It’s in the Genes Patent Barriers to Genetic Research

By Lee Drutman

In 1998, when University of Wisconsin scientist Dr. James A. Thomson became the first person to isolate human embryonic stem cells, the patent on stem cells went into the hands of the Wisconsin Alumni Research Foundation (WARF). WARF then licensed the patent to the Geron Corporation to develop the stem cells into six specific types of human tissue.

But while the patent on stem cells was a boon to Wisconsin and Geron, much of the rest of the scientific community responded with a collective gasp. With control of such a patent, would WARF and Geron stand in the way of future research on stem cells either by exacting licensing fees for researchers who needed to use the patented cells or even preventing researchers from using the cells at all? With treatments for Parkinson's, heart disease and diabetes potentially hanging in the balance, such licensing questions were not just academic. But it wasn't until September 2001, when the National Institutes of Health forced WARF to sign an agreement, that Wisconsin agreed to freely allow scientists from other universities to conduct their own research based on Wisconsin's patents.

Tales like this are beginning to raise concerns in the scientific community. With DNA-based treatments and procedures playing a growing role in the future of medicine, universities and private corporations alike have for years been rushing to be the first to patent new DNA-based "inventions." But a growing number of scientists are now beginning to raise concerns that excessive patenting could prove troublesome for the future of DNA-based research by placing costly infringement obstacles in the way of scientific discovery.

"There's definitely a lot of concern," says Tim Leshan, senior policy analyst at the National Human Genome Research Institute at the National Institutes of Health (NIH), which is in the process of issuing a best practices policy for genetic patenting.

"It's a big tax on the work going forward," adds Rebecca Eisenberg, a professor at the University of Michigan Law School. "It's a looming potential tax liability that might be dampening incentives to undertake risky, costly research."

Genetic Exclusion

Since the field of genomic research is only about 10 years old, little data has been collected on what impact overzealous patenting has had. But already, some signs of danger are beginning to hint at a future where genetic research becomes increasingly difficult to conduct.

"Though there's not a lot of data, it's clear that some universities and companies are requiring exclusive licenses that make it so only a few people can conduct research, and that can stifle research," says Leshan.

Earlier this year, the National Research Council of the National Academies issued a report, "A Patent System for the 21st Century," that found problematic costs in the current patent system. "The gist was that it has increased costs of doing research at companies and universities," says Stephen Merrill, director of Science, Technology and Economic Policy at the National Academies and a lead author of the report. "Certainly, intellectual property complications delayed some work."

Meanwhile, a study led by Mildred Cho, the associate director of the Stanford University Center for Biomedical Ethics, has found that half of directors at genetic testing labs said they chose not to develop a new test because of concerns about licensing. Additionally, one quarter of lab directors said that they had stopped providing at least one test because licensing fees made it too expensive.

Says Cho: "We also found that laboratory directors said people are less willing to share information they had found about certain diseases or genetic conditions because of the possibility somebody might want to patent it themselves or be working on getting a patent."

And, in a draft of new guidelines for best practices regarding genetic patenting and licensing, the National Institutes of Health writes that "anecdotal and empirical data is beginning to reveal a pattern of exclusive licensing practices for genomic technologies at U.S. academic and non-profit institutions that could have detrimental short-term and long-term effects on both the quantity and quality of healthcare products and services."

"In recent years several important disease genes and cancer susceptibility have been exclusively licensed to a small number of diagnostics or biopharmaceutical companies," continues the draft guidelines. "But such an exclusive arrangement may not be the most beneficial one for the public. Ö Choice among competing products is a time-tested warranty of quality."

So far, 35,000 DNA-based patents have been filed with the U.S. Patent Office, according to LeRoy Walters, a senior research scholar at Georgetown University's Kennedy Institute of Ethics who is conducting a study of DNA-based patents. The majority of those patents were filed in the late 1990s. In 1991, there were about 500 patents filed. By 1997, that number had jumped to 2,500. The number of patents peaked in 2001, with about 4,500. But the wave seems to have crested. By 2003, the number had fallen to 3,500.

Robert Cook-Deegan, director of the Center for Genome Ethics, Law & Policy at Duke University, worries that big problems will begin to occur over the next decade as the biotechnology industry begins to mature and become increasingly profitable. This, in turn, will make patent infringement suits a more profitable business for both patent holders and lawyers alike.

