a rapidly growing industry. This investment has, since the 1970s, increasingly come from the private sector as government funding has declined.[31] One of the goals of the patent system is to promote the advancement of human knowledge. It achieves this in two ways. First, by requiring the disclosure of full details regarding every patented invention. Secondly, the exclusive right to commercially exploit an invention acts as an incentive to encourage the basic research from which patentable innovations may spring. In biotechnology, the distinction between basic and applied research is blurred because many basic discoveries have immediate commercial application. For example, many biological innovations are simply tools for further research. Therefore, it is important that intellectual property rights are available as an incentive to further the growth of knowledge in this discipline. The benefits to society are particularly important in the areas of biomedical research for new therapeutic treatments, and in agriculture where research is aimed at improving human nutrition. Traditionally, patent protection could not be obtained for basic research discoveries. In theory, no patent is available for theoretical or abstract discoveries, laws of nature, products of nature, principles, mathematical formulae or algorithms. Some courts have even noted the irony of denying patent protection to the discoverers of scientific principles while extending protection to lesser geniuses who put such discoveries to practical uses.[32] Where the fields of pure and applied research are distinct, this line between discovery and invention is easily drawn. In biotechnology the distinction becomes blurred.
Recombinant DNA research can lead immediately to new products. For example, the discovery of how a specialised cell controls the production of a certain protein may also provide a means of industrially producing that protein for commercial use. The investment of private money into basic research means new scientific discoveries may be made in commercial laboratories. The elusive distinction between pure and applied research means that patentable inventions may be developed in universities. In many universities, the securing of intellectual property rights on research results is encouraged. How patents create an incentive to invent may be re-evaluated in the light of increased commercial involvement in basic research. Has the time come when it should be acknowledged that the distinction between discovery and invention is arbitrary and, in accordance with the incentive function of intellectual property law, require entrepreneurs who apply new knowledge to commercial purposes to pay royalties to those who contribute to the stock of human knowledge?
In New Zealand, the Patents Act 1953 and the Plant Variety Rights Act 1987 govern intellectual property rights in biological materials. Plant variety rights were established, in accordance with the 1961 UPOV Convention, to provide protection for the products of plant breeding. There was a need for an alternative to the patent system because plant material was seen as incapable of meeting the requirements of novelty, inventive step and disclosure. In recognition of the importance of plants in the human food chain, the scope of the monopoly right is limited. The use of new plant material for research and breeding does not infringe the plant variety right. A second limitation on the scope of the plant variety right is the so-called farmers' privilege. A farmer who grows a protected variety may hold back some of the resulting seed for replanting the following season. New Zealand has not yet ratified the 1991 version of the UPOV convention. This updated version extends the scope of protection to include essentially derived varieties. An essentially derived variety is one that is distinct from the initial variety in one characteristic but otherwise has all of the characteristics of the initial variety. There is a concern that new techniques available for novel plant development make it easy for breeders to take protected varieties, make minor modifications to them, and commercially exploit the new variety while so avoiding infringing the initial plant variety right.[33] This issue illustrates a problem for the traditional methods of securing intellectual property protection over biological materials. Descriptions of biological inventions are usually made in general terms, while the actual invention may be narrower in scope. A plant variety right for a Royal Gala apple tree encompasses all of the characteristics of that tree. The scope of protection extends to all trees that have those characteristics in that particular combination.
It is suggested that when property rights are granted in biological materials, the scope of the right must be commensurate with the size of the contribution made by the breeder. Extending protection to essentially derived varieties is a step towards giving the right holder a property right in each of the characteristics of the whole organism individually. Arguably, this is granting a right of wider scope than is warranted by the breeder's actual achievement. It may be preferable to allow patent rights for specific genes that are made available for breeding, and which confer specific characteristics.
No inventiveness is required to obtain a plant variety right. They were designed to reward the effort that is needed to breed new varieties or new combinations of existing characteristics. New technologies have made it possible to apply some human inventiveness to the field of plant breeding, and inventiveness has traditionally been the hallmark of patentability. Therefore, patents may be the appropriate form of protection to use for plant innovations which meet the patentability criteria of inventive step, novelty and utility. Patent protection carries the advantage for the inventive plant breeder of stronger protection than the plant variety right, and more accurately matches the scope of the right granted to the actual contribution made by the inventor. The challenge of stating the invention at the right level of generality commensurate with the actual contribution made by the inventor is discussed below in Part XII.
Two rationales underpin the patent system. First is the notion that an inventor has a natural right to the product of his or her endeavour in accordance with the views on property rights promoted by philosophers such as Locke.[34] Secondly, a utilitarian rationale underpins the exchange of a short-term monopoly right to the commercial exploitation of the invention for an addition to the store of public knowledge contributed by new inventions. This utilitarian purpose has received judicial approval:
The patent system rests on the policy that a limited term monopoly will be granted as an incentive to innovation but subject to the invention and the best method of carrying it out being disclosed and made available for public use at the end of the term of protection.[35]
The fundamental relationship between the state and the grantee of a patent 'represents a quid pro quo. The quid to the patentee is the monopoly; the quo is that he presents to the public the knowledge which they have not got.'[36] The primary purpose of intellectual property systems is to promote and protect human intellectual creativity and innovation.[37] Patents are a form of social contract, where inventors receive an exclusive right for a twenty-year term[38] to exploit their invention commercially in return for public disclosure of information about it. During the term of the patent only the patentee may make, use or sell the invention. The publication of details of the invention enables researchers and competitors to have immediate access to this information which they may study. This availability of new knowledge helps to spread and widen technical knowledge. As the grant of a monopoly restricts freedom of trade and commerce and is, therefore, not to be given lightly, inventors must contribute to the sum of human knowledge. Patents are available for inventions. Not every new discovery will qualify. The term invention is used to describe a patentable innovation. In contrast, an idea or principle alone is without technical application and is not patentable. However, the term invention can mean both the product, or process, and the abstract quality which the thing so invented must embody. Yet, this quality has proved difficult to define and can lead to difficult questions of law. This requirement for patentability is discussed further in Part XI.
The enrichment of the public information base is one goal of the patent system. It aims to achieve this goal through the granting of an exclusive property right in the exploitation of an invention in exchange for the contribution of new knowledge to the public domain. If the patent holder is able to control the dissemination of this new knowledge, then the public are denied the full value of the patent bargain. The disclosure of the details about the invention secures the public benefit.
DNA sequences store information about the structure and function of biological materials. The use of biotechnological innovations such as gene sequences will be necessary in order to access this information. A molecule of DNA can be used as a probe to detect the presence of a particular DNA sequence in a sample. This procedure has applications for routine diagnostic work as well as for pure research.[39] Patents that restrict the public from accessing the disclosed information alter the balance of the patent contract. Therefore, it is important that gene patents do not restrict public access to the information stored in patented genes.
The incentive provided by a commercial monopoly will have an effect upon the areas in which innovation will be stimulated. If the reward is dependent upon a market for the results of research and development, then, market preferences will influence the course of research. It has been suggested that one result of this is too little investment in applied research that clearly benefits society, such as repairing damage done to the environment.[40] However, socially desirable innovations can also benefit from a patent system. The first patent on a genetically modified organism was awarded for a bacterium engineered to be useful for cleaning up land contaminated with oil spills.[41] Four ways in which the patent system stimulates technical progress are:
First it encourages research and invention; secondly, it induces an inventor to disclose his discoveries instead of keeping them secret; thirdly, it offers a reward for the expense of developing inventions to the state at which they are commercially practical and, fourthly, it provides an inducement to invest capital in new lines of production.[42]
Information about the invention is published at the beginning of the patent term. This is contained in the patent specification which is held at the Intellectual Property Office of New Zealand library and is available to the public. However, the use that the public may make of this information is limited by the scope of the patent claims.
