SPEAKERS CONTENTS INSERTS
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66–043
2000
GENE PATENTS AND OTHER GENOMIC INVENTIONS
HEARING
BEFORE THE
SUBCOMMITTEE ON
COURTS AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
JULY 13, 2000
Serial No. 121
Printed for the use of the Committee on the Judiciary
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For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
LINDSEY O. GRAHAM, South Carolina
MARY BONO, California
SPENCER BACHUS, Alabama
JOE SCARBOROUGH, Florida
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DAVID VITTER, Louisiana
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
THOMAS E. MOONEY, SR., General Counsel-Chief of Staff
JULIAN EPSTEIN, Minority Chief Counsel and Staff Director
Subcommittee on Courts and Intellectual Property
HOWARD COBLE, North Carolina, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
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ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
WILLIAM L. JENKINS, Tennessee
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
MARY BONO, California
HOWARD L. BERMAN, California
JOHN CONYERS, Jr., Michigan
RICK BOUCHER, Virginia
ZOE LOFGREN, California
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
BLAINE MERRITT, Chief Counsel
VINCE GARLOCK, Counsel
DEBBIE K. ROSE, Counsel
CHRIS J. KATOPIS, Counsel
ALEC FRENCH, Minority Counsel
EUNICE GOLDRING, Staff Assistant
C O N T E N T S
HEARING DATE
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July 13, 2000
OPENING STATEMENT
Coble, Hon. Howard, a Representative in Congress From the State of North Carolina, and chairman, Subcommittee on Courts and Intellectual Property
WITNESSES
Dickinson, Todd, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Department of Commerce
Dixon, Carl F., president and executive director, Kidney Cancer Association
Henner, Dennis J., Ph.D., senior vice president, research, Genentech, Inc.
Merz, Dr. Jon F., assistant professor of bioethics, Center for Bioethics, University of Pennsylvania
Ryan, M. Andrea, vice president, Warner-Lambert Company and president-elect, American Intellectual Property Law Association
Scott, Dr. Randal W., president and chief scientific officer, Incyte Genomics
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Severson, James A., president, Cornell Research Foundation on Behalf of the Association of University Technology Managers
Varmus, Dr. Harold, president and CEO, Memorial Sloan-Kettering Cancer Center
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Coble, Hon. Howard, a Representative in Congress From the State of North Carolina, and chairman, Subcommittee on Courts and Intellectual Property: Prepared statement
Conyers, Hon. John, Jr., a Representative in Congress From the State of Michigan: Prepared statement
Dickinson, Todd, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Department of Commerce: Prepared statement
Dixon, Carl F., president and executive director, Kidney Cancer Association: Prepared statement
Gallegly, Hon. Elton, a Representative in Congress From the State of California: Prepared statement
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Henner, Dennis J., Ph.D., senior vice president, research, Genentech, Inc.: Prepared statement
Merz, Dr. Jon F., assistant professor of bioethics, Center for Bioethics, University of Pennsylvania: Prepared statement
Ryan, M. Andrea, vice president, Warner-Lambert Company and president-elect, American Intellectual Property Law Association: Prepared statement
Scott, Dr. Randal W., president and chief scientific officer, Incyte Genomics: Prepared statement
Severson, James A., president, Cornell Research Foundation on Behalf of the Association of University Technology Managers: Prepared statement
Varmus, Dr. Harold, president and CEO, Memorial Sloan-Kettering Cancer Center: Prepared statement
APPENDIX
Material submitted for the record
GENE PATENTS AND OTHER GENOMIC INVENTIONS
THURSDAY, JULY 13, 2000
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House of Representatives,
Subcommittee on Courts and
Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The subcommittee met, pursuant to call, at 9:35 a.m., in Room 2141, Rayburn House Office Building, Hon. Howard Coble [chairman of the subcommittee] presiding.
Present: Representatives Howard Coble, Howard L. Berman, Elton Gallegly, John Conyers, Jr., Rick Boucher, Edward A. Pease, Zoe Lofgren, William D. Delahunt, and Mary Bono.
Staff present: Blaine Merritt, chief counsel; Chris Katopis, counsel; Vince Garlock, counsel; Eunice Goldring, staff assistant; Alec French, minority counsel; and Sam Garg, minority counsel
OPENING STATEMENT OF CHAIRMAN COBLE
Mr. COBLE. Good morning, ladies and gentlemen. The subcommittee will come to order.
It is well known to those who follow the work of this subcommittee that we spend a great deal of time on issues pertaining to the Internet. Today, however, we turn our interest to another very exciting and important area of the United States technological leadership, the biotechnology industry, which will have an equal, if not greater, impact on our lives in the years ahead.
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This year, the efforts of researchers in the public and private sectors will unveil the complete map of the human genome. For the first time in human history we will have a clear understanding of this science for the blueprint of human life. This landmark work will make the 21st century the biotechnology century.
The intellectual property questions surrounding these efforts have enormous consequences that will impact all aspects of life, America's continued global technology leadership, and the course of related research. These are issues of great interest to the subcommittee members and recent developments compel us to explore them.
While Congress will not consider any additional patent legislation on this topic this year, there are two points I would like to share with you. The concerns about all varieties of patents prompted Congress to pass landmark legislation, the American Inventor's Protection Act, last November. While our patent system is the envy of the world, as the provisions of last year's legislation, including the transformation of the Patent and Trademark Office into a more autonomous entity, the early publication of patent applications and expanded procedures like reexamination go into effect, the structure of our system will be greatly enhanced and more efficient.
In addition, I know that the subcommittee members and I are united in the belief that the PTO deserves to retain all of its user fees. This has been a torridly hot topic on this Hill in recent days and I want to emphasize the significance of that. In fact, I will digress a minute. I was at the Patent and Trademark Office this year, Todd, you will recall, and I, in perhaps a very indelicate manner, admonished the administration and the appropriators to keep their grubby paws out of the PTO coffers. I received great applause for that statement; not normally embraced on the Hill by many, however. But this is very significant. I'm sure we will touch on that today.
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The diversion of fees is unfortunate, to say the least, and will result in a negative effect for the biotechnology industry due to increased patent application pendency, lessened overall patent quality, and the deprivation of resources. It is our hope that the appropriations committee and the administration will restore this badly needed money.
We are very fortunate to have the benefit of talented witnesses, who are joining us this morning, to survey this exciting field and to help educate us in this process. I am now pleased to recognized the ranking member of this subcommittee, the distinguished gentleman from California, Mr. Howard Berman, for an opening statement.
[The prepared statement of Mr. Coble follows:]
PREPARED STATEMENT OF HON. HOWARD COBLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA, AND CHAIRMAN, SUBCOMMITTEE ON COURTS AND INTELLECTUAL PROPERTY
The Subcommittee will come to order.
It is well-known to those who follow the work of this subcommittee that we spend a great deal of our time on issues pertaining to the Internet. Today, however, we turn our interests to another very exciting and important area of the U.S. technological leadership, the bio-technology industry, which will have an equal, if not greater, impact on our lives in the years ahead.
This year, the efforts of researchers in the public and private sectors will unveil the complete map of the human genome. For the first time in human history, we will have a clearer understanding of this science for the blueprint of human life. This landmark work will make the twenty-first century the ''bio-technology century.''
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The intellectual property questions surrounding these efforts have enormous consequences that will impact all aspects of life, America's continued global technology leadership, and the course of related research. These are issues of great interest to the subcommittee members, and recent developments compel us to explore them. While Congress will not consider any additional patent legislation on this topic this year, there are two points I wish to make.
The concerns about all varieties of patents prompted Congress to pass landmark legislation—the American Inventors Protection Act—last November. While our patent system is the envy of the world, as the provisions of last year's legislation—including the transformation of the PTO into a more autonomous entity, the early publication of patent applications, and expanded procedures like re-examination—go into effect, the structure of our system will be greatly enhanced and more efficient. In addition, I know that the subcommittees members and I are united in the belief that the PTO deserves to retain all of its user fees. The diversion of fees is unfortunate to say the least and will result in a negative affect for the biotechnology industry due to increased patent application pendency, lessened overall patent quality, and the deprivation of resources. It is our hope that the Appropriations Conference restores this badly-needed money.
We are very fortunate to have the benefit of talented witnesses who are joining us this morning to survey this exciting field and help educate us in the process.
I now turn to the Ranking Member, Mr. Berman, for an opening statement.
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Mr. BERMAN. Well, thanks very much, Mr. Chairman, for holding this hearing and for focusing us on these very important issues. In light of the rapid events, as we've seen in gene sequencing, I think it's very important that the subcommittee explore the legal and policy issues, which we're going to hear about today and it's appropriate that we do so at this time.
