By Paul Cole* —

Introduction

It is strongly arguable that insofar as the USPTO's  Myriad-Mayo Guidance[1] dismisses as non-eligible newly isolated substances (including small molecules), nucleotide sequences and microorganisms having new utility (US parlance) or producing new technical effects (European parlance) it is in conflict with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)[2].

It is unsurprising that only 10 of the 83 comments published to date on the USPTO website[3] cover this issue.  It is taken for granted within the profession that officially-issued regulations and guidelines will have been checked for compliance prior to issue.  The mind-set of most prosecution or litigation attorneys therefore treats such compliance as a background issue for which an independent check is not normally needed.  Also, some organizations and companies have been unwilling to allege TRIPS non-compliance in deference to the USPTO and to the Government.  But silence about objectively plausible non-compliance arguments once they have been identified falls into the Emperor's New Clothes fallacy, delays necessary remedial action, and does the USPTO no service.

Nine of the relevant comments assert non-compliance either directly or implicitly within the broader topic of international harmonisation.  Only the Australian commentator Luigi Palombi[4] asserts compliance based on his 2005 PhD thesis entitled "The Patenting of Biological Materials in the context of TRIPS"[5].  However, his brief comment to USPTO takes no account of subsequent developments including the opinion of the Federal Court of Australia in Cancer Voices Australia v Myriad Genetics[6].

Policy considerations underlying the Guidance

Those IP organizations and associations that provided relevant comments viewed the Guidance as a serious setback to harmonization.  The position of the American Bar Association (ABA)[7] typifies comments made by the International Bioindustry Association[8] (representing member associations in Canada, Europe, Japan and the US), AIPPI Japan[9], The International Federation of Intellectual Property Attorneys (FICPI)[10], and the Chartered Institute of Patent Attorneys (CIPA)[11]:

The United States and specifically the USPTO should remain a strong advocate for TRIPS.  The U.S. would not take lightly a member state carving out certain technology from the patent eligibility requirements of Article 27, and therefore the USPTO should reflect carefully on whether the Guidance as written will result in an invention or a category of inventions being declared ineligible for patent protection inconsistently with the letter and principles of TRIPS.  The IPL Section respectfully submits that it remains important that the USPTO continues to lead by example in following the letter and principles embodied in TRIPS and narrowly apply Myriad and Mayo to do so.

Damage created by the Guidance is summarised by the International Bioindustry Associations:

The U.S. Government, together with the governments of EU member states, Japan, Korea, Australia and other major U.S. trading partners have been making efforts over a considerable period of time to encourage more harmonization and the adoption of more uniform and consistent rules relating to intellectual property and, in particular, patents.  Progress, although slow, has been significant.  Such efforts have borne fruit through increased membership and use of the Patent Co-operation Treaty, the adoption of the Patent Formalities Treaty and Patent Law Treaty, and in the extension of WTO rules to intellectual property.  Currently, in negotiations that are taking place, U.S. negotiators are hoping that other countries will sacrifice tradition for uniformity, for example by considering the adoption of harmonized grace periods for inventor disclosures.  The effect of an unnecessarily broad interpretation of the Supreme Court's decisions such as is proposed under the new Guidance will be a serious setback to such efforts and to progress in achieving further steps on the road to harmonization and the benefits that this would bring to many countries, but in particular, to the United States.

Compatibility with TRIPS

Simon Elliott[12] of Foley and Lardner argues that the USPTO must not interpret 35 USC § 101 in a manner that violates TRIPS.  He traces the requirement to avoid conflict with treaty obligations to observations of Chief Justice Marshall 210 years ago in Murray v. The Charming Betsy that "an Act of Congress ought never to be construed to violate the law of nations if any other possible construction remains."  He goes on to explain that decisions giving deference to agency interpretation of statutes have less force because the USPTO has no substantive rule-making authority, and that such decisions do not support giving deference to USPTO Guidance that has a general and substantive impact across a broad swath of patent applications.

The International Bioindustry Associations set out their views on the Guidance in generalised but nevertheless forthright terms:

By subjecting such inventions to a heightened patentability analysis, the Guidance conspicuously departs from internationally accepted standards of patent-eligibility.  Many valuable inventions that would be patentable in the patent offices of the U.S.'s major trading partners will nevertheless be rejected in the USPTO because they fail to pass an extrastatutory "significant differences" test that has no equivalent in the patent laws of other industrialized countries.  Doing so creates a deep disparity in substantive patent law whereby whole categories of socially beneficial inventions would face obstacles to patent protection in the United States but remain patentable among its major trading partners, with attendant harmful effects on the flow of investment, trade, and cross-border transfer of innovation.