Knowledge fuels innovation. Intellectual property rights are concerned with protecting innovation in order to promote the development of new knowledge. As government funding for research fades and private sector investment becomes a greater source of the necessary money, the incentive to make this investment must be provided by private monopoly rights. Once any new piece of knowledge exists, the greater public interest lies in a wide and rapid dissemination of that knowledge. Free usage leads to the fastest and widest distribution.[43] Patent law aims to balance these two conflicting objectives.
A tension exists between the objectives of providing a monopoly on the exploitation of a new invention and the promotion of research and development. Widespread use of a new invention is the most efficient way to promote further developmental work in the field in which the invention was made. Yet the patent monopoly allows the patent holder to control and restrict the use of the invention. This tension is brought into sharp focus by inventions in biotechnology because inventions that carry their essential information with them in the form of genetic material will usually require the use of the invention itself in order to access that information. The number of patent applications that contain a genetic sequence has exploded over the past decade.[44] In New Zealand, it is estimated that over 500 patent applications for genes encoding plant or animal proteins had been filed or granted prior to October 2000.[45]
The balance between these conflicting aims of the patent system is addressed in two ways. First, by defining patentable inventions in such a way that knowledge itself is not patentable, only industrial applications of knowledge. This is discussed in the following section. Secondly, an exclusion from patent infringement liability exists for bona fide experimental use of a patented invention. The scope of this exclusion is discussed in Part X.
The Patents Act 1953 is based on the British Patents Act 1949 and provides for the grant of letters patent for inventions. To qualify for a patent an invention must be sufficiently and fairly described, novel and inventive. The Act defines an invention as 'any manner of new manufacture the subject of letters patent and grant of privilege within s 6 of the Statute of Monopolies'.[46] The phrase 'manner of new manufacture' derives from the Statute ofMonopolies 1623 which banned all monopolies except those for inventions.
Through the application of 'judicial ingenuity',[47] the concept of 'manner of new manufacture' has served as the basis for defining patentable inventions throughout British law countries since 1623, successfully accommodating advances in technology. The scope of the term 'invention' was examined by the Court of Appeal in Pharmaceutical Management Agency Ltd v Commissioner of Patents,[48] where a lengthy passage from the judgment of the High Court of Australia in the NRDC[49] case was recited. This passage rejected any attempt to reduce the concept of invention to an exact verbal formula as unsound, and stated that the inquiry should be: 'is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute ofMonopolies?'[50] This question should be considered in light of the purpose of s 6 which 'was to allow the use of the prerogative to encourage national development in a field which already, in 1623, was seen to be excitingly unpredictable'.[51] One limitation seen as inherent in the concept of manner of new manufacture is that the invention must be useful. Proving utility is rarely a problem for patent applicants, probably because few people would go to the trouble and expense of patenting a useless invention. This requirement also underlines the distinction that patent law is concerned with the world of commerce and not basic research. However, the debate in the USA over the patentability of short fragments of DNA, called expressed sequence tags (or ESTs), has focused on the requirement of utility.
Early gene patents generally had well-defined utility because the protein that the gene encoded was well characterised and its function within the cell was known. Recent advances have allowed researchers to locate genes for which no function is known using ESTs. The question that has arisen is whether the use of an EST to locate a gene of unknown function is sufficient to warrant patent protection for that EST, and even for the full gene itself. In response to criticism of such patent applications from scientists, who feared that EST patents would restrict the freedom to pursue further research into the parent genes,[52] the US Patent and Trademark Office has said that these applications 'must demonstrate a more substantial, real-world utility' .[53] This issue is discussed later in the context of the patentability of research tools where it is suggested that rather than raising the bar on patentability by requiring a more substantial utility for the invention, the focus should be on limiting the scope of the patent claim, so that it is commensurate with the technical contribution to the art made by the inventor. In particular, a claim to an EST should confer a right to that EST alone, and general claim language extending the scope of the patent to include full length parent genes of the EST should not be allowed.[54] The Court of Appeal has noted that as a signatory of the TRIPs agreement New Zealand is obliged to make available patents 'for any inventions, whether products or processes, in all fields of technology'.[55] Natural products and naturally occurring DNA sequences cannot be patented in their natural source or environment because they are not new or inventive.[56] However, the discovery of a product of nature, and the industrial application of that discovery, is an invention. Patents are available for the products of human invention. Where the invention involves the isolation, purification or recombination of naturally occurring genes or substances, these can be claimed as inventions but the claim 'shall be construed as not extending to that substance when found in nature'.[57] This means that a patent for the synthetic production of human insulin using an isolated DNA sequence is not infringed by the production of human insulin in the body. On the other hand, those who get injections of human insulin produced by a biotechnological process have to pay a royalty to the inventors who developed an industrial application of the natural production of insulin.
The invention must have some new characteristic which is not known in the body of existing knowledge. An application for the grant of letters patent will be subject to examination to determine whether or not the claimed invention is anticipated by prior publication.[58] Lack of novelty is a ground for opposition to the grant of a patent where 'the invention has been published before the priority date in New Zealand'.[59] There is an important exception to this rule. A paper presented to a learned society by the inventor does not constitute prior publication.[60] This position is consistent with the encouragement of research and development, through the dissemination of new information: a key part of the rationale for the patent system.
In Ancare Gault J said, 'Patents are granted for real advances in knowledge capable of industrial application.[61] In Biogen Lord Hoffmann said, 'Whenever anything inventive is done for the first time it is the result of the addition of anew idea to the existing stock of knowledge'.[62] If there is no addition to the stock of knowledge, there can be no patent. The evaluation of an inventive step, embodied in the patentee's claim, requires an analysis of whether the degree of difference between the invention and the state of the prior art is sufficient to warrant the grant of a patent monopoly. In the words of Lord Westbury:
there would be no end to the interference with trade and with the liberty of adopting any mechanical contrivance, if every slight difference in the application of a well-known thing should be held to constitute ground for a patent.[63]
Thus, the requirement of an inventive step is rooted in a public interest consideration.