These are very complex issues dealing in arcane areas of science and law. Actually, I think the interest in these issues reveals something extraordinary about the times in which we live. What once was the arcane, what once was only heard and spoken of in the corridors of academia and legal institutions, is now a regular part of the public discourse. The front pages of the newspapers are regularly reporting the legal and moral issues that are raised by patenting in new areas of technology. At the same time, we are celebrating the successes of once anonymous researchers extending human knowledge at a previously unheard of pace. It is clear that the public is interested and even concerned about this intersection of intellectual property rights and science.
In time, health care is going to improve dramatically as a result of the sequencing of the human genome. And without the continuing efforts of those in both the public and private sectors, the medical advances we will hope to achieve would undoubtedly take much longer to develop and some would never occur. But, there are some who are asking whether the goals of the patent system and those of science and medicine are properly balanced.
Some are concerned that patent holders, public and private, will impose licensing terms on users of their inventions that will impede medical research or restrict patient access to affordable new clinical tests and therapeutic treatments. There have been a few notable cases already that suggest that this is an issue that at least warrants discussion. Some are concerned that patents have issued that may not meet the statutory requirements for patentability and they are concerned that the Patent and Trademark Office will not adequately elevate the bar to patentability in their new utility guidelines.
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Without question, we are looking into this at a time of substantial change, both in terms of what patent applicant seek to patent and how the PTO measures the patentability of submissions. Industry continues to make adjustments in light of what it learns about patents and licensing. The PTO is developing new guidelines and the rest of us are just beginning to understand the issues at play, but there clearly are policy questions that we need to be asking.
With that said, I want to thank the witnesses for coming here today and I particularly want to thank Dr. Varmus for joining us. I look forward to the testimony. This is one of those issues that—you know, so many of the issues we deal around here, we start with our own sort of ideological and philosophical biases and political biases and past records and it's very hard to sort of overcome those perhaps genetic redispositions. But in this—this is true for me, at least. This is an issue that's just a fascinating subject to learn about. I only try to figure out what makes the best sense to do and very possibly to do nothing, except to try to follow and learn and let people with different views articulate them, in the event that something does crystallize all of this. So, I think it's just a great time to have this hearing, Mr. Chairman, and I want to thank you again for scheduling it.
Mr. COBLE. I thank the gentleman. Folks, inevitably, we're going to have votes here, as the morning progresses. So, in the interest of time, I want to restrict opening statements to Mr. Berman and me, and without objection, we will have any other member's statements entered into the record. We are pleased to be joined by Mr. Gallegly, the gentleman from California, and Mr. Delahunt, the gentleman from Massachusetts.
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[The prepared statement of Mr. Gallegly follows:]
PREPARED STATEMENT OF HON. ELTON GALLEGLY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Chairman Coble, I want to begin by thanking you for your tremendous leadership on patent issues and for scheduling this important hearing.
Mr. Chairman, the biotechnology industry is one of the most exciting and rapidly growing industries in the world today. Biotechnology products have not only dramatically improved our quality of health care, but they have increased the possibility of discovering the root causes of diseases and developing the cures to combat these diseases.
The United States intellectual property system provides the framework that makes the development of new medical or biological products possible. Patents are essential to the biotechnology companies because they allow companies to recapture the enormous cost of research and development on these products. It is imperative to the future of this industry that we ensure that this system continues to provide effective protection and promote innovation, especially in the development of new products that have the potential to provide cures to diseases such as Alzheimer's, cancer and osteoporosis.
I look forward to hearing the testimony of our distinguished panel of witnesses and thank them for coming.
[The prepared statement of Mr. Conyers follows:]
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PREPARED STATEMENT OF HON. JOHN CONYERS, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
We are here today because the patent protection we give for genetic material that is used to develop new drugs—known as a gene patent—has generated a great deal of controversy over the morality and nuances of granting ''ownership'' over biological substances.
Some ask how it could be possible that people can obtain patents on genetic material, the building blocks of life. It has been a settled principle of law for twenty years now, though—most well known through the Supreme Court decision in Diamond v. Chakrabarty—that genetic material created or manipulated by humans can be patented.
And it is important to recognize that it is patent protection that drives scientists to spend countless hours in laboratories and develop new drugs from gene sequences even when the odds are against them. Without the promise of patents, our drug development industry would fold, leaving many diseases and illnesses with no hope for a cure.
That being said, I believe it would stifle future research for patents to be given on gene sequences that have no identified purpose. I am pleased that the PTO is developing regulations along those lines and that the drug industry and consumer groups are largely in agreement with them.
In the midst of this debate, though, we must not forget about the social issues that are raised by the biotech revolution. Patents cannot and must not be used to stifle research into potential cures for diseases and illnesses. Thankfully, it is an unspoken rule among most, if not all, scientists to share information and spur biotech innovation.
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Second, this country is facing a crisis over the rising cost of prescription drugs. It is my hope that these recent scientific breakthroughs will enable researchers to develop new drugs more quickly and easily, leading to lower costs for consumers.
Also, many Americans are concerned that gene sequencing will lead to discrimination by employers and others against people based upon their genetic makeup—commonly known as ''genetic discrimination.'' For instance, no job applicant would want a potential employer to know that his or her DNA indicates a likelihood of contracting cancer. Already, this country is feeling the strain of discrimination based on race, religion, ethnicity, gender, and sexual orientation, and I hope that government and industry can work together to ensure that we do not have to add another category to that list.
These questions will continue to be asked for years to come because we have hit only the surface of genetic discovery. The PTO has granted patents on approximately 1,000 human genes—there are between 30,000 and 100,000 genes left to discover. In addition, scientists recently determined the sequence of all 3.2 billion letters of the human genome—in essence, the blueprint for human life. This will increase exponentially the speed of discovery of the other thousands of genes and the controversies surrounding them.
I would like to thank the witnesses for coming and look forward to their testimony.
Mr. COBLE: The Government witness this morning is someone who is no stranger to this subcommittee, the Honorable Todd Dickinson, who is the Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office at the Department of Commerce. Mr. Dickinson is an active member of numerous professional associations, including the American Bar Association, the American Intellectual Property Law Association, the International Trademark Association, and the Copyright Society of the United States. A native of Pennsylvania, Mr. Dickinson earned a B.S. degree in chemistry from Alleghaney College and a J.D. from the University of Pittsburgh School of Law. He is a member of the Bars of Pennsylvania, California, and Illinois, and has practiced law in the private sector.
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The subcommittee has copies of Mr. Dickinson's testimony, which, without objection, shall be made a part of the record. And we invite you to the podium, Mr. Dickinson. Todd, you have many titles, but I still like the ring of Commissioner. That has a very authoritative sound to it. Which of your several titles do you prefer, Todd?
Mr. DICKINSON. Either one——
Mr. COBLE. Good to have you with us. And for the benefit of the remaining panelists who will join us subsequently, as each of you have—we'd like to restrict our oral testimony to 5 minutes. Now, that's not to say that you'll be key hauled if you go 5 1/2 minutes; but when the red light appears, that is your warning that you are running out of time. We're doing that in the interest of time, because, as I say, we're going to be interrupted, I am confident, for votes on the floor. Good to have you with us, Mr. Dickinson.
STATEMENT OF TODD DICKINSON, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, DEPARTMENT OF COMMERCE
Mr. DICKINSON. Thank you, Mr. Chairman, thank you very much, and to Mr. Berman. We appreciate the opportunity to testify today, and I commend the subcommittee for holding this hearing on patents in this cutting edge area of biotechnology. I'm hopeful that this discussion will clear the air of some of the misperceptions of what genetic material is and isn't patentable.
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One of the key tenets of the United States 210 year old patent system is that it's technology neutral. From gear shifts to genomics, it applies the same norms to all inventions and all technologies. The uniformity and facileness of the patenting standards, coupled with the incentives to invent, invest in, and disclose new technology have enabled millions of new innovations to be developed and commercialized. This, in turn, has enhanced our quality of life and helped fuel our robust economy.
The USPTO takes its direction on what subject matter is patentable from Congress and from the courts. Current patent law specifies that the basic statutory requirements that must be met to obtain a patent are novelty, nonobviousness, and utility.
The courts have ruled for some time that isolated and purified products of nature are eligible for patent protection. The most significant ruling on the patentability of biological products occurred in 1980 with the Supreme Court's landmark Diamond v. Chakrabarty decision. Finding the genetically engineered bacteria were patentable, Chief Justice Burger noted that the Congress intended statutory subject matter to include anything under the sun that is made by the hand of man.
