Friday, 29 May 1998

Veterinary and Agricultural University Copenhagen, Denmark

Steering committee Jan Merks, chairman, IPG - Institute for Pig Genetics (NL)

Ole Andersen, the Danish AI Societies (DK)

Pierrick Haffray, SYSAAF (F)

Cliff Nixey, BUT - British United Turkeys (UK)

Observers Beatrice Lucaroni, CEC DGXII E1

Iréne Norstedt, CEC DGXII E3

Carlos Alvarez Antolìnez, CEC DGVI FII

Florentina Cruz Medina, CEC DGXIV C2

Secretariat Anne-Marie Neeteson

Benedendorpsweg 98, 6862 WL OOSTERBEEK, The Netherlands

Tel +31 26 339 15 38 Fax +31 26 339 15 39

E-mail Neeteson@iaf.nl Internet http://www.faip.dk

Cover art work Jill Taylor Whitmore

ISBN 90-803234-7-0 AnNe Publishers, July 1998

The European Farm Animal Production and Processing Sector are on the threshold of new biotechnological developments. Until recently the protection of biotechnological inventions was covered by a 30 year old patent directive. This directive was not adequately covering the issues that are necessary to protect new biotechnological inventions. At this moment the EU is far behind the USA and Japan in the field of new biotech companies, and new patents. In 1995 European Parliament rejected a proposal for a new EU directive. European Parliament has accepted a new EU patent directive at 12 May 1998 with overwhelming majority.

The new EU patent directive is explicitly directed to biotechnology among others in plants and animals. The potential applications of biotechnology in farm animal production are various: new reproduction technologies, markers assisted selection, genetically modified feed or feed additives, cloning, transgenic animals. The new directive will influence research investments and developments in the future. Questions exist about the possibilities and the scope of the new directive, and about the risks and possible consequences for the structure of farm animal industry and research.

The Farm Animal Industrial Platform (FAIP) has taken the initiative to organise a workshop on the new EU directive for biotechnological inventions especially for the farm animal sector. The aim of the patent workshop was to enable specialists from several fields to discuss patenting biotechnological inventions, to make the breeding sector aware of the content, possibilities and constraints of the directive, and to focus attention on the implementation of the directive into national law and into the practice of breeding. The European Commission DGXII Biotechnology and Demonstration Units have recognised this initiative and granted the workshop. The workshop was hosted by the Royal Veterinary and Agricultural University Frederiksberg, Copenhagen, Denmark, who invited FAIP to be their guest. This has been appreciated very much. Our sincere thanks to Professor Torben Greve, Professor Poul Hyttel of the Veterinary and Agricultural University for their hospitality. We like to thank Dr. Beatrice Lucaroni of the EC DGXII Biotechnology Unit for her priceless help in the preparation of the workshop. Last but not least, many thanks to Dr. Ole Andersen and Ms. Randi Boll Johnsen of the Danish A.I. Societies for their indispensable advice and help in the organisation of this event.

3 Preface

4 Contents

5 Summary

6 Information about the speakers

7 Programme

8 Jan Merks - Background of the workshop

9 Torben Greve - The Royal Veterinary and Agricultural University

11 - Hans-Rainer Jaenichen - Procedure, time path, and costs of patent applications

17 - Nick Scott-Ram - The patent directive: what it does and does not cover

21 - Armin Machmer, Willi Rothley - The development of a new patent directive

for biotechnological inventions

25 - Lisbet Dyerberg - The implementation of the directive in a EU member state

31 - François Chrétien - Experience with patents in plant breeding

33 - Ed Kenney - Innovation Foundation’s experience with patentable inventions

37 - Harry Griffin - Patents in animal biotechnology: Roslin’s experience to date

41 - Peter Sandøe - Ethical questions concerning the patenting of inventions in farm

animal production

List of participants

Farm Animal Industrial Platform. List of members

On 29 May 1998 an audience of core specialists in patenting and animal breeding discussed the new EU patent directive at the EC/FAIP patent workshop. The workshop took place at the Royal Veterinary and Agricultural University in Copenhagen, Denmark.

The workshop consisted of three parts. In the morning, core legal experts and a representative of the EP Legal Affairs Committee have addressed the implications and impact of the new patent directive for farm animal production in Europe. After lunch, the experience with patents of industry and research were addressed. During the discussions several questions were highlighted and sometimes clarified, especially in the so-called 'grey areas' of the directive. It was identified that the implementation of the directive in national legislations needs careful attention.

According to Mr. Armin Machmer, who represented the EP rapporteur of the legal affairs committee Mr. Willi Rothley, the decision to allow the harmonisation and clarification of the patent directive in Europe is important to saveguard Europe’s competitiveness. Dr. Nick Scott-Ram (BIA, UK) addressed a grey area in the directive, the inconsistency in applicability: traditional crossing of whole genomes cannot be patented, while transgenic organisms can. Ms. Lisbet Dyerberg (Patentdirektoratet, DK) pointed out the measurements that have to be taken within two years in order to implement the directive at the national level. Dr. Hans-Rainer Jaenichen (Vossius&Partner, Germany) clarified the procedure of a patent application, including the time and costs involved.

According to Dr. François Chrétien (Rhône Poulenc Agro, F), explaining practice with patents and plant breeders’ rights, the EU patent directive combined with registrations may offer sufficient protection for animal varieties. What patenting means for a company was made clear by Mr. Ed Kenney (Innovations Foundation, Canada), the patent on a stress gene test for pigs being a successful product of his firm. Dr. Harry Griffin (Roslin Institute, UK), putting forward Roslin’s experience in animal biotechnology: ‘Timely filing for patent protection and an appropriate vehicle for taking an invention to commercial reality is equally important.’ The ethical aspects were highlighted by Professor Peter Sandøe (Veterinary and Agricultural University, DK). He called upon the audience to guard against the effect of commercial protection of biotechnological inventions on the free exchange of ideas between scientists.

FAIP chairman Dr. Jan Merks (IPG, NL): ’ The patent directive is a first step. It involves both the farmer’s privilege and the right of research and industry to protect inventions. However, for farm animal production in Europe it will be crucial that the incorporation of the directive into national law will be executed carefully.’ Article 11 leaves the implementation of the farmer’s privilege for farm animals to national laws, regulations and practices. Patented animals or animal reproductive material should be available for farming purposes, but not for sale or for the purpose of a commercial activity by the farmers.

FAIP calls upon national governments to work out this intention carefully and harmonize at European level in order to keep breeding research in Europe. Europe is on the forefront in world farm animal breeding. Keeping this competitive position means being able to influence the composition of breeding stock in the future. For this, precompetitive research and the protection of research results will be essential.

Patent specialist for Rhône Poulenc Agro. He is represented in the FEBC Policy Group on legal protection for biotech inventions. He demonstrates the experience of a European company with patents in the field of plant breeding and the need for protecting research efforts and the influence of these developments on research, dissemination of research results, and the structure of the industry.

Master of Law at the Danish Patent Office. At the legal department her main fields of activity are patents. Apart from the EU patent directive for bio-technological inventions, this includes e.g. the European Commission’s green paper on patents, the EU patent system and other international patent aspects. She was closely involved in the work relating to the Danish acceptance of the directive and will be working on the implementation of the EU directive to Danish law.

Assistant director (science) of Roslin Institute, Midlothian, UK. Roslin Institute is a leading international Centre for research on molecular and quantitative genetics of farm animals. It also has important programmes on early embryology, reproduction, growth, poultry science, nutrition and animal welfare.

It's research on nuclear transfer led firstly to the production of lambs from embryo-derived cells and then to the birth of 'Dolly' the sheep, the world's first mammal cloned from an adult cell.

Specialist for biotechnological inventions at Vossius & Partner, a law firm in Munich, Germany, having Patentanwälte, European Patent Attorneys and European Trademark Attorneys. He explains the procedure and costs for getting a European patent. The information is valuable and practical for scientists and/or companies who seek to protect their research results as intellectual property.

Director of Innovations Foundation (IF) in Toronto, Canada. The Foundation is the owner of the halothane gene patent for stress resistance in pigs (Maligne Hyperthermie). This patent is widely known in the animal production world. It illustrates the scope of the directive in a practical case. Patents and the protection of inventions are a rather new area for scientists and companies in the field of animal breeding and reproduction.

Mr. Willi Rothley: Member of European Parliament (MEP) for the Party of European Socialists (PSE), rapporteur for the Legal Affairs Committee of the European Parliament. The Legal Affairs Committee is the committee responsible for the new European patent directive for biotechnological inventions. Mr. Armin Machmer: political advisor to the Socialist Group of the Committee on Research and Technology in European Parliament. In the absence of Rothley he has made the presentation on his behalf. Before that he worked as an independent lawyer, as a research assistant for Mrs. Roth-Behrendt MEP, and for CEC DGIII.

