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Biotechnology is an industry of ideas and invention. That makes intellectual property-typically in the form of patents-the most important asset at most biotech companies. These companies are often small firms-most biotechs have 50 or fewer employees-developing products that can take upwards of 10 years and hundreds of millions of dollars in investment to bring to the marketplace.
In fact, biotech historians credit the resolution of a patent case in 1980 with lifting the industry off the ground. In that case, Diamond v. Charkrabarty, the court held that anything touched by the hand of man-including modified cells and other biological materials-may be patented.
What Is a Patent?
A patent is an agreement between the government and an inventor whereby, in exchange for the inventor's complete disclosure of the invention, the government gives the inventor the right to exclude others from making, using, selling or importing the invention for a limited time. Note that the property right provided in a patent is quite different from what we typically think of when we own property. What is granted is not the right to make, use, offer for sale, sell or import, but the right to stop others from making, using, offering for sale, selling or importing the invention.
The United States Patent & Trademark Office (PTO) evaluates patent applications and issues patents. Patents usually last 20 years from the date on which the patent application is filed (not when it is issued). Thus, the enforceable term of a patent is between 17 and 20 years; exactly how much shorter depends on how long it is under PTO review. The PTO provides a three-year period for the agency to issue a patent. Anything beyond three years will be added to the end of the patent term. For example, if an application is examined in the PTO for four years before it is issued, the enforceable patent term will be 18 years.
In highly regulated industries such as biotechnology, the "effective" period of patent protection may be much less than 17-20 years. Why? As an example, consider a drug whose patent is issued during Phase I trials. Before it can enter the market, the drug still has to undergo at least two more rounds of clinical testing and an evaluation period at the FDA, all of which may take five to 10 years. By the time the drug reaches patients, it may have less than 10 years of patent protection left. (The Hatch-Waxman Act partially offsets the time lost in development of drugs, but the period of "effective patent protection" is still much shorter than for other products.)
Once a patent has expired, anyone may make, use, offer for sale, sell or import the invention without permission of the patentee.
TYPES OF PATENTS
Three types of patents exist: utility, design and plant patents. Utility patents are granted to those who invent or discover new and useful machines or processes, while design patents are issued to inventors of new, original and ornamental design for an article of manufacture. Plant patents are given to those who invent or discover, then asexually reproduce a new plant type.
PATENT PROTECTION IN THE CONSTITUTION
A patent grants exclusive rights to inventors for limited periods. The first law providing exclusive rights to the makers of inventions for limited time periods seems to have been in Italy in the 15th century. Even before the signing of the Federal Constitution of the United States, most states had their own patent laws. The U.S. Constitution entrusted Congress to provide protection for inventions. The basis for the federal patent and copyright systems is found in the Constitution of the United States, Article 1, Section 8, Clause 8, which states:
Congress has enacted various laws relating to patents. The first U.S. patent law was enacted in 1790. Today, in the United States, patents are granted by the U.S. Patent and Trademark Office (PTO) and are effective only within the United States and its territories. The term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in certain cases, from the date an earlier, related application was filed.
The Purpose of a Patent
The rationale for a patent system is to provide an advantage to society as a whole by rewarding the development of new inventions. Thus, the patent system has two basic purposes: to promote the advancement of technology and to protect the inventor.
PROMOTING TECHNOLOGICAL ADVANCEMENT
The patent system provides a process for the disclosure of valuable information that can stimulate research across the globe. To obtain a patent, an inventor must "teach" the public how to make and use the invention in the best way the inventor knows. Thus, the patent system rewards only those inventors who are willing to share their inventions with the whole world.
Moreover, the information disclosed in a patent application is usually available to the public long before a patent issues. If a patent application is filed internationally or (from 2000 onwards) in the United States, it is published 18 months after its initial filing. The exception to this rule is that an applicant who has filed only in the U.S. and not abroad may request that the U.S. application not be published. If however, the applicant files in a foreign country, then the U.S. patent application will be published.
Once published, a patent application and all its information are available to anyone. Thus, the patent system greatly stimulates the flow of scientific and technological knowledge. That's why societies that protect inventors with patents are the world's most advanced, scientifically and technologically.
Patentable Inventions
Under U.S. law, various types of invention can be patented. These are:
A process-for example, a process of making a chemical by combining chemical X with chemical Y, or a method of treating a cancer patient by administering a specific drug. A machine-for example, a flat-screen high-definition television set or an X-ray machine. An article of manufacture-for example, a silicon computer chip or a specially molded piece of plastic for an automobile bumper. A composition of matter-for example, a new pharmaceutical drug or a new plastic for use in kitchen counters. Any new and useful improvement to an invention that falls under any of these categories.
Other types of inventions or discoveries cannot be patented; these include naturally occurring organisms, laws of nature, natural or physical phenomena, and abstract ideas.
BIOTECHNOLOGY PATENTS
Biotechnology inventions generally fall into one of two classes:
New compositions of matter related to newly discovered isolated genes or proteins or to pharmaceutical inventions based on those genes or proteins. One cannot patent a naturally occurring gene or protein as it exists in the body, but one can patent a gene or protein that has been isolated from the body and is useful in that form as a pharmaceutical drug, screening assay or other application. Methods of treating patients with a given disease through the use of a particular gene or protein. Even if someone has a patent on a gene or protein, a second inventor can obtain a patent on a new use of that gene or protein, if the second inventor discovers a new use for the substance.