In the wake of Chakrabarty, the courts have consistently ruled that genomic products are patentable subject matter, provided that they are the result of human intervention and are not in their naturally occurring state. So long as these conditions are met, a key issue for determine whether genomic inventions are patentable is the question of utility. As with any other invention, genomic products must be useful in order to obtain a patent. Raw DNA sequence data, such as that recently generated by the Human Genome project and by various corporate endeavors, is not patentable as it stands. There is no utility associated with it.
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In order to assure the highest standards of utility, the USPTO recently published revised utility examination guidelines in the Federal Register. These new utility guidelines, which we expect to finalize this fall, require patent applicants to explicitly identify, unless it's already well established, a specific, substantial, and credible utility for all inventions. In other words, one simply can't patent a gene itself without also clearly disclosing a real world use.
We believe this heightened standard futility will allow appropriate patents on genomic inventions, while also resulting in the rejection of hundreds of genomic patent applications, particularly those that only disclose theoretical utilities. I'm very pleased with the positive feedback we've received on these guidelines. The general consensus indicates that we've set the utility standard at an appropriate level to ensure incentives for research and the efficient dissemination of valuable data.
Despite these favorable comments, however, the patenting of genomic inventions does remain controversial. For example, some critics assert that genetic material can't be patented, because it's found naturally in our bodies. However, genes are basically chemicals; complex chemicals to be sure, but chemicals nonetheless. And as I've noted, chemicals and pharmaceuticals that have been isolated and purified from nature, penicillin for example, have long been held patentable. In addition, the USPTO has issued hundreds of patents to products extracted from the human body for pharmaceutical or diagnostic use, including clot-busting proteins to treat stroke, antigens for the detection of cancer, and antibodies to treat infection.
In a particular example, the cloning and subsequent patenting of the human insulin gene allowed researches to synthesize genuine human insulin in the laboratory, resulting in insulin protein that is less risky to human diabetics than that derived from animal sources.
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Secondly, some of the criticism is premised on the belief that patents unnecessarily impede access to the underlying technology. This is rarely proven true in practice, however. For example, the broad patents issued to the inventors Cohen and Boyer in the early 1980's regarding common DNA techniques, were used in a significant amount of molecular biological research. Owned by Stanford University and widely licensed for nominal fees, these patents are considered to be some of the most profitable in biotechnology. This profitability is largely due to their widespread use in the advancement of biological research. Indeed, the dominance of these patents did not stifle research, but spurred innovation by providing the incentive of patent protection.
With that said, the USPTO believes that inventors and owners of genomic patents need to be acutely aware of the heavy responsibilities inherent in that ownership. Licensing and other technology transfer regimes need to strongly account for the powerful public desire to ensure that the use of these inventions for the greater good is not unduly burdened. The administration is also pleased to see that, in keeping with the President's recent recommendations, several private industries, such as the SNP consortium, have agreed to make their raw human genome sequence data publicly available.
Lastly, many of the arguments against genomic patents are strikingly similar to those voiced in the past for other emerging technologies. For example, some 30 to 40 years ago, it was predicted that the polymer industry would be devastated if broad generic claims were granted on the building blocks of basic polymers. More recently, people argued that patents on software would impede the development of the software industry. Most would agree that these fears have failed to come to pass.
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In reality, patents have been integral to the U.S. biotech industry's growth into the world leader it is today. The biotech and pharmaceutical industries are exceptionally research intensive and the majority of their research is privately funded. Understandably, the private sector often looks for security in the investment they make in supporting that research, namely through patents and other intellectual property rights. Without these incentives, research into genetic diseases and the development of tools for the diagnosis and treatment of such diseases would be significantly curtailed.
Mr. Chairman, we stand in the midst of an information revolution that rivals the great renaissances of centuries past. These advances would not have been possible without broad patent eligibility and the balance the patent system strikes between generating intellectual property and distributing those ideas. While we must remain vigilant to ensure the use of genomic inventions for the greater good, patents in this area are consistent with our law and with our practice. Just as the patent system has nurtured the development of telephony, aeronautics, and computers, so, too, will it ensure that the new discoveries in genomics lead to healthier, longer lives for all of humankind.
The USPTO and the administration look forward to continuing to work with you and the members of the subcommittee toward that end. Thank you, very much.
[The prepared statement of Mr. Dickinson follows:]
PREPARED STATEMENT OF TODD DICKINSON, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, DEPARTMENT OF COMMERCE
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Mr. Chairman and Members of the Subcommittee:
Thank you very much for inviting me to testify today on the patenting of genes and other genomic inventions. As you know, patents in this cutting-edge area of biotechnology are a topic of considerable interest and debate in many circles. While some of this debate is unfortunately fueled by misinformation, legitimate questions have been raised about just what genomic discoveries, if any, should be patentable and whether genomic patents will inhibit researchers' access to the data, materials, and methods needed to develop new tools for the diagnosis and treatment of disease.
Given the gravity and far-reaching implications of these issues, I commend the Subcommittee for holding this hearing. I am hopeful that this morning's discussion will help clear the air of some misperceptions of just what is and isn't patentable and provide all parties with a better understanding of the essential role the patent system plays in unlocking the mysteries of the human body.
U.S. Patent System
In order to understand why genes are patentable, I believe it is necessary to first review the underpinnings of the U.S. patent system itself and the role of the United States Patent and Trademark Office (USPTO) in administering this system. The basis for our patent system is found in Article 1, Section 8, of the Constitution, which provides that Congress shall have the power:
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To promote the progress of science and useful arts by securing for limited times to . . . inventors the exclusive right to their . . . discoveries.
In carrying out the intent of this Constitutional directive, our Founding Fathers designed an extremely flexible patent system based on principles that have proven remarkably suitable to 210 years of unceasing technological advancement. Indeed, one of the key tenets of our patent system is that it is technology-neutral; from gearshifts to genomics, it applies the same norms to all inventions in all technologies.
While some are critical of this aspect of the patent system, the uniformity and facileness of the patenting standards of novelty, obviousness, and utility—coupled with the incentives patents provide to invent, invest in, and disclose new technology—have allowed millions of new inventions to be developed and commercialized. This has enhanced the quality of life for all Americans and helped fuel our country's transformation from a small, struggling nation to the most powerful economy in the world. Equally as impressive, the patent system has done all this without the need for Congress to constantly retool the law—a powerful testament to the system's effectiveness in simultaneously promoting the innovation and dissemination of new technologies.
Patentability Criteria
In administering the patent system, the USPTO takes its direction on what subject matter is patentable from Congress and our reviewing courts. The current Act that details the standards of patentability, the Patent Act of 1952, specifies four basic statutory requirements that must be met to obtain a patent: (1) the claimed invention must be statutory subject matter and have utility; (2) it must be novel; (3) it must not have been obvious to a person having ordinary skill in the art at the time the invention was made; and (4) it must be fully and unambiguously disclosed in the text of the patent application, so that the skilled practitioner would be able to practice the claimed invention.
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Prior to granting a patent, the USPTO examines each patent application to determine whether it meets these four criteria, as set forth in Title 35 of the U.S. Code. With respect to the first statutory requirement, 35 U.S.C. §101 states that any person who ''invents or discovers any new and useful . . . composition of matter, or any new and useful improvement thereof, may obtain a patent . . .'' subject to the conditions and requirements of the law.
Going back nearly a half century, the courts began to rule that isolated and purified products of nature were eligible, as compositions of matter, to be patented. For example, not long after James Watson and Francis Crick published their seminal work on the structure of deoxyribonucleic acid (DNA) in 1953, the Fourth Circuit stated in 1958 in a case involving naturally occurring vitamin B compounds that ''There is nothing in the language of the [1952] Act which precludes the issuance of a patent upon a 'product of nature' when it is a 'new and useful composition of matter'. . . . All of the tangible things . . . for which patent protection is granted are products of nature in the sense that nature provides the source materials.'' The court further noted that ''[t]he fact . . . that a new and useful product is the result of processes of extraction, concentration and purification of natural materials does not defeat its patentability.'' (Merck & Co., Inc. v. Olin Mathieson Chem. Corp., 253 F.2d 156, 161, 163). Two decades later, the Court of Customs and Patent Appeals ruled in 1979 that a biologically pure bacterial culture was patentable since the culture did not exist in nature in its pure form and could only be produced in a laboratory under carefully controlled circumstances. (In re Bergy, 596 F.2d 952, 201 U.S.P.Q. 352.)
