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Gene Patents and Innovation

Bendekgey, Lee JD; Hamlet-Cox, Diana PhD, JD


Special Theme Commentaries

Mr. Bendekgey is general counsel, and Dr. Hamlet-Cox is vice president for intellectual property, Incyte Genomics, Inc.; telephone: (650) 855-0555

The authors thank the editors of Academic Medicine for the opportunity to present these comments. They also thank Cathleen Rocco of Incyte's Legal Department for assistance in checking citations.

The purpose of the patent system, as reflected in Article I, Section 8 of the U.S. Constitution, is to “promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries.” While the world in which we now live has changed a great deal since the drafters of the Constitution completed their work, the patent system has served the United States well, and has demonstrated its ability to adapt to dramatic economic and scientific changes.

As is often the case when a new area of science or technology emerges, some have argued that the application of the current U.S. patent system to a new category of invention, in this case gene-based inventions, will have a negative impact on innovation and the economy.1 This commentary argues that modification to the patent system to discriminate against a particular category of inventions, in this case gene-based inventions, will not achieve the patent law's goal of promoting progress in science and the useful arts. It also argues that concerns directed towards the consequences of gene patent owners' behavior are more appropriately addressed by antitrust laws and health care legislation, including health care funding policies that deal more directly with issues relating to the cost and availability of novel diagnostics and therapeutics. Finally, to the extent that many gene patents owned by public or non-profit research institutions result from publicly-funded research, this article proposes that legislation establishing policies regarding the licensing of such publicly-funded gene patents, at least in the research field of use, would go far in addressing concerns expressed regarding the impact of gene patents on life sciences research.

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Much of the discussion of patents on gene-based inventions reflects misunderstandings regarding both the nature of the inventions themselves and the legal principles that are fundamental to our patent system. We begin this commentary by attempting to dispel some of the more common of such misunderstandings.

Those who oppose patents on gene-based inventions often argue that patents shouldn't be allowed on genes or genomic sequences because they are products of nature. Therefore, it is important that those who participate in this discussion understand clearly the difference between genomic sequence, which exists in nature, and gene-based inventions, for which patent protection is appropriate.

It is true that human genes have existed for at least as long as humans have existed. Until recently, however, no gene has ever been used by humans to diagnose or cure disease. The inventive steps of isolating a gene, determining its function, and putting it into a commercially useful format form the basis for the promise of the genomic revolution in health care, and entitle inventors to patents on their inventions. These steps transform a product of nature into an isolated, purified product that has real-world utility for research, diagnosis, and therapy.

Genomic sequences as used in this context are sequences obtained by sequencing an organism's chromosomes, which make up its genome. In the case of humans and most eucaryotes, the vast majority of chromosomal or genomic DNA does not code for protein. In fact, only 3% of human chromosomal DNA encodes protein. As a consequence, most genomic DNA cannot be patented simply by sequencing it, without knowing more about the sequence than what it is—there must be something about it that gives it a utility beyond the desire to know what it does, e.g., its biological function, or some other utility.

On the other hand, gene sequences as used in this context are nucleotide (e.g., DNA and RNA) sequences that encode protein. It is of particular importance to understand that DNA sequences that encode protein are almost never “obvious” or easily discernable from the chromosomal DNA sequences in which they are buried. This is because most genes are made up of distinct partial pieces of coding DNA (exons) that are scattered between non-coding sequences (introns) on the chromosomal (genomic) DNA, and the signals that the RNA expression machinery uses to determine the start, stop, and junction points of the coding regions to make the protein are still very poorly understood. Even the most complex computer algorithms being used today for gene discovery from chromosomal DNA are quite poor at accurately picking out the exact start and stop sites of each gene, much less of multiple start and stop sites of the exons that make up the full-length protein.

In fact, the elucidation of most gene sequences is the result of one or more much more complex discovery processes that involve isolating not genomic DNA, but rather the messenger RNA that results from the transcription of genomic sequences in the region comprising the coding sequences, which RNA sequences are then processed by the cell's RNA expression machinery into processed mRNA that has had the non-coding intronic RNA transcript spliced out. While it might seem “obvious” that this mRNA would be what should be sequenced, and thus gene sequence discovery would simply be a matter of isolating and purifying this “product of nature,” the problem is far more complex. This is because mRNA is a very ephemeral and unstable molecule, and occurs in vanishingly small amounts per cell at any given time, making it almost impossible to isolate a sufficient amount of it intact, e.g., without degradation by intracellular enzymes, in order to sequence it. In fact, it is almost exclusively the case that cellular mRNA has to be artificially transcribed into a product that does not occur naturally, cDNA (“complementary DNA”), which is more stable, and can be cloned in order to make many copies of it, and thus to make it possible to sequence it.