Patent Requirements
To obtain a patent on a new invention, an inventor must show that these three criteria are met:
The invention is novel and nonobvious: that is, the invention is really new. The invention must not have been described or discovered by another before the inventor filed a patent application. The invention must also not be obvious from the prior work of others. In patenting a gene or a protein, the requirement for novelty and nonobviousness usually means that the inventor must know the chemical structure of the new gene or protein. If that structure already is known, the inventor can't meet this requirement. The invention is useful. The inventor must show that the invention has a real-world use. It isn't enough just to find a new gene or protein. The inventor must specify what the uses are; for example, whether the gene or protein is useful as a drug for disease X or as a target for disease Y or as a diagnostic marker for disease Z. The application describes the invention in sufficient detail to allow the public to make and use the invention. The inventor must teach or "enable" other persons that are skilled in the technological area of the invention to use the invention described by the inventor.
In addition to the above criteria, a description of the material or tool for which a patent is sought cannot have been published in print, either in the United States or abroad. Also, if the invention has been on sale or in use in the U.S. for a year before the application is filed, a patent will not be awarded to the invention.
The Patent Application
To obtain a patent, the inventor is required to submit a patent application to each country in which he or she desires to obtain patent protection. In the United States, a complete patent application must contain the following components:
A written English language document (called the specification) that clearly describes and explains the invention. Attached to the specification must be at least one "claim" that sets forth the desired legal parameters of the claimed invention. A drawing illustrating the invention, if such a drawing is necessary for understanding the invention. An oath or declaration by the inventor(s) claiming inventorship. A filing fee (about $400-$800, or more, depending on the patent application).
Patenting Organisms
Some living things can be patented, but not all. Like any invention, a living thing must be "new" in order to be patented. More importantly, living organisms under consideration for patenting cannot be those that occur or exist in nature. Thus, one cannot obtain a patent on just any living creature, such as a mouse, because mice have been around for a long time. If someone makes a kind of mouse that never existed before, however, then that kind of mouse might be patented. Here are a few examples of patentable organisms:
Microbes: As long ago as 1873, Louis Pasteur received a U.S. patent for yeast "free from organic germs or disease." With the growth of genetic engineering in the late 1970s, the patentability of living organisms was re-examined, and confirmed. A landmark case involved Ananda Chakrabarty's invention of a new bacterium genetically engineered to degrade crude oil. In 1980, the Supreme Court clearly stated that new microorganisms not found in nature, such as Chakrabarty's bacterium, were patentable. Chakrabarty received a patent in 1981 (U.S. Pat. No. 4,259,444). In the Chakrabarty decision, the Supreme Court stated that "anything under the sun that is made by the hand of man" is patentable subject matter. Therefore, if a product of nature is new, useful and nonobvious, it can be patented if it has been fashioned by humans.
Plants: In 1930, the U.S. Congress passed the Plant Patent Act, which specifically provided patent protection for newly invented plants that are asexually reproduced. In 1970, Congress provided similar protection for newly invented sexually reproduced plants.
Animals: In the 1980s, the question of whether multicellular animals could be patented was examined. The key case involved a new kind of "polyploid" oyster that had an extra set of chromosomes. This new, sterile oyster was edible all year round because it did not devote body weight to reproduction during the breeding season. The PTO found that such organisms were in fact new and therefore eligible for patenting. It found this particular type of oyster to be obvious, however, and thus did not allow a patent for it. Nonetheless, the polyploid oyster paved the way for the patenting of other nonnaturally occurring animals. In 1988, Philip Leder and Timothy Stewart were granted a patent on transgenic nonhuman mammals (U.S. Pat. No. 4,736,866) that covered the so-called Harvard mouse, which was genetically engineered to be a model for the study of cancer.
Natural Compounds: Natural compounds, such as a human protein or the chemical that gives strawberries their distinctive flavor, are not themselves living, but occur in nature. Thus, they are new and can be patented only if they are somehow removed from nature. Therefore, a compound that is purified away from a strawberry, or a protein that is purified away from the human body can be patented in its purified state. Such a patent would not cover the strawberry or the person. The U.S. PTO does not allow anyone to patent a human being under any circumstances.
Patent Licensing
A patent license is a contract between the owner of a patent and an independent party who wishes to make, use or sell the invention claimed in the patent. Such a contract is in essence a promise by the patent owner that the owner will not sue the independent party, called the licensee, for patent infringement, provided that he or she complies with the terms of the contract. Typically, the licensee agrees to pay the patent owner a percentage of the revenue the licensee receives from sale of the invention and/or other license fees.
Many inventions require significant capital investment before they can be used commercially. By licensing a patented invention to a third party, a patent owner who may not have the resources to fully develop an invention can work with a third party to commercialize it.
In some cases, a license from more than one person may be necessary to use an invention effectively. For example, one party could obtain a patent on a new protein, while a second party obtains a patent on a new use of that same protein. In order to sell that protein for the new use, a third party would require a license from both patent owners. If the two patent owners want to sell the protein for the new use, they would need to grant a license to each other. Such licenses are often called cross-licenses. In rapidly developing fields of technology, cross-licenses are very common.
If a third party does use a patented invention without a license, the patent owner can seek legal remedies for infringement. Such remedies can include damages and an injunction against the infringer to prevent future use.
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