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The most significant ruling on the patentability of biological products occurred a year later, in the Supreme Court's landmark decision in Diamond v. Chakrabarty, 447 U.S. 303, 309, 206 U.S.P.Q. 193, 197 (1980). In that decision, which found that genetically engineered bacteria were patentable, Chief Justice Burger cited the Congressional Report accompanying the 1952 Patent Act in noting that ''Congress intended statutory subject matter to 'include anything under the sun that is made by man'.'' When considering the scope of subject matter eligible for patent protection, the U.S. Supreme Court stated:
[Chakrabarty's] microorganism plainly qualifies as patentable subject matter. His claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter—a product of human ingenuity ''having a distinctive name, character [and] use.'' (Hartranft v. Wiegmann, 121 US 609, 615 (1887)) . . . [T]he patentee has produced a new bacterium with markedly different characteristics from any found in nature and one having the potential for significant utility. His discovery is not nature's handiwork, but his own; accordingly it is patentable subject matter under §101.
Many commentators believe the Chakrabarty decision was a major factor in the phenomenal growth of the biotechnology industry. Indeed, the Supreme Court's ruling altered somewhat the philosophy of the USPTO, from one of skepticism of patentability to more openness, and paved the way for a variety of patents involving living materials. In the wake of Chakrabarty, for example, we issued the first transgenic animal patent to the now-famous Harvard ''onco mouse,'' a mouse genetically engineered to be more susceptible to tumor growth. Patents have since issued on other genetically engineered plants and animals.
Over the past twenty years, many patent applications have been filed that are drawn to subject matter relating to genes. The filing rate of applications relating to genes has dramatically increased in the past few years. Currently, over 20,000 applications relating to genes are pending before the USPTO. Since the first gene related applications were filed, approximately 6,000 patents have issued which are drawn to full-length genes from human, animal, plant, bacterial and viral sources. Of these 6,000 patents, over 1,000 are specifically drawn to human genes and human gene variations that distinguish individuals.
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To digress for a moment, the complexity of some of these applications is almost unimaginable. For example, we received a DNA sequence listing as part of a patent application that, had it been submitted on paper, would have totaled more than 400,000 pages. The challenges of searching and examining applications of this complexity are great, and we are working with our customers and industry to generate creative solutions to examining applications in these technologies. This is yet another reason why it is vital that the USPTO have sufficient funding, and I want to thank you, Mr. Chairman, for your outstanding leadership on that issue.
Consistent with the findings in Chakrabarty, the courts have consistently ruled that genomic products and their mutations fall within the statutory categories of compositions of matter and manufactures. (See, e.g., In re O'Farrell, 853 F.2d 894, 7 U.S.P.Q.2d 1673 (Fed. Cir. 1988) and Amgen, Inc. v. Chugai Pharm. Co., Ltd., 927 F.2d 1200, 18 U.S.P.Q.2d 1016 (Fed. Cir. 1991)). However, in order to be patentable, they must not be in their naturally occurring state, and their invention must be the result of human intervention. In other words, the gene must be isolated and purified from its natural environment. The patent statutes also provide that a new use for an old and known compound (e.g. a gene or gene fragment) would also be eligible for patent protection.
Provided that these conditions are met, a key issue for determining whether a genomic invention is patentable is the question of utility. As with any other invention, a nucleic acid must be useful in order to be patentable. Raw DNA sequenced data, such as that recently generated by the Human Genome Project and various corporate endeavors, is not patentable.
Utility Requirements for Genetic Materials
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The issue of the utility of an invention is one that the USPTO takes very seriously. That is why we continue to take steps to ensure that genomic patent applications are meticulously scrutinized for an adequate written description, sufficiency of the disclosure, and enabled utilities, in accordance with the standards set forth by our reviewing courts. In fact, in order to ensure the highest standards of utility, the USPTO published ''Revised Interim Utility Examination Guidelines'' in the Federal Register on December 21, 1999 (Volume 64, Number 244). A companion training document was also published on our website (www.ustpo.gov) on March 1, 2000. We are currently finalizing these guidelines, based upon public comments, and we expect to publish them by early this fall. We do not anticipate any substantive changes to the interim guidelines.
In order to meet the utility requirement of 35 U.S.C. §101, our new utility guidelines require patent applicants to explicitly identify, unless already well-established, a specific, substantial and credible utility for all inventions. In effect, we have raised the bar to ensure that patent applicants demonstrate a ''real world'' utility. One simply cannot patent a gene itself without also clearly disclosing a use to which that gene can be put. As a result, we believe that hundreds of genomic patent applications may be rejected by the USPTO, particularly those that only disclose theoretical utilities. Let me briefly explain the new utility definitions:
An asserted utility is credible unless the logic underlying the assertion is seriously flawed, or the facts upon which the assertion is based are inconsistent with the logic underlying the assertion. For example, at least some nucleic acids might be used as probes, chromosome markers, or diagnostic markers. Therefore, the per se credibility of assertions regarding the use of nucleic acids is not usually questioned. However, even if credible, at least one asserted utility must also be both specific and substantial.
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A utility is specific when it is particular to the subject matter claimed. For example, a polynucleotide said to be useful simply as a ''gene probe'' or ''chromosome marker'' does not have specific utility in the absence of a disclosure of a particular gene or chromosome target. Similarly, a general statement of diagnostic utility would ordinarily be insufficient to meet the requirement for a specific utility in the absence of an identification of what condition can be diagnosed.
A substantial utility is one that defines a ''real world'' use. Utilities that require or constitute carrying out further research to identify or reasonably confirm a ''real world'' context of use are not substantial utilities. For example, basic research that uses a claimed nucleic acid simply for studying the properties of the nucleic acid itself does not constitute a substantial utility.
In general, if a partial nucleic acid sequence is useful for diagnosis of a particular disease, then the sequence would likely meet the utility requirement and patent protection commensurate in scope with the disclosure would be granted assuming the other statutory requirements for patentability are met. As increased amounts of information are provided both in the nature of the nucleic acid and its uses, broader coverage would be granted.
I am very pleased with the positive feedback the USPTO has received on these new guidelines. The general consensus from the major parties involved indicates that we have set the utility standard at an appropriate level to ensure incentives for both research and the efficient dissemination of valuable data. For example, the former Director of the National Institutes of Health (NIH), Dr. Harold Varmus, stated earlier this year that he was ''very pleased with the way [the USPTO] has come closer to [the NIH's] position about the need to define specific utility.'' Dr. Francis Collins, Director of the National Human Genome Research Institute, has said that the new utility guidelines are ''quite reassuring in terms of making sure that we end up with an outcome where the patent system is used to provide an incentive for research and not a disincentive.'' In addition, Dr. Craig Venter, the President and Chief Scientific Officer of Celera Genomics Corporation, recently stated that he was ''pleased to see [the USPTO] is raising the bar'' on gene patents.
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Responding to Concerns
Despite these favorable comments, the patenting of genomic inventions remains controversial. However, I believe much of this criticism stems from a lack of understanding of the legal issues at hand and of the functions of the patent system.
For example, some of the criticism we hear confuses issues of patentability with issues of access. Whether something is patentable subject matter is a related but entirely different issue from whether it will be licensed to ensure appropriate access by researchers. As I have described, the USPTO's chief duty is to determine whether an invention claimed in a given patent application meets the legal criteria for patentability.
With that said, the USPTO does take notice of the legitimate concerns regarding access to genomic inventions. Clearly, inventors and owners of genomic patents need to be acutely aware of the heavy responsibility inherent in that ownership; their licensing and other technology transfer practices need to strongly account for the powerful public desire to ensure that the use of these inventions for the greater good of all humankind is not unduly burdened. Moreover, the Administration is pleased to see that, in keeping with the President's recommendations, several private entities have agreed to make their raw human genome sequenced data publicly available.
As to the general assertion that patents inherently impede access, history provides little evidence that this is the case. For example, consider the broad patents issued to inventors Cohen and Boyer that have been at the center of molecular biology research since they were issued. U.S. Patents 4,237,224 and 4,468,464, issued in 1980 and 1984, respectively, cover a significant amount of the subject matter currently being used in biological research, including recombinant DNA materials and methods of making and using such materials. These patents, which are owned by Stanford University and widely licensed for nominal fees, are considered to be some of the most profitable patents ever to issue in biotechnology. This profitability is largely due to their widespread use in the advancement of biological research. Indeed, the dominance of these patents did not stifle research, but served instead to spur innovation by providing the incentives of patent protection.