The 'inventive step' so required is a concept that has eluded precise definition, and has therefore been judged, in a negative sense, by its absence. It is common for defendants in infringement actions to challenge the validity of a patent on the ground it lacks an inventive step. There are two provisions in the Patents Act 1953 providing for the revocation of a patent on the ground of lack of inventive step. First, opponents can contest the applicant's right to a patent in a hearing before the Commissioner of Patents on the ground the invention is 'obvious and clearly does not involve any inventive step' having regard to matter published (prior knowledge) or what was used in New Zealand before the priority date of the applicant's claim.[64] Secondly, once a patent has been granted, the validity of that patent can be contested in the High Court on a similar ground.[65] The Court of Appeal has endorsed the well-established test for obviousness:
It postulates a person (or, where appropriate, a team) skilled in the field but not inventive, invested with the common general knowledge available in the field at the priority date, presented with the prior knowledge or prior use relied upon. It asks whether to that person or team the alleged inventive step would be obvious and would be recognised, without bringing to bear any inventiveness, as something that could be done or is at least worth trying.[66]
In determining the issue of obviousness, a four step analysis is adopted.[67] First, the court identifies the inventive concept embodied in the patent. Next, the court will assume the mantle of the skilled in the art but unimaginative addressee, and will impute to him the common general knowledge in the relevant art at the priority date. The skilled addressee may be a team with differing scientific knowledge.[68] The court should then identify what, if any, differences exist between the matters cited as being published or used and the alleged invention. Finally, the court has to decide whether, viewed without any knowledge of the alleged invention, those differences constitute steps which would have been obvious to the skilled person, or whether they require any degree of invention.[69] If any embodiment within the claim is obvious, the claim is invalid.[70] The court must be careful to avoid using the benefit of hindsight to find obvious that which at the relevant time was not obvious: 'Ex postfacto analysis of invention is unfair to the inventors and, in my opinion, it is not countenanced by English patent law'.[71] The primary evidence — opinions of expert witnesses — will be of assistance to a court in determining whether or not the relevant step would have been obvious to a person skilled in the art.[72] Evidence of the commercial success of the invention may suggest that it has fulfilled a 'long felt want' .[73] Such evidence may support a finding that the invention was not obvious, but 'it is no more than an aid in assessing the primary evidence'.[74]
The Court of Appeal recently acknowledged the existence of the 'exclusion from infringement for the benefit of those practicing the invention for the purpose of bona fide research'.[75] The defence of experimental user is not part of the Patents Act 1953, but is derived from case law. In Monsanto v Stauffer[76] the defendants were using a patented herbicide in field trials designed to obtain data necessary to achieve permission to use the herbicide in New Zealand. In the High Court Eichelbaum J accepted that the unlicensed use of patented inventions for the purpose of bona fide experiments, or with a view of seeing whether an improvement can be made upon the invention, is not an invasion of the exclusive rights granted by the patent.[77] Under the grant of the letters patent the patentee has 'the full power, sole privilege and authority to make, use exercise and vend the invention within New Zealand'.[78] It was clearly stated, however, that this right is limited by permitted experimental uses of the invention. A monopoly would be infringed where there was 'some deriving of advantage'.[79] The defendant's use of the herbicide in field trials had 'gone well past the demarcation line of permitted experimental use'.[80] Beyond these guidelines there is no definition of the scope of this experimental use exclusion.
The United Kingdom Patents Act 1977 contains an express provision excluding from infringement acts done for experimental purposes relating to the subject matter of the invention.[81] The scope of this provision has been said to include 'trials carried out in order to discover something unknown or to test a hypothesis or even in order to find out whether something which is known to work in specific conditions, e.g. of soil or weather, will work in different conditions'.[82]
It may be asked whether permitted experimental use of a patented invention is part of the patent social contract. If it was in the legislation, as it is in the United Kingdom, then it would be clear to the inventor that he or she enters the contract agreeing to experimental use. In New Zealand, it is judicially crafted,and in order to determine the scope of this exclusion from infringement liability, the policy that guides and determines the boundaries of the exclusion needs to be examined. Can this policy help to set the limits as to what is research use and what is not? The experimental use exclusion from patent infringement liability can be justified by reference to the social contract underlying the patent system. It would be contrary to the aim of encouraging research and development, which is part of the patent social contract, if the progress of basic research were to be inhibited by patents. Therefore, the conduct of basic scientific research should be the first activity accepted as falling within the experimental use exception.
The scope of this exception may need to be carefully considered in light of biotechnological patents that appear to claim basic discoveries such as DNA sequence information. Too narrow a scope could stifle research and impair the processes of building new knowledge upon old. Too broad a scope may inhibit private sector investment in research by reducing the incentive value of the patent monopoly.
The incentive to invent rationale of the patent system works by persuading the inventor to disclose her or his invention in return for protection of the potential to generate financial rewards from its exploitation. The enticement is a guarantee of compensation for any unlicensed use of the invention. Any use which the inventor does not voluntarily accept, and which potentially reduces the profitability of the invention, will be a disincentive to future inventors to utilise the patent system.
In the context of biotechnology, the research exclusion may assume a more prominent role in the light of accusations that gene patents lock up basic biological information.[83] The patent system requires a full specification of the invention to be made public, and the social contract analysis would suggest that the scope of the patent monopoly is equivalent to what has been contributed to the public stock of knowledge in the specification. The conclusion is that the information cannot be locked up. The patent holder may only control the commercial exploitation of the information. Research conducted upon patented inventions solely for the purpose of scientific curiosity does not threaten the potential rewards that a patentee can expect. This activity supports the advancement of human knowledge.
The scope of this permitted use is poorly defined because it will generally only be available as a defence to an infringement action where the patent holder's pecuniary interests are not threatened by the use of the invention. In these circumstances, litigation is unlikely. Cases indicate the issue has arisen primarily where a competitor has sought to use a patented product in order to gain regulatory approval to market a generic product. This was the situation in Monsanto v Stauffer,[84] and has arisen most frequently in the area of generic pharmaceuticals which need the approval of the Department of Health before they can be marketed in New Zealand.[85] The New Zealand Patents Act 1953 guards against a patent holder not making an invention available in New Zealand. Where the invention covered by a patent is not available in New Zealand on reasonable terms, an application can be made to the High Court for issue of a compulsory licence.[86] This provision was amended in 1994, narrowing the grounds upon which a licence could be ordered, in compliance with the TRIPs agreement.[87] Prior to this change, there was a presumption in favour of a grant of a compulsory licence for patented inventions in the fields of food and medicine.[88] Applicants must first make every effort to obtain authorisation from the patentee on reasonable terms. Evidence suggests that fears of patent holders locking up areas of research are unfounded. DuPont, the holder of the patent for the Harvard Mouse, has agreed that not-for-profit researchers will be able to use the mouse without having to pay any licensing fee.[89] Patents that comprise the breast cancer genes BRCA have not hindered the production of several hundred research papers discussing these genes.[90]
Evidence was presented to the Royal Commission on Genetic Modification which suggested patents covering tools and techniques used in research did not inhibit the progress of research. This evidence suggests the use of patented inventions, particularly the tools of genetic engineering, is facilitated by licensing agreements. The ownership of intellectual property is used as a bargaining chip in order to secure licences to use others' intellectual property.[91] Improvements upon existing innovations will frequently involve the use of the intellectual property embodied in the first innovation. An example is a patent for a mousetrap (pioneer patent), and a subsequent patent for an improved mousetrap (improvement patent).[92] It is likely that exploitation of the improved mousetrap will, in the absence of permission from the pioneer patent holder, be an infringement of the pioneer patent. The pioneer patent holder must obtain the permission of the improvement patent holder to use the better mousetrap invention. There is a commercial incentive for each owner to reach an agreement with the other, and the strength of each inventor's bargaining position reflects the value of his or her invention.
In the seventeenth century the Royal Society required confirmation of any remarkable finding by qualified members before it could be recorded as fact.[93] The use of a patented invention for the purpose of testing the validity of the claims can be justified. The public is entitled to ensure that the consideration of a patent monopoly is not awarded where it is not earned. This is consistent both with patent law and with the normal scientific process. It acts as a check on the adequacy of the disclosure for facilitating working of the invention by a person skilled in the relevant art.
It may be that the exclusion should apply to the use of patented inventions in purely non-commercial research, or in research that does not compete with the commercial interests of the patent holder. However, to define the exclusion purely in terms of use that does no harm to the interests of the patent holder is problematic. Any unlicensed use of the invention will harm the patent holder if he or she would otherwise have received a licence fee. The difficult area to evaluate is where the patented invention is used in research aimed at developing improved alternative products. This approach may benefit the public by accelerating the introduction of better products. It may also harm the interests of the patent holder by curtailing the period in which his product enjoys market competitiveness. The patent system aims to promote further development of, and improvements upon, the current state of the art. To this end, patent holders ought not to be able to block research aimed at making improvements to a patented invention.[94] However, a broad experimental user exclusion that facilitates the rapid development of improved and competing commodities will reduce the potential returns on the inventor's research and development outlay, and thus weaken the incentive provided by the patent. On the other hand, free access to the raw materials of research would help to keep down the costs of doing the research.