The conventional method of isolating and sequencing a gene generally involves looking for a precise biological function, exhaustively attempting to find and purify enough of the protein to sequence a few amino acids of that sequence, and making DNA probes corresponding to all the possible nucleotide combinations that might encode these several amino acids. The entire mRNA complement of the cell suspected of expressing the protein is then cloned, after transforming it into cDNA, and the probes designed from the partial protein sequence are used to try to fish out the coding sequence for the particular gene from the very complex mixture of cDNAs that correspond to the cellular mRNA

The vast majority of gene sequences discovered during the past several years has been determined as a result of a different process, one that turns the paradigm of the conventional method upside-down. Rather than looking for the gene that encodes a particular biological function, the new tools of high-throughput DNA sequencing have allowed gene sequences to be identified a priori from cDNA, and then functionality is determined by a variety of techniques, including “homology analysis,” which compares the structural relationship between the newly determined sequence and already known sequences. Other methods for determining gene function include the use of microarray-based expression analysis to identify correlations between gene expression and disease or drug response. It is this process that seems to have raised the concerns—and the ire—of those who now complain that gene patenting is “unfair.” The reasons for this “unfairness,” as we discuss below, seem to be primarily emotional rather than factual—the complaints tend to center on the assertions that high-throughput sequencing is “too easy” to qualify for patent protection and that elucidating gene sequences is “discovery” rather than invention.

Both of the issues complained of under the rubric of “unfairness” must be examined under the tenets of patent law, not in view of the emotion-laden prejudice against how the science behind the genomic approach to medical research compares with conventional discovery or invention methods.

First, the patent statutes do not permit, and explicitly eschew, any distinctions being made in patentability based on the degree of difficulty of the work involved. As stated clearly in the Federal Patent Statutes: “Patentability shall not be negatived by the manner in which the invention was made.”2 Thus, no “flash of genius” is required for patentability; rather, even a random “trial-and-error” effort to solve a problem is all that is necessary.3 It does not matter whether a gene is discovered by a search for a specific source of a biological activity, or a biological activity or other utility is ascribed to a gene sequence determined by another method. The “difficulty” of the intellectual process is irrelevant to patentability.

Second, and perhaps even more important, is that despite what is repeatedly asserted by the opponents of gene patenting, patent law applies equally to “discoveries” as to “inventions.” In fact, Article I, Section 8 of the U.S. Constitution (supra) explicitly refers to “discoveries,” as does the Patent Statute: “Whosoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor….”4 [Emphasis added.] Discoveries are patentable subject matter.

Patents to genes, as to any other discovery, must, by requirement of law, be distinguishable from the product of nature as it occurs in nature. As noted above, human gene sequences in particular do not occur in nature in their final form except in vanishingly small amounts; the DNA encoding proteins as it exists in genomic DNA is mixed in with non-coding DNA sequences and is not the DNA sequence as claimed in most gene patents, which are directed to the protein coding region alone. While this nucleotide sequence does occur ephemerally as mRNA, it does not exist as DNA separate and apart from the genomic DNA. In contrast, the encoded protein sequences do exist as separate entities. However, in both cases, as with all claims to “products of nature” such as antibiotics and flavoring molecules, claims to gene sequences, whether DNA, RNA or protein, are always limited to “isolated” or “purified” molecules, distinct from how they occur in nature. Gene sequence patents do not cover the molecules that exist naturally in anyone's body. Arguments against gene patenting that rely on assertions that the genes are products of nature, or that the patents cover the naturally-occurring embodiments of molecules as they occur in nature, are based on a fallacious premise.

Finally, a fourth issue that is often misunderstood by both scientists and the Patent Office alike is what constitutes a patentable utility for a gene sequence. As with any other composition of matter (as compared with a claim to a process or method of use), all that is required by the patent statutes, as well as over 200 years of patent law as elucidated by our federal courts, including the Supreme Court, is that a single utility be disclosed by a patent applicant in order to obtain a patent claim to the composition of matter for all uses. That utility need not be the best or most important use of that composition of matter, only a practical, “real-world” use.5 The apparent anomaly that disclosure of the absolute, laboratory-determined biological activity of a gene is not the only real-world use of a gene sequence sufficient to establish a patentable utility under the patent statutes is one that seems counterintuitive to the general public and to the Patent Office as well. It is, nevertheless, the law, and has been for over 200 years. Nothing presented in the accompanying papers has set forth any evidence or sound scientific or economic reasoning to support a change in those laws or the policies underlying them.