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Secondly, there is a tendency among the patent system's critics to assert that genetic material cannot be patented because it is found naturally in our bodies. However, genes are basically chemicals—complex chemicals to be sure, but chemicals nonetheless—and chemicals and pharmaceuticals that have been isolated and purified from naturally-occurring sources have long been held patentable.
When Dr. Fleming discovered that mold in his petri dish had killed bacteria nearby, and then isolated penicillin from that mold, that drug was patented, and the world was a safer place. The USPTO has also issued hundreds of patents to products extracted from the human body for pharmaceutical or diagnostic use, including clot-busting proteins to treat stroke, cancer antigens for detection of cancer, and antibodies to treat infection. Human Growth Hormone was originally isolated from human pituitary glands, as were some vitamins.
It was the cloning and subsequent patenting of the human insulin gene that allowed researchers to synthesize genuine human insulin in the laboratory using recombinant DNA technology. This approach results in more reliable insulin protein and reduces complications than can occur from a reaction to animal insulin. Indeed, there are so many chemicals in the human body that, if we ruled them all off limits to patenting, we would rule out an extraordinary number of valuable and important inventions.
Many of the arguments of our critics also resemble those voiced in the past about emerging technologies. For example, thirty to forty years ago when polymer chemistry was an emerging technology, some argued that the industry would be devastated if broad generic claims were granted on the building blocks of basic polymers. Clearly, that didn't happen. The U.S. polymer industry is very much alive and well. More recently, people argued that patents on software would impede the development of the software industry. Most would agree that this has not happened either. In reality, patents have been integral to the United States' biotech industry's growth into the powerhouse it is today.
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Indeed, while the patent system provides protection to inventors for their innovations, it also provides for dissemination of information and technology that might otherwise be maintained as trade secrets. The biotechnology and pharmaceutical industries are some of the most research intensive industries in existence. Given that the majority of research in these areas is privately funded, it should come as no surprise that in supporting that research, the private sector often looks for financial returns. These financial returns are very often packaged as—or linked to—patents and other intellectual property rights.
Without the funding and incentives that are provided by the patent system, research into the basis of genetic diseases and the development of tools for the diagnosis and treatment of such diseases would be significantly curtailed. Moreover, genomic patents enable companies, especially smaller enterprises, to raise the capital needed to bring beneficial products to the marketplace or fund further research.
Conclusion
Mr. Chairman, the USPTO is committed to ensuring that our practices and policies promote the innovation and dissemination of new technologies. I am proud to say that we have a proven track record in that regard. Indeed, thanks in large part to invention and collaboration fostered by broad patent eligibility, we stand today in the midst of an Information Revolution that rivals the great renaissances of centuries past.
While we must remain vigilant to ensure the use of genomic inventions for the greater good is not unduly burdened, the patenting of genomic inventions is consistent with our law and with our practice. Just as the patent system has nurtured the development of telephony, aeronautics, computers, and a host of other industries, the balance it strikes between generating intellectual property and distributing those ideas will ensure that new discoveries in genomics lead to healthier, longer lives for all of humankind. The USPTO and the Administration look forward to continuing to work together with you and the members of the Subcommittee toward that end.
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Thank you, Mr. Chairman.
Mr. COBLE. Thank you, Mr. Dickinson. Good to have you back with us. As evidenced by this room's capacity today, there is widespread interest in this subject, Mr. Dickinson. I know that many await the new guidelines and I want to commend you for taking a cautious approach as to their content. Can you give us some indication as to when the guidelines will likely be finalized?
Mr. DICKINSON. Well, the new guidelines, as I indicated, were published last December. We have been examining two of them for some time now. They will be likely finalized this fall.
Mr. COBLE. Can you explain to us, Mr. Dickinson, in some detail, how the needs of the relevant PTO group section, which examines gene patents, differ from the other divisions, (a); and (b), how does ongoing and future funding shortfalls—I know the answer, but I want it on the record—affect your ability to serve the applicant needs of those in the biotech field?
Mr. DICKINSON. Well, the biotech area is examined in our Technology Cener 1600 and they have some very particular needs, Mr. Chairman; in particular, the need for greater automation tools to be able to do the kind of searching that's necessary. There's an extraordinary amount of data produced. We recently received a patent application that was 400,000 pages in length. I brought one patent here today that's not that long, but it gives you an idea of what the size and scale of these patents are looking like today.
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We need computers to be able to search those patent applications. They can't be searched in the traditional manner. And we had to buy last year a new one million dollar new server to be able to do that. This server is starting to have its capacity outstripped, so we need to buy another one or we won't be able to keep up.
On the human side, we do examination with a very trained cadre of high tech examiners, 150 of which in the biotechnology area have Ph.D.s. We need to be able to recruit more of those examiners, and we need to be able to retain them. For example, we were not able to hire 100 examiners, which were budgeted for this year, because we won't be able to pay them due to vagaries of the 2001 budget. So, if we don't have 100 new examiners, there is a significantly increased waiting time for patents to issue. In the biotech area, that's a particular challenge, because the patent applications on some of these sequences have been waiting examination for a while and we don't want to get to a defacto submarine situation. So, it is a very problematic issue for us. The budgetary impacts fall especially heavy in the biotech area.
Another concern we have is due to the law that was passed last year, as you'll remember, Mr. Chairman, where you have to make patent term adjustments when there are inordinate delays in our office. If we have to give patent term back for the kind of delays that we have as a result of not having the resources we need, that means patents will have unnecessarily longer terms and that will have, I think, a significant impact on areas like health care.
Mr. COBLE. Thank you, sir. Mr. Dickinson, I am advised that some people would like to see some of the issues relating to the standard of utility clarified by sending a test case to the courts to decide. What, if you have an opinion on this, can we expect in the foreseeable future, as to this course of action; and if such a test case is likely to come to the fruition of litigation? Do you have an estimate as to when we could expect a decision regarding the issue?
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Mr. DICKINSON. Thank you, Mr. Chairman. We, too, share that concern and we have been making appropriate rejections across the board. My understanding is that at least one of these is now considered a test case in our office that raises a number of very important issues: utility is one; written description, transitional language, and the scope and breadth of the claim subject matter are the others. This will be ready for the Board of Appeals, it's my understanding, by the end of the fiscal year. We have asked the Board to expedite that case as quickly as possible. It's presumed likely that it will then move on to the Court of Appeals for the Federal Circuit, who has also been acting expeditiously in recent years. That has generally taken about a year or so. So, if you ask me to guess, I would say it's probably a 1 1/2 or 2 years out until we get a final resolution at the Court of Appeals for the Federal Circuit.
Mr. COBLE. Thank you, sir. The gentleman from California?
Mr. BERMAN. Thank you, Mr. Chairman. Commissioner Dickinson, you've indicated in the past that it's not the role of the PTO to establish health care policy, but the fact is that PTO decisions as to what is patentable and what is not do impact health care, as it would any industry. PTO is in a very difficult position of placing themselves in the shoes of those skilled in the particular art, to make certain determinations. Some of those skilled in this art, particularly at the NIH, argue that certain things should not be patentable, based on their view of the science as it applies to describing a utility. Their concerns may be driven by public health; but the bottom line is that a significant community of those who are ''skilled in the art'' have strong views that certain subject matter does not meet the test for patentability.
In that light, I'd like to ask you a few questions. I guess for 20 years, these gene patents have been issued; but, as I understand it, the methodology initially during that time allowed the patents to be issued on applications on whole genes with clearly understood utilities. Now, we're in a situation—the current methodology, where we do sequencing by computers, where the importance of the utility guidelines becomes heightened, and you've responded to that fact. In preparing the new guidelines, have you studied whether the guidelines will set a standard that will produce a similar level of information about utility, as was the case in the early patents? In other words, this new methodology is not so revealing about the utility and what are the implications of that, in terms of your new guidelines?
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Mr. DICKINSON. Thank you, Mr. Berman. NIH is one of our most important customers in this area. As a matter of fact, the largest number of gene sequence patents that issue have issued to the NIH, so they are very concerned about this topic. In some of the areas in which they've done research, the human genome project, for example, they decided not to file patent applications and dedicated that information to the public.
In the drafting of our utility guidelines, we met several times with—actually with Dr. Varmus, one of your witnesses here today, and other members of NIH to discuss these topics. We're very pleased that both Dr. Varmus and Dr. Francis Collins from NIH have both indicated that they've been generally supportive of the approach that we've taken. They have indeed raised some very specific issues with regard to a particular subset of the gene sequence applications that are on file, what we call expressed sequence tags, which are gene—basically fragments of genes.