It is difficult to judge how significant a wide scope for the experimental use exclusion would be for the incentive function of patent law. In support of a broad experimental use exclusion, it is claimed that innovators may be reluctant to license competitors to use the invention.[95] However, in order to benefit from a patented invention, the patent holder is usually encouraged to license use of the invention as widely as possible. This will include market competitors.
Eisenberg asserts that the experimental use exclusion should apply to the use of a patented invention in research leading to improvements in the patented technology, or to development of alternative means of achieving the same purpose.[96] Yet, it is arguable that this very use is damaging to the pecuniary interests of the patent holder. A broad exclusion, enabling improvements or substitute technologies to be developed on the back of patented inventions, limits the ability of the patent to guarantee a patentee appropriate returns on his or her investment in research and development.[97]
Karp maintains that any reduction in the scope of the patentee's exclusive rights will act as a disincentive to innovators. One strong argument advanced in support of a narrow scope for the experimental use exclusion is that it is the patentee's inventive effort that provides the foundation for competitors' development of alternative or improved inventions. In comparison with copyright law, the patent term is very limited. Twenty years is the term of a patent monopoly, whereas copyright subsists for the life of the author plus seventy years. One reason for this difference is that there is a greater likelihood of more than one person achieving the inventive step required to develop a patentable invention. Another reason is that copyright protects only the form of the creation and not the idea, whereas a patent may protect, from commercial exploitation by others, the idea encapsulated within the invention. By awarding the patent to the first inventor, a second inventor who was slower to lodge a claim may be harshly treated in gaining no reward at all for his or her efforts. Thus, the patent system promotes early application for patents, often before the invention is ready for full commercialisation.[98] The patent grant plays a role in enabling the inventor to seek the investment necessary to fully develop the invention into marketable commodities. Prospective investors will seek assurance from the existence of patents before investing the funds to facilitate ongoing development of the invention. Consequently, there is often a time lag between the securing of a patent and the commercial exploitation of the invention. A wide experimental use exclusion, allowing competitors to develop improvements and alternatives at the same time as the patentee was working on bringing the invention to market, may discourage this investment.[99]
Another factor to consider is the inherent uncertainty of research. Only a fraction of all research will lead to marketable innovations. If the developer of the improved mousetrap had failed to create an innovation, there is little to be gained by imposing a cost for the use of the pioneer mousetrap in his research. It is when the subsequent research is realised as a commercial product that the commercial interests of the pioneer inventor are threatened. Uncertainty about the eventual success of a pathway of development may dissuade a researcher from incurring the cost of obtaining licences to use patented research tools.
A workable compromise may be to use a form of compulsory licence in which the royalty is linked to the commercial success of any subsequent innovation.[100] This would leave pure scientific research free and unhindered. It is possible that patent holders may form similar private agreements with researchers. In return for the immediate free use of a patented research tool, a licence agreement may confer upon the patent holder rights in subsequent downstream discoveries. One possible drawback to this scheme is that where multiple pieces of intellectual property are required for the development of one marketable product, the division of the ultimate profits among too many owners could become a disincentive to undertake the development process.[101]
The suggested linkage between the royalties due to the patentee of research tools, and the commercial success of downstream products that result from research utilising those tools should be approached with caution. The social contract underlying patent law calls for the inventor to be able to reap the rewards of his or her own effort, and that alone. The market for the invention largely determines the size of the reward which is influenced by such factors as consumer demand. A licence that enables the patent holder to participate in the commercial development of other innovations would extend the scope of the patentee's reward beyond the original contribution to the art. An example would be DuPont Corporation, which holds the patent on the Harvard oncomouse, licensing the use of the mouse in research in exchange for the right to participate in future negotiations to develop commercial therapeutic cancer treatments well beyond the scope of the oncomouse patent claims. Agreements such as these will make it difficult to establish clear titles to downstream products.
Biotechnological research involves the use of highly technical equipment. Research tools are products whose target market is researchers. A Harvard mouse retails for about fifty US dollars.[102] It is important that an experimental use exception is not made wide enough to interfere with the supply of innovative research tools. It is difficult to justify a research exemption where the researcher is an ordinary consumer of an invention. Patents on the tools of basic research are unlikely to lock up areas of research. The patent holder can only gain the benefits of the patent by supplying the invention to as wide a market as possible. Therefore, there is an incentive to make the invention available to researchers. The issue of the patentability of expressed sequence tags (ESTs) brings into focus the problems surrounding patented research tools. ESTs are tiny fragments of genes. In any given cell, the active genes will be transcribed into messenger RNA which is then translated into a protein. ESTs are obtained by converting messenger RNA into complementary DNA (cDNA) and therefore share homology with those genes in a cell which are active, but the ESTs do not contain introns (noncoding regions). The function of the full gene from which these fragments are derived may be unknown.
The industrial application of ESTs is their use as molecular probes in finding full length sequences. Pieces of DNA (sequence information) including ESTs, for which no function is known, are more like pieces of information than new and useful chemical molecules. It has been suggested that because the utility of these molecules is so limited, patent claims to ESTs should be limited to the EST alone and not include longer sequences.[103] The argument for a narrow scope for such claims is that further research on the full length gene may be hindered by a patent on an EST. The social contract basis of the patent system also suggests that a patentee who has identified only an EST has given consideration only for exclusive rights in the EST. Exclusive rights in a full gene should only be awarded for a disclosure of the function of that gene. If a patent on an EST also claims the full length gene sequence, other research teams may not be able to continue work on finding and understanding the function and regulation of that gene without a licence from the patent holder.
ESTs are useful for isolating full-length genes, locating coding regions on genomic DNA and identifying patterns of expression in different tissues.[104] The development of commercial products, such as therapeutic proteins or genetic diagnostic tests, is likely to require the use of multiple gene fragments. This requirement is likely because biological systems use many regulatory mechanisms with overlapping functions. An example is the regulatory receptor gene families. The adrenergic receptor occurs frequently in the human genome, and may perform a different function in different tissues. The term adrenergic receptor occurs in the claims of over 100 issued patents in the United States.[105] This means that a researcher wishing to learn about the effects of new therapeutic agents that exhibit adrenergic activity may have to negotiate over 100 separate licence agreements. It is asserted that the burden of arranging these licences can be a strong disincentive to undertake such research. Product development may also be hindered where patents on individual fragments of upstream research are held by different owners. Costly transactions may be required to bundle licences together before a firm can have the necessary materials for product development.[106]
ESTs as experimental tools raise interesting questions for patent law. As the only use of ESTs is as research tools for research into the full length gene from which they are derived, do they fall within the scope of the research exclusion to patent infringement? Does use of a sequence in electronic searching of databases constitute infringing use? Patent claims concerning ESTs generally claim not only the sequence of the EST but also claim DNA molecules that comprise the DNA sequence of the particular EST.[107] This means that any DNA sequence that includes the EST sequence will fall within the scope of the patent. The decision of the House of Lords in Biogen[108] may suggest that claims to a full-length gene sequence based on the invention of an EST would be invalid on the ground of insufficiency. A claim may exceed the technical contribution to the art by claiming every way of achieving a result when it enables only one way.[109] An EST offers one way of obtaining the full gene sequence, but there may be other ways of doing so that owe nothing to the disclosure of the EST.