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A patent is essentially a transaction between a patent applicant and the government, in which the government grants the applicant a limited right to exclude others from making, using, or selling an invention, provided that the invention represents sufficient innovation over the then state of the art, in exchange for the patent applicant's complete disclosure of the invention.6 The patent system assumes that limited protection against “free rides” by the inventor's potential competitors is necessary to avoid disincentives to innovation.

The President's Council of Economic Advisors recently articulated the policy underlying the patent system as follows:

[I]n many cases, firms or individuals might not embark on developing an innovation because, although the social benefit from it may be large enough to justify its development costs, the firm or individual could not expect to reap enough of that benefit to justify those costs. The consequences of this problem were recognized in the U.S. Constitution, which empowered Congress to develop a body of intellectual property laws, including those establishing patents. A patent for an invention confers on an individual or firm (the patent holder) limited rights to exclude others from making, selling, or using the invention without the patent holder's consent…. Patents give a firm the legal power to keep others from using its innovation to create competing products without bearing the cost of the innovation…. Thus policy has long recognized that, to encourage innovation, firms must expect that successful innovations will yield a market position that allows them to earn profits adequate to compensate for the risk and cost of their efforts.7

Concerns about free riders are most severe in cases in which the innovation is either expensive or risky to develop, but easy to copy. Pharmaceutical products provide one example of a category of product that is expensive and risky to develop, but easily copied, which may go a long way to explaining why participants in the pharmaceutical and biological industry ascribe a relatively high degree of importance to patents as a means to capture the benefits of innovation.8 The same could be said of gene-based innovations; the cost of isolating and characterizing a gene, and of putting it into a commercially viable format, can be very expensive, but once the discovery is complete, the gene is easily duplicated.

The U.S. patent system does not distinguish between categories of invention in determining either eligibility for patent protection or the scope of rights afforded the patent owner. Indeed, provided that they meet the legal requirements of novelty and lack of obviousness, and provided that the patent applicant complies with his or her disclosure obligations, the patent law protects “anything under the sun that is made by man.”9 The scope of patent claims to which an inventor is entitled is a function of the breadth of the invention disclosure provided in the patent application, the sufficiency of that disclosure in supporting the claims sought, and the extent of the relevant prior art.10

Thus, the genius of the patent system is that it permits the application of the principles applicable to the patent transaction across the many generations of innovation that our country has witnessed, without the necessity of constant legislative adjustments to reflect economic and scientific development. Contrary to the assertions in the articles in this issue by Murashige and Scherer, however, U.S. patent law does not assume any particular stage of economic development, just as it does not attempt to promote differing policies applicable to differing “innovation markets” in different technologies or sectors of the economy.11

That said, as the U. S. economy has become increasingly dependent on technological innovation and services, it is hardly surprising that patents and other forms of legal protection for intellectual assets have received more attention as a component of competitiveness.12 It is for this reason that the United States has consistently adhered to the position, reflected in the agreements reached in the Uruguay Round of the General Agreement on Tariffs and Trade, that countries should not in their patent systems discriminate between categories of inventions.13

Despite these key lessons learned from over 200 years of patent law history, periodically a major new category of innovation emerges, for which commentators claim that the current intellectual property system is either inadequate or inappropriate.14 The accompanying articles by Murashige, Barton, and Scherer all claim that the application of current patent law to gene-based inventions is problematic, particularly insofar as it applies to the use and licensing of genes for research use. They respond to the issues by proposing new rules that would apply to specific categories of inventions, with principal focus on the use of gene-based inventions as research tools (and in Barton's case, diagnostics).

The principal drawback to this approach, aside from its obvious inconsistency with the most recent version of the General Agreement on Tariffs and Trade,15 is that virtually any category that one could propose for special treatment, including those proposed by Murashige, Barton, and Scherer, is very likely to be both over- and under-inclusive in its attempt to provide appropriate incentives for innovation.

For example, all three raise issues relating to the application of patents to “research tool” uses of genes. Murashige and Barton argue for expanded research exemptions from patent protection. There are three basic difficulties with their arguments.

First, if the purpose of the patent system is to create incentives for innovation, then research tools, which by their use inherently promote further innovation, would seem particularly appropriate subjects for patent protection. In this context, the position taken against a patent reward for creating an innovation that will enable further innovation seems particularly perverse.

