Intellectual Property Rights in the Biotechnology Field

I. L. "Pep" Fuller

Irving L. "Pep" Fuller is Director of Chemicals and Advanced Technology Trade Policy, Office of the U.S. Trade Representative, Executive Office of the President.

[19 ELR 10513]

I would like to address the protection of intellectual property as it relates to biotechnology. My office is not competent to assess human risk and environmental risk issues, so I will not discuss them. But there are some other risks that we have not considered at this conference, namely, the risk in terms of U.S. competition and competitiveness in the world market.

When we discuss these issues, it is important to understand that we operate in a global economy. The concept of a world trading system is relatively new. Certainly, it is a new focus for the United States and many smaller U.S. corporations. In this context, there is a risk that domestic biotechnology policy decisions may affect U.S. competitiveness.

Speakers have mentioned in passing a number of risks that relate to the present technology, the regulatory system, and the inadequacies of that system, whether real or imagined. I submit that there is also a risk of not going forward, which people concerned about health and the environment must consider. If biotechnology can invent laboratory animals that will provide safer, more sensitive, and more accurate identification of human toxins — including carcinogens, mutagens, and teratogens — then not to go forward because of some perceived risk to health or the environment is in itself a risk.

A bill is pending before Congress to put a moratorium on the patenting of novel animals.¹ The risks associated with [19 ELR 10514] the genetic engineering of novel animals ought to be debated. But what are the proper forums in which to debate those issues? One certainly cannot ask the Trademark and Patent Office to make environmental health judgments — they have never done so before.

So what do we want when we ask for a moratorium? One possible rationale is that a moratorium will slow down biotechnology, giving us more breathing room, fewer resources committed, and less research accomplished. But a moratorium is a false start, because it moves the debate about health and environment to a forum that was never designed for, and has no ability to evaluate, those issues.

We need to be open about our objectives. Using a moratorium as a platform to address issues of human and environmental risk would be inappropriate and unfortunate. It would not stop the research. If people truly believe that research should not go forward, then we should debate it on those grounds and go to Congress on those grounds. If we truly believe that biotechnology should not be commercialized, then we should approach Congress on those grounds.

What we should not do is deny a patent to something that fulfills all the other requirements to receive a patent, on the grounds that the invention is living matter. I do not hear anyone arguing that we should not patent novel microorganisms or novel plants, but I have heard these arguments raised for novel animals. To agree with these arguments would hamstring the United States in international competition. American companies would be trying to compete in an international arena, in a high gross research intensive field for which the United States lacks adequate protection of intellectual property.

I have spent a good deal of time visiting countries and insisting that they provide better protection to intellectual property. I do this with respect to the pharmaceutical industry, agrichemicals, and a number of other concerns. To make that argument meaningful, the United States itself must offer adequate protection of intellectual property.

It is legitimate to raise questions about activities in India, Argentina, and Brazil, where biotechnology is available but the proper regulatory structure and scientific expertise may not be in place to address health and environmental risks.

Something else that is occurring in these countries is that U.S. biotechnology, agrichemical, and pharmaceutical products are being pirated. Some countries have pirated as part of an announced national industrial policy.

The U.S. has had some effect on eliminating pirating policies by bringing strong pressure to bear. Nonetheless, pirating has gone on for a number of years and its incidence continues to increase. The pirating has also shifted in type, from domestic use of pirated goods to situations where countries like Brazil have announced a policy of exporting pharmaceuticals for which they give no domestic patent protection. Argentina also has a large pharmaceutical industry operating on the basis of pirating.

In many of these countries, one can buy test results that were generated in the United States or Europe, submit the test dossier to the country's regulatory office, and receive a registration. Once registered, one can start producing the pirated pharmaceutical.

Why should people who have been debating biotechnology's health, environmental, and legal aspects be concerned about pirating? Industry is certainly concerned because pirating is a direct threat to the United States's ability to profit from and receive the benefits of its research. Pirating threatens both public research and the extensive amount of private research that is occurring in the innovative biotechnology companies.