The ABA argues that "as written the Guidance and the exclusions for patent eligibility under TRIPS do not appear to be consistent".  FICPI takes that position, as also do Joe Liebeschuetz and Joe Storella commenting as individuals.  Cole and Roberts[13] argue that any  administrative or judicial interpretation of the provisions of any statute, including 35 USC § 101, which places the US in a position where it does not meet the obligations of an international agreement by which it is bound is prima facie incorrect and requires reconsideration, and further that:

These considerations seem particularly compelling in relation to the Supreme Court opinions mainly relied on for the extended interpretation applied in the Guidance.  Those opinions include Hartranft v. Wiegmann, 121 U. S. 609, 615, 7 S. Ct. 1240, 30 L. Ed. 1012 (1887), Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 131 (1948) and Diamond v. Chakrabarty, 447 U.S. 303 (1980).  Those opinions were well known to and understood by the US Government, the USPTO and US patent attorneys at the time when the TRIPS Agreement was negotiated.  The US Government would not have negotiated that Agreement if there was at the time any reasonable ground for belief that US domestic law was inconsistent with the terms being negotiated.  There is no basis in law or in logic for assuming that the rulings in those long-established opinions have changed between the time when the TRIPS Agreement was negotiated and now.

The conflicting examples

The eligibility of isolated natural products, including small molecules, lies at the heart of the Guidance.  It is strongly arguable that each of the examples listed below gives rise to potential conflict with TRIPS.

Example B concerns purified amazonic acid, a hypothetical cancer-fighting chemical extracted from the leaves of the Amazonian cherry tree.  It is not made clear whether it is a small molecule or, for example, a protein.  The relevant degree of purity is not made clear, and as pointed by the Coalition for 21st Century Medicine[14], the wording could cover purities too low to produce a desired therapeutic effect.  The alternative rapamycin-based example given by Cole[15] includes a claim specifying that antibiotic as a colourless crystalline compound of defined melting point.

Example A concerns a stable energy-generating plasmid which provides a hydrocarbon degradative pathway.  This wording is unrepresentative because, as pointed out in recent comments by the Coalition for 21st Century Medicine the claim encompasses, as one of its distinct embodiments, a natural plasmid sitting in a natural bacterium.  More typical is the claim suggested by Cole which is directed to a plasmid isolated from the organism in which it occurs in nature and which is divisible into particular fragments by named restriction enzymes.

Example E recites a pair of primers, the first having the sequence of SEQ ID NO: 1 and the second having the sequence of SEQ ID NO: 2.  Eligibility of a primer pair under US law is considered by the Coalition for 21st Century Medicine at pages 30-31 of their comments.  They aver that there is no clear natural product against which to compare the claimed pair of primers, that the term " a pair of primers" implies that the two primers are designed as a coordinated pair of molecules capable of catalyzing a polymerase chain reaction and thus does not encompass just any two random oligonucleotides, and that they have new utility insofar as that they can prime a DNA polymerase chain reaction, working in a coordinated interactive way to amplify a specific sequence of interest.  An admission in oral argument in Myriad that no ruling concerning the use of a DNA probe or primer was necessary is reproduced at page 32 of their comments.

Example D concerns a composition of matter, and in this instance the claim in Funk Brothers v Kalo, directed to an inoculant for leguminous plants comprising a plurality of selected mutually non-inhibitive strains of different species of bacteria of the genus Rhizobium, said strains being unaffected by each other in respect to their ability to fix nitrogen in the leguminous plant for which they are specific.  The Guidance takes the position that because the bacteria are structurally identical to naturally occurring bacteria, they are not markedly different and hence ineligible.  A similar position was taken in the recent Federal Circuit opinion in Roslin[16].

