Patenting in the biopharmaceutical industry - comparing the US with Europe

December 2002

Patents play a key role in the biopharmaceutical industry. Although there are significant differences between the laws governing biopharmaceutical patents in the US and in Europe, over the past decade the number of biopharmaceutical filings and granted patents has risen substantially, on both sides of the Atlantic.

Thomson Derwent's Luke Foster, Doina Nanu and Simon Alcock take a closer look at the trans-Atlantic differences.

Importance of patents
The evolution of patent laws
Leading assignees
A question of patentability
Utility
Cloning
Exclusions
Stem cell patenting
Rapid rises in biopharmaceutical patents
Attributable causes

Importance of patents
A patent is the grant of an exclusive right to exploit a specific product or process for a set period of time. This protection of new products and processes from competitors, and the exclusive right to market that it proffers, is crucial to commercial success for biopharmaceutical companies. It enables them to recoup the significant investments they have made developing and discovering new products and processes and bringing them to market. Patent protection also enables companies to generate sufficient income to support future research and develop new products. Patents, therefore, are the lynchpins of the biopharmaceutical industry.¹

The evolution of patent laws
As equally important as patents are to biopharmaceutical companies, the biotechnology industry as a whole has been a major influence on the patenting system and the evolution of patent laws. The patenting system has been adapted to meet and respond to a whole range of controversial issues arising from genetic research, while biotechnology companies have raised significant, new questions on how established patent precedent should be applied².

For example, many biotechnology companies viewed the ruling in the case of In re Durden, 763 F.2d 1406 (Fed. Cir. 1985), that a method of producing a new product could be held to be obvious, notwithstanding the fact that the product produced had never been disclosed and was not known, to be a threat to obtaining an essential level of protection when applied to biotechnological processes. As a result, the biotechnology industry took the lead in pressing for legislation that effectively overruled the impact of the Durden decision on biotechnological process inventions, via the Biotechnological Process Patent Amendments Act of 1995.²

Leading assignees
In 2001, according to statistics found using Derwent World Patents Index®, the top patent assignees amongst US biopharmaceutical organisations were Smithkline Beecham, the University of California and Hitachi (see Graph 1).

In the same year the top patent assignees in Europe were Degussa-Huels AG, Novo Nordisk AS, and Degussa AG (see Graph 2).

A question of patentability
Patent practitioners generally agree that the patentability requirements governing these companies' patent applications are comparable between Europe and the US. However, the way the United States Patent Office (USPTO) and the European Patent Office (EPO), who handle the majority of patent applications in the US and Europe, examine for patentability is different.

To be granted a patent in the US, an invention has to be new, non-obvious and useful. There have been lengthy debates on whether the specific utility can or should be present in a 'gene' patent. One wide-spread opinion is that "the utility of a particular gene or polypeptide rarely can be demonstrated until there has been a sufficient characterisation of the function of a gene or its expression product" (Testimony of Dennis J. Henner before the US House Judiciary Subcommittee on Courts and Intellectual Property).²

In comparison, European patent law is governed by Article 52 of the European Patent Convention, which stipulates that the basic requirements for a patentable invention are novelty, inventive step and industrial application. Although the novel aspect and the industrial application, mainly medicine and agriculture for the field of biotechnology, are easier to identify, the law on inventive step in Europe is seen as a greater hurdle than the equivalent law in the US (that of non-obviousness), and has attracted more controversy. The distinction between discovery, which is not patentable under European law, and a patentable biotechnology invention, is often difficult to make and can add an ethical dimension.

Utility
It is also largely accepted that the concept of 'utility' is broader in the US than its corresponding stricter requirement of 'industrial application' in Europe. However, on 5 January 2001, the USPTO issued new, stricter guidelines on patenting genes. These new rules raised the bar, requiring that a gene-related invention should present substantial utility to qualify for grant. The new guidelines were welcomed both by industry and law firms for creating a well-defined framework¹, and brought USPTO guidelines closer to European patent law.

Cloning
An area where the US and European patenting systems differ in approach, is the controversial issue of human cloning. Whereas in the US, no attempt has been made to implement strict legislation on this issue, in Europe, in July 1998, a European Directive (98/44/EC) was adopted on the legal protection of biotechnology inventions. The Directive set up specific provisions on applications concerning biotechnological inventions and stipulates as unpatentable, inventions whose commercial exploitation is in conflict with morality. This specifically referred to:

• processes for cloning human beings
• processes for modifying the germ line genetic identity of human beings
• uses of human embryos for industrial or commercial purposes
• processes for modifying the genetic identity of animals that are likely to cause them suffering without any substantial benefit to man or animal

According to Article 5 of the Directive, the human body, as such, and discoveries related to it that extend human knowledge but do not extend to human ability, e.g. the human genetic code, are not patentable. However, the isolated elements of the human body, e.g. genetic material isolated from its natural environment, may constitute a patentable invention.