Second, the recent acceleration of genomic research confirms this assumption, and argues against Barton's and Murashige's proposals. The recent completion of the first draft of the human genome would not have been possible without the availability of off-the-shelf research tools, such as automated sequencing machines and large-scale computing systems. Similarly, the pace of the discovery and characterization of genes will depend on the availability of a range of genomic tools, such as microarrays and other functional genomic tools. The types of companies that provide such products, typically small companies without publicly-traded securities and those whose securities are traded over the counter, are precisely those for whom Scherer finds patents most important.16

Cockburn has similarly noted the emergence of a new category of economic participant in the life sciences sector, which he identifies as the supplier of “enabling products and technologies.”17 A patent policy that is hostile to research tools and their developers will certainly not encourage the development of products that promise to accelerate research processes and make them more efficient.

Third, as the above makes clear, there is no principled way to distinguish between a gene-based invention and any other research tool, since any right to exclude that applies to research could theoretically be invoked to inhibit research. Thus, if one adopts the logic of Barton, Scherer, and Murashige, their concerns about patent rights in research tools would apply equally to sequencing machines, assays, PCR, and the Cohen—Boyer methods of making recombinant DNA. As Scherer's article confirms, to the extent that we rely on the private sector to provide these products on an off-the-shelf basis, the absence of exclusionary patent rights will surely inhibit their development.18

In a similar vein, Scherer proposes that “[t]o ensure that promising future lines of research are not impeded, existing genome patent claims and any claims allowed in the future ought to be interpreted narrowly.”19 This blanket approach fails to calibrate the scope of the inventor's rights to his or her contribution to the development of the relevant science. Thus, for example, if a gene encodes a protein that the inventor has determined is itself a therapeutic, it is difficult to understand why the inventor should not be entitled to the same scope of protection to which the inventor of a synthetic, “small molecule” chemical drug would be entitled.

Barton creates a similar conundrum in his apparent distinction between “products,” such as drugs, for which patent protection is appropriate, and “information about the world or… abstract methods of using such information,” for which patent protection would be denied.20 This distinction merely shifts the argument to one of definitions, without yielding clear or principled outcomes. Is the discovery of a highly specific association between a gene and a disease mere “information about the world?” Should the discoverer be entitled to a patent on the gene or its use as a diagnostic? Why should it matter whether the patent claims the use of the gene itself as a diagnostic, rather than a particular diagnostic kit? In all of these cases, the principal innovation was the provision of the gene sequence and discovery of the gene's disease association, which sequence enabled, and is used in, the diagnostic method. Why should the resulting patent rights depend on whether the innovation is characterized as “information” or a “product”?21

These definitional issues demonstrate that the research tools proposals merely reflect a preconceived notion of the undesirability of gene patents for research. Their proponents' inability to distinguish gene-based inventions from other categories of useful innovations that have research applications demonstrates that they will yield arbitrary results and may in fact have serious negative consequences for the acceleration of biological research.

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Many of the objections to gene patents are based on assumptions regarding the way in which such patents might be asserted to limit or otherwise interfere with research.22 For example, Barton argues that “the possibility that licenses may have to be sought from a variety of different holders of sequence patents may pose prohibitive complications in developing, marketing or using a multi-purpose chip.”23

As a threshold matter, it is interesting to note that none of the commentators lamenting the likely development of a gene patent “thicket” has produced evidence that research has in any way decelerated as a consequence of gene patenting. While Merz has produced some evidence that individual researchers may have terminated individual research projects as a consequence of intellectual property disputes,24 the evidence falls far short of indicating that there has been any aggregate reduction in biological research as a consequence of gene patenting.

Proponents of gene patent reform obscure the paucity of evidence to support their position by hypothesizing that a patent owner “may” refuse to license his or her invention. It is, of course, the case that a patent confers the right to exclude others; the U.S. patent laws have for the most part not concerned themselves with how the patent owner chooses to exercise his or her exclusionary right.

Patents give a firm the legal power to keep others from using its innovation to create competing products without bearing the cost of the innovation. Licensing provides a means whereby the innovator can receive compensation, in the form of licensing fees, from others that find a beneficial use of the innovation.25

In other words, having conferred the exclusionary benefit of a patent, the patent laws assume that the inventor will maximize its perceived value to him or her, consistent with the market demand for the innovation.26 This does not mean that the patent owner's behavior is unconstrained.

Principles of patent misuse, developed over the years by the courts, make a patent unenforceable if the patent owner tries to exploit his or her patent right in a way that confers competitive advantage over unpatented subject matter.27 Antitrust laws regulate (anti-) competitive behavior, including the behavior of patent owners.28 And, of course, depending on the sector in question, various types of legislation affect the conduct of economic participants, including patent owners.

Health care is obviously one area in which there is a strong public interest that may, where appropriate, result in legislation or other regulation. Where that is the case, it is important that the policy issues be addressed directly, rather than indirectly through the patent system. It has never been the role of the patent system to establish industrial policy with respect to any particular category of invention or sector of the economy.