Research professor in bio-ethics at the Veterinary and Agricultural University, Department of Animal Science and Animal Health of Copenhagen, Denmark. Philosopher, educated at the universities of Copenhagen and Oxford. Since 1992 Chairman of the Danish Ethical Council for Animals. Research in Bioethics with particular emphasis on the ethical issues related to animals and biotechnology.

Chairman of the UK BioIndustry Association's Intellectual Property Advisory Committee and EuropaBio's Patents Task Force. He was, until recently, with British Biotech and is now building up his own consultancy business with a particular focus on start-ups. He has been chairing the policy group on the legal protection of biotech inventions of the Forum for European Bioindustry Coordination (FEBC). The secretariat is provided by EuropaBio, the European Association for Bioindustries. FEBC is an informal grouping of the major Bio-Industries in Europe.

Friday, 29 May 1998

Veterinary and Agricultural University Copenhagen, Denmark

Workshop dinner, joint with FAIP annual dinner: Thursday 28 May 1998, 19.00 h.

Tivoli, Copenhagen, Denmark

8.30 - 8.45 Coffee and registration

8.45 - 8.50 Welcome by Jan Merks, chairman FAIP

8.50 - 9.00 Torben Greve - The Royal Veterinary and Agricultural University

9.00 - 9.30 Hans-Rainer Jaenichen, Vossius & Partner, Munich, Germany

Procedure, time path, and costs of patent applications

9.30 - 10.00 Nick Scott Ram, BIA, UK

The patent directive: what it does and does not cover

10.00 - 10.30 Coffee

10.30 - 11.00 Armin Machmer, Parliamentary Officer of The Socialist Party, on behalf of

Willi Rothley, Member European Parliament

The development of a new patent directive for biotechnological inventions

11.00 - 11.30 Lisbet Dyerberg, Patentdirektoratet, Copenhagen, Denmark

The implementation of the directive in a EU member state

11.30 - 13.00 Lunch

13.00 - 13.30 François Chrétien, Rhône-Poulenc Agro, France

Experience with patents in plant breeding

13.30 - 14.00 Ed Kenney - Innovations Foundation, Canada

IF's experience with patentable inventions, e.g. halothane test pigs

14.00 - 14.30 Harry Griffin, Roslin Institute, Midlothian, UK

Experience with patents in farm animal biotechnology

14.30 - 15.00 Peter Sandøe, Royal Veterinary and Agricultural University, Copenhagen, DK Ethical questions concerning the patenting of inventions in farm animal production

15.00 - 16.00 Forum discussion

patwor98.pro / 973

The Farm Animal Industrial Platform (FAIP) started three years ago. It is a forum of companies, industries all working in farm animal reproduction and selection. The platform is set up because of the interest in research and development. Topics which are of interest to the industry are, for instance, gene mapping, embryo technology, cloning but also the possibilities of transgenic animals. Next to that the platform and the industry represented by FAIP is interested in regulatory aspects related to research. Thus the new patent directive is of very much importance to the industry to make use of their research possibilities in the future. But next to that it is not only the research. It is the whole scope of farm animal reproduction and selection, and aspects related to that. This includes, very importantly, also public preception, consumers attitude and ethical implications of what the industry is doing. These are important to the platform. The list of members incorporates 34 companies -, and we should add one member since two days: NLA, a Norwegian fish breeding company - will give you an indication of the kind of companies involved in farm animal breeding and reproduction, where they are coming from and what kind of aspects they take care of. This is the background of the workshop today. FAIP, interested in the new EU patent directive for biotechnological inventions, bringing you and members of the platform together to have a good discussion on this new directive to go for what is possible in the future. The EC Biotechnology and Demonstration Unit has funded this workshop.

Welcome to the Royal Veterinary and Agricultural University (KVL), which is the only one in Denmark performing university education in animal and veterinary sciences, agricultural sciences, and food sciences. We have one veterinary and agricultural university, not seperated in an agricultural university and a veterinary university. Currently, I am pro-vice chancellor of research of the University. My real interest is embryo technology, embryo transfer, cloning, in vitro embryo production. I am a professor of animal reproduction at this university. The work we are doing in our faculty and the platform work since 1995 is very relevant. Therefore, the things you are going to discuss today will be highly appropriate for the future. I will not talk to you as a reproductive biologist, but as a representative of KVL.

The funding from our university basically comes from the newly formed Danish ministry of research. For education we receive about 140-150 million Danish Crowns. Further, KVL receives research money from the ministery at an almost equal level. Besides that, we have 180 million of external funding, coming from research councils, EU and other bodies. Further, there is additional funding from private industries. The latter is interesting from todays point of view. Here patents may come in. The industries may be Carlsberg, the larger biotechnology industries, and agricultural companies, e.g. the Danish cattle breeders and pig breeders, or the dairy industry. External collaboration is responsible for a considerable part of our work.

Within the contracts with industry, there are always some patenting elements. For this reason we are occupied, together with the university of Copenhagen, in a platform on how universities are handling patent matters. It is a constant challenge when we have collaborations: how can we utilise it? And how can we help our scientists: and that is our main interest. How can their brain be protected from being "exploited" in a way by an industry, that wants to have their innovations. On the other hand, we need the money from industry, and how do we optimise this relationship? In a way, we have different goals. But there is also the same goal, that is either to get more development in science or to get more money. Nowadays the office of this university spends quite a bit of effort on making contracts. We ask ourselves how we should handle patents. We realise they are very expensive, and in our normal funding we have no way of really handling this. We do think it is an important subject.

In what areas should patents be used? In reproduction of farm animals I see no useful applications. In many other areas, they can be used, e.g. in transgenic animals for the production of pharmaceuticals. It is a challenge to make the rules such, that science flourishes, and scientists will not become "silentists", because that would be the worst that can happen to us. I hope the various regulations in Europe and the USA may prevent this.

The lecture I would like to give today deals with some elementary aspects of patenting. Of course, it matters how much money you have to spend for patenting a certain invention. However, especially for universities it normally is paid off to try to patent inventions. By patents the innovations that come out of the universities are protected against use by third parties. If third parties are actually interested in using these innovations, they would have to pay royalties.

Before talking about costs, I will briefly explain the patentability requirements in the European Patent Office (EPO). The first issue, of course, when you have invented something, is wether it is patentable.

1) What can be patented? In US terminology this is called ‘statutory subject matter’. Article 52 and 53 of the European Patent Convention (EPC) regulate what we can actually patent.

For instance, therapeutic methods carried out on the human and animal body are not patentable. More importantly is that Article 53(b) EPC stipulates that animal and plant varieties cannot be patented. This was a real issue in the European Patent Office (EPO) in the last few years. I am involved in a test case, T 1054/96, that deals with the question whether a broad claim covering plant varieties is actually allowable under the EPC and not in conflict with Article 53(b) EPC. With this decision, the Technical Board again rejected such claims, but submitted questions on points of law to the Enlarged Board in the EPO. In view of the forthcoming new EU Directive and its specific regulations we can expect that the practice of the EPO will change. It means that it is likely that we will eventually be able to get a broad claim for transgenic plants and also probably for transgenic animals even if it covered plant varieties. People that invent broadly applicable technical contributions in the field of making transgenic plants can only protect their intellectual property by having such claims, because what is being put on the market is actually plant varieties.

2) Novelty is an important patentability requirement. For those of you who work in the universities: what you should know is that, if you go to a conference, if you are showing abstracts, or talk about your invention, then all of this is a disclosure of the invention. If somebody to whom this disclosure is directed is able to repeat what you are talking about, this is an enabling disclosure and than it would be detrimental to novelty. We do not have a grace period. We have the absolute novelty principle in the EPO and in its contracting states. The patent acts in all contracting states of the EPC are harmonized and incorporate the absolute novelty requirement. All disclosures, including abstracts, posters and so on, are novelty destroying. It is different in the USA where sometimes, when you have spoken about something, you might still be able to get a patent in the USA. However, this is no longer the case in most other countries in the world. Japan also has a grace period.

3) Inventive step. The principle for the assessment of inventive step is the question whether something was obvious to try with a reasonable expectation of success. There is much to say about this patentability requirement, but it would go too far to address this subject much further.

4) „Industrial Applicability" means that something that is the subject matter of a claim, must be exploitable in an industrial enterprise. Normally, that is the case. Once a chemical compound, or a pharmaceutical composition, can be made in industry, nobody will doubt industrial applicability of that. The EU Directive might be interpreted so as to contain some limitations in this respect as far as certain types of DNA inventions are concerned.

5) Enabling disclosure. The philosophy of the patent system is that you provide something to the public, and, as a compensation, the public gives you a monopoly for a limited period of time. The period of time for which the monopoly is granted by the EPO is twenty years from the European filing date. Enabling disclosure means that, if you explain your invention in the patent application, you have to explain it in a way that would allow an expert reading the patent application and later on the patent, to actually reproduce what you have disclosed and what you are claiming.