There is some uncertainty regarding the tests used to determine the question of obviousness. This uncertainty could have been eased by a definitive statement on the nature of an inventive step from the House of Lords in Biogen.[110] The decision, in that forum, that Biogen's patent was invalid was made on the ground of insufficiency, but Lord Hoffmann did make a potentially very useful observation on the question of inventive step. This observation was that the identification of the inventive concept is critical. In particular, the use of general language will tend to cast the inventive step too widely when the actual contribution to the art may be quite specific:
A proper statement of the inventive concept needs to include some express or implied reference to the problem which it required invention to overcome.[111]
It has been suggested there are two ways in which something can be non-obvious.[112] First, a solution to a problem may involve some lateral thought because the step does not follow linearly, or logically, from an understanding of the prior art. Secondly, the solution may be the end result of a sequence of logical steps to be taken from the point at which the prior art had placed the skilled addressee:
The citadel may be captured either by a brilliant coup de main or by a slow laborious approach by sap and mine according to the rules of the art; the reward is the same.[113]
Merely finding new knowledge is not sufficient for a patent. Novelty is one requirement but is not to be mistaken for an inventive step. Not every advance upon the prior art will have been achieved by the taking of an inventive step. Only those inventions that embody an inventive step are patentable. How the invention was developed is therefore relevant to this issue.
Biotechnology has combined science and industry with the effect that scientific advances will result from business decisions that guide research effort and supply resources. Mere business decisions will not earn patent protection but where those decisions result in programmes of research that contribute real advances in knowledge patent rewards are warranted. In Genentech it was held that the patent for human tissue plasminogen activator protein produced by recombinant DNA techniques was invalid because the product was known and the steps taken to produce it were obvious. If the alleged invention is stated at a general level, it is likely to coincide with prior art and appear to be obvious. Yet any invention can be stated at a level of particularity which will appear to reveal something not previously known. As Mustill LJ observed, 'the way in which the question about obviousness is put, will often, if not always, dictate the answer'.[114] In this context, the precise configuration of the sought-after genes and the expression vectors created could not have been known before the work was done. These products were novel. However, the general nature of the route taken to find these products was obvious. This illustrates how the test for inventive step is clearly distinct from the test for novelty. A line of cases in the USA has illustrated the problems that can arise from an overly objective approach to the question of inventiveness. These cases involve the question of whether a known amino acid sequence rendered a corresponding DNA sequence obvious. Following the disclosure of partial amino acid sequences from human insulin-like growth factors in scientific journals, the US Patent Office rejected patent applications that claimed the human DNA and RNA sequences that encoded those proteins. This decision was based upon the fact that a general method for isolating a gene for which a partial amino acid sequence is known, using a short probe constructed by putting together DNA bases that encode part of that amino acid sequence, was known in the prior art. A Federal Circuit court overturned this decision on the basis of the degeneracy of the genetic code.[115] The redundancy or degeneracy of the genetic code means that, with very few exceptions, it is possible to have several nucleotide sequences which correspond to a given amino acid sequence. The court held that because many different sequences of DNA could potentially code for the same amino acid sequence, the actual DNA claimed by the patentee was not obvious. The patentability of DNA sequences derived from known amino acid sequence information is not precluded in the USA by obviousness.[116] This is because novel chemicals are generally not presumed obvious unless structurally similar to a known compound. The amino acid sequence and the corresponding DNA sequence are sufficiently different chemical molecules that knowledge of the former does not enable conception of the latter.
Discovering the DNA sequence of a gene is also an addition to the stock of human knowledge because the precise sequence of bases was not previously known. However, to assert that this alone is enough for patentability is to assimilate the test for obviousness with that for novelty. In the words of Mustill LJ, something more is required. Unfortunately, the enunciation of just what this something extra is has eluded precise definition.
With the change in the way that research is conducted, many inventive steps will be the result of planned research programmes undertaken on the basis of careful management decisions involving cost-benefit analyses. Mere business decisions will not earn patent rewards. In Genentech v Wellcome[117] the research team had identified a target for research, a route to achieve that target, and decided to bear the risk of failure. The achievement of the target was described as 'excellence in the field of management',[118] but was held to involve no invention and was therefore unpatentable. However, the nature of the biotechnology industry, in which product development is a planned exercise involving accountants and managers, should not be a bar to gaining patents for the results of the work. As was recognised by Lord Hoffmann in Biogen:
The fact that a given experimental strategy was adopted for commercial reasons, because the anticipated rewards seemed to justify the necessary expenditure, is no reason why that strategy should not involve an inventive step. An inventor need not pursue his experiments untouched by thoughts of gain. Most patents are the result of research programmes undertaken on the basis of hard-headed cost-benefit analysis.[119]
In Ancare the Court of Appeal stated the test to be whether the alleged inventive step was 'something that could be done or was at least worth trying'.[120] This approach indicates that some consideration should be given to the likelihood of success of a proposed course of development. The assessment of a probability of success invites a court to set a threshold level of probability above which a method would be held to be obvious to try. This type of test is vulnerable to yielding inconsistent results. For example, the Biogen success was held to result from a method that was obvious to try by the English Court of Appeal,[121] while the European Technical Board of Appeal held that the same invention was not obvious.[122] The English Court of Appeal held Biogen's patent obvious because the route taken was known even though the state of the art suggested the chances of success were low. The European Technical Board of Appeal focussed instead on the objective achievement, the fact that Biogen had overcome scientific uncertainty, and held that while the method may have been known as a possible method to try, it did not offer a reasonable expectation of success.[123]
Uncertainty is a continuous variable. It ranges from zero to one hundred percent. This fact may have influenced the English Court of Appeal's decision to revoke Biogen's patent on the ground of obviousness.[124] As the probability of the success of a method for solving a problem approaches one hundred, it becomes an obvious method to try. The success of a method that is reasonable to try may add new knowledge to the state of the art, but little that can be called inventive. Yet, only a scintilla of invention is enough for a patent.[125] The New Zealand Court of Appeal has said that the element of inventiveness necessary to resist an attack on the ground of obviousness was not high.[126] Analysis of the likelihood of success of a particular path of research, as a measure of whether an inventive step was achieved, invites the criticism that a patent is earned for mere 'skilful exertion of time and effort'.[127]
It may be that to pursue an exact definition of inventive step is both difficult and unnecessary. For guidance as to the patentability of an invention, the underlying social contract should be examined: 'Patents are granted for real advances in knowledge capable of industrial application'.[128] An invention must contribute a new idea to the existing stock of knowledge. Lord Hoffmann has described three forms that this new idea could take:
Sometimes, it is the idea of using established techniques to do something which no one had previously thought of doing. In that case, the inventive step will be doing the new thing. Sometimes, it is finding a way of doing something which people had wanted to do but could not think how. The inventive idea would be the way of achieving the goal. In yet other cases, many people may have a general idea of how they might achieve a goal but not know how to solve a particular problem which stands in their way. If someone devises a way of solving the problem, his inventive step will be that solution but not the goal itself or the general method of achieving it.[129]
In short, these steps are the goal itself, the general method of achieving the goal, and the solution to a problem. If patents are to be granted for additions to the stock of human knowledge then whether the invention has solved some scientific uncertainty should be taken into account. As the techniques of genetic engineering become commonplace, the number of patents awarded for biotechnological inventions might be expected to decline. A vast array of materials, tools, and protocols developed by molecular biologists are now part of the art.[130] Applying established techniques to achieve an identified goal is not within the scope of invention as defined by Lord Hoffmann. To do so would constitute an obvious developmental step.
Traditional plant breeding techniques for combining desirable characteristics from two plant varieties into one new variety would generally be considered obvious and therefore unpatentable.[131] An exception to this proposition is the granting of a patent for a sunflower seed conventionally bred to have an oleic acid content of approximately 80% or greater.[132] In this case, it was held that the existing wisdom in the prior art suggested that the course of breeding undertaken by the applicants would not have been successful.[133] By achieving their goal, the applicants had shown that something previously thought not possible was, in fact, possible. This was held to be a sufficient contribution to the art to warrant the grant of a patent.