"[Genetics] has been a pretty active field for the last 10 years," says Cook-Deegan. "Typically patent litigation doesn't happen until the product cycle is finished, and then it suddenly becomes worthwhile to litigate. The typical product cycle is 15 to 20 years, and the rapid rise in DNA patents started in 1994, so the litigation cycle could start in the next five to 10 years."

"It could get worse in five to 10 years," agrees Leshan. "We already have some companies sending cease and desists for using their patents. Ö Technology transfer officers in some offices have become more aggressive, but they are not always realizing broader implications. It's definitely starting to happen, and what we fear is that if we don't try to address the issues now, five to 10 years down the road most people will enforce all sorts of patents."

And what happens if patent holders start to get aggressive about enforcing their patents?

"The first and most obvious thing is that it makes it more expensive," says Cook-Deegan. "It also makes it more complicated. If routine infringement that's going on now begins to cost people money, then you have to make sure that you aren't doing it and spend a lot of time and effort examining what you are doing and the intellectual property surrounding what you are doing."

Ownership of DNA-based patents is roughly split between the private sector and the public sector. The University of California and the U.S. government are the top two holders of DNA patents, but the other eight holders in the top 10 are all private corporations. Rounding out the top five are GlaxoSmithKline, Incyte Genomics and Aventis.

Industry Divided

For the time being, however, Cook-Deegan notes that large corporations have not been particularly aggressive about patent enforcement, recognizing that a kind of live-and-let-live truce is working well. For them, profits lie in end-product pharmaceuticals, not early-in-the-pipeline gene patents. These large firms generally do not enforce gene patents, and hope that others don't enforce such patents against them.

The danger, Cook-Deegan suggests, is that "a small biotech company or a university that doesn't have a big stake in it buys up patents and starts to enforce them as a way of making money. They don't care if they don't play in the game."

Adds Stephen Merrill of the National Academies: "My concern is not that big companies will start suing, but that very small firms or consultancies are now increasingly in the business of acquiring and asserting patent rights just for royalties, and that as a source of revenue they will start going after universities."

Walters, who is analyzing the data on patents, has noticed that "some private companies are monitoring publications coming out of universities to see if their invention is being used in basic research. If it is, they may write a complaint letter to the university, complaining about the infringement of their patent. If there is any area that deserves investigation in terms of whether basic research is being slowed down, it would be that area."

There are also some private companies who want to see less aggressive patenting, such as those who compile gene cards and provide other services that would be made costly and difficult if patent holders decided to get more aggressive in enforcing their claims. In short, companies' positions on patenting largely depends on what they stand to gain or lose.

"The private sector is a huge player, but it is not a monolith," Cook-Deegan says. "They're a big player, but they have no coherent position."

But Lila Feisee, director of intellectual property with the Biotechnology Industry Organization (BIO), says that strong patenting rules are crucial to the development of the biotechnology industry.

"Intellectual property is of huge importance," says Feisee. "It is the lynchpin of biotech product development. For the majority of our companies, their patents are their assets. Of the thousand or so members we have, about 90 percent don't have any products yet, but will in five to 10 years. They will need to generate funds to develop those products and most of the funding comes from the private sector. And what does private sector need? Some kind of reassurance that their investment is protected. If you don't have patents you won't have a product in the market. If you start to take away or erode patents on biotech inventions either here or abroad --you will see a slowdown on biotech investment, and probably see it take longer for these products to come out."

Everybody Was Patenting Everything

As for the public sector, the focus on aggressive academic patenting in all fields of scientific research dates back to the early 1980s, when there was a shift in both policy and attitudes toward patenting.

The policy shift came with the 1980 enactment of the Bayh-Dole Act, which gave universities the right to patent inventions developed with government funding.

"I think the general change is that where there used to be more of a free exchange of materials and information, the advent of patenting has caused researchers to be less forthcoming about both sharing materials and sharing information," says Mildred Cho. "People are more cognizant of thinking about patenting things. They are asking whether they can collect royalties, they want to be sure if they have something patentable."

Still, despite the aggressive patenting of just about everything gene-related, many scientists say that it hasn't been a major problem because the majority of patent holders have turned the other way when their patents were being infringed upon, especially in university settings.

"Infringement is rampant in the research community," says Merrill. "One of the reasons that there haven't been more problems with university research was that to some degree they have been operating on the assumption that there was no problem using other people's patents as long as they were not developing a product."