6) „Clarity" requires that, if you write the patent application, the language you are using has to be conceivable to a person skilled in the art. There is a lot of case law on clarity. Again this is a topic that could be covered in much more time.

What does the European patent application look like? You have a description, claims, an abstract and figures.

In the description you have

The following Table I lists the EPO's steps in handling a European patent application and in its prosecution. The time periods given are either stipulated by the EPC or based on statistical reviews.

The EPC provides simplification and cost saving means for people that are interested in having a patent in several European countries. Before, we had the EPC, it was necessary to nationally file and prosecute patent applications. Since the EPC, this is no longer necessary. If you file European patent applications for less than three or less than four countries, it will be more expensive than filing it nationally. The current contracting states of the EPC, and the list is growing, are the Federal Republic of Germany (1977), United Kingdom (1977), France (1977), The Netherlands (1977), Switzerland (1977), Belgium (1977), Luxembourg (1977), Sweden (1978), Italy (1978), Austria (1979), Liechtenstein (1980), Spain (1986), Greece (1986), Denmark (1990), Monaco (1991), Portugal (1992), Ireland (1992), Finland (1996), and Cyprus (1998). These are the contracting states you can reach with a European patent. The designation fee per contracting state is DM 150.

When you file the European application, which is in fact a bundle of applications, and when the patent is granted, it disintegrates into national patents. A patent granted for, e.g., Denmark via the EPO will have the same effects as a patent granted by the national Danish Patent Office. And that applies to all countries.

There are some countries that are not yet members of the EPC, e.g., Slovenia, Lithuania, Latvia, Albania, Romania, and Macedonia. However, you can extend the European Patent to these six other countries for a fee of DM 200 per extension state.

When filing the EP application, one can also request accelerated prosecution. In this case, the time line looks about as follows.

The fees that become due at the EPO are indicated in the table below. For an example, the fees for filing a European patent application, designating all contracting states (no extension states) and containing twenty claims, will be DM 5,450.00. The request for examination will be another DM 2,800.00.

The purpose of the renewal fees listed in the above Table III is to encourage people not to insist on maintaining patents that they do not need anymore. If renewal would be inexpensive, there would be more incentive to keep the patent even if there is no commercial need for doing so any more. If renewal is expensive, one thinks about it more carefully.

I would like to add one extra source of costs. Once a patent is granted and disintegrates into national patents, maybe the highest amount of cost arises, because translations have to be made and paid. A granted patent has to be translated into the official languages of the contracting states of your EU patent in order to become effective. Suppose you need ten translations for a EU patent. A translation is, roughly, DM 70 - 100 per page per language. That is actually where you have to spend a lot of money too.

Ladies and Gentlemen, it gives me a great pleasure to have the opportunity to talk to you about the biotechnology patent directive. Armin Machmer, who follows me, will address the political process and what that involves. It took ten years for this directive from initiation to final approval a few weeks ago and that is a considerable amount of time.

The directive is a balance between the variety of different interests, including industry, the consumer, legislators and also, for the first time in such detail, ethics in biotechnology. The main focus of the directive is on patentability of biological material: what can and cannot be patented. Also, important from a public perception view point, it covers the question of patentability of human genes. Another important issue is the infringement on second generation material, i.e. on material that is capable of reproducing or being reproduced. The areas on ethical issues and the question of the plant varieties is clarified in the directive. In the directive, the farmer’s privilege and compulsory cross-licensing represent a derogation from the patent rights.

Before going into detail on the directive, a couple of areas need to be highlighted:

There has been a debate about the difference between discovery and invention. Many people argued that if you found or isolated a gene from the human body, or even from an animal, that was a discovery and not an invention. However, prior to that, the European Patent Office (EPO) has said that even if you find something which is a substance freely occuring in nature, there is a distinction between whether it is just a discovery or a whether it is subsequently isolated and then used for a technical purpose. This would be more akin to an invention. The EPO guidelines for examination (Part C, Ch. IV, 2) say on naturally occurring products (Article 52(3) EPC - Discoveries): "To find a substance freely occurring in nature is also mere discovery and therefore unpatentable. However, if a substance found in nature has first to be isolated from its surroundings and a process for obtaining it is developed, that process is patentable. Moreover, if that substance can be properly characterised either by its structure, by the process by which it is obtained or by other parameters and it is ‘new’ in the absolute sense of having no previously recognised existence, then the substance per se may be patentable. An example of such a case is that of a new substance which is discovered as being produced by a micro-organism."

Another difficult question at the time when the directive was debated in European Parliament, concerned the question of DNA. "DNA is akin to life" was an often used argument. The European Patent Office, in a case between the Howard Florey Institute versus the Green Party of European Parliament, argued on this, for "Relaxin" (EP-B-0112149), DNA fragments encoding human H2-preprorelaxin: "it is worth pointing out that DNA is not ‘life’, but a chemical substance which carries genetic information and can be used as an intermediate in the production of proteins which may be medically useful".

This was an important distinction. It was also important that it came forward ans was clarified.

Article 53 of the EPC is critically important for today’s discussion. It covers two situations where patents cannot be patented. It says:

"European patents should not be granted in respect of:

a) inventions the publication or exploitation of which would be contrary to ‘ordre public’ or morality, provided that the exploitation shall not be deemed to be so contrary merely because it is prohibited by law or regulation in some or all of the Contracting States;

b) plant or animal varieties or essentially biological processes for the production of plants or animals; this provision does not apply to microbiological processes or the products thereof."

Prior to the EU biotechnology patent directive, there was a lot of debate over the difference between plant varieties and transgenic plants and transgenic animals, and how those relate in patent law on plant and animal varieties. The definition of a plant variety is : "characterised by at least one single transmissible characteric distinguishing it from other plant groupings and which is sufficiently homogeneous and stable in its relevant characteristics" (Council Regulation (EC) no 2100/94). However, you can also argue that, if you insert a new gene through a common DNA technology, e.g. coding for petal colour using a series of genes, you end producing a variety as well. It is not clear how patent legislation should distinguish this.

Historically, crossing and selection of plant varieties is not patentable. However, when you use recombinant DNA technology, involving the insertion of single genes should be patentable.

For animal varieties, the situation is even more complex. There is no unanimity about the definition of animal variety. There are different definitions for animal varieties in different languages. E.g. in French ‘races animales’, and in German ‘Tierarten‘ (meaning species). Species are groups of interbreeding populations which are reproductively isolated from other such groups. Simply drawing parallels is therefore not possible.

Recent European Patent Office Opposition proceedings covering this issue include the Technical Board of Appeal Decision T356/93 Re Plant Genetic Systems - "Plant Cells": the case of Plant Genetic Systems versus Greenpeace (1995, T356/93) about herbicide resistant transgenic plants (EP-B-242236). Greenpeace argued that patentability of transgenic plants is immoral; that it was a plant variety and that an essentially biologically process for the production of plants was used. The EPC Technical Board decided, referring to Article 53b, that "plant cells as such, which can be cultured like bacteria and yeast, cannot be considered to fall under the definition of a plant or a plant variety." They are "considered to be ‘microbiological products’ in the broad sense". As for the ‘essentially biological process’, the EPC decided that "a process for the production of plants comprising at least one essential step, which cannot be carried out without human intervention...shall be taken into account. A process which, taken as a whole, does not exist in nature and is more than a traditional breeding process shall be considered patentable".

Also in this Technical Board of Appeal Decision it says that

- the claims to plants per se were directed to plant varieties and therefore invalid, even though the claims did not appear to define a variety, examples used in the specification involved recognised plant varieties, because the transgene was genetically stable, and because any claim to the transgene would cover varieties

- products of microbiological processes have to be micro-organisms themselves or metabolites of them

- claims directed to plant cells per se are allowed

- the herbicide resistant transgenic plants are not contrary to morality

So you cannot get claims to transgenic plants and in theory the same can be applied to transgenic animals.

It is clear that part of the difficulty in defining the scope of definitions for ‘plant varieties’, ‘microbiological processes’ and the applicability to transgenic animals and plants involves the overlap in applicability: traditional crossing of whole genomes cannot be patented, while transgenic organisms can. Transgenic organisms can be defined as those organisms where one or more specific, well determined DNA coding sequences are introduced by direct gene transfer. The new directive seeks to address this difficult area of the dividing line and scope of patentability of transgenic organisms and how this links to traditional breeding techniques. It is one of the important features in the new directive.

The directive helps to clarify the position in respect of these issues. In particular, Articles 2, 4 and 6* provides the basis for clarifying the scope of patenting transgenic animals and plants in respect of microbiological processes, plant and animal varieties and ethical requirements.

Article 2 starts with defining biological material, and when a process is essentially biological. Any natural crossing or selection is an essentially biological process. The concept of plant variety is also defined; this refers back to the previous definition (EC 2100/94).

In Article 3, the directive restates the fundamental principles of patentability (new inventions, involving an inventive step, industrial applicability).