Scientific uncertainty is not to be equated with mere lack of information if the means to gather that information are readily available. Where DNA sequencing is done automatically by machine, mere sequencing of DNA can not be inventive. As described above,[134] scientific progress involves building upon steps previously taken. One difficulty is that taking the next step may well involve solving scientific uncertainty but, equally, it may be seen as an obvious course to try. The question of obviousness may turn on the way in which the inventive concept is described. In Biogen Lord Hoffmann made the point that the level of generality at which the inventive step is stated is critical. Here, the patentee had chosen to pursue an identified goal by known means. Lord Hoffmann said: 'A proper statement of the inventive concept needs to include some express or implied reference to the problem which it required invention to overcome .[135]
Advances in science usually comprise a series of small steps. Each forward step is prompted by the preceding one. Biogen built on existing knowledge of recombinant DNA techniques to produce recombinant DNA molecules coding for Hepatitis B virus (HBV) core and surface antigenic polypeptides, and successfully produced these polypeptides in prokaryotic cells. Recombinant DNA techniques were well established at that time, but it was not known whether the DNA contained in the Dane particle (the identified HBV infective agent) carried the genes encoding the viral antigen proteins. It was also not known whether prokaryotic cells transformed with eukaryotic genomic DNA could successfully transcribe and translate these genes into proteins.
Previously recombinant DNA techniques had been shown to be capable of expressing eukaryotic genes obtained from mRNA in prokaryote cells. However, no mRNA for the HBV antigenic proteins were available. Biogen attempted to express large fragments of the HBV genomic DNA in the hope that among the fragments would be a piece large enough to be expressed in the host cell and that would exhibit HBV antigenic activity. The attempt was successful. The uncertainty surrounding expression of eukaryotic genes in bacterial host cells meant that the probability of success was low. The Court of Appeal (UK) found that the decision to express a polypeptide displaying HBV antigen specificity in a suitable host generated no new teaching, and so declared the patent invalid for lack of an inventive step.[136] Yet, an addition to the stock of human knowledge had been made by Biogen in providing answers to the two unknown questions that had persuaded expert opinion to rate the chances of success as low. In the House of Lords, Lord Hoffmann agreed that so stated the alleged inventive step was obvious.[137] However, when the invention was described with greater particularity the argument for the existence of an inventive step was much stronger. Lord Hoffmann characterised the inventive step as 'the idea of trying to express unsequenced eukaryotic DNA in a prokaryotic host'.[138] In taking this step, Biogen addressed the uncertainty of using recombinant DNA techniques to express eukaryotic proteins in bacterial (prokaryotic) host cells.
The decision in Biogen poses a challenge to patent applicants to state the invention at an appropriate level of generality. Too high a level and the patent will be vulnerable to an attack on the ground of obviousness, and the claim may be too broad. On the other hand, too narrow a claim will facilitate competitors inventing around the patent to avoid infringement. This position, reached by considering the level of abstraction at which the inventive step is stated, is in accord with the social contract rationale for the patent system. A monopoly should be granted that is commensurate with the actual contribution to the art made by the inventor. Biogen did not invent the first method of expressing eukaryotic proteins by introducing recombinant DNA molecules into bacterial cells, but they did invent one way of using recombined genomic DNA to express HBV antigenic proteins in prokaryotes. Biogen was entitled to a patent for this invention. The reason that the patent was held invalid was because Biogen claimed a larger monopoly than they were entitled to under the patent social contract. This related issue, the scope of the patent claim, is considered next.
In Biogen, the patent was held invalid because the claims were wide enough to include the same products made by methods not disclosed in the specification. It was accepted that the invention would work, but the claims were drafted too broadly, or at too high a level of abstraction, to be commensurate with the inventive step that was achieved. The patent application lay claim to 'any recombinant method of making the [HBV] antigens' .[139] This type of broad claim, where the claimed monopoly exceeds the 'technical contribution to the art embodied in the invention',[140] can inhibit subsequent innovation by making that which may be in the public domain, or is yet to be discovered, subject to a private intellectual property right. Lord Hoffmann said:
It is inevitable in a young science, like (...) recombinant DNA technology in the 1970' s, that dramatically new things will be done for the first time. The technical contribution made in such cases deserves to be recognised. But care is needed not to stifle further research and healthy competition by allowing the first person who has found a way of achieving an obviously desirable goal to monopolise every other way of doing so.[141]
The social contract underlying patent law limits the scope of a patentee's monopoly by reference to the technical contribution made by the invention. Broad claims to biotechnological inventions have been criticised for monopolising large tracts of ground over and above what the patentee is entitled to.[142] Sometimes a patentee can justifiably claim more than what is shown in working examples. Too narrow a scope for the claim and others will be able to avoid infringement with minor changes. The scope of a claim should be that which the patentee has made available in the sense that he has advanced the art by converting uncertainty into certainty. A patentee deserves to be rewarded with a monopoly over his solution to a recognised problem, but not to all solutions to that problem.
Usually, the existence of prior art encompassing part of the claims will serve to check over-broad claims. Where the technology is new and little prior art exists, as in biotechnology, the claims must be scrutinised to ensure that the information disclosed in the patent application enables others to work the full width of the invention claimed.[143] A patent will be too broad if it claims results it does not enable, or if it claims every way of achieving a result when it discloses only one way and it is possible to envisage other ways of achieving that result which make no use of the invention.[144] Product claims are vulnerable to excessively broad claims because the inventive step often lies in the process developed to get to that product. This inventiveness does not warrant a monopoly over the entire field. As Lord Hoffmann said in Biogen: '[T]he Wright Brothers showed that heavier-than-air flight was possible, but that did not entitle them to a monopoly of heavier-than-air flying machines'.[145]
Broad claims are likely to arise where patents are sought for many biotechnological inventions because biological materials are described in functional rather than structural terms. For this reason. claims are naturally going to consist of generalised wording. To some extent this is unavoidable where genes are concerned because 'gene' is itself a functional term. Genes consist of lengths of DNA, but not all lengths of DNA are genes. A length of DNA can be described as a gene only when it has a described function. Functions can include comprising the coding sequence for specific polypeptides used in protein synthesis, or a gene may have a regulatory function, such as a promoter gene which interacts with the cellular environment to control when a particular section of genome is transcribed into mRNA.
Biotechnological inventions will need to use broad and general descriptive terms in order to secure effective intellectual property protection. This is because of the ease with which variety can be introduced into biological material. In a case concerning a claim that included the general terms 'plasmid,' 'bacterium' and 'regulon', the European Technical Board of Appeal supported the use of terms that embrace variants of the components of an invention.[146] The reason given was that variants, of components of the invention, which are equally suitable to achieve the same effect in a manner which could not have been envisaged without the invention, must also be protected if the patent protection is to be effective. On the other hand, a claim which covers any transgenic cotton plant exceeds the protection earned by an inventor who describes only one way of transferring a foreign gene into the plant.[147] It is conceivable that other ways of achieving the result may be developed that owe nothing to the teaching of the patentee.
In Ancare Gault J said in relation to the question of obviousness: 'No patent should interfere with what has been done or disclosed before nor with obvious variants of what has been done or disclosed before'.[148] It is suggested the scope of biotechnological patents should also be considered to include obvious variants of the patented invention. The term 'obvious variant' has the same meaning in the context of plant varieties as essential derivation. The ease with which variants of biological materials can be developed lends support to the legitimacy of broad claims. As plant varieties become increasingly the result of inventive research work, it can be expected that difficult issues about the appropriate scope of plant patents will arise.
Verification of research results by other researchers may require more than access to a written report of the experiments. Biological material is especially difficult to reproduce without access to the actual material used by the inventors. Traditionally, goodwill and convention facilitated the exchange of such material between research teams.[149] In order to ensure that the disclosure of inventions required by the patent social contract was met in the field of microorganisms, an international agreement was formed that calls for a system of deposits of new micro-organisms. The Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure 1977 is administered by the World Intellectual Property Organisation (WIPO). In order to comply with the enabling disclosure requirement of most countries' patent laws, it is international practice to deposit a sample of a micro-organism in a public depository. The treaty ensures that samples of micro-organisms for which patents have been granted are publicly accessible. New Zealand is yet to join this treaty, even though the guarantee of access to inventions is a key aspect of the patent social contract.