Not only is the pirating phenomenon a serious hemorrhage of American ideas, American creativeness, and American research, but it also poses health and environmental risks. If someone submits a dossier compiled by someone else, without doing any testing, real risks are involved when he or she tries to produce the same product. How do we know that the same product will be produced — do we take the pirate's word for it? We need to find ways to stop this trend.

For the first time in the history of trade negotiations, we have made protection of intellectual property a trade issue. With the support of a number of other developed countries that have adequate protection of intellectual property, we have introduced the intellectual property issue into the new trade round that was agreed on at Punta del Este, Uruguay under the General Agreement on Tariffs and Trade.

Why is this significant for the future of intellectual property? For one thing, people are now discussing patent protection at a level that has not existed since it was mentioned in the Constitution. The founding fathers thought patent protection was important, but for a number of years the area was the exclusive province of inventors and patent lawyers. Now, heads of state and prime ministers are actually using the terms, "protection of intellectual property." This is something that we have not heard on the world stage for decades.

Intellectual property activity is properly a trade issue. The International Trade Commission recently completed an investigation of problems associated with inadequate protection of U.S. intellectual property.² As a result of this study, the Commission estimated that U.S. firms lost between $ 43 and $ 61 billion in 1986 from inadequate intellectual property protection in other countries. Even the low end of this estimate represents a sizeable loss of money from inadequate protection of intellectual property overseas.

The United States should not reduce the level of intellectual property protection for biotechnology. From a trade standpoint, this would give the worst kind of international signal. Reducing domestic intellectual property protection would make it difficult for the United States to continue to make the strong pro-patent arguments it has made overseas.

The broader question is whether living matter is patentable subject matter. In the United States, the issue was decided a number of years ago. The Supreme Court ruled on the issue for microorganisms in its very broad decision in Diamond v. Chakrabarty;³ Ex parte Allen⁴ and Ex parte Hibberd⁵ decided the issue for novel plants and animals.

Many developed countries do give patent protection to novel microorganisms, but the United States is in the minority at present in granting patent protection to novel plant varieties. Once source of plant variety protection is the International Union for the Protection of New Varieties and Plants. While many nations have some level of protection for plant varieties, in most cases it is inferior to full utility patent protection. There are many exceptions under the Plant Varieties Act, including farmer use exemptions; this does not result in the same level of protection as full patent protection.

[19 ELR 10515]

From a trade standpoint, we are trying to make the case that other countries should rise to the level of protection provided in the United States. We had an entire day of discussion on these issues with the European Community. The Europeans have the European Patent Convention (EPC), with 13 signatory countries. The EPC is not a creature of the European Community, nor do the 13 EPC signatories directly overlap with the 12 members of the European Community.

That Convention was completed in 1973, but the national debates that fostered it occurred prior to that time, before the advent of modern biotechnology. As a result, some exceptions in the EPC pose problems for protection of whole plants, let alone for whole animals and whole plant varieties.

In the discussion we had with the European Community, there was general acknowledgment that: 1) full patent protection should be considered, 2) there are real benefits to full patent protection, and 3) the general system of plant breeders' rights currently existing in Europe is flawed by serious inadequacies in terms of reward for the innovator and the inventive research company.

Indeed, the head of the legal department ofthe EPC has noted that for applicants in the field of biotechnology, the United States may seem like the Garden of Eden, where everything achieved by biologists or microbiologists is eligible for protection. He quoted the dicta in Chakrabarty that "everything under the sun that is made by man" can be protected.⁶ This illustrates that the United States's structure for intellectual property in biotechnology is the envy of many other countries in the world.

The U.S. is certainly part of a global market for biotechnology. In that global market we need to look at what our trading partners are or are not doing; some of them have serious deficiencies in this area. Denying adequate protection to intellectual property, whether across the board or through individual exemptions, denies market access and thereby undermines the rights and guarantees that are provided by the General Agreement on Tariffs and Trade.

