Issues Magazine

The Patent Amendment (Human Genes and Biological Materials) Bill: No Barrier to Biotech Patenting

By Luigi Palombi

In late July, the Court of Appeals for the US Federal Circuit held that human genes are patentable subject matter. The ramifications of this decision have yet to be felt in Australia. Are our politicians prepared to stand up to the biotechnology industry and pass the Amendment Bill into law?

The Patent Amendment (Human Genes and Biological Materials) Bill currently under Senate review (see box) is very unpopular with the pharmaceutical and biotechnology industry, patent attorneys, patent lawyers, universities, scientific research institutes, scientific associations and leading Australian scientists. Professor Ian Frazer, Director of the Diamantina Institute for Immunology and Cancer Research and CEO of Translational Research Institute, wrote in his submission:

The bill if enacted would actually prevent much development of novel products of biomedical research. It would remove much of the patent protection that currently can be granted to the inventor of a method of manufacture of a material that is “substantially identical” to something that exists in nature, but could not be manufactured without a novel and inventive method, and which once manufactured would be of potential utility in industry or in health care.

All the Bill seeks to do is prohibit the patenting of biological materials identical or substantially identical to those that exist in nature – things that no one invented. How is that objective inconsistent with the Australian patent system? Indeed, how could it, using the words of Professor Frazer, “actually prevent much development of novel products of biomedical research” when these naturally occurring products are not, as a matter of fact, novel?

The Tripartite Precedent
The genesis of the problem is a joint statement released in June 1988 by the patent offices of the United States, the European Union and Japan:

Purified natural products are not regarded under any of the three laws as products of nature or discoveries because they do not in fact exist in nature in an isolated form. Rather, they are regarded for patent purposes as biologically active substances or chemical compounds and eligible for patenting on the same basis as other chemical compounds.

In other words, the DNA encoding a protein, being a naturally occurring phenomenon, was to be deemed to have been invented if it was “isolated” from its natural environment – the key word being “isolated”. Nothing more was required. No further modification. No further elucidation. Not even a need to demonstrate a practical application. The mere act of isolating a naturally occurring biological material was enough, as far as these three patent offices were concerned, to transform such a biological material from being a product of nature into being a product of humankind. In other words, from being a discovery about the natural world into being an invention.

At that time the United States Patent and Trade Mark Office (USPTO), the European Patent Office (EPO) and the Japanese Patent Office (JPO) were the world’s most prolific patent producers. Not only that, the US, the EU and Japan were the world’s greatest patent filing and granting countries. According to the OECD’s patent application and patent grant data, in 1987 these three countries/regions were responsible for 92% of the world’s patent applications and 88% of the world’s granted patents. Australia’s contribution was 2.5% and 3.5%, respectively. The only other country to exceed Australia’s output was Canada, with 4.3% and 5.5%, respectively. The combined output of New Zealand (0.62%/0.94%), Switzerland (0.74/1.64%), Turkey (0.13%/0.12%) and the former Yugoslavia (0.36%/0.28%) were 1.81% and 3.06%, respectively.

Clearly, the US, the EU and Japan were the world’s largest exporters of intellectual property. They were also the homes of the world’s pharmaceutical and agricultural seed industries. And as modern biotechnological innovations were just beginning to be the subject of patent applications and granted patents by these industries, the issue they faced was how to create intellectual property around these innovations, especially when the DNA that encoded proteins of interest, such as human insulin (Genentech with Eli Lily) and erythropoietin (Amgen with J&J), were not something anyone invented.

The dilemma was immediately apparent. But the USPTO, the EPO and the JPO did not want to miss out on the biotechnology patent gold rush. More to the point, they wanted to ensure that their countries, and specifically the pharmaceutical, biotechnological and agricultural seed industries domiciled in their countries, were able to use the patent systems around the world to create non-tariff barriers to trade – monopolistic barriers that would generate billions of dollars in additional export earnings.

The Patent System
The patent system is based on a bedrock principle going back hundreds of years. In Anglo-American patent law that principle, derived from the Statute of Monopolies passed by the English parliament in 1623, meant that patents were granted to the first and true inventor of a “manner of new manufacture”. In continental Europe the most relevant source of modern continental patent law came from the Venetian Republic which, in 1474, created the world’s first patent registration system for “any new and ingenious devices”. Over hundreds of years these systems gradually converged, first by effect of the Paris Convention for the Protection of Industrial Property in 1883 and, more recently, by effect of the Agreement on Trade Related Aspects of Intellectual Property Rights of 1994 (TRIPS). TRIPS now binds all 153 countries belonging to the World Trade Organization (WTO), and sets the minimum standards for intellectual property protections.