Disclosure of the invention at the beginning of the patent term places the new addition to the stock of knowledge into the hands of researchers who can build upon it. The extension of knowledge is in the public interest and fulfils the obligation of the patentee under the patent social contract. The specification submitted by the applicant must contain a description of the invention. This must be sufficiently detailed so that a person skilled in the art can understand and work the invention. In New Zealand, an invention must be fairly and sufficiently described in order to fulfil the requirements for the grant of a patent.[150] A function of the claims is to define the limit of monopoly. This will enable others to know the metes and bounds of the patent in order to avoid unintentional infringement.[151]
Biotechnology is important for New Zealand's future economic prosperity. This country has a strong tradition of biotechnological research which has helped to maintain its primary producers' market competitiveness. As changes in the way that biotechnological research is undertaken, particularly the increase in private funding, it will be very important to maintain incentives for technological progress. This paper has shown that the plant variety rights and patent systems can provide these incentives.
An understanding of the social contract that underpins patent law can assist in the application of this industrial age system to the biotechnological inventions of today. One key challenge for the intellectual property community is to ensure the scope of an intellectual property right, awarded to an inventor, is commensurate with the actual contribution to the relevant art made by the inventor. This will require developing language skills to correctly describe biological inventions in functional terms but at an appropriate level of specificity.
Plant variety rights should be extended to include essentially derived varieties. It is also noted that plant research is greatly assisted by the current breeder's exemption. Patent applicants face the challenge of stating their inventions at a level of generality that reflects their true achievements, and is sufficiently wide to ensure adequate protection. An inventive step, however small, deserves to be recognised and rewarded but does not warrant a monopoly protection of excessive scope.
Intellectual property systems and scientific research share the goals of promoting the advancement of knowledge. An initial perception may suggest that granting private property rights in research outcomes conflicts with the scientific tradition of free dissemination of knowledge and new discoveries. This paper has shown that with an appropriately carved research exclusion from patent infringement that perception is not accurate. The patent system is designed to allow the information developed through research to flow freely into the public domain. DNA lies at the centre of the biotechnology industries because of the value of the information encoded in nucleotide sequences. The key balance to be struck by the patent system is to promote biotechnological research while facilitating the dissemination of that genetic information to researchers who can use it to enhance many aspects of human life.
[*] Andrew Allen has an MSc in Plant Biotechnology. This paper was written as part of the undergraduate LLB Honours programme.
[1] G B Petersen, 'The cost of knowledge' (2001) 58 New Zealand Science Review 7, 8.
[2] Report of the Royal Commission on Genetic Modification (2001) 94. Appendices to the Journals of the House of Representatives <AJHR, 2201, H.1> [ hereafter G M Commission Report].
[3] L C Thurow, 'Needed: A New System Of Intellectual Property Rights' [1997] Harvard Business Review 95.
[4] Petersen, above n 1, 8.
[5] Thurow, above n 3, 98.
[6] J Pilkington, An Adventure on the Old Silk Road (1989) 8.
[7] J Robertson and D Calhoun, 'Treaty on Biological Diversity: Ownership Issues and Access to Genetic Materials in New Zealand' [1995] European Intellectual Property Review 218.
[8] D Hampton and A Baker, 'Protecting plant breeders' investment: patents and new plant cultivars in New Zealand' [2000] New Zealand Intellectual Property Journal 269.
[9] From the French: Union pour la Protection des Obtentions Vegetales.
[10] [1996] UKHL 18; [1997] RPC 1.
[11] GM Commission Report, above n 2, 108.
[12] Ibid, 420.
[13] R Teitelman, Profits of Science (1994) 179-202.
[14] Thurow above n 3, 97.
[15] GM Commission Report, above n 2, 278.
[16] M A Heller and R S Eisenberg, 'Can Patents Deter Innovation? The Anticommons in Biomedical Research' (1998) 280 Science 698.
[17] See Part VIII.
[18] Heller and Eisenberg, above n 16, 698.
[19] Discussed in Part X.
[20] R K Merton, On the shoulders of giants: a Shandean postscript (1965) 1.
[21] R S Eisenberg, 'Patents and the Progress of Science: Exclusive Rights and Experimental Use' (1989) 56 University of Chicago Law Review 1017.
[22] L Jardine, Ingenious Pursuits (1999) 317.
[23] Petersen, above n 1, 12.
[24] D Vaver, 'Intellectual Property Today: Of Myths and Paradoxes' (1990) 69 Canadian Bar Review 98, 116.
[25] J D Watson and F H C Crick, 'A Structure for Deoxyribose Nucleic Acid' (1953) 171 Nature 737.
[26] R S Eisenberg, 'Proprietary Rights and the Norms of Science in Biotechnological Research' (1987) 97 Yale Law Journal 177.
[27] Ibid 178.
[28] GM Commission Report, above n 2, 278.
[29] See Part X.
[30] R Teitelman, Profits of Science (1994) 183-90.
[32] Katz v Horni Signal Mfg. Corp 145 F 2d 961, (2 d Cir, 1944).
[33] Hampton and Baker, above n 8, 269.
[34] D I Bainbridge, Intellectual Property (1999) 321-3.
[35] Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 533 (Gault J).
[36] Pope Appliance v Spanish River (1929) 46 RPC 23, 55 (Viscount Dunedin).
[37] GM Commission Report, above n 2, 277.
[38] Patents Act 1953 (NZ) s 30(3).
[39] R S Eisenberg, 'Re-examining The Role Of Patents In Appropriating The Value Of DNA Sequences' (2000) 49 EMORY Law Journal 783, 798.
[40] D Vaver, 'Intellectual Property Today: Of Myths and Paradoxes' (1990) 69 CanadianBar Review 98, 121.
[41] Diamond v Chakrabarty [1980] USSC 119; 447 US 303 (1980).
[42] Chiron Corporation v Organon TeknikaLtd (No. 10) [1995] FSR 325, 332 (Aldous J).
[43] Thurow, above n 3, 95.
[44] M Enserink, 'Patent Office May Raise The Bar on Gene Claims' (2000) 287 Science 1196.
[45] GM Commission Report, above n 2, 280.
[46] Patents Act 1953 (NZ) s 2.
[47] Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 534.
[48] [1999] NZCA 330; [2000] 2 NZLR 529.
[49] National Research Development Corp v Commissioner of Patents [1959] HCA 67; (1959) 102 CLR 252.
[50] Ibid 269.
[51] Ibid 271.
[52] T Reichhardt, 'Patent on gene fragment sends researchers a mixed message' (1998) 396 Nature 499.
[53] M Enserink, 'Patent Office May Raise The Bar on Gene Claims' (2000) 287 Science 1196.
[54] See Part X.
[55] The Agreement on Trade Related Aspects of Intellectual Property Rights, Article 27(1).
[56] GM Commission Report, above n 2, 283.
[57] Patents Act 1953 (NZ) s 10(7).
[58] Patents Act 1953 (NZ) ss 13, 14.
[59] Patents Act 1953 (NZ) s21(b).
[60] Patents Act 1953 (NZ) s 60.
[61] Ancare New Zealand Ltdv Cyanamid ofNZ Ltd [2000] NZCA 127; [2000] 3 NZLR 299, 315.
[62] Biogen Inc v Medeva plc [ [1996] UKHL 18; 1997] RPC 1,34.