For example, Barton proposes a number of alternative solutions to what he believes are negative consequences of gene patents on diagnostics.29 Barton's concerns are representative of those articulated by many clinical geneticists, such as Dr. Debra Leonard, Director of the Molecular Pathology Laboratory of the University of Pennsylvania Health System, who complains:

We may have spent years developing these tests, and educating our clinicians in performing them. They become the standard of medical practice. Then the patent is issued, and one or two labs get the exclusive licenses, and we can't do the testing for our own patients.30

It is of course fair to ask why the patent system, or for that matter the health care system, should be concerned at all as to whether Dr. Leonard or her colleagues are permitted to do the testing for their own patients.31 Shouldn't the concerns be whether patients have access to new diagnostic tests at reasonable prices? If compensation of patent owners indeed results in higher costs to patients, rather than simply lower revenues or reduced sales margins to providers of such tests, should that not be addressed through the health care funding system rather than an amendment to the patent law? Wouldn't that approach be less likely to produce unintended consequences than would an amendment to the patent law? Isn't this issue closely related to current policy discussions regarding prescription drug benefits, and could it not be addressed through mechanisms similar to those currently under discussion with regard to the cost and availability of prescription drugs, rather than through an amendment to the patent law? There is evidence that new molecular diagnostics are emerging that will allow the selection of treatment of diseases, especially cancers, which will avoid for both patient and health-care provider the delay, expense, and debilitating effects of treatments that will not benefit individual patients. Shouldn't these savings be considered in evaluating the effects of gene patents on health care?

It is far from clear that a diagnostic exemption, or compulsory licensing, will result in the greater availability of new molecular diagnostics at reasonable prices. It is likely that the principal beneficiaries of such a legislative change would be the handful of leading global diagnostics companies. These companies would be assured of freedom to operate under gene patents, either for free or at a mandated rate. They would be able to continue to benefit from their installed base of diagnostic testing equipment and their existing sales forces, with much less risk of losing business to emerging competitors who have developed new molecular diagnostics. It is difficult to see how this scenario benefits patients.

In fact, it now appears that the first health care products that benefit directly from genomic research will likely be diagnostics.32 Companies such as Millennium Predictive Medicine, Celera Diagnostics, diaDexus, and Genomic Health, to name a few, are making rapid progress toward the commercial introduction of new diagnostics developed through genomic approaches to identifying and characterizing genetic markers for disease diagnosis as well as for treatment options.33 These companies all fit Scherer's profile of those companies for whom the availability of patent protection is likely to be most critical. Absent the availability of patent protection for their novel products, these companies would likely have difficulty persuading investors to invest in them, with the result that they would be correspondingly less likely to bring their products to market. It would be certainly undesirable if these companies were to fail and their products failed to reach the market, to the detriment of patients, based on a patent amendment intended to provide freedom to operate to Dr. Leonard and her counterparts in the clinical genetics community.

Given the concerns raised about gene patent licensing practices, though, it is important to note that in the United States universities are the leading holders of human-gene patents.34 Given the role that the federal government has played in funding biological research,35 it is likely that a significant portion of these patents are based on federally-funded research. Scherer infers that the relatively high rate of gene patenting by U.S. universities, when compared with their non-U.S. counterparts, is attributable to the Bayh—Dole Act.36

It would therefore be possible to address much of the gene patent concerns raised by Murashige, Barton, and Scherer if the largest gene patent holders adopted a policy, either voluntarily or as a result of modifications to the Bayh—Dole Act, that mandated non-exclusive licensing of university-owned gene patents for use in the research field on standard terms. One can certainly argue that to the extent that public funding enabled the innovations claimed in the patents, the public interest in those patents entitles society to a greater role in the way in which they are exploited than would be the case if they were funded entirely with private dollars.

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Debate on concerns that gene patents inhibit either basic research or the provision of health care in a timely and affordable manner is itself very healthy. However, it is of some very real concern that unsubstantiated assertions about what “might” happen if patentees act in a manner that seems both unlikely from an economic point of view as well as destructive from a societal perspective seem to be fueling not only debate but ill-conceived legislative “fixes” for ills that do not actually exist.37

Very little, if any, objective evidence exists to support assertions that gene patents have inhibited research, particularly in the context of the dramatic acceleration in research that the availability of patent protection has encouraged. Nowhere is there any objective evidence that any patient has been denied access to available genetic tests due to a patentee's refusal to allow the test to be done. Nowhere is there any objective evidence that research on gene therapies have been inhibited by gene patents. The main issues of the most vocal of the gene patent opponents seem to reduce to their unhappiness that gene patents enable their inventors to recoup their investment in the inventive process by charging royalties for a license to their invention, or that the patentee asserts its right to perform the test itself. It is not seen how this harms patient care at all—rather, at most it seems to prevent the doctors and clinical geneticists from performing these tests for profit, or in a way that competes with the patent holder, without reimbursement to the inventors of those tests.