Although the Directive was supposed to clarify and harmonise patent legislation applied to biotechnology throughout the Member States, it has created controversy. EU members should have incorporated the Directive into their national legal systems by 31 July 2000. So far only five states have done so. However, the validity of the Directive was confirmed by the European Court of Justice in October 2001 following a challenge by the Netherlands, and the European Patent Convention has subsequently been amended to include the main dispositions.

Exclusions
There are also differences between Europe and the US regarding exclusions from patentability. In Europe, patents on diagnostic, therapeutic and surgical methods are not accepted. However, inventions regarding drugs and products for medical purposes are patentable. In the United States, treatment methods, as such, can be patented.

Stem cell patenting
Another major difference between the US and Europe is that, whereas in the US patents on human embryonic stem cells have been granted, in Europe the ethics of stem cells patentability is still a controversial subject of debate, with need for further clarification and legal foundation.

The ethical aspects of patenting involving human stem cells have been analysed by the European Group of Ethics (EGE), the main advisory body on biotech ethics of the European Commission. The Group decided that the recourse to compulsory licence should be encouraged, when the access to diagnostic and treatment is blocked by misuse of patent rights, and stressed the fact that it is the responsibility of the Member States to establish legal procedure for delivery of compulsory licences, and to examine, if fair access to health-care justifies such a procedure. The Group considered that only human stem cells lines that have been modified by an inventive process to get new characteristics for specific industrial application are patentable. However, stem cells that have been isolated and cultured, but have not been modified should not be considered for patents. Concerning cloning techniques aimed at obtaining human embryonic stem cells for therapeutic purposes, the Group called for a cautious approach, taking into account the exclusion of such inventions from patentability. The Group also called for the creation of an EU Registry of unmodified human stem cell lines.

Rapid rises in biopharmaceutical patents
Even though there are significant differences between the laws governing biopharmaceutical patents in the US and in Europe, the number of biopharmaceutical patent applications has risen dramatically in the past decade on both sides of the Atlantic. In 1978, the USPTO received just 30 patent applications from the whole biotechnology field. By 1995, this figure had reached 15,600. ⁴ In 2001, the technology centre in the USPTO, of which the biotechnology examining division is a major part (about two-thirds of its examiners specialise in biotechnology), received 34,527 filings.³ The number of US granted patents is also on the increase. In 2001, according to statistics in Derwent World Patents Index, 5170 biotechnology patents were granted (Table 1).

Source: Derwent World Patents Index

In Europe, the number of applications for biopharmaceutical patents has grown from just 430 in 1992, to 3544 in 2001 (Table 2).

Source: Derwent World Patents Index

In the same time period, the number of granted patents has risen from a handful in 1993 to 533 in 2001. Out of this figure, the most granted patents were given to German companies, closely followed by Japanese and Dutch companies (Table 3).

Source: Derwent World Patents Index

The explosion in the number of biopharmaceutical patents has posed new problems for patent offices, who have had to adapt their procedures and practices to cope with the increased workload. The EPO receives between 2,500 and 3,000 biotechnology applications a year, comprising 3.5% - 4% of total applications. Of the office's 4,500 examiners, about 200 work in the biotechnology division, a figure that has doubled over the past few years. In response to the rapid rise in biotechnology patents, the EPO has put in place a number of initiatives to speed up the patent grant procedure, from simple changes to the rules to the introduction of sophisticated automation systems (see Graph 3).

Attributable causes
The dramatic rise in the number of biopharmaceutical patents in the past few years could be attributable to the completion of the human genome project, with genes and sequences arising out of the project providing a new route to drug discovery. It is also possible that advances in technology, especially in bioinformatics, are helping to swell patent volumes, by providing faster means of processing data.

Biotechnology companies are starting to use bioinformatics techniques to visually analyse new nucleotide sequences, in order to quickly and efficiently determine the most promising drug targets and turn them into pharmaceutical products. This is giving these companies a competitive advantage, and is making bioinformatics techniques themselves as important competitively to companies as the products the techniques are helping to develop. As a result, biopharmaceutical companies are looking to protect their bioinformatics techniques with software patents.5 This is opening up a whole fresh area of debate over biopharmaceutical patents, again highlighting differences between the US, where software is seen as patentable, and Europe, where software is considered to be unpatentable.

Luke Foster is a Copywriter for Thomson Derwent.
Doina Nanu is Data Acquisition Manager for Thomson Derwent.
Simon Alcock is Thomson Derwent's Product Development Manager -
Life Sciences.

This article was first published in Drug Plus International
(August 2002 Volume 1 No 1)

¹ Biotech companies call for patent reform, Tabitha Parker, Managing Intellectual Property, 2001.
² Testimony of Dennis J. Henner before the US House Judiciary Subcommittee on Courts and Intellectual Property, July 13 2000.
³ How to obtain biotech patents, Ingrid Herling, Managing Intellectual Property, 2001.
⁴ The power of patent information, Jenny Bush, International Biotechnology Labaratory, October 1998.
⁵ United States: Bioinformatics: The new software patent frontier, Dr Stephen Lesavich, 27 September 2001.