We have had discussions with Canada about their level of protection, since Canada is not a signatory of UPOV. Canada does not grant any protection for novel plants, and a recent Canadian court decision repudiated the patentability of plant varieties. That decision is being appealed, but in the meantime it is a repudiation. The Canadian government has stated that it intends to introduce plant variety protection, but it has not done so to date.

Another trade issue in the biotechnology area occurs under the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure, which sets up depositories for novel microorganisms. The depository concept arose because in the early days of biotechnology, no one thought it was possible to describe adequately in writing the genetic inventions that were occurring. The idea was that tissue culture collections or depositories would be established, operating under international standards. Anyone wanting information on a microorganism would not only receive the written description in the patent, but also would be able to obtain a sample of the novel microorganism from the international depository.

The problem is that even if one can patent a microorganism, one may or may not be able to obtain regulatory approval for it — this happens frequently in the pharmaceutical area. So if people are concerned about environmental and health issues, they should be reviewing closely the conditions for releasing microorganisms from these depositories to third party countries.

What will happen when these microorganisms reach the third party country? With the tissue culture, a country has a pocket factory. With a little fermentation skill they can begin to produce that particular product.

Remember that the structure of the Patent and Trademark Office and of these depositories was never set up to address health or environmental concerns. Indeed, an organism can be deposited for patent purposes long before there is any approval by the Food and Drug Administration or anyone else in the regulatory process. Therefore, it is conceivable that an organism that would not be wise to release to a particular developing country could be released under the present arrangement.

Another concern is a competitive one: why should we send products to a country that lacks intellectual property protection for biotechnology, and that has announced that it will copy and export some of these products? Are we creating a situation that encourages people to take advantage of the regulatory structure for competitive purposes? If restrictions should be imposed in other countries, what should they be?

As a result of our negotiations for adequate protection of intellectual property, a number of countries have agreed to change their laws. That is the good news — some countries are acknowledging that it is not in their long-term interest to remain mere copiers. The bad news is that if a country announces it will change its law, it may be faced with a rush to the registration office in the period before the new law goes into effect.

When Chile announced that it was planning to change its patent law, the announcement triggered a flood of registration applications under the existing law. This flood began as soon as there was general knowledge that the Chilean government was thinking about changing the law. The applicants knew that the government could not ask companies to take a product off the market if it was in commerce before the new patent law came into effect.

Since this flood of applications increases the problem of copying and using U.S. inventions, how do we prevent this from occurring? One option is to make the period between the old and new patent law as short as possible. Or, from a health and environment standpoint, a country could require that the "me-too" manufacturers provide bioequivalency test results that they have generated themselves. This allows government officials to certify that there has been adequate review of the applicant product, at least to the extent that the products use the same active ingredient.

What do we do with the international depositories when we begin to patent plants and animals? The Trademark and Patent Office has proposed regulations that would apply the rules for depositing microorganisms to plants and animals.⁷ Unfortunately, no one knows of any organization that is willing or able to undertake the responsibilities of a suitable depository for live animals.

If the depository concept is to be extended as biotechnology evolves, we need to reexamine it. The current Trademark and Patent Office position on novel microorganisms is that no restrictions should be placed on release of [19 ELR 10516] deposit. Anyone who writes in should be able to obtain the deposit. That is an interesting position; the only two countries in the world that have taken this position are the United States and Spain. All other countries that have considered the issue have placed some restrictions on release of deposits. I submit that the latter approach is the more useful one. Otherwise we will be compelled to rely overly on trade secret protections.

1. S. 2111, 100th Congress, 2d Sess. (1988).

2. U.S. International Trade Commission, __, Investigation No. 332-245 ( ).

3. 447 U.S. 303 (1980).

4. 2 USPQ 2d 1425 (Bd. App. & Int., April 3, 1987).

5. 117 USPQ 443 (1985).

6. 447 U.S. at 309.

7. 52 Fed. Reg. 34,080 et seq. (September 9, 1987).