To the extent that any such concerns might some day be justified by actual facts, it would seem that other, less drastic, measures should be considered before attempting to change the basic principles of patent law in a technology-specific way. Such a process risks running afoul of our commitments to the TRIPS treaty agreements, as well as providing a precedent for unnecessary legislative intervention that will increase the risks, and thus the costs, of all technology improvements—i.e., the progress of science and the useful arts—that the patent statutes were enacted to promote. This would be by far the most damaging and counterproductive outcome in the long run.

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1See, e.g., Eisenberg, Rebecca S. “Reexamining the Role of Patents in Appropriating the Value of DNA Sequences,” 49 Emory L.J. 783 (2000).
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235 U.S.C. § 103(a) (Conditions for patentability; non-obvious subject matter).
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3 In re Merck & Co., Inc. 231 USPQ 375 (Fed. Cir. 1986):
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Congress has also rejected that approach by enacting the second sentence of 35 U.S.C. § 103, which states “[p]atentability shall not be negatived by the manner in which the invention was made.” The reviser's note on this sentence states “it is immaterial whether it resulted from long toil and experimentation or from a flash of genius.”

435 U.S.C. § 101 (Inventions Patentable).
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5To meet the utility requirement of sections 101 and 112 of the Patent Act, the patent applicant need only show that the claimed invention is “practically useful,” Anderson v. Natta, 480 F.2d 1392, 1397, 178 USPQ 458 (CCPA 1973) and confers a “specific benefit” on the public. Brenner v. Manson, 383 U.S. 519, 534–35, 148 USPQ 689 (1966). As discussed in a recent Court of Appeals for the Federal Circuit case (Juicy Whip Inc. v. Orange Bang Inc., 51 USPQ2d 1700 (Fed. Cir. 1999)), this threshold is not high:
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An invention is “useful” under section 101 if it is capable of providing some identifiable benefit. See Brenner v. Manson, 383 U.S. 519, 534 [148 USPQ 689] (1966); Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1571 [24 USPQ2d 1401] (Fed. Cir. 1992) (“to violate Section 101 the claimed device must be totally incapable of achieving a useful result”); Fuller v. Berger, 120 F. 274, 275 (7th Cir. 1903) (test for utility is whether invention “is incapable of serving any beneficial end”).

While an asserted utility must be described with specificity, the patent applicant need not demonstrate utility to a certainty. In Stiftung v. Renishaw PLC, 945 F.2d 1173, 1180, 20 USPQ2d 1094 (Fed. Cir. 1991), the United States Court of Appeals for the Federal Circuit explained:
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An invention need not be the best or only way to accomplish a certain result, and it need only be useful to some extent and in certain applications: “[T]he fact that an invention has only limited utility and is only operable in certain applications is not grounds for finding lack of utility.” Envirotech Corp. v. Al George, Inc., 730 F.2d 753, 762, 221 USPQ 473, 480 (Fed. Cir. 1984).