Mr. BERMAN. To what extent are those patentable?
Mr. DICKINSON. They're patentable to the same extent that any other invention is patentable, so long as they meet the test of patentability. And the question that it basically comes down to, as you rightly said, and the question of utility and the ability to demonstrate sufficient utility to meet the section 101 standard.
Mr. BERMAN. Can you give us just—can you give me an example of a patentable fragment?
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Mr. DICKINSON. I think that's a difficult question, because the fragment itself would probably be somewhat on the order of——
Mr. BERMAN. You can say almost anything and I wouldn't know what——[Laughter.]
Mr. DICKINSON. Some call the ESTs the filet mignon of the gene. They are a portion of the overall sequence itself. They're an extremely—often extremely—important portion.
The question comes down to the level of disclosure of the utility, as you mentioned. They have come in basically in we call generations. There are three generations of the ESTs applications. The first generation are cases where there is no disclosure of where the gene EST lies. There's very little disclosure of utility. Very, very few of these EST applications are going to make it through to a patent.
On the other end is the third generation, where there's a complete disclosure, they are located on the gene, and a very broad utility is disclosed, often an actual utility. Those will have a much greater chance of——
Mr. BERMAN. There are some segments where utility is revealed?
Mr. DICKINSON. Yes. And you'll hear from other witnesses today that take the other point of view. This is a topic that is widely debated. NIH stands as an applicant of our office and other applicants are here today to testify, as well. The question comes down to, as you've suggested, how much utility can be inferred from the computer modeling that is used now to determine the utility associated with a particular EST. The question is what percentage of that analogous information—it's called percent homology in the term of the art—is sufficient, in order to justify the utility.
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In traditional chemical practice, for example—I've been a chemical patent practitioner all my life—you basically make a general allegation of a utility and that's sufficient to meet 101. It's a very low standard in most chemical arts. The reason we've looked at this question again, and the reason that we've raised the bar, is because of the sensitivity of this issue, the concerns raised by NIH and others, and the need to make sure that we're doing it right in this particular circumstance.
Mr. BERMAN. Mr. Chairman, my time is up. I had one—I do have one more question——
Mr. COBLE. Without objection——
Mr. BERMAN [continuing]. On the second round—not that I want—we have a number of witnesses coming up, so I don't want to take too much time. But, at some point, either here or with the other panelists, I'd like to just get into the whole issue of homology and to what extent that's a legitimate basis for issuing patents. But, we'll do that later.
Mr. COBLE. We might do that for a later day, if that suits you, Howard. The gentlelady from California?
Ms. LOFGREN. Thank you, Mr. Chairman. I'd like to commend you for scheduling this hearing. I think it's an important thing to do and not only for us to discuss what the Commissioner and the witnesses, the whole issue of patenting the genome, which is very much of interest to the American public and to the world; but also to allow the Commissioner to tell us the steps that he has taken to address issues that have arisen prior to today's hearing. And I will guess that this is not the last time that we will be together sorting through these very complicated issues.
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First, I will state that I think there are a lot of comments made in the popular press that are so misunderstanding of what is at stake here. Clearly, the protection of intellectual property has fueled the growth of innovation in the United States and around the world and I don't think there's any of the witnesses or the members of this committee who would feel otherwise. So, the question really is how do you sort the balance between protection and providing incentive for further research and disclosure that allows other scientists to find out what's been found, so they can also advance human knowledge? And that's always a difficult thing to do, especially when something as new as this.
One of the things that has—I don't know what the answer is, but concern has been raised about the utility standard in the—as it's been applied early on, and I think your office has recognized that, because of the changes that you've proposed. One thing that has been brought to my attention, a concern is what happens and what impact will those early patents have on the advance of human kind? Will they—knowledge for human kind. What—where does that leave us, both in terms of those who hold the patents, and also in terms of researchers and those who are now perhaps even taking the research farther? Is that a looming—you said ''defacto submarine patent''—I don't know that you were applying it to this issue, but what do we do about that, if anything—not the Congress, but the Patent Office? How can that be dealt with?
Mr. DICKINSON. Well, several things. We work under a standard in section 282 of the Patent Act, that all patents are presumed valid. So all the patents which are issued issue with a presumption of validity. Having said that, we think it's also important to note, as Mr. Berman suggested, a lot of the patents which have issued to this point on gene sequences or gene fragments were done at a time prior to the very widespread use of sequencing machines. They were done using wet biology and there's a significant amount of disclosure in those patents that issued. We come to a new era now and that's, I think, one key reason why we want to take a look at that standard at this time.
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After patents have issued, there's very little our office can do. We have a procedure called reexamination, which I think you are all familiar with from your debates last year. The standard under reexamination only allows the Director to order reexamines when there is a 102 or 103 concern, based on patents or publications; not under 101, unfortunately. But, this, I think, is also a question. If there is a problem here, and it's not clear yet whether there is or is not, but if there is a problem here, the court's job is to look at all of this and say that some patents may have issued inappropriately. But, I think we're still under the presumption of validity.
Ms. LOFGREN. Let me ask you, and I'm not saying that—I'm not conclusionary, as to whether the patents are over broad, should have been issued, but just in terms of process and volume I'm interested in. Since the onset of computer sequencing and the publication of the new utility guidelines or standards, how many patents are we talking about, do you think, in the genome are?
Mr. DICKINSON. That have issued prior to the standards? Let me check.
Ms. LOFGREN. And since the rigorous onset of——
Mr. DICKINSON. My understanding is we've issued about 10,000 patent applications at this point. Excuse me just 1 second.
[Pause.]
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Mr. DICKINSON. My understanding is that approximately 6,000 patents have issued on gene sequences since we first started issuing them. We haven't tracked the exact number since the first issuance of the revised interim guidelines. We can provide that information to you, if it will be helpful.
Ms. LOFGREN. I'm just trying to—my time is up, but trying to get a sense of if this is going to be—this issue that has perked up is going to address the volume of litigation that might be facing the courts. It wouldn't be every case or every patent, clearly, but I'm just——
Mr. DICKINSON. That's a very interesting question. I think most observers would say that most of the patents that have issued so far have issued with sufficient utility and sufficient information, because they've come out prior to the real heavy use of the sequencing machines that are the subject of a lot of the debate.
Ms. LOFGREN. I'd be interested in what other further data you could get on that specific question after the hearing. Thank you, very much, Commissioner.
Mr. COBLE. I thank the lady. The gentleman from Massachusetts, Mr. Delahunt.
Mr. DELAHUNT. Thank you, Mr. Chairman. And I thought my colleague's question was very pertinent to the concerns that have been expressed by the research community. And I wonder if after a patent has been issued, there have been, in your experience, licensing practices that are so restrictive in nature, that they've caused a certain level of angst, if you will, to yourself and to the research community.
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Mr. DICKINSON. There are isolated instances that have been reported in the press, where the kind of licensing fees associated with it by some have been regarded as a concern. But with the exception of those, I think, rare and isolated cases, it's not normally the case. There's a reason for that. You will have other witnesses who can speak to that question, but I think you'll note one of the witnesses later will talk about the way that the biotechnology industry is now organized. The parts of that industry that are developing these sequences and obtaining the patents, the way in which they'll make their money, the way that they'll get a return on their investment is through the licensing of that information. They will not necessarily be the companies, which take those discoveries on, and build the pharmaceuticals from them. So, they're incented to make sure that the licensing regimes that they're going to offer won't be onerous.
Mr. DELAHUNT. Except I wonder whether those whose patents were issued early on, are in the position now have no idea, to leverage that minimal early investment into something of such magnitude that it really does cause a problem.
Mr. DICKINSON. I would only take exception with this piece. I would not call it a minimal early investment. I think there's an extraordinarily large investment, a substantial investment by the biotech community. Even the sequencing companies, if you see the vast investments they've made in this equipment and the scientists that they need to run it, it's a very substantial one.
Mr. DELAHUNT. Well, thank you for educating me.
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I guess I see your role and the role of the agency as really one to, if you will, monitor the public interest here. Clearly, the biotech world is the private sector and there is a profit incentive. And clearly, as you've indicated, that's important, in terms of the progress that has been made. But, also in your testimony, you did link the advances in health care, to what is happening now, in terms of the research, obviously with the recent announcement of the genome study and that wonderful result.