In addition to the articles, the directive has a number of recitals, which help to clarify some ot the areas around it. They help to give a greater interpretation of the articles, and are meant as a guidance.

Recital 29, about plant and animal varieties, says that if you have a patent that covers a transgenic plant and it is only directed at one variety, than you would not get that patented. Recital 30 iterates the concept of plant varieties.

Article 4 follows the EPC, saying that neither plant and animal varieties, nor essentially biological processes are patentable. Article 4.2 and 4.3 say that you cannot get claims to transgenic plants or animals, provided that you are not focusing on one particular variety. That is an important point in the Directive. Recital 31 covers the situations when you are extending this to new varieties. Recital 32 and 33: a new plant variety which is derived from a variety which cannot be patented cannot be covered by a patent. It relates back to the definitions of essentially biological.

The next issue that comes up concerns patentability of nucleotide sequences derived from human research and human genetic material. The Parliament was keen to balance out the ethical considerations in relation to patentability of human gene sequences (recital 16). Some people had the idea "if you patent one of my gene sequences, you own part of me". Nothing is further from the truth, but the perception people had of it was a matter of concern. Article 5 states, that no parts of the human body are patentable. However, an isolated element is patentable, and also the industrial application of a (partial) sequence of a gene must be given. In patent terms, if you work with cDNA then that is not naturally occurring. And if you work with interferon and only put down the structure and no industrial applicability or technical input in it, than that will constitute a discovery. With an application or indication of a function it is a patent. The EPO takes the approach that if you have a problem, and you find the solution, then that is where you have the invention coming in. A number of recitals clarify issues around this (Recitals 22, 23, 24, 25, 26).

The Directive also gives directions on the scope of the Farmer's privilege in respect of transgenic animals (Articles 8 and 1, and Recitals 47 and 50*). There was a lot of debate about the scope and extent of this pivilege, such as farm saved seed and transgenic animals. Farm saved seed. Article 11.1 says that farmers can use the patented material on their farm, but not for resale. On transgenic animals the way Article 11.2 is drafted is more vague. This will be discussed this afternoon. This is an area where there could be ambiguity about what you would define as an agricultural actitivity and how much overlap there would be with that within the sale. It also means that if you make transgenic organisms or transgenic animals, i.e. BSE resistant cows, and if you take this combined with Article 6.2.d , one would have to look very closely whether or not you could get adequate patent coverage out of that. To me it is not really clear. And it will take some time before the patent applications will work their way through the EPO.

As for cross-licensing, I would like to refer to the information pack of today’s meeting.

There is often a lot of concern that a patent can stop fundamental research going on. Under European law you have exemption from patent infringement for doing research on a patent for non-commerical acts and acts done for experimental purposes. The reason behind it is that patents should only prohibit economic commercial exploitation of the invention. The precise interpretation of these criteria can be difficult. In the pharmaceutical area in Europe, it is such that, when you take a product into a clinical trial that would no longer constitute an experimental purpose. You then are on the development pathway at a stage where you are looking to commercialise a product. In your industries there may be different marking points at which you can say you are definitely going to commercialise something or not. That is something you would have to look at on a case to case basis.

There is a difference here from the USA where legislation is more lean. In the USA it are more later stage clinical trials which would cause an infringement of the patent. However, in Europe it is still early in the development and this area is not fully explored yet.

Apart from the basic patent law differences (i.e. grace period, transgenic plants and animals, derogation and cross-licensing) the differences are not too big.

- Inventions vs discoveries

USA allow patents on discoveries, however

USA law prohibits patents on ‘products of nature’

USA law permits patents on purified strains of naturally-occurring plants and

microbes

- Human genetic sequences and ESTs

USA requires ‘utility’ for ESTs

There are substantially differences on

- Transgenic plants

USA allows all transgenic plants and plant materials to be patentable

- Transgenic animals

USA allows patenting of all transgenic animals

- Requirements for derogations and cross-licensing

USA have no farmer’s privilege or compulsory cross-licensing

Due to these substantial differences the debate on whether Europe is setting up trade barriers or not to USA imported material is probably going on.

These were the main issues in the EU patent directive for biotechnological inventions. Thank you for your attention.

Ladies and gentlemen,

I would first of all like to apologize for Willy Rothley’s absence. He had to be hospitalized, the strain of the last months taking its toll. He asked me, being the political advisor to the Socialist Group of the Committee on Research and Technology in the European Parliament, to make the presentation on his behalf. My job is to coordinate and assist the political work of the Members I am responsible for. I have worked very closely with Willy Rothley over the last few years on the patenting directive. As much as I could, I helped to get his report - representing also the line of our political group - through the several readings in Parliament. Before rejoining the Parliament in 1995, I worked for the Biotechnology unit of the European Commission’s DG III. Before that I was active as an independent lawyer and research assistant of Mrs. Roth-Behrendt, MEP for Berlin.

Rather than going too much into the details of the directive, I would like to focus on the political aspects and the background which finally led to the adoption of the directive in Parliament two weeks ago after its initial rejection in 1995.

The debate on this directive has been going on for more than 10 years now. This illustrates the political difficulties and the, at times, almost hostile public opinion around Biotechnology and regulatory affairs related to it.

The original proposal of 1988 had been rejected in March 1995 following a conciliation procedure with the Council of Ministers. For the first time, Parliament had used its codecision powers, received at the famous Maastricht treaty, to reject the compromise reached by the conciliation committee. Several reasons led to the majority of Parliamentarians voting against their rapporteur. This happened, although the contentious issues which gave rise to many concerns had been resolved to the satisfaction of those Members participating in the conciliation committee mentioned above. The concerns were the exclusion of patenting parts of the human body, animal welfare aspects, the farmer’s privilege and the ban on patenting the germline-therapy. Unfortunately the concensus in the conciliation committee did not translate into an approval of the conciliation result in plenary (a simple majority of the members present is required for either adoption or rejection of the conciliation committee results).

There were very cleverly orchestrated lobby activities by various anti-biotechnology pressure groups, including the "no-patents-on-life" campaign, politically led by the Greens (predominantly German). Also sections of our own group played on the fears and lack of knowledge of the wider public and parliamentarians by spreading one-sided and alarmist information. To give an example, it was claimed that patents granted ownership rights leading to the complete commercialisation of nature, to biopiracy. It was also claimed that medical treatment would become immensely expensive because of licence fees that would need to be paid every time a certain treatment was applied. Patents and resulting licence fees would also actually hinder research. Similar misinformation was spread during the last days before the vote. On the day of the vote a spectacular action by Greenpeace activists took place, blocking one of Brussels’ main thoroughfares in front of the Parliament, urging Members to vote "no". The anti-biotechnology groups also very cleverly used other interest groups who had their own misgivings about the new developments in this scientific field, ranging from farmer’s representatives, and "purpose-built" patient groups to religious fundamentalists. The negative opinion in the public and the pressure this exerted on the Members grew by the minute. All these last minute efforts led to a lot of confusion and insecurity on the side of the members, especially those who already had their doubts, finally leading to a clear majority voting against (190 : 140). The debates in plenary were highly emotionalized and sometimes even personal accusations were made. The vote on the patenting directive obviously was a vote on biotechnology in general.

The rejection came as a big surprise to those people who thought they were on the safe side. It sent shock waves through the Biotech world. I do admit that mistakes were made on our side. There was some complacency on our part since in the responsible committee, the legal affairs committee, things went relatively smoothly. We had underestimated the opposition and only realised when it was already too late that the tide had turned against the Rothley report.

A few months later, the European Commission presented a new proposal. It incorporated or clarified the points I mentioned above, but left the bulk of the content unchanged. After the Legal Affairs Committee nominated Willy Rothley again as responsible Member for the dossier, we saw to it that nothing would go wrong, covering all possible points of conflict and traps. Willy Rothley did a tremendous job and defended "his" directive before all the Parliament committees involved, including those with a predominantly sceptical attitude e.g. the Environment Committee and the Development Committee. This time much more Parliamentarians were involved than before in order to ensure that the silent majority would not again vote against. We also managed to limit the number of dissidents within our own ranks. Outside of the Parliament big efforts were undertaken both by politicians and the scientific and industrial world to inform the public and convince people to look more into the benefits of the new technology rather than to focus on the risks alone. Gradually, over the years, the mood and the public attitude towards biotechnology changed. The job creation argument and global competition - Europe lagging significantly behind compared to our main competitors - of course played a significant role as well, especially in times of high unemployment. People also came to realise that it would be ineffective to hinder a develop-ment which is taking place anyway, if not here then in Japan or in the US.

At First Reading (completed in July 1997), 67 amendments were adopted of which the Commission was able to accept 65 in its revised proposal. Because of legal and procedural reasons, this limited the scope for amendments that were admissible in Second Reading on the common position.