6 See, e.g., Bonito Boats Inc. v. Thunder Craft Boats Inc., 489 U.S. 141, 150–151, 9 U.S.P.Q.2d 1847, 1842 (1989) (“The federal patent system… embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful and nonobvious advances in technology and design in return for the exclusive rights to practice the invention for a period of years…. We have long held that after the expiration of a federal patent, the subject matter of the patent passes to the free use of the public as a matter of federal law.”)
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7Economic Report of the President, February 2002, available at 〈> (Accessed July 20, 2002.)
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8See generally, Scherer, F.M., “The Economics of Human Genome Patents.” Acad Med. 2002;77:1348–67.
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9 See Diamond v. Chakrabarty, 447 U.S. 303, 206 U.S.P.Q. 193 (1980) (quoting from the Congressional Record at S. Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952); H.R. Rep. No.1923, 82d Cong., 2d Sess., 6 (1952)).
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10 See 35 U.S.C. §§ 101, 102, 103 and 112 (1952). Section 101 requires inter alia that the claimed invention be useful. Section 102 requires that the claimed invention be novel. Section 103 requires that the claimed invention be non-obvious. Section 112 requires (1) that the specification (a) provide evidence the applicants' conception of the invention was complete as of the time of filing, and (b) provide a description adequate to enable persons of ordinary skill in the relevant technology how to make and use the invention; it further requires (2) that the claims describe the invention with sufficient specificity to permit persons of ordinary skill to determine what the claimed invention is so that he or she may avoid infringing it.
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11See Murashige, K., “Patents and Research—An Uneasy Alliance.” Acad Med. 2000;77:1329–38; see also Scherer, op. cit.
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12It may be that this economic shift accounts for the increase in patent filings that Scherer notes, although he does not seem to have considered this as a possible explanation for a phenomenon that he seems to view as anomalous. Scherer, op. cit.
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13The Uruguay Round Agreements Act of 1994, Public Law 103–465, 108 Stat. 4809 (1994) (hereinafter “URAA”) implements the Uruguay Round General Agreement on Tariffs and Trade (hereinafter “GATT”), which includes an agreement on the Trade-Related Aspects of Intellectual Property (hereinafter “TRIPS”). TRIPS Part II, Section 5, Article 27, Paragraph 1, provides: “Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”
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14The Semiconductor Chip Protection Act of 1984 (Pub. L. No. 98–620, 98 Stat. 3347 (codified as chapter 9 of title 17 of the United States Code)) is one such example. Congress enacted the law at the behest of the U.S. semiconductor industry, which claimed that patents, copyrights, and trade secret laws were inadequate to protect their innovations, which they claimed were under serious economic threat from chip “pirates.” See Hearings on H.R. 1028 Before the Subcomm. on Courts, Civil Liberties and the Administration of Justice of the House Comm. on the Judiciary, 98th Cong., 1st Sess. 62 (1983) (testimony of Ray Patterson, Professor of Law, Emory University School of Law) (opposing chip protection as a “pilot project” for general design protection); id. at 170 (testimony of Dorothy Schrader, Associate Register of Copyrights for Legal Affairs and General Counsel of the Copyright Office) (supporting chip protection and noting it might serve as a “precedent” for legislative action on designs). Since its enactment, this piece of legislation has been the subject of very few published decisions, e.g., Brooktree Corp. v Advanced Micro Devices, Inc., 705 F. Supp. 491, 10 U.S.P.Q.2d 1374 (SD Ca 1988) (preliminary injunction denied for lack of showing of likelihood of infringement by defendant's mask works that differ from plaintiff's mask works enough to avoid substantial identity and are designed after evidence of reverse engineering efforts), later proceeding 757 F. Supp. 1088, 18 USPQ2d 1692 (SD Ca 1990), stay gr 757 F. Supp. 1101, 18 USPQ2d 1703 (SD Ca 1990) and affd 977 F.2d 1555, 24 USPQ2d 1401 (Fed. Cir. 1992), reh, en banc, den 1993 US App LEXIS 415. Given the near total-absence of enforcement actions under this statute, one can certainly question whether piracy was as serious a problem as the statute's proponents contended.
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15TRIPS, Part II, Section 5, Article 27, Paragraph 1.
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16Scherer, op. cit.
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17Iain Cockburn, “Intellectual Property Rights in Biotechnology and Pharmaceuticals,” presented February 4, 2000, at the “Conference on Intellectual Property Rights: How Far Should They be Extended?” hosted by the National Academy of Sciences. The presentation is available on the internet as a streaming audio feed synchronized with a video Power Point presentation at 〈〉. (Accessed July 20, 2002.)
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18 Ibid.
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19Scherer, op. cit.
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20Barton, J. Patents, genomics, research, and diagnostics. Acad Med. 2000;77:1339–47.
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21It is possible that Barton's concerns about patents claiming rights to “information about the world” reflects his discomfort with the genomic approach to pharmaceutical research. In the traditional pharmaceutical research approach, one begins with a disease and looks for a method of diagnosing or treating it. Once the “solution” (in the form of a product) to the “problem” (the disease) is found, its patentability is intuitively obvious, assuming it meets the legal requirements for patent protection. In contrast, genomics seeks a comprehensive understanding of the biological basis for disease and drug response; as a consequence, the genomic approach is to ask questions, with the understanding that at some point the answers will yield solutions, instead of trying to solve a discrete problem in isolation. In either case, the question is whether the inventor has made a discovery that satisfies the applicable patent law requirements, but the context for the discovery is quite different.