I guess what I'm saying is that it is of great consequence. I agree with my colleagues in applauding the Chair for calling this hearing, and I'm sure this will be one in a series of hearings to monitor what's happening. And I think it was Mr. Berman who indicated maybe we should do nothing and I think that's my—that's just my inclination at this point in time, because, as I'm sure you can tell from our questions, we're not particularly conversant with this rather esoteric topic. I speak for myself; I don't speak for Mr. Berman, of course.
But, I guess your position, Mr.—Commissioner, would be that, as of this point in time, you don't see any need for any changes in the statutory scheme whatsoever. Is that a fair statement?
Mr. DICKINSON. That's a very fair statement. I think—as I indicated in testimony, I think one of the strengths of our system is that it is facile enough to deal with all new technologies as they emerge. I think that's proven itself through time. That does not mean, by any means, that this committee and others in Congress should not provide appropriate oversight on these issues; they should. Our job is to try to strike the right balance; and I think that what you'll hear from witnesses today is that there are some that criticize us from one side and some that criticizes from the other side, which is something of an indication that we may have struck the right balance.
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Overall I think the most important part to remember is that the kind of benefits that the human genome project and other discoveries in this area will result in will only be made possible through a strong and vigorous patent system. Just this week, the Scientific American magazine has a study on the business of the human genome. There's a quote that says, ''Without such patents, a company like Myriad Genetics in Salt Lake City could not afford the time and money required to craft tests from mutation of genes, BRCA–1 and –2, which have been linked to breast cancer.'' And so they need that kind of protection, in order to justify the kind of investment.
Mr. DELAHUNT. Well, I really welcome your testimony and I think your points are well taken. I was also pleased to hear the Chair prompt from you again the absolutely critical need for that resources, so that the advances that we look forward to can actually happen. And I'm sure you're aware that members of this committee have been advocating vigorously on behalf of funding, so that the American people—and this is really what it's about—can enjoy the rewards of these incredible advances, in science and particularly the health sciences.
Mr. DICKINSON. Thank you, Mr. Delahunt. You're absolutely on point with regard to the resource question. It's critical to the ability of us to do our mission, both for the applicants, but more important, as you suggested, for the American public. And I want to thank you personally and on behalf of the USPTO, and all of the committee, for their vigorous defense of that, because it's critical to our work.
Mr. DELAHUNT. Well, thank you. And I hope that the biotech industry and the research community bring that message to Congress and to the American people, because I agree, it's critical. I yield back.
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Mr. COBLE. I thank the gentleman. Let me extend what the gentleman from Massachusetts said. I don't mean to be critical of anyone, but many people think in promoting a cause, that all they have to do is take a half of page ad in Roll Call and that will take care of it. You're going to have to knock on some doors folks, to help us in this funding scenario.
We have been joined by our colleague from Indiana, Mr. Pease.
Mr. PEASE. Mr. Chairman, I have no statement at this point. I would like, though, to say publicly what I've said privately on a number of occasions, and that is how grateful I am for the professional manner, in which Mr. Dickinson conducts himself and his office. He and his staff have been very helpful to us. And I am grateful for the opportunity to say that publicly and to you and the ranking member for having us here.
Ms. LOFGREN. Would the gentleman yield?
Mr. PEASE. Indeed.
Ms. LOFGREN. I would just like to echo the comments made by my colleague. Commissioner, I think you are really doing quite a wonderful job and your staff has been very responsive and I just wanted to concur on this side with the professionalism with which you've dealt with these issues.
Mr. BERMAN. Would the gentleman yield?
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Mr. PEASE. Certainly
Mr. BERMAN. In addition to totally agreeing with your comments, I wanted just—the point raised by Mr. Delahunt was initially raised by the chairman—just, I don't want my silence to be thought of as somehow not agreeing with the importance of their comments regarding the—how stupid it is over the long term for us not to understand what is going on in the context and what your office has to do and the resources you need. If ever the designation, ironically, it's totally—it's totally anticipated, but if ever the time to apply the application emergency funding to an issue, it is the resources we can now plow in, to allow you to do what you need to do, to staff up, to even amplify what you've done, in terms of professionalizing the office, to have the kinds of people who can make the judgments on these incredibly complicated questions that you're presented with and the benefits to the American economy and to human health and the human condition are so dramatic. It's a very dry and technical issue involving the appropriations process, but it has incredible implications.
And so, I mean, we have to persuade the appropriators on both sides of the aisle, that the ability to pluck funds from these fees for what seem like important causes at the time is so penny-wise and pound foolish, and that we have to stop that practice and provide additional resources.
Mr. PEASE. Thank you, Mr. Chairman. I yield the balance of my time.
Mr. COBLE. Mr. Dickinson, in defense of the gentleman from Indiana, to assure you that he's not buttering you up, he had said those same things to me in private. He's saying in public what he said in private.
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Mr. DICKINSON. Thank you, Mr. Chairman. We enjoy working with all the committee and all the committee staff. We're only saddened that we won't have Mr. Pease on the committee next year, because we have enjoyed working with him and his staff.
Mr. COBLE. I was about to say he will be sorely missed on this subcommittee next year. I think we all agree with that. Now in the era of political correctness, when I said that many people believe in taking a half page ad out in Roll Call, there are two Hill newspapers, so perhaps a half page ad in The Hill, as well, might suffice for some.
Mr. Dickinson, as has been stated today, and ladies and gentlemen, this is the first step of a long journey. I'm sure you will be in contiguous contact with the subcommittee, Mr. Dickinson, and we, again, thank you for your attendance today.
Mr. DICKINSON. Thank you, Mr. Chairman, for having us here. One of the inquiries was to see what an actual gene sequence patent looked like. We didn't want to bring a copy of this one for everybody, so we brought a smaller one, and we can give it to your staff for distribution, if that's all right.
Mr. COBLE. Mr. Berman can read that on his next trip to California.
Mr. DICKINSON. Thank you, Mr. Chairman.
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Mr. COBLE. Thank you, sir. If the next panel will come forward. Now, folks, I want to apologize to each of you for the 5-minute time frame, because this hearing, as Howard just said, could last for 2 days; but, we have a very important appropriations bill on the floor and the bell was going to ring before too long. In the interest of time, we do need to keep it on a fairly short leash today. I'm sure we will see witnesses subsequently from time to time and I appreciate your attendance today.
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The introduction will take some time, but I think it's important that we all know the credentials that these witnesses bring to this table. Our first witness is Dr. Randal Scott, who is currently president and chief scientific officer for Incyte Genomics. Dr. Scott is the co-founder of the company, which is at present, has been awarded the most number of human gene patents on record. He is a native Kansan and holds his undergraduate degree from Emporia State University in Kansas, and his doctorate in chemistry from the University of Kansas.
Our next witness is Dr. Dennis Henner, vice president of research at Genentech prior to his 18 years of science and research at Genentech. He was with the Scripps Clinic and Research Foundation. Dr. Henner holds a doctorate in microbiology from the University of Virginia Medical School and has published more than 60 scientific articles and books.
Our third witness is Andrea Ryan, who is the president elect of the American Intellectual Property Law Association. Ms. Ryan is also vice president and associate general counsel, Intellectual Property, for the Warner-Lambert Company, Morris Plains, New Jersey. Prior to that, she was an attorney in private practice. Ms. Ryan is a cum laude graduate in chemistry from Emmanuel College in Boston, and received her law degree from the Hofstra School of Law in New York.
Our next witness is Dr. James F. Severson, who is currently the president of the Association of University Technology Managers, a national organization of university technology transfer professionals. He is also the president of the Cornell Research Foundation, where he has overall responsibility for the university's technology transfer activities. Dr. Severson received a B.S. in zoology, and a Ph.D. in physiology from the Iowa State University and did post-doctoral research at the University of Southern California. He also served on the faculty at the University of Southern California School of Medicine.
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Our fifth witness is Mr. Carl Dixon, who is the president and executive director of the Kidney Cancer Association. Mr. Dixon is a magna cum laude graduate of the Illinois Wesleyan University. He was the recipient of the Edward R. Murrow Fellowship to the Fletcher School of Law and Diplomacy and holds a law degree from the University of Chicago. Mr. Dixon has practiced law in private practice and has spent the last 20 years in service to various health organizations, including on the board of the American Lung Association.
Our next witness is Dr. John F. Merz, who serves as an assistant professor of bioethics at the University of Pennsylvania. Mr. Merz holds an undergraduate degree in nuclear engineering from the Rensselaer Polytechnic Institute, a J.D. from the Duquesne University School of Law, and a Ph.D. from the Carnegie-Mellon University. He is a prolific author and commentator on the public policy issues in the patent and bioethics field.