Of course there were again attempts to destroy the directive and to discredit those people advocating a smooth and rapid adoption. This time the anti-lobby focused on an ethical matter, a screening agency or an ethical committee which should have checked every single patent application for ethical implications. This would have contributed to rendering the directive unworkable. There was also the "Third World" argument, which implied that the big Biotech-companies were robbing the genetic resources of nature in the third world and of the indigenous people. Amendments were introduced to make the granting of patents dependent on financial compensation, designation of origin and to make consent to extracting genes in question imperative. All this would have had to be proved by the patent applicant and evaluated by the patent offices, in my eyes an impossible task in the practice.

However, none of the amendments which were tabled in second reading reached the required absolute majority of 314 votes. In the end, the common position of the Council was adopted without changes.

We believe that this directive, which is predominantly commercial or even competition law, will help to harmonize existing European law, prevent fragmentalization of law and will provide a common interpretation background for national courts which should lead to a common court practice. As a functioning patent-practice stimulates research, it should also contribute to getting Biotechnology off the ground in Europe, where we are lagging behind both in R&D and bringing products on the market. Biotechnology is a rapidly growing industrial sector with numerous beneficial applications and very promising job creation prospects. I consider it a political duty to help Biotechnology on its way by creating a legislative framework which does take the concerns of its critics seriously but which enables a developing industry to thrive. I hope we have been able to contribute to reaching this goal.

First of all, I want to thank the FAIP for the invitation to come and give a speech about the directive on the legal protection of biotechnological inventions, especially with respect to the implementation of the directive to Danish law.

At first I will introduce myself. I work in the legal department of the Danish Patent Office. My main fields of activity are patents including the directive on legal protection on biotechnological inventions, the EU-Commission’s green paper on the EU-patent and the European patent system and other international aspects in relation to patents. Accordingly, I have participated in the work relating to the Danish acceptance of the directive and I will be working with the implementation of the directive to Danish law from a legal point of view. All technical aspects will be solved in cooperation with engineers working in my department. Before I joined the Danish Patent Office, I worked as an attorney-at-law, and especially with intellectual property rights.

As you can see from the summery, of which I hope you all have received a copy, my speech will concentrate on the following points:

The Danish reservations in connection with the discussions of the directive

Measures – amendments

Essential aspects to be evaluated in connection with the implementation

Other aspects in relation to the directive, and finally a

Conclusion

The adoption of a EU directive on protection of biotechnological inventions has not been easy. From a Danish point of view, we have had a number of reservations, before the Danish Parliament and the Danish Government finally agreed upon the text, as it is today.

The Danish Government was very interested in joining the Council’s common position, because it found that the directive was important for innovation and the Danish biotechnological industry. Accordingly, the Minister of Business and Industry worked very hard to get the acceptance from Parliament. This resulted in a lot of discussions and debates in relation to the Danish reservations up to the Council meeting in November 1997, and I have been working closely together with the Minister in this process. The Minister of Business and Industry was very much involved in this matter and did participate in the drafting of the final adjustments to the Danish proposal at the final discussions at the Council meeting.

The discussions that have taken place in Denmark are very much similar to the discussions in the other EC countries. I will not go through all the Danish reservations, but only concentrate on a few, just to give you an idea of the broadness of these reservations.

First of all, we had a reservation concerning the possibility of obtaining patents for animals. As the Danish Patents Act is today, like the patent’s acts in most of the other EC countries and the EPC, it is not possible to obtain patents for animal varieties, but the Danish interpretation of this exemption is that this also covers animals as such. After many discussions and after some amendments of the directive, we finally accepted - with certain restrictions - that it is now possible to obtain patents for animals. I here mainly have Observation 45 and Article 6 d in mind. Further, it is also expressly stated in Article 4 1 (a), that animal varieties are not patentable. One of the reasons for accepting the wording as it is today being that the use of such animals in research can reduce the number of animals used in tests, and the outcome of such research can contribute to the cure of diseases, which cannot be cured today.

Another Danish reservation was about patents for human beings. This issue is now covered by the text of the directive.

Thirdly, we wanted the directive to cover "farmer’s privilege". The directive now includes provisions regarding this issue, both in respect of plants and animals.

Biodiversity

Finally, the Danish reservation regarding preserving the biological diversity caused a lot of debate, both internationally and nationally. After intense negotiations at the Council meeting in October 1997, we succeeded in having an observation included. The observation states that information about biological material should be included in the patent application if this information is known. However, this is not a condition for obtaining a patent. The reason for adding such an observation to the directive is that this will keep the focus on the obligations, which the member states have in relation to the Convention on Biological Diversity. Like the European Parliament, Denmark’s prior aim was to add an Article to the directive, but this was not possible, among other things because this would mean new requirements to fulfil in order to obtain a patent. This will not be feasible due to the obligations in respect of other international agreements (TRIPS).

All in all, the reservations made by Denmark were all met in such a way that Denmark did join the common position as agreed upon in November 1997, and which was formally adopted by the Council in February this year.

Just to give you a brief view of what needs to be done nationally to implement the directive to national law, I can inform you that the directive has to be implemented within two years from the date of publication in the Official Journal of the European Communities. This seems to be a long time, but bearing in mind that all national legislation in each member state has to be reviewed and amended, it is in most cases the time it takes before the implementation has fully taken place. Amending the Danish Patents Act, associated orders, directives guidelines etc. is not something that is done overnight, but is a time-consuming process. First it has to be determined which provisions in the Act, the orders etc. that have to be amended. Secondly, the "users" of the patent system have to be heard and their proposals have to be evaluated. Then the new Act has to be adopted by the Danish Parliament, which, at the earliest, can take place at the assembly of the Parliament in 1999. Once the Act has been amended, the orders, directions, guidelines etc. have to be amended, too. So a heavy work load is lying ahead of us.

Now some preliminary considerations from a legal point of view of what needs to be considered when implementing the directive to Danish law. I must emphasise that these considerations are only preliminary, because at this time we have not fully determined what needs to be done to make the Danish Patents Act in accordance with the provisions in the directive. This will, as I will come back to, also be something that has to be discussed with our Nordic colleagues.

However, I will say a few words about some main issues:

First the issue about patents for animals. As in the directive, the Danish Patents Act contains a provision stating that species of animals cannot be patented. As mentioned earlier, this provision is in Denmark interpreted as also covering animals "as such" meaning that no patent can be obtained for animals or parts hereof, irrespective of the process in which the animal is made (biological or microbiological). However, the non-biological process itself is, under certain circumstances patentable. And, it is under certain circumstances possible to obtain a patent for microbiological processes and the products thereof, eg. isolated somatic cells as long as the product is not regarded as an animal. However, the directive goes further than the interpretation of the Danish Patent Act. In article 6.2.d. it is stated, that no patent shall be granted for processes for modifying the genetic identity of animals which is likely to cause them suffering without any substantial medical benefit to man or animal, and also animals resulting from such processes. Accordingly, it is possible to obtain a patent for genetic modified animals which not suffer, and for genetic modified animals which suffer under the conditions mentioned earlier. Since we interpret the Danish Patents Act as prohibiting patents for animals as such, including animals resulting from microbiological processes, we probably have to amend the Act to be in accordance with the directive. Otherwise, we have to adopt a new interpretation of the provisions as they are now. But most likely, the Act will have to be amended.

Secondly, I will focus a little bit on the issue regarding patents for human beings. It is not under any circumstances possible to obtain a patent for the human body, parts thereof etc. However, it is possible to obtain patents for specific types of isolated human cells. This is not expressly stated in the Danish Patents Act, but is due to an interpretation of the provision regarding "ordre public", order and morality.

Contrary hereto, the directive contains provisions regarding the exclusion of patents for human beings, parts of the human body, embryos etc. In order to comply with these provisions, it has to be considered whether the Danish Patents Act should contain specific provisions regarding the exclusion of patents for human beings. It has to be determined, whether the provisions as they are today can be interpreted in accordance with the provisions in the directive.

Finally, as mentioned in relation to the Danish reservations, we wanted to maintain the focus on the obligations of the member states in relation to the Convention on Biological Diversity. Article 1.2 expressly states that the directive is without prejudice to these obligations. Further, as also mentioned earlier, the Danish delegation succeeded in having an observation added to the directive which also deals with the obligations in the Convention (information about the origin of biological material).

In addition to this, it should be noted that the parties of the Convention have just concluded a Conference regarding the implementation of the intentions of the Convention on Biological Diversity, at which the issue relating to import/export of biological material and benefit-sharing was subject to discussion. From a Danish point of view, the existence of sufficient legislation in each contracting state is of importance in order to secure that the intentions in the Convention will become effective.

As mentioned in the summary, other aspects exist, which have to be dealt with when implementing the directive to Danish law. It should be noted that what I have mentioned in the summary is not an exhaustive list of aspects.

The definition of biological process appears from Article 1.2, and the definition of "microbiological process" is found in Article 1 b of the directive.