Article 27.1 of TRIPS mandates that patents be granted only for “inventions”. TRIPS, unfortunately, does not define “invention”. In any event in 1988, when the tripartite statement was released, TRIPS was not yet a reality so it was irrelevant to how the tripartite patent office joint statement was formulated. And it would be fair to suggest that article 27.1 of TRIPS, the central patenting clause, merely reflected the state of the law as it applied to each of these three patent offices in 1988.

The problem then, just as now, was how a natural phenomenon such as human DNA encoding a human protein could be patentable subject matter? In other words, how could such biological materials be, as a matter of fact and law, an “invention”?

Material Differences
According to the tripartite statement, these biological materials, having been isolated, are patentable subject matter “on the same basis as other chemical compounds”.

Therefore, the authors of the joint statement arguably relied on established legal precedent, as it was in 1988, to arrive at their proposition. This proposition, however, is impossible as a matter of scientific fact. While it is true that chemical compounds such as acetylsalicylic acid were patented, the fact remains that DNA and their encoded proteins, while also being chemicals, are materially different. The proposition was therefore false as a matter of fact and law.

To begin, with DNA is not a “biologically active substance”. It does not react in vivo to modify the body’s chemistry as does, for example, acetylsalicylic acid, the active ingredient in the drug Aspirin that produces analgesia, reduces fever and inflammation, or inhibits the production of thromboxane. Rather, DNA has a specific function: to carry genetic information.

Next, although proteins like human insulin and erythropoietin, which are encoded by human DNA, are “biologically active substances”, they are significantly different to chemical compounds like acetylsalicylic acid in that they are identical to the corresponding proteins as found in nature.

This is a scientific fact, regardless of how these naturally occurring proteins are synthesised. For example, the synthetic erythropoietin produced using the biotechnological process patented by Amgen in 1984 is identical in every material way to the erythropoietin produced by the human body. Any doubt about this, as a matter of scientific fact, was dispelled by a US District Court decision handed down in 1989. In that decision, which was primarily about resolving the dispute between Amgen and Genetics Institute over competing claims to priority of “invention”, the Court held:

… the overwhelming evidence, including Amgen’s own admissions, establishes that [natural erythropoietin] and [recombinant erythropoietin] are the same product. The [erythropoietin] gene used to produce [recombinant erythropoietin] is the same [erythropoietin] gene as the human body uses to produce [natural erythropoietin]. The amino acid sequences of human [natural erythropoietin] and [recombinant erythropoietin] are identical. … There are no known differences between the secondary structure of [recombinant erythropoietin] produced in a Chinese hamster cell and [erythropoietin] produced in a human kidney. Amgen’s own scientists have concluded that by all criteria examined, [recombinant erythropoietin] is the “equivalent to the natural hormone”.

Furthermore, the identical structure of synthetic erythropoietin to natural erythropoietin is precisely why the Appellate Judicial Committee of the House of Lords in 2004 (since replaced by the UK Supreme Court) invalidated the patent claim in Amgen’s European patent over synthetic erythropoietin.

These are not isolated cases. According to US Supreme Court precedent, a synthetic version of a naturally occurring biological material has never been patentable subject matter under US patent law. This was held to be the case back in 1884 at a time when synthetic chemistry was a leading-edge technology and the newly unified Germany was leading the world in the development and production of artificial dyes. Focusing on the chemical formula for alizarine, a natural dye extracted from the madder plant, the US Supreme Court in Cochrane & Others v Badische Anilin & Soda Fabrik (1884) held that there was “no difference between the natural and artificial alizarine” made using the bromide process developed by BASF scientists. In fact, the Court held that “[i]t was an old article”. And being chemically indistinguishable from natural alizarine, the patent was directed to something that was excluded from patentability. The Court reinforced its holding in this statement:

Calling it artificial alizarine did not make it a new composition of matter, and patentable as such, by reason of its having been prepared artificially for the first time from anthracene, if it was set forth as alizarine, a well known substance.

Returning to the UK, similar reasoning was employed by the Court of Appeal in 1989 to invalidate the entire patent granted to Genentech over another synthetic human protein, human tissue plasminogen activator (t-PA) and its process of manufacture. The principal product claim of Genentech’s t-PA patent defined the invention to be “recombinant human tissue plasminogen activator essentially free of other protein of human origin”. It was a claim to a synthetic t-PA. And it clearly was a claim to both purified and isolated t-PA. Yet the Court held that this was not something that could be patented under the European Patent Convention (as it was then). And, reinforcing the point, Lord Justice Mustill held that the word “recombinant” did not describe “the product itself, but its history”. In his opinion, to describe t-PA produced by recombinant means was misleading because it suggested that “[the] protein molecules with the amino acid sequences shown … and the functional characteristics set out in the [patent] specification” were new, when in fact they “have existed since far into the distant past”. Neither was he convinced that the technical process used to mass produce purified t-PA resulted in a product that was any different from the t-PA produced by the human body, concluding: “[t]he t-PA which Genentech made [was] neither more nor less than t-PA”.