[63] Harwood v Great Northern Railway Company [1865] EngR 708; [1865] 11 HLC 654, 682.
[64] Patents Act 1953 (NZ) s 21(1)(e).
[65] Patents Act 1953 (NZ) s 41(1)(f).
[66] Ancare New Zealand Ltdv Cyanamid ofNZ Ltd [2000] NZCA 127; [2000] 3 NZLR 299, 309 (Gault J).
[67] Windsurfing International Inc v Tabur Marine (GreatBritain) Ltd [1985] RPC 59, 73.
[68] General Tire andRubber Co v Firestone Tyre andRubber Co Ltd [1972] RPC 457, 485.
[69] Smale v North Sails [1991] 3 NZLR 19, 44.
[70] Ancare New Zealand Ltd v Cyanamid ofNZLtd [2000] NZCA 127; [2000] 3 NZLR 299, 309.
[71] British Westinghouse v Braulik (1910) 27 RPC 209, 230 (Moulton LJ).
[72] Molnlycke A B v Procter & Gamble Ltd [1994] RPC 49.
[73] Wildey and White 'sMfg Co. Ltd v Freeman andLetrikLtd (1931) 48 RPC 405, 414 (Maugham J).
[74] Molnlycke A B v Procter & Gamble Ltd [1994] RPC 49, 112 (Nicholls VC).
[75] Pharmaceutical Management Agency Ltd v Commissioner of Patents [1999] NZCA 330; [2000] 2 NZLR 529, 530 (Gault J).
[76] Monsanto Company v Stauffer Chemical Company (NZ) [1984] FSR 559.
[77] Ibid 565.
[78] Ibid 564 ( Eichelbaum J).
[79] Ibid 567 ( Eichelbaum J).
[80] Ibid 566.
[81] Patents Act 1977 (UK) s 60(5).
[82] Monsanto Co v Stauffer Chemical Co [1985] RPC 515, 542 (Dillon LJ).
[83] GM Commission Report, above n 2, 278.
[84] [1985] RPC 515.
[85] A Baker, 'GATT, TRIPS, the revision of New Zealand's patent legislation and pharmaceuticals' [1997] New Zealand Intellectual Property Journal 245.
[86] Patents Act 1953 (NZ) s 46.
[87] Baker, above n 85, 245.
[88] Glaxo Group Ltd v Commissioner of Patents [ 1991 ] 3 NZLR 179.
[89] M Perry and P Krishna, 'Making Sense of Mouse Tales: Canada Life Forms Patents Topsy- Turvy' [2001] European Intellectual Property Review 196, 203.
[90] GM Commission Report, above n 2, 278.
[91] Ibid 279.
[93] L Jardine, Ingenious Pursuits (1999) 316.
[94] R S Eisenberg, 'Patents and the Progress of Science: Exclusive Rights and Experimental Use' (1989)56 University of Chicago Law Review 1017, 1036.
[95] Eisenberg, above n 26, 225.
[96] Eisenberg, above n 94, 1078.
[97] J P Karp, 'Experimental Use as Patent Infringement: The Impropriety of a Broad Exception' (1991) 100 Yale Law Journal 2169, 2180.
[98] Ibid 2183.
[101] Heller and Eisenberg, above n 16, 698.
[102] Eisenberg, above n 21, 1017.
[103] M Wadman, 'NIH is likely to challenge genetic 'probe' patents' (1997) 386 Nature 312.
[104] M A Holman and S R Munzer, 'Intellectual Property Rights in Genes and Gene Fragments: A Registration Solution for Expressed Sequence Tags' (2000) 85 Iowa Law Review 735.
[105] Heller and Eisenberg, above n 16, 698.
[106] R Merges and R Nelson, 'On the Complex Economics of Patent Scope' (1990) 90 Columbia Law Review 839.
[107] R S Eisenberg, 'Genes, Patents, and Product Development (1992) 257 Science 903.
[108] Biogen Inc v Medeva plc [1996] UKHL 18; [1997] RPC 1.
[109] Ibid 51.
[111] Ibid 45 ( Lord Hoffmann).
[112] J Thomson, ‘The Grey Penumbra of Interpretation Surrounding the Obviousness Test for Biotech Patents' [1996] European Intellectual Property Review 90.
[113] I G FarbindustrieAG's Patent (1930) 47 RPC 289, 323 (Maugham J).
[114] Genentech v Wellcome [1989] RPC 147, 274.
[115] In re Bell 991 F2d 781 (Fed Cir, 1993).
[116] In re Deuel34 USPQ 2d 1210 (Fed Cir, 1995).
[117] [1989] RPC 147.
[118] Ibid 273 ( Mustill LJ).
[119] Biogen Inc v Medevaplc [1996] UKHL 18; [1997] RPC 1, 44 (Lord Hoffmann ).
[120] Ancare New Zealand Ltd v Cyanamid of NZ Ltd [2000] NZCA 127; [2000] 3 NZLR 299, 309 (Gault J).
[121] Biogen Inc v Medeva Plc [1995] RPC 25.
[122] BIOGEN/Hepatitis B [1995] EPOR 1.
[123] B C Reid, 'Biogen in the EPO: The Advantage of Scientific Understanding' [1995] European Intellectual Property Review 98.
[124] Biogen Inc v Medeva Plc [1995] RPC 25.
[125] Samuel Parkes & Co Ltd v Cocker Brothers Ltd (1929) 46 RPC 241, 248.
[126] Ancare New Zealand Ltd v Cyanamid of NZ Ltd [2000] NZCA 127; [2000] 3 NZLR 299, 309.
[127] B Sherman, 'Patent Law in a Time of Change: Non-Obviousness and Biotechnology' (1990) 10 Oxford Journal of Legal Studies 278, 283.
[128] Ancare New Zealand Ltd v Cyanamid of NZ Ltd [2000] NZCA 127; [2000] 3 NZLR 299, 315 (Gault J).
[129] Biogen Inc v Medeva plc [1996] UKHL 18; [1997] RPC 1, 34.
[130] P E Montague, 'Biotechnology Patents and the Problem of Obviousness' (1993) 4 Australian Intellectual Property Journal 3.
[131] Hampton and Baker, above n 8, 269.
[132] In re Sigco 36 USPQ 2d 1380 (Fed Cir, 1995).
[133] R H Kjeldgaard and D R Marsh 'Recent Developments in the Patent Protection of Plant-based Technology in the United States' [1997] European Intellectual Property Review 16.
[134] See Part V.
[135] Biogen Inc v Medeva plc [1996] UKHL 18; [1997] RPC 1, 45.
[136] Biogen Inc v Medeva Plc [1995] RPC 25.
[137] Biogen Inc v Medeva plc [1996] UKHL 18; [1997] RPC 1, 45.
[138] Ibid 52.
[139] Ibid 51 (Lord Hoffmann).
[141] Ibid 52 (Lord Hoffmann).
[142] T Roberts, 'Broad Claims for Biotechnological Inventions' [1994] European Intellectual Property Review 371.
[143] R S Crespi, 'Biotechnology, Broad Claims and the EPC’ [1995] European Intellectual Property Review 267.
[144] Biogen Inc v Medevaplc [1996] UKHL 18; [1997] RPC 1, 51.
[145] Ibid 52.
[146] GENENTECH/Polypeptide expression T292/85 [1989] EPOR 1.
[147] Roberts, above n 142, 371.
[148] Ancare New Zealand Ltd v Cyanamid of NZ Ltd [2000] NZCA 127; [2000] 3 NZLR 299, 315.
[149] Eisenberg, above n 26, 177.
[150] Patents Act 1953 (NZ) s 10(3), (4).
[151] Electric & Musical Industries Ltd v Lissen Ltd (1939) 56 RPC 23.
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