As regards research exemptions, the directive does not require amendments of Danish law on this point. According to Danish law, the proprietor of the patent cannot prevent acts done for noncommercial purposes, acts concerning products put on the market in Denmark by the proprietor of the patent or with his consent (consumption), acts done for experimental purposes relating to the subject matter of the patented invention and preparation in a pharmacy of a medicinal product according to a prescription in individual cases or acts concerning the medicinal product so prepared.

This principle is also in accordance with the principal provision of the patent legislation of patent protection that information about patents shall be made available to the public.

Compulsory licensing is also an aspect that needs to be dealt with in relation to the amendment of the Act. The Danish Patents Act contains provisions regarding compulsory licensing in the field of patents, and the act concerning plant varieties and the EU regulation contains provisions in the plant field. However, the directive introduces a new possibility of obtaining a compulsory license, namely what is called compulsory cross-licensing. This opens up for a holder of a plant variety - under specific circumstances such as interdependence between the plant variety and the invention - to get a license on an invention which is protected by a patent and conversely. No such provisions exist today in either the Danish Patents Act or the act concerning plant varieties, and accordingly such provisions must be added to the acts. I will also mention that the EU Commission is presently considering possible amendments of the EU Regulation No 2100/94 in order to comply with the directive in relation to the requirements that have to be fulfilled when applying for compulsory licensing.

Any further changes and/or amendments to national legislation as a result of the implementation of the directive and so-called "grey areas" will be assessed in the final work. At this stage it is not possible to comment further on this aspect.

To conclude my speech, I will briefly mention that any amendments to the Danish Patents Act will most probably be made in cooperation with our Nordic colleagues, as the patent’s acts of the Nordic countries are very much alike. Working groups, also in the field of patents on biotechnological inventions already exists today, and would be an obvious forum to discuss any amendment that needs to be made as a result of the directive.

And speaking of amendments, it is also very likely that the EPC and the EPO practise to some extent will be amended as a result of the directive. However, it is also worth mentioning that the directive to a certain point can be regarded as a codification of the EPO practise.

Further, the Danish Patents Act, as I have just described, is at several points probably already in accordance with the provisions in the directive and can be interpreted in such a way that there will be compliance with the directive. However, amendments have to be considered more thoroughly, especially in the field of patents for animals, farmers privilege and compulsory licensing.

Finally, let me just say, that the Danish Minister of Business and Industry is very pleased that the directive finally seems to become a reality, and that Denmark joined the common position in November 1997. As you all may very well be aware, Denmark has a large biotechnological industry, and the directive is one way to harmonise the legislation within the EU, creating a basis for equal competition between the Danish industry and the industry in EU. Further, the directive will be a means to preserve the Danish biotechnological industry in Denmark. The directive will also strengthen the European biotechnological industry in relation to the United States of America and Japan. Finally, the directive may contribute to the invention of methods/medicine to cure diseases, which are non-curable today.

Developing a transgenic plant variety involves two main steps, first producing a transgenic mother plant (transformation and regeneration), then transferring this mother plant for breeding in a breeding programme to create an elite variety.

Producing a transgenic mother plant with a novel character (trait) implies two steps. The first one is transforming a plant cell with a DNA sequence of interest coding for herbicide tolerance, insect or disease resistance, or a quality trait (e.g. oil content modification). The second step involves the transformation technology for inserting the DNA of interest. This can take place by using Agrobacterium (dicots and recently monocots). Here constructs of DNAs of interest are used, with regulation elements and bacterial vectors. Another transformation technology consists of the bombardment with DNA bearing projectiles (monocots). Also a combination of these technologies is possible (recently with monocots).

After this, the transformed cell should be regenerated into a plant by embryogenesis comprising three main steps each involving a specific culture medium: the induction of embryos from a plant totipotent issue, growth of embryos, and the obtention of plantlets.

Compared to agrochemistry there are more opportunities of patentable inventions in plant breeding biotechnology, creating also more complicated drafting, procedures and overlapping of rights. The main types of inventions are the product (DNA, protein, as chemical product; cell; plant), the process of making, and the use.

In order to be able to patent, three patentability criteria are required: novelty, inventive step and industrial application (utility). Further, the sufficiency of disclosure should be adapted to biological material. For strains of bacterial vectors, cells, and even seeds a deposit is required by the Budapest Treaty, organizing the recognition of these deposits (EPC Rule 28 and directive A13-15 for deposit access and renewal). For plants the situation is simpler in the USA than in Europe (EPO case law, EU directive).

Transferring the mother plant for breeding mentioned above in a breeding programme is the second phase. Usually license agreements are used for evaluating the transgenic to create a variety with a certain trait, i.e. an elite at a commercial level. In Europe, if there is no agreement and/or no exploitation: dependancy licence of the EU Directive for the legal protection of biotechnological inventions (Article12) and national laws.

What kind of intellectual property protection is available for the created variety? The legal general frame is plant breeder right according to UPOV 1961/1978/1991 (in force late April 1998). The Plant Variety Certificate (PVC) covers the morphological expression (now in relation to the genetic identification according to UPOV 1991) of the plant genome. A protectable variety should be Distinct, Homogenous and Stable (DHS). In Europe regulation 2100/94 is in force and national Patent Variety Certificate (PVC) laws are applicable. In the USA, PVC exists. However, and although the USA is a member of UPOV, the USA has further to PVC also plant patents (for vegetative reproducing plants) and utility patents for sexual reproducing plants (corn, soybean), including plant varieties.

The patent on plants first covers the plant with the patented transgenic, i.e. a specific and limited change in the plant genome. It covers any commercial use of any plant variety with the patented gene. The transformed plant with the specific patented gene is protected, but not the basic genome itself, because a patent on a plant variety is not possible. Regarding the breeder's exemption, in Europe, the experimental search on the patented invention is free; in the US the use for breeding is an infringing act (not an experimental use). There is no seed saving exemption in plant patents. In Europe, the farmer’s privilege is introduced in the EU patent directive (Article 11) under an implicit licence for the farmer to propagate on its farm with reduced or no royalty.

Plant Breeder Rights (or Plant Variety Certificate (PVC)) covers any act with the variety (say V1) itself, but not the use of this variety as a variation source for creating new varieties (sayV2) (UPOV). This is the so-called breeder's exemption with an exception for an "essentially derived variety" (EDV). Last there is, in the Plant Breeder Rights, a derogation for self reproducing species: the saved seed or farmer's privilege. This is an infringing act under some national laws. This derogation is now optional under UPOV 1991 and compulsory under Regulation 210094 (Article 13).

In short, the situation in transgenic plant breeding regarding intellectual property is as follows:

Patents on plants dominate, corresponding transgenic varieties when commercially used. This does give some problems with patent validity and the scope of the patent in this field.

In the EU the breeder’s exemption is saved, there is compulsory licensing in national laws and the EU patent directive for biotechnological inventions (Article 12).

In the USA the protection is more unbalanced, in favour of the patentee.

In the practice, in most cases the mutual interest of the patentee and the breeder is a strong incentive to an agreement between the parties.

The patentability of animals is recognized in the USA and in Europe (of EU Directive for protection of biotechnological inventions and EPC with some uncertainty with case law (the myc mouse case)).

Animal varieties

Animal varieties are excluded from patentability (EPO Article 53a and EU Directive Article 4).

Is there any possibility for Patent-Variety-Certificate-like specific protection (AVC)? No, this is not likely. In the first place, no scientific definition of "animal variety" exists. Further, the Distinct, Homogenous and Stable (DHS) criteria are not applicable to animals. Last but not least, the implementation of a AVC is very questionable: heavy controls would be necessary and all together it would be an expensive procedure. Some attempts to set up a specific system in France/Germany and the UK failed.

Is there really a need for a specific legal protection for animal varieties? For farm animals and animals for production of useful products (pharmaceuticals) registration affords good protection. Basically in animal breeding the ongoing change of the animal genome gives relative value to legal protection. Having the lead in the ongoing change of the animal genome is the best protection.

Thus a suggestion could be that anyway patent protection exists on transgenic animal cells and the scope ruled by Article11 in the EU Directive for the protection of biotechnological inventions combined with registration could be considered as sufficient.

This morning, we had some questions from the audience regarding university based technologies. What is patentable? What should be patented? What does it cost? How do we commercialise it? For better or for worse, that is the arena we live in every day.

Today, I will describe our organisation, to give an idea of the set up, of the way we are doing business, and to give an insight in at least one group in North America. Further, I will present a case study about our most successful project today. It is a diagnostic test for genetic disease in swine that we have licensed all around the world.

In 1980, the University of Toronto (UT) had some technologies beginning to generate money. This was an interesting development. Universities can handle such a situation in three ways. One is taking the licensing function and putting this together with the contract research function. There will always be a contract research offices on campuses trying to generate money for the university and the licensing function is similar to their work. The second is to have the licensing organisation separate from the universities contract research work, letting the licensing organisation run itself. If, after a certain period, this organisation does not make money, it should not be in that business. The third option is not to be in the licensing business at all. There are plenty of companies handling inventions from universities, e.g. British Technology Group in Europe, and Research Corp. in the USA.