Comments supporting conflict

Examples A, B, and D and the quoted passage from Roslin markedly differ from the EPO Examination Guidelines at G II, 3.1 which it is submitted encapsulates the law and practice that is applicable in most industrialised countries:

To find a previously unrecognised substance occurring in nature is also mere discovery and therefore unpatentable.  However, if a substance found in nature can be shown to produce a technical effect, it may be patentable.  An example of such a case is that of a substance occurring in nature which is found to have an antibiotic effect.  In addition, if a microorganism is discovered to exist in nature and to produce an antibiotic, the microorganism itself may also be patentable as one aspect of the invention.  Similarly, a gene which is discovered to exist in nature may be patentable if a technical effect is revealed, e.g. its use in making a certain polypeptide or in gene therapy.

Insofar as the Guidance is narrower and excludes isolated naturally occurring substances from protection it is difficult to avoid the conclusion that such technology has been arbitrarily carved out from the eligibility requirements of a.27 in conflict with TRIPS.

For biotechnological inventions, Cole and Roberts point out that Exclusions are covered by Articles 27.2 and 27.3 of TRIPS.  They cover the protection of ordre public or morality, protection of human or plant life or health and avoidance of serious prejudice to the environment.  They also cover diagnostic, therapeutic and surgical methods for the treatment of humans or animals and essentially biological processes for the production of plants and animals.  No other exclusions are provided for.  In particular there is no provision for excluding natural products or processes involving natural products or 'laws of nature'.  They go on to argue that:

The scope of Article 27 is demonstrated by EU Directive 98/44/EC on the legal protection of biotechnological inventions.  This was drafted inter alia to be compliant with the TRIPS Agreement to which it makes no less than five specific references.  Article 1 of the Directive requires that member states shall protect biotechnological inventions under national patent law and is without prejudice to the implicitly over-riding obligations under the TRIPS Agreement.  Article 3.3 provides that biological material which is isolated from its natural environment or produced by means of a technical process may be the subject of an invention even if it previously occurred in nature.  Article 5.2 provides that an element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention, even if the structure of that element is identical to that of a natural element.  That is subject to the provisions of Article 5.3 that the industrial application of a sequence or a partial sequence of a gene (i.e. its utility) must be disclosed in the patent application.  We submit that the Directive accurately reflects the requirements of the TRIPS agreement, and that national law providing any lesser eligibility falls short of compliance with that Agreement.

Cole and Roberts express particular concern about coverage in the Guidance of naturally occurring microorganisms and about the exclusion expressed in the Roslin opinion:

Article 27.3 specifically provides that microorganisms and microbiological processes shall be patent-eligible.  Any prohibition by the USPTO or the US courts on the grant of patents for newly isolated strains of bacteria or other microorganisms having new utility amounts to discrimination as to field of technology contrary to Articles 27.1 and 27.3 of the TRIPS Agreement.  Example D of the guidance and the recent Federal Circuit opinion in In re Roslin Institute place the US outside the scope of that Article because they purport to exclude naturally occurring microorganisms from eligibility.  Example D identifies naturally occurring bacterial strains as falling within judicial exceptions and hence ineligible under §101.  The same position is taken by the Federal Circuit in Roslin:

"Even before the Supreme Court's recent decision in Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013), the Court's opinions in Chakrabarty and Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), made clear that naturally occurring organisms are not patentable."

 . . . we dispute the proposition that any of the three cited cases resulted in the holding attributed to them even under US domestic law.  As Chakrabarty made clear, patents for naturally occurring organisms were granted routinely by the USPTO — at least since 1873 when Louis Pasteur obtained US Patent 141072 directed to: "Yeast, free from organic germs of disease, as an article of manufacture" — and continued to grant such patents at least up to 1970.  The EPO routinely grants patents for strains of naturally occurring bacteria.  So should the USPTO.

Comments denying conflict

A contrary view is expressed by Luigi Palombi who practiced patent law in Australia between 1982 and 1987 and was much involved in litigation concerning gene-related patents.  In his 2005 PhD thesis he argued that a device that he called "isolation contrivance" had been developed by the patent community to categorise "isolated" biological materials as "inventions".  He avers that the EU directive conflicts with the provisions of TRIPS, and supports that proposition with reference to decisions of the UK courts in Genentech v Wellcome (tPA) [1987] R.P.C 553, [1989] R.P.C. 147-205, Kirin-Amgen v Hoechst Marion Roussel Ltd [2005] R.P.C. 169 (erythropoietin), and Chiron Corporation and Others v Murex Diagnostics Ltd and Others (No 12) [1996] R.P.C. 535.

