IP In Biotechnology In Need Of A New Start, Experts Say

By Catherine Saez
PARIS – Biotechnology is in dire need of a change to its business model, restoring trust among all actors and building partnerships, according to participants in a recent seminar here. After nearly thirty years, the industry still is not making profits, the field seems to be running out of steam, and controversies over patents in the health and agriculture areas have influenced public opinion, they said.

The seminar on IP, biotechnology, traditional knowledge and social issues, co-hosted by Sciences Po, a well-known political science school in Paris, and McGill University (Montreal), was held 13-14 November in Paris.

The crisis of confidence in the patent system for biotechnology was ignited by the Myriad Genetics case some seven years ago, said Richard Gold, professor at McGill University and chair of the Innovation Partnership, an international expert group on biotechnology, innovation and IP, describing it as ‘the perfect policy storm.”

Myriad Genetics, a US biopharmaceutical company, applied for patents at the European Patent Office (EPO) on two breast and ovarian cancer genes and a related diagnostic test. The company obtained four patents from the EPO between 2001 and 2002.

Decisions by Myriad about how to use and enforce their patents launched a crisis of confidence in the patent system as governments, hospitals and researchers around the world feared that Myriad’s patents would stop research, drive up healthcare costs and deprive women of appropriate health care, Gold said. These concerns were not all based on facts but still induced government action, he added. For example, France and Germany passed legislation narrowing the scope of gene patents and France also introduced a compulsory licensing system for diagnostic procedures. The Organisation for Economic Co-operation and Development adopted guidelines on the licensing of genetic inventions.

The patents were finally opposed by six parties among which were the Institut Curie of France, the government of the Netherlands and Greenpeace Germany. The patents were revoked but Myriad appealed this decision and after a public hearing in Munich on 19 November, a technical board of appeal maintained the patent related to the “method for diagnosing a predisposition for breast and ovarian cancer’ in an amended form, according to the EPO’s website.

This “crisis” spanning several years could have been avoided, according to Gold, and was brought on by three major failures; miscommunication, institutional failures and lack of trust between the actors. In particular, the business model followed by Myriad failed, as they still are not able to use the patents.

Yet other companies are following Myriad’s business model. “Every single mistake Myriad made” is being repeated, said Gold. “The same thing is going to reproduce itself.”

For Alain Gallochat, consultant and expert in industrial property for the North Atlantic Treaty Organisation, “it was not a patentability problem, the question was the use that was made of this right,’ as the company tried to enforce them in unreasonable ways, he said.

For speakers at the event, it is not the fact that inventors are seeking to protect their inventions through patents that is problematic, but the way patents are granted and how their rights over those patents are exercised. Patents are essential for academics, said Frederic Foubert of the technology transfer department of the Paris-based Centre National de la Recherche Scientifique (CNRS). “If discoveries were not patented the technology would stay inside laboratories,” he said. Industry is the academics’ partner.

Trust between partners is thus a key element. Vincent Jouhanneaud, patent engineer for Pierre Fabre research institute, said that patents were only one side of IP. Sometimes an efficient contract is a better choice than pursuing a patent. Upstream patents filed to protect potential resulting products, for example, can prove dangerous for their owner and backfire, as industries may be reluctant to invest at such an early stage. Gallochat added that upstream patents, mainly the result of a lack of trust, can be totally counterproductive for all sides.

“The goal is a balance between the patent and the general interest,” he said. The role of a patent office is not to distribute patents but to verify that a patent can be granted, he said, adding that the EPO is no longer accepting speculative applications. Nowadays, opposing patents is a way to tell patent offices that their patent grant was not adequate, said Jouhanneaud, for example, that allowed claims are too broad.

Can IP Rights Protect Traditional Knowledge?

To protect traditional knowledge (TK), IP might not be the perfect solution. “There is a mismatch between the IP rights framework and TK” said Tania Bubela, assistant professor at the University of Alberta (Canada). The main problem is that IP rights are time limited. Patenting of TK also requires public disclosure but most TK is based on cultural and spiritual beliefs that do not always agree with disclosure. It is also very difficult to know who holds the traditional knowledge. An appropriate balance needs to be struck between national economic interests and the needs of the communities to which TK owes its existence, she said.

Denis Bohousoou, director of the Cote d’Ivoire IP office said three main threats endanger TK: the challenge to preserve it – as it is closely linked to change in the social and physical environment, the danger of illicit exploitation, and the difficulty in promoting it. Prior knowledge also needs to be recognised, he said.

Traditional knowledge should be used as leverage for development, Bohousoou said. A lot of technology coming from the North can not be appropriated by people in the South because it does not fit in their everyday life. In Cote d’Ivoire there are some training centres which associate traditional healers with modern medicine as a way to promote TK.

David Vivas Eugui from the International Centre for Trade and Sustainable Development said the trust issue is a major challenge, as indigenous people are suspicious of foreigners and that TK is low on their list of priorities compared to land rights or self-determination.

Regulatory Questions

New developments are occurring, such as some patent applicants submitting extremely long applications with a totally unreasonable list of demands – sometimes over 100 – and a rising tendency to submit divisional patent applications (containing matter from previously files applications), said Denis Dambois of the Trade Directorate of the European Commission . There are no sanctions on the regulatory level but this creates legal insecurity for companies wishing to ensure their activities do not involve third party rights.

Technology transfer from developed countries to some emerging economies such as China or Mexico can present a risk for European Union patent holders, Dambois said, as some EU companies are forced to give access to their technology and know-how in the process of a commercial contract or a public market contract beyond the normal frame of the usual commercial relationship.

In addition, a recent decision of the Chinese Supreme Court might influence the legislation on standards, he said. The decision implied that if a company accepts the inclusion of its technology in a Chinese standard, the company will not be able to take legal action against people using its technology. The company might claim financial compensation but this would be much lower than royalties. Participating in a Chinese standard might put EU companies’ IP at risk, he said.

New Tools for Patent Management

There is an inflation of patents in the world, said Frederic Caillaud, technology transfer manager for l’Oreal. He and others are predicting a “big bang of IP” by 2010, when the first patent stock exchange will open its doors in Chicago. “This will change the face of IP,” he said.

New tools are becoming available that will change the way patents are obtained and used. Web marketplaces, auctions, patent aggregation, patent mapping, patent rating and patent stock exchange are among the new trends, he said. Investment funds are buying IP – 5000 patents were bought last year, patent aggregation is trendy and lucrative for newcomers due to the emergence of computerised tools, he said.

The main issue for developing countries is the lack of IP knowledge, said Charles Molinier from the African Intellectual Property Organization (OAPI). Results from university or research institutes remain unpatented. It is the intention of OAPI to promote IP knowledge by training academics, researchers and lawyers as it is essential that they obtain solid rights, that countries attract direct foreign investment and achieve an efficient application of law. OAPI hopes to develop partnerships with other IP offices.

Catherine Saez may be reached at csaez@ip-watch.ch.