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22See Barton at 2; Murashige at 6. See also Michael A. Heller and Rebecca S. Eisenberg, “Can patents deter innovation? The anticommons in biomedical research.” 280 Science 698–701 (1998).
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23Barton, op cit.
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24Jon F. Merz, Antigone G. Kriss, Debra G. B. Leonard, Mildred K. Cho, “Diagnostic testing fails the test,” 415 Nature 577–579 (2002).
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25Economic Report of the President, February 2002, available at 〈〉. (Accessed July 20, 2002.)
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26In the context of research tools vendors, it is difficult to imagine any significant pattern of refusal to license or exclusive licensing, since the vendor's business strategies will in most cases require the sale of the same product to multiple customers. Indeed, Incyte Genomics, where the authors of this article are employed, has a well-publicized policy of licensing its gene patents on a non-exclusive basis for research purposes. This licensing model has proven acceptable to 19 of the top 20 pharmaceutical companies, suggesting that the transaction costs, royalty-stacking and other patent “thicket” issues raised by Dr. Murashige, Barton, and Scherer are not insurmountable. In other cases noted by these and other commentators, see, e.g., Murashige at 6, patent owners proposed to charge fees that the commentators apparently considered high. In that case, the patent system presumably provides the mechanism for designing around or otherwise finding alternatives to the patented invention, which over time should cause the patent owner to moderate its economic demands if indeed they are exorbitant.
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2735 U.S.C. § 271(d) (1952) provides for the defense of patent misuse. The defense has been made unavailable by the Patent Misuse Reform Act of 1988 in two types of cases. Cases of the first type are those in which the patentee has refused to license or use any rights to the patent. See 35 U.S.C. § 271(d)(4). Cases of the second type are “tying” cases (i.e. cases where a patentee conditions the license of patent rights or the sale of a patented product on the acquisition of a license to rights in another patent or on the purchase of a separate product) wherein the alleged infringer cannot show that, in view of the circumstances, the alleged misuser has market power in the relevant market for the patent or patented product on which the license or sale is conditioned. See 35 U.S.C. § 271(d)(5). Nonetheless, cases heard by the Federal Circuit Court of Appeals have consistently affirmed its continued viability, and availability of the defense in cases involving practices which constitute per se misuse, as defined in subsections (1)-(3) of the statute, remains unaffected by the 1988 Act. See generally 6 Chisum on Patents, Chapter 19. In this context, Barton's suggestion that use of SNPs for diagnostics be free, while potentially requiring users to purchase kits from the patent holder if available on reasonable terms seems odd, since it confers no patent rights with respect to the use of the SNP as a diagnostic, which is presumably the key innovation, while conferring kit rights to a patent owner who may have no particular competitive advantage with respect to the kits he or she sells. Barton, op cit.
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28 See generally 6 Chisum on Patents 19.03[6][e] and 19:04[2]. Circumstances under which antitrust liability may be imposed on a patentee include the following: (1) where the patentee brings an infringement suit that is both subjectively and objectively baseless (see Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 26 U.S.P.Q.2d 1641 (1993); (2) where the patentee knowingly asserts a patent that was procured by fraud on the PTO (see Walker Process Equipment v. Food Mach. & Chem. Corp., 382 U.S. 172, 147 U.S.P.Q. 404 (1965); and (3) cases involving patent misuse, where there is proof of both the requisite elements for imposition of liability under the Sherman Antitrust Act (15 U.S.C. § 2 (1994) and the elements of misuse (see Virginia Panel Corp. v. MAC Panel Co., 133 F.3d 860, 45 U.S.P.Q.2d 1225 (Fed. Cir. 1997), cert. denied 525 U.S. 815 (1998).
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29Barton J. op. cit.
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30AAMC Reporter Vol. 9, February 2000; also cited at 〈〉. (Accessed July 20, 2002.) See also our comments in Footnote 21.
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31One can contrast the issues raised by Dr. Leonard and other clinical geneticists, who are providing services to patients for a fee, from basic research that does not involve delivery of any service to any particular patient. In the latter case, even absent a legal “research exemption” from patent infringement, why would any patent holder sue for infringement when there would be no damages to recover and no ongoing commercial infringement to enjoin? In this setting, it is hard to imagine a patent owner suing for infringement, and the authors are aware of no evidence that such suits are being filed in significant numbers.
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32Tom Abate, Economics of gene patents for diagnostic testing under scrutiny, San Francisco Chronicle, February 11, 2002; 〈〉, link now inactive.
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33Protein analysis helping doctors tailor treatment to individual's cancer,” San Jose Mercury News, April 4, 2002, reporting that a new way of analyzing tumors to see which proteins they produce shows promise in helping doctors tailor treatments for each patient's cancer.
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34Scherer, op. cit.
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35 Ibid.
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36 Ibid.
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37H.R. 3967, March 14, 2002, proposed by Rep. Lynn Rivers (D. Mich.), which propose to make gene patents unenforceable against doctors and laboratories that perform diagnostic tests.
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Public Versus Private Ownership of Scientific Discovery: Legal and Economic Analyses of the Implications of Human Gene Patents

© 2002 Association of American Medical Colleges