By Kevin E. Noonan —

The Enlarged Board of the European Patent Office issued its decision denying a European patent on European Patent Application No. 96903521.1 (EP 0 770 125) to the Wisconsin Alumni Research Foundation (WARF), directed to human embryonic stem cells (hESCs).  This decision is another example of European antipathy to biotechnology inventions, an attitude that in the past has had an extremely negative effect on the continent's competitiveness with the U.S. and Asian countries.

The bases of the Board's decision are provisions of the European Patent Convention (EPC) prohibiting patents on inventions that would be contrary to public order ("ordre public") or morality if exploited commercially (Rule 23d(c), recodified as Rule 28c).  The EPC also proscribes patenting expressly for any use of human embryos for industrial or commercial purposes.  The Board reached this result even though the stem cell claims at issue recited neither a use of a human embryo or the method for obtaining the claimed cells.  On its face, the decision seems a fair and accurate reading of the prohibition under the EPC.

These "public morality" provisions exist in the patent law of many countries, as express provisions preventing certain types of patents.  They find their most common expression in prohibitions on methods of human treatment, resulting in "first" and "second" medical use claims.  With one exception, there are no similar provisions in U.S. patent law:  that exception, codified at 35 U.S.C. § 287(c), exempts medical practitioners (doctors, nurses, and others "licensed by a State to provide" medical activity) from the patent infringement provisions of the statute.  "Medical activity" is also expressly defined, to be the practice of a medical or surgical procedure on a [human] body"; however, the statute also excludes from protection "use of a patented medicine," "practice of a patented use," and "practice of a process in violation of a biotechnology patent."  Other proscriptions against certain types of patents on morality or other grounds are a consequence of either Patent Office procedures or judicial decisions; an example is the Office's rejection of the attempt by Jeremy Rifkin and a scientific colleague to patent a human-animal chimera (as a dramatic way to have transgenic animal claims assessed for patentability).

Generally, the European approach to biotechnology patenting has not inured to the benefits of its citizens or innovation in Europe.  As discussed in an earlier Patent Docs post, a Washington Post story reported that in the early 1980's half of the top ten pharmaceutical companies in sales were European, and European companies invented half of the world's new drugs.  Today, American pharmaceutical companies account for 60 percent of global sales.  The percentage is even greater for biotechnology companies (75 percent of biotech sales).  Indeed, U.S. companies have two and a half times as many biotech drugs in development as do their European counterparts — a staggering 4,500, according to the Post report.

In addition to all of the other economic factors at work behind those numbers is the legal and political choice in the U.S. to support biotechnology through patents.  While true that:

[t]he grant or denial of patents on micro-organisms is not likely to put an end to genetic research or to its attendant risks.  The large amount of research that has already occurred when no researcher had sure knowledge that patent protection would be available suggests that legislative or judicial fiat as to patentability will not deter the scientific mind from probing into the unknown any more than Canute could command the tides.  Whether respondent's claims are patentable may determine whether research efforts are accelerated by the hope of reward or slowed by want of incentives, but that is all.

Diamond v. Chakrabarty, 447 U.S. 303, 317 (1980), the relative "acceleration" of biotechnology research and development as a consequence of the Chakrabarty decision provided the impetus for this sea change in the fortunes of U.S. as opposed to European pharmaceutical companies.

Even regarding stem cells, the Bush administrations proscriptions against Federal funding has been well-recognized as "slow[ing] by want of incentives" the progress of human stem cell research in this country.  The result was a "brain drain" of top scientists to Singapore and other "stem cell friendly" countries, and efforts by private groups and several States (including, famously, California) to fund the banned research.  In Europe, a few countries (notably the United Kingdom and Sweden) treat stem cells as patentable subject matter in their national patent systems.  It is likely that applicants will be willing to expend the additional costs associated with pursuing national phase patents, but such a trend is contrary to the uniformity available using the European patent system under the EPC.

These considerations are lost on those inclined to see stem cells (and gene patenting, and biotechnology generally) as being properly outside the scope of patents.  Bavarian Justice Minister Beate Merk, a member of the conservative Christian Democratic Union, called the ruling an "ethical victory," and Greenpeace praised the decision, saying (with no appreciation of its irony), "[w]ithout public interference, such patents would long be accepted."  Politicians were not alone in the anti-patent sentiment for stem cells:  Dr. Robin Lovell-Badge (at right), head of stem cell biology and developmental genetics at the U.K. National Institute for Medical Research mused that there might be "sighs of relief" from biotech companies wanting to use stem cells (inter alia, for screening purposes) or products derived from stem cells.  What is missing, of course, from this analysis is that the short-term "benefit" of license fee avoidance is purchased at the cost of investor support for new stem cell-based technologies that will lack patent protection.

Dr. Lovell-Badge posited that the Board's ruling should make it easier for stem cell companies to operate in Europe than in the U.S., where WARF's stem cell patents recently survived a re-examination challenge by a California "taxpayer" ground and the Public Patent Foundation.  Europe (or at least those European countries that do not enact national law contrary to the Board's decision) now becomes the laboratory for testing the hypothesis that stem cell research will be more fruitful without patent protection.  If history provides any insight, that result is extremely unlikely.