But increasingly, patent holders are becoming less tolerant about infringement. "The idea was that if you were not using it for commerce, it was okay," says Stephen Heinig, a senior research fellow at the American Association of Medical Colleges (AAMC). "But that has been very much narrowed."

One reason for that is a two-year old Federal Circuit Court of Appeals decision, Madey v. Duke. The case involved a former Duke faculty member named John Madey who had developed a laser while at Duke. Upon leaving the university, Madey sued Duke for a number of things. One of those was for infringement of his patent. Duke argued that it was free to use Madey's invention under a research exception to patents. The court disagreed, holding that no such exception exists in U.S. law.

Now, according to Heinig, "universities are reporting that since the Duke case, they are seeing letters alleging infringement that say for a certain fee we will let you use this technology,"

"Then again," adds Heinig. "they got letters before, so we don't know how much more frequently this is happening."

Still, despite some troubling developments, there are also some encouraging signs that the scientific community is beginning to take concerns about patenting and proprietization seriously.

Cook-Deegan notes that, "By the mid-1980s, everybody was patenting everything, and commercial attachments were widely accepted. Now there's a general ethos that maybe we have done too far."

Sounding the Alarm

One of the loudest voices sounding an alarm about overzealous patenting is the NIH, which distributes more than $20 billion a year in research funding. A few years ago, the NIH began asking research applicants to describe how they would deal with issues of intellectual property and technology transfer in their applications. As a result, applicants began to take these issues more seriously.

Now, responding to continued pressures and concerns, the NIH is drafting a set of best practices guidelines for issues of patenting and licensing. Though these guidelines will be voluntary, they do carry a good deal of force given the NIH's central role in distributing research funding.

In a draft of the guidelines, the NIH recommends non-exclusivity wherever possible, and where exclusive licenses are deemed necessary "to encourage R&D by private industry," the NIH recommends very narrow limits on the licenses, clear benchmarks and monitors to "ensure expeditious development." The agency says holders of patents developed with government funding should make sure that research uses are protected and public health goals are always kept in mind.

"We're trying to make sure that we're moving along as quickly as possible," says the NIH's Leshan.

The National Academies of Science, among other research organizations, is also devoting increased attention to the perils of gene patenting.

Meanwhile, at least a few members of Congress, including Representative Lynn Rivers, D-Michigan, and Representative Dave Weldon, D-Florida, have introduced related legislation. One of the bills would carve out exemptions from patent infringement for "gene sequence information" and "genetic diagnostic testing." Another bill would have called on the Office of Science and Technology Policy to critically assess how federal gene patent policies are impacting innovation.

Some scientists have criticized the U.S. Patent and Trademark Office for being too generous in granting patents for genes. Some have argued that the idea of allowing gene sequences to be patented makes little sense, since gene sequences exist naturally and should be counted as discoveries, not inventions. But the U.S. Patent Office has decided that since isolated gene sequences do not occur in nature, they should be patentable.

Some scientists also point to the European standards for patenting as a model. Walters notes that in Europe, there has been less inclination to approve gene-based patents and standards for what should count as patentable have been far more stringent. Europe also maintains a research exemption.

But Brigid Quinn, deputy director of public affairs for the U.S. Patent and Trademark Office, defends the U.S. patent policy on genomics, which she says is largely the consequence of a series of court decisions.

"I think if you look to the pharmaceutical industry, which is obviously much further along, you'll find that they find the system more than valuable," notes Quinn. "We wouldn't have the healthcare products today if it weren't for the patent system that gives them exclusive rights. And at some point in the biotech industry, they will feel the same way that the system of gene-related patents is to their advantage. I think you'll find that those in the biotech industry are very strong supporters of the system."

Quinn also adds that, "We haven't seen any evidence to show that the patenting of gene-related inventions is impeding progress."

While it is not clear how the issues will eventually work themselves out, what seems certain is that a growing percentage of the research community is getting worried that if there aren't some changes made to the patenting system, it will increasingly stifle DNA-based research in the years to come.

"It's a concern and if this continues, what would it look like in 10 years?" asks Heinig. "People can't argue that this will all sort itself out."

Lee Drutman is co-author of the forthcoming The People’s Business: Controlling Corporations and Restoring Democracy (Berrett-Kohler).