An Australian answer

A more balanced Australian view would have covered the opinion in Cancer Voices Australia v Myriad in which the court denied that the opinion of Lord Hoffmann in Kirin-Amgen was authority for the proposition that an isolated protein was inherently not patent-eligible and reaffirmed that a product that consists of an artificially created state of affairs which has economic significance will constitute a "manner of manufacture".  Because essentially the same issues arose before the US Supreme Court and the reasoning is helpful to understanding the holding of Justice Thomas, the Court's reasoning is set out at length below:

Whether or not a composition of matter (including a micro-organism) is a "manner of manufacture" must be decided in accordance with the principles set out in the NRDC case.  It follows (leaving aside any relevant statutory exception) that a composition of matter may constitute patentable subject matter if it consists of an artificial state of affairs, that has some discernible effect, and that is of utility in a field of economic endeavour . . . .

In the context of biological material, an artificial state of affairs may manifest itself in different ways. The physical properties of the naturally occurring material may have changed as a result of it having been isolated.  But even if the physical properties of the material have not changed, the removal of the material from its natural environment and its separation from other cellular components may still give rise to what might reasonably be described as an artificial state of affairs.

In my opinion the patentability of the isolated nucleic acids referred to in the disputed claims does not turn upon what changes have been made to the chemical composition of such substances as a result of them having been isolated.  In particular, the question of whether these substances constitute patentable subject matter does not depend upon the type of chemical bond that may have been broken in the process of isolating them.  It is inevitable that some bonds will be broken in the course of isolating nucleic acids, but it is not apparent from the evidence that these will necessarily include covalent bonds.  As I have already explained, the disputed claims do not require that the isolated nucleic acids they describe differ from those found in the cell in this or any other respect so far as their chemical composition is concerned.

Accordingly, the issue in this case turns upon whether an isolated nucleic acid, which may be assumed to have precisely the same chemical composition and structure as that found in the cells of some human beings, constitutes an artificial state of affairs in the sense those words should be understood in the present context.  There are three considerations which lead me to think that it does.

First, in explaining the concept of manner of manufacture as one involving the creation of an artificial state of affairs, it is apparent that the High Court in NRDC was deliberate in its use of very expansive language.  Not only did the High Court emphasise the "broad sweep" of the concept involved, it also made clear that metaphorical analysis may not be helpful in determining whether or not something constitutes patentable subject matter.

Secondly, in the absence of human intervention, naturally occurring nucleic acid does not exist outside the cell, and "isolated" nucleic acid does not exist inside the cell.  Isolated nucleic acid is the product of human intervention involving the extraction and purification of the nucleic acid found in the cell.  Extraction of nucleic acid requires human intervention that necessarily results in the rupture of the cell membrane and the physical destruction of the cell itself.  And purification of the extracted nucleic acid requires human intervention that results in the removal of other materials which were also originally present in the cell.  It is only after both these steps are performed that the extracted and purified product may be properly described as "isolated" in the sense that word is used in the disputed claims.

Thirdly, as Dann's Patent demonstrates, the isolation of a particular micro-organism may require immense research and intellectual effort.  In that case, it was only as a result of an intensive research effort that the isolated micro-organism in question could be made available for use in the manufacture of the new antibiotic.  It was fortuitous for the patentee that it was its employees who were first to isolate the new micro-organism and first to deploy it in the manufacture of the new drug.  That will not always be so.  It would lead to very odd results if a person whose skill and effort culminated in the isolation of a micro-organism (a fortiori, an isolated DNA sequence) could not be independently rewarded by the grant of a patent because the isolated micro-organism, no matter how practically useful or economically significant, was held to be inherently non-patentable.  In my view it would be a mistake, and inconsistent with the purposes of the Act, not to give full effect in such situations to the broad language used by the High Court in NRDC.

Concluding remarks

It will be apparent that the overwhelming majority of the relevant comments identifies concern about TRIPS conflict, although detail from more of the commentators with reference to the specific examples in the Guidance would have been helpful.  The dissenting comment is valuable not only in drawing attention to the older case law but also in prompting renewed attention to the observations in Cancer Voices which it is submitted are of great wisdom and insight.  An artificial state of affairs that has some discernible effect and that is of utility in a field of economic endeavour is along the same lines as Hartranft/Chakrabarty in the US and would not be a bad starting point for revision of the Guidance.

* Mr. Cole is a European Patent Attorney and Partner with Lucas & Co. in Warlingham, Surrey, UK and Visiting Professor at Bournemouth University.