The University of Toronto decided to set up a small company, owned by the university, called the Innovations Foundation (IF). They attracted new people for this firm from the private sector. The firm does not report to the university, but to a board of directors. From 1980 to 1990 the invention policy was very traditional. When a scientist made an invention, he/she disclosed it to the University. The University payed the salary of the scientist and owned the invention. The University then assigned ownership of all inventions to the Foundation. For a period of ten years, the expenses grew, and the income of the Foundation was very low. Also, during the same period, the number of invention disclosures at the university dried up to 10 % of disclosures ten years earlier. The situation had to change.

The university took a few key decisions. The main one was to change the invention policy to allow the inventors to take personal ownership. The inventors agree that, if they take this road, they will pay the university 25 % if they make any money. Remember, the university operates independently from IF and at this point IF became non-exclusive licensing agent at the University. Also the personnel of IF changed - I came in 1991. The new invention policy and the new people of IF together raised the invention disclosures from ten to one hundred in one year. From the first day of the new policy, IF had no exclusive right to the disclosures of the inventors any more. It meant that part of our job was to convince the inventors that we offer a good service. On the other hand, we were not forced to work with all inventors. We could choose our technology very carefully. Our present portfolio is about two third medical and biotech, one third physical science projects.

We also looked further than the university for inventions. We have work from teaching hospitals - each teaching hospital being its own entity - too. I am proud to say that the research done at the UT medical school and the teaching hospitals together represent the third largest group of medical research in North America. We are only behind the California system and the Harvard system as far as total research is considered. So the fishing waters are fertile.

However, the rules of the hospitals do not always coïncide with the university rules. This often makes things rather complicated. For example, we may have had a team of five inventors approaching us. The university inventor may want to be the owner of the invention, in the case of one hospital, the hospital is the owner, and so on. Our first job is to sort out which party owns the invention.

IF gets about 125 to 150 inventions per year, of which we take twenty to work on. Being selective is one of the keys to success in our business. The selection process is a lot less scientific than you might think. We rely heavily on the inventors. Secondly, the market research is done by ourselves. We call companies we know in a certain area. This way we can determine ourselves whether any companies are interested in an invention. The third and most important part is patent protection. In the end this is what we sell: patent rights.

What kind of inventions do we take? We only take on things that are simple, clean and straight forward. If possible, we leave the grey area to the technology owners. We take in technologies, but we are not looking for a small improvement. We need inforceable, unquestionnable patents. We will not take in a process to make something a little bit cheaper; process claims are less interesting in our eyes. In the pharmaceutical area there are a lot new users for existing compounds: we will never license this type of invention.

From the twenty projects we take in every year, we license about ten. Out of those ten one or two will generate some significant royalties, e.g. $100,000 a year. So actually 2- 4% of all inventions will make significant money.

IF is a small group, with four professionals, and two support staff. Our backgrounds vary, but we are not lawyers, nor geneticists, nor agricultural experts. In fact we are salesmen.

The second part of the talk is a real life example. The technology was invented by professor David MacLennan, a geneticist at the University of Toronto and Dr. Peter O’Brien, a veterinarian at the University of Guelph, Canada. With pigs, lean meat is important. In the USA, pig farmers are payed for lean meat and by the pound, so the bigger the pig, the better it is. Some breeds from Easthern Europe, being both: lean and big, were crossed into our pigs.

However, due to a mutation, part of the pigs were susceptible to stress: a certain disease with a genetic origin (malignant hyperthermia). In the seventies, 83 % of the pigs were normal, 15 % were carrying one copy of the gene, and 2 % were carrying the disease on both alleles. The pigs carrying two copies of the gene for the disease either die before they reach the slaughter house or, if they reach the slaughter house, the quality of the meat is very poor. It is pale, soft meat that does not hold its water very well, called PSE.

In the first instance, David MacLennan was working on malignant hyperthermia on the human side. Humans are the only other mammals to get this disease. He was using the pig genome because it was simpler. He discovered a single point mutation that predicted the presence of malignant hyperthermia in swine with 100% accuracy. Continuing work on the human side had not resulted in one single mutation that predicted 100%, but numerous little mutations that are still only up to 20 or 30% describing the particular disease. We actually filed some early patents on the human side, hoping to find one big mutation and getting a genetic test for people. We did not find it, and it has costed us about $100.000 on patents. World wide more research groups were looking for this type of mutation. It actually was a big race. MacLennan’s discovery was confirmed by Peter O’Brien (Guelph) who had some test pigs. In O’Brien’s case, the owner of the technology was the University of Guelph (UG). The Foundation clients were MacLennan and UG. However, in this case, when we make money and split, all five parties will get money: the two inventors and the two universities and the Foundation.

In December 1990, MacLennan and UG granted us the right to grant licenses to their discovery. The patent was not sold to us. The test itself is a blood test, a DNA-test. For the test one needs a blood sample from a pig. From the blood a lab can extract the DNA, cut it with enzymes, and amplify it using PCR technology. On the PCR technology the labs have to pay a royalty as well to Hoffman LaRoche. Then the pieces are separated on a gel, and the result can be read. The lab must have a license from us to perform the test legally in countries where we have patent and trademark protection.

How can you make money out of such an invention? We had a few goals. 1) We wanted the whole industry to be able to use the technology. In this industry were a few big players, and a lot of little breeders in the market. 2) We wanted a fair return for the university.

We faced a few problems. If this test is used diligently, and the strategy is to eliminate the mutation, it is a goal you will surely achieve after just a few years. We had to recognise the potential short life-time of the invention. Not being familiar with the market, we found out that licensing such a test was totally new for this industry.

In the first place, we had to decide who should be the licensees. It could be the laboratories, that do the test, or the breeders.The breeders are the ones who really know what the value of the test is. By using this test they can advertise that their nucleus animals are free of this mutation and eventually all of the progeny. Another decision we had to take was, to license it exclusively to a company so that it can have a monopoly in this area, or license non-exclusively to a lot of companies. We decided the breeding industry should control the test. If the laboratories were going to control the tests, we would get less returns, e.g. 5 or 10% of the price of the test the lab is offering.

In order to protect our rights, we set up a dual licensing strategy, with a patent and a trademark. We filed patents very quickly, and almost worldwide. Scientists like to publish. Often they value this more than money. In order to keep infringers away, the patenting had to take place before publication. If you publish, even give a lecture, in Europe, it is not possible to get patent protection. In North America it is still possible to get a patent after publication, because there is a one year grace period. About a month after we filed our patents, McLennan published, in 1991. We also established a trademark, which is another way to protect property. Trademark rights go longer than patents; you can even collect royalties under trademarks, e.g. Coca Cola, Marlboro, Harley Davidson. The idea behind it was, if we could successfully promote the trademark, and after 5 or 10 years when the testing has decreased, maybe the mark would have some value. The dual licensing strategy means that we licence the laboratories to do the test, and we collect the royalties from the breeders. We did take trademark HAL-1843 in a lot of countries. The name of the trademark: ‘HAL’ stood for ‘Halothane’, which was a test used prior to this one, and ‘1843' is a site of a mutation on a gene. We have used the trademark commercially since 1992.

When trying to commercialize the test in different countries we discovered that, in every country, the pig breeding industry is set up differently: some centralised, some decentralised. It meant that one licensing plan for the whole world would not work.

At first we licensed PIC, and shortly after to Cotswold: companies with geneticists on their staff. They knew how to control the mutation to produce a better product. In Canada we have a number of small breeders across the country. The Canadian Pork Council, the association of Canadian pig breeders agreed to become a master license holder. When a breeder wants a test to be done, he can go to any laboratory he chooses. Further he pays a royalty fee to the local organisation. The royalties are collected automatically and sent to us. The National Pork Producers Council in the USA did not agree with this strategy, and sent us to the state breeding organisations and breeders directly. Here we had to use another strategy. We addressed the breeders directly by advertising with a toll free telephonenumber. We gave free licenses in the USA to the breeders. They agreed to use a trademark when they advertise and to do testing at an approved laboratory. With the laboratories they agreed to collect royalties: $12. In each country we contacted, we had to find a different solution. In Italy, we have countrywide a deal with one of the breeding associations. We also have national licenses in Australia, South-Africa, and New Zealand.

And we have agreements with some swine breeding companies and organisations, and with purebred organisations. In The Netherlands, it is a laboratory that does the tests. There are service laboratories with international licenses in Canada (three labs), USA (three labs), The Netherlands, Germany (two labs), Italy, England, Australia, Brasil and South Africa.

Approximately the cost of the test is, for the laboratory, about $15. We have maintained $12 royalty in the USA since the beginning of the programme. When the programme started, the laboratories charged $50-60 for the test. Our $12 royalty is fixed. We put the labs in competition with one another. Now the lab prices have came down to the $15 level.