The US Government’s Position
The US government agrees that biological materials that have been isolated from their natural environments are not patentable subject matter under current US patent law. This was made clear in an appeal from the decision of the US District Court that invalidated key claims in seven US patents granted to Myriad Genetics over the genetic mutations in the BRCA1 and BRCA2 human genes linked to breast and ovarian cancers and to the methods of using these mutations to render a genetic test result. Importantly, the US government confirmed that its position on the issue was “contrary to the longstanding practice of the Patent and Trademark Office, as well as the practice of the National Institutes of Health and other government agencies that have in the past sought and obtained patents for isolated genomic DNA”.

Learned Reaction to the US District Court Decision
Prompted by the US District Court decision, Nobel laureates Professor Sir John Sulston and Professor Joseph Stiglitz wrote an article for the Wall Street Journal entitled “The Case Against Gene Patents”. In it they hailed the decision as “a major victory to science and medical innovation” because gene patents “not only prevent the use of knowledge in ways that would most benefit society, they may even impede scientific progress”.

The US Federal Circuit
The 2:1 majority of the US Court of Appeals for the Federal Circuit (CAFC) handed down on 29 July of this year, however, reversed the US District Court on this issue. Judges Lourie and Moore concluded that isolated genomic DNA was patentable subject matter even though they came to that result applying different reasoning. Judge Lourie interpreted the US Supreme Court’s famous biotechnology case of Diamond v Chakrabarty in such a way that literally anything artificial, even if it is merely isolated, is “markedly different” to anything found in nature, while Judge Moore, who did not feel it was her place as a judge to interfere with the longstanding USPTO policy, believed that it was a matter for the US Congress to overrule the USPTO. In dissent, however, Judge Bryson held that an isolated DNA, in line with established US Supreme Court precedent, could not be patentable subject matter. Judge Bryson wrote:

In this respect, the genes are analogous to the “new mineral discovered in the earth”, or the “new plant found in the wild” that the Supreme Court referred to in Chakrabarty. It may be very difficult to extract the newly found mineral or to find, extract, and propagate the newly discovered plant. But that does not make those naturally occurring items the products of invention.

Substantially Identical?
The most contentious aspect of the Bill, according to Professor Frazer, is the term “substantially identical” which, he says, will “remove much of the patent protection that currently can be granted to the inventor of a method of manufacture”. This opinion, however, is the result of a misunderstanding on his part. The Bill will not prevent the patenting of biotechnological processes. The Bill has nothing whatsoever to do with biotechnological processes. The Bill will, if passed, prohibit the patenting of the end result of those processes if, and only if, they are identical or substantially identical to those that exist in nature. The Bill is therefore directed to these specific products and only these products. It merely seeks to apply, in accordance with established legal precedent, the longstanding principle of patent law: that invention is rewarded with a patent, but a discovery is not.

The term “substantially identical” has not been previously used in the context of patent law. This, the Bill’s critics argue, will produce “unintended consequences”, but that prediction is predicated on self-interest and a determination to preserve the status quo, no matter how wrong it is as a matter of fact or law. While it is true that that term is undefined in the Bill, this does not mean that a court will not impute a fair and reasonable interpretation to the term when the time comes. Indeed, the term “substantially identical” is no more and no less problematic in this context as is the term “markedly different”, yet this is precisely the term that the US Supreme Court used in Chakrabarty to distinguish a genetically modified bacterium, which it held patentable, and a naturally occurring one, which it held was not patentable.

As a result of the CAFC’s decision, Professor Frazer is now on the horns of a dilemma. In his article published in the Australian in 2009 while he was still chair of Cancer Council Australia, he too was of the view that isolated DNA should not be patented. He said that by patenting genes we are “patenting ourselves”. And on the subject of the patent system he said that it “should protect inventive medicines developed from research using data on gene sequences” and not the “gene sequence used to develop the invention”.

However, the ease in which the CAFC has misapplied US Supreme Court authority by interpreting the term “materially different” to the point of rendering it otiose only fortifies the need for the term “substantially identical” in the Bill.

Just as the term “markedly different” has not caused any unintended consequences for the past 30 years in the United States, it is unlikely that the term “substantially identical” will do so in the next 30 years in Australia.