The total gross royalties of the HAL-1843 test are about $Cdn3,500,000.

From 1990 until now, we learned a lot about enforcement too. You can not prevent somebody from using the test until your patent is issued. In the European system, there is a way to translate claims early in the game. Then, once your patent is issued, there is a chance to go back and get back royalties. In the USA, once we had the patent issued, there were already five labs doing the test. We had to enforce our rights by putting each one on legal notice. Eventually one of them signed. And the rest we had to shut down.

We learned a lot in patenting and trademarketing the HAL-1843 test. Firstly, I want to summarize the highlights.

1) We came with a creative programme. In each country we went to, we created a different deal.

2) It was a good strategy to license the breeders, and not to licence the labs directly, at least at the start. Thus we set the value of the technology by the people who can use it. That way we kept a higher royalty payable to us.

3) The trademark was a good idea. The programme only began five years ago. In the next five or ten years, we can tell what is the long term value.

4) Being flexible in each market is important. There is no such thing as a standard agreement. And we were flexible

5) We had a lot of meetings in a lot of foreign countries. Actually meeting the people you have to deal with, makes all the difference in the world. You can not do this job by the telephone. You have to go see the people.

6) Last but not least, we stuck to our guns. People will tell you all kind of things along the way, but if you stick to your ideas, you can get something done.

Now the other side of the coin. What should we have done better, should we start today.

1) We should have filed patents in the USA first. In the USA it is not possble to collect back royalties after patents issue.

2) We clearly should have known more about the patent rules in Europe. We would have been able to collect a little bit more in back royalties if we had done that.

3) You can not be on the road enough. Never. There are certainly more people, we could have visited along the way which would have led to more deals.

4) And then, if you have the choice, never be the first test in the industry. It is better to be the second, and let someone else blaze the trail. The path is nice and clean now, and we have the scars to prove it.

Patents in Animal Biotechnology: Roslin’s experience to date

Roslin Institute is the leading centre for research on the genetics of farm animals in the UK, with internationally-recognised programmes of research in animal breeding, genome analysis, reproduction, growth and development, poultry science, animal welfare and nutrition. Roslin Institute has also pioneered the development of methods for genetic modification of farm animals. Roslin Institute was formally created on 1 April 1993 from the Edinburgh Research Station of the Institute of Animal Physiology and Genetics Research. This in turn was formed by the amalgamation in 1986 of the Agricultural and Food Research Council’s Poultry Research Centre and Animal Breeding Research Organisation.

Roslin Institute has more than 320 staff, visiting scientists and PhD students. It is located close to the village of Roslin about 7 miles south of Edinburgh city centre. The Bio-technology and Biological Sciences Research Council (the BBSRC; the successor of the AFRC) and the Ministry of Agriculture, Fisheries and Food are the major funders of Roslin’s research, contributing approximately 30 and 45% of its annual turnover of £10M. The remainder comes from a variety of sources, including the EC, the Scottish Office, the Department of Trade and Industry, industry organisations such as the Meat and Livestock Commission and British Poultry Federation and individual companies, particularly in the animal breeding and feed compounding sectors. The Institute’s staff are employees of the BBSRC.

Roslin Institute’s traditional remit has been the improvement of productivity and welfare of farm animals and this continues to be a major focus of our research. In the past, the expectation of sponsoring government departments and the agricultural industry was that the results would be freely available to everyone, usually via the scientific literature. Encouragement of a more ‘entrepreneurial’ attitude in the public sector by successive governments, overall reductions in funding for agricultural research and new opportunities provided by advances in molecular biology have produced some significant changes in our relationships with sponsors and customers. Contracts and collaborations with individual companies have increased and last year we created Rosgen, a specialist genotyping company which has first option on results from the Institute’s farm animal genome programme (i.e. any molecular markers linked to commercially important traits).

Nevertheless the opportunities for major innovation in conventional agriculture are limited and this is reflected in our current portfolio of patent applications: 14 of the patent applications filed by the Roslin Institute are currently active, but only two have their primary application in conventional agriculture. The remaining applications cover techniques for genetic modification of livestock and poultry. In these instances, the immediate applications are in biotechnology and medicine, where commercial rewards are potentially much larger.

Lack of interest from the major pharmaceutical companies prompted ABR0 to seek venture capital to create a new company to exploit its invention. The company now known as PPL Therapeutic was established in 1987 with one employee: it now has over 120 staff and is one of three leading companies in its field. In 1991,PPL produced ‘Tracy’ the first sheep to produce large quantities of a human protein in milk (35 g per litre). In 1996, PPL became a publicly quoted company with an initial valuation of over £110M.

The US patents will last until 2011; the European patents until 2007. PPL’s lead product, alpha-I antitrypsin, (AAT) is a protease inhibitor that is a normal component of the lung’s defences against bacteria but one which can be overwhelmed by persistent infection. AAT from PPL’s transgenic flock is now being used in phase II clinical trials to treat children suffering from cystic fibrosis, a condition that afflicts 1/2500 of Caucasians. If clinical trials are successful, AAT is expected to be on the market in 2001 (i.e. some 15 years after the key patents were filed).

Two other companies are producing therapeutic proteins in milk using similar technology. Genzyme Transgenics in the US initially focused on using the whey acidic protein ( WAP) promoter to direct transgene expression to the mammary gland. Pharming in the Netherlands have used casein promoters. This may appear to be simply three companies based on the use of three different milk protein promoters, but the situation is more complex than this. For example, PPL & Genzyme and Pharming & Genzyme have cross licence agreements to each other’s technologies and broad claims in a European patent granted to Genzyme to all casein and milk serum protein promoters are being disputed by Pharming.

Recent attention at Roslin has focused on Dolly, the first mammal cloned from an adult cell and on the prospects for the cloning of humans. Our reasons for doing the work were to develop better methods for the genetic modification of farm animals and -in the longer term- to provide ways of multiplying elite cattle and pigs in farm animal production. Until recently the only way of producing transgenic farm animals was by a technique called pro-nuclear injection. This involves the introduction of 200-300 copies of the transgene into recently fertilised eggs which are then transferred to surrogate mothers. Only 1-2%of the offspring are transgenic and only a proportion of these express the transgene at commercially interesting levels. Pronuclear injection can also only add genes.

The ability to carry out more sophisticated genetic modification is important to several biomedical applications of genetically modified farm animals. In therapeutic protein production, for example, there is a need for large quantities of human serum albumin for a range of clinical uses, including treatment of burns patients. Annual demand is estimated at 500 tonnes, which at a cost of $3 a gram translates into a world market of over $1.5 billion a year. Cow’s milk already contains a similar albumin and simply adding the human gene to transgenic cows would require an expensive purification step to separate the two proteins. The more radical solution would be to replace the gene coding for the cow’s albumin with the human serum albumin gene. More sophisticated genetic modifications are needed in xenotransplantation. There is a large shortfall in the availability of human organs for transplant to human in all countries and genetically-modified pigs are being developed as an alternative source of organs. At present it is only possible - by pronuclear injection - to add genes to pigs and the ability to also remove genes would greatly improve the chances of preventing immune rejection.

Experience with bacteria, yeast and mammalian cells has shown that very precise genetic modifications can be introduced into cells in culture, including the removal or replacement of specific genes or the introduction of the single base pair changes into the whole of the genetic code that are typical of many human genetic diseases. In mice, the availability of embryo stem cells has allowed genetically modified mice to be derived from genetically modified cells. To date, however, no group has isolated embryo stem cells in livestock.

Nuclear transfer provides an alternative approach. The technique involves the fusion of individual cells with unfertilised eggs from which the genetic material has been removed. The ‘reconstructed eggs’ are activated by a low voltage electric pulse and then implanted in surrogate mothers. Cloned sheep and cattle were produced in the 1980's by nuclear transfer of cells directly from early embryos, but for nuclear transfer to be used for genetic modification, it has to be successful with cells that have been cultured for extended periods in the laboratory.

The major technical breakthrough in our nuclear transfer research was made by Ian Wilmut, Keith Campbell and their colleagues in 1995 with the production of live lambs - Megan and Morag - from an established cell line. This success followed the use of serum starvation to induce quiescence and patents were filed by Roslin Institute to protect their invention in August 1995. Subsequent work produced lambs from other embryo-derived cells, from foetal cells and - in collaboration with PPL Therapeutics - one lamb (Dolly) from an adult cell. Roslin Institute and PPL subsequently announced the production of the first transgenic lambs by nuclear transfer. In December 1997, the editors of the prestigious US journal ‘Science’ voted Dolly ‘Science breakthrough of the Year’ ahead of NASA’s Mars pathfinder mission and advances in cyclotron design.

The patent applications filed by Roslin Institute on August 1995 are described in PCT/GB96/02098 and PCT/GB96/02099. Patents will be jointly owned by the Roslin Institute, the BBSRC and MAFF and are unlikely to be issued for at least 3-4 years. In the