Our final witness is a gentleman unknown to none in the community, a Dr. Harold Varmus. Dr. Varmus was the co-recipient of the Nobel Prize for Medicine for his investigatory work pertaining to the genetic basis for cancer. He also served as the Director of the National Institutes of Health from 1993 to 1999. Dr. Varmus has a B.A. from Amherst College, a masters from Harvard, and is a graduate of the Columbia University's College of Physicians and Surgeons. He currently serves as the president and chief executive officer of the Memorial Sloan-Kettering Cancer Center in New York City.
We have written statements from all the witnesses on this panel, and I ask unanimous consent to submit into the record in their entirety. Again, lady and gentlemen, it's good to have you all with us, and Dr. Scott, if you will kick it off. Dr. Scott?
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STATEMENT OF DR. RANDAL W. SCOTT, PRESIDENT AND CHIEF SCIENTIFIC OFFICER, INCYTE GENOMICS
Mr. SCOTT. Thank you, Mr. Chairman. In the essence of time, I will not read my written testimony but just make a few comments. We very much appreciate the opportunity to engage in this public dialogue, and in fact, we're very excited about what I think will be a very long discourse in society about the future of genomics technology, genetics, the impact that's going to have, not only in patents, but in many of the ethical issues that face us.
Truly, this is a unique time and place in history. If we step back and think for a second of the obvious, human genes have been around, well, just about as long as humans have been around, and yet they haven't necessarily been available for the diagnosis and treatment of disease. It's only over the course of the last few decades that we have had the technology to be able to isolate, purify genes and take them out of a form they're found in nature in the human body, into purified, isolated compounds that we can now use in a commercial venue to be able to diagnose and treat disease.
So, this is a phenomenal accomplishment by mankind. In fact, in the last 10,000 years of recorded history, it's only been the last five to 10 years that we've really been able to apply these technologies in a way that allows us to study now thousands of genes at a time, not just one gene at a time. In fact, it drives the hope that over the course of the next ten to 20 years, we will be able to identify the molecular basis for virtually every human disease. We'll be able to identify the appropriate targets for Alzheimer's disease, for AIDS, for various different types of cancers and be able to apply these genes as tools into diagnosing and solving those disease problems.
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At my company, Incyte, when we founded the company back in 1991, we were drive by the principle that the history of science was long and arduous. Identifying a biological function and then painstakingly purifying the one molecule out of a commish of biological molecules was very hard work. In effect, we begin operating on a different principle, that we could begin to take cells and tissues of interesting biological meaning, such as prostate cancer and normal prostate tissue and start to scan thousands of genes and look at the differences between those genes, which genes association with different diseases, for example.
It was really that driving force that led us in 1991 to begin to launch an internal program to essentially discovery every gene in the human genome. It's with great pleasure that we can look back now over the last 10 years and know that we now have most of the genes in hand that will be the future of all medical research, because while biology is complex, it's also absolutely finite.
The ability to take those genes now and put them into commercial viable forms to be able to study, diagnose and treat disease, as well as simply to get those into the hands of scientists to be able to do research is a phenomenal new and growing industry. In fact, I would argue that the genomics industry of today or biology of today is exactly where the computer industry was in the 1970's. In fact, it's being driven by many of the same factors, Moore's Law, Metcalf's Law.
Every year, we sequence DNA at ever cheaper costs and at more rapid rates, just like the computer industry provides us with greater computer power at lower costs. The impact of that is that we are able to not only identify and have all of the genes in the human genome available, we can begin to put every piece of DNA from the human genome onto a DNA chip. It was asked earlier about EST's and how fragments of genes can be patentable. Well, in fact, you don't have to have an entire gene to be able to use a piece of that gene to diagnose the presence or absence of that gene in a patient and how it correlates to disease.
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So, in fact, one of the most phenomenal commercial accomplishments, I think, of this decade will be the first DNA chip that has every gene in the human genome on that chip. We believe that will be a universally accepted commercial product that will allow scientists the world around to diagnose, treat disease, to look at the toxicity associated with many drugs and many compounds. Thus, the real world utility of genes is facts not just buried in their biological function and what they do naturally in the body. The real world utility of genes is based around our ability to use those as tools, as diagnostics, as markers for disease and drug therapy.
Our company has been one of the leaders in licensing practice. We believe that gene patents are incredibly valuable, that they've been a tremendous incentive to this industry, with billions of dollars raised for R&D;, and that R&D; going toward helping suffering people, people with disease who need hopes for a cure.
Those same gene patents are also a great trust. We describe our own intellectual property, which now comprises almost 500 gene patents. In fact, we're still second in the world to the NIH and the government in terms of the number of gene patents issues, but it's also an incredible trust. We established a policy five to 6 years ago that said we would only license genes nonexclusively in the research field and that we would license those broadly to anyone who asked.
We also established a policy that we would license genes in the diagnostics field nonexclusively to anyone who would ask because we can't predict the future of diagnostics. We don't know which formats will work and which formats won't work, so we want to insure the commercial viability of those products. Internally, we like to describe that sometimes as the Dolby stereo school of business. We don't make the stereos, in Dolby's case. In our case, we don't make the drugs. We make the drugs faster, better and cheaper. Same thing for diagnostics.
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By essentially making this technology available broadly, we think we have added tremendous value to industry and a tremendous value to society. We also believe that we're seeing a changing time in the pharmaceutical industry, just as we've seen in the computer industry. In the early days of the computer industry, every company did everything. They made their own chips. They made their own software. They had their own sales and distribution network, but effectively, as Intel and Microsoft and many companies came along, they began to fragment that industry. Pretty soon it was discovered that it was much more effective for one company to make chips and sell them to all manufacturers.
You're beginning to see some of that same influence in the pharmaceutical industry, where in the past every company, every researcher, went all the way from A to Z, making the discovery, screening and developing the compound, developing that drug. Companies like ourselves no longer focus on the end product of manufacturing a drug and taking that to the clinic and to the market, but rather on the early discovery phase and providing that as a service to the entire industry. That's been the basis of our company.
We now have 18 out of the top 20 pharmaceutical companies in the world are already subscribers to our database. They have licenses to all the genes and all the genes' patents that we've identified. They have those nonexclusively, so they share with each other the capability to do research and to develop diagnostic and therapeutics off of that information. With that, I'll close out my opening comments, and we're very much appreciative of the opportunity to join you here today.
[The prepared statement of Dr. Scott follows:]
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PREPARED STATEMENT OF DR. RANDAL W. SCOTT, PRESIDENT AND CHIEF SCIENTIFIC OFFICER, INCYTE GENOMICS
EXECUTIVE SUMMARY
Incyte Genomics is a genomic information company. Our mission is to revolutionize health by providing genomic information to researchers and consumers through a worldwide network of collaborators. Our goal is to help provide scientists with an understanding of the molecular basis for all major human diseases within 10 years.
By discovering and characterizing the functions of all of the genes in the human genome, genomics companies like Incyte contribute to improved efficiency in the health care industry, to the ultimate benefit of the public. Genomics technologies have already begun to accelerate the development of new drugs and diagnostic tests. They hold the promise of dramatically reducing drug development costs and improving drug safety, both of which will save lives and reduce health care costs.
Genomics is the most innovative new approach to curing disease in the history of medical research. Genes cannot be patented as they exist in nature. Consequently, the science required to identify and characterize genes is substantial and represents significant invention. Genomic inventions and gene patents are critical to the continued success of the genomics industry, providing incentives for private enterprise to make the necessary investments and, in contrast to trade secret laws, encouraging broad access to and use of gene-based inventions. Given the impact of genomic inventions on health care, the award of patents on these inventions is entirely consistent with the Constitution's goal of granting patents to enable ''progress in science and the useful arts.''
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The patent system is designed to create incentives for invention, and nowhere is its role more apparent than in the case of genomic inventions. Existing patent guidelines, which have spurred the tremendous advances we've recently seen in medical research, must remain intact to ensure continued discovery. These revelations already have made a profound impact on the acceleration of drug development and the availability of new molecular diagnostic tests. The real world utility of these discoveries entitles them to patent protection. In keeping with its mission, Incyte licenses its gene patents broadly for research and diagnostic uses, facilitating the acceleration of the development and delivery of health care products and services.
It is not the role of the patent system to create health care policy, just as it is not the patent law's role to create any other industrial policy. As a consequence, patent laws should apply neutrally across categories of inventions, including genomic inventions.
I. OVERVIEW OF INCYTE AND ITS BUSINESS
Incyte is the leading genomic information company in the world. Its business is focused on the discovery and characterization of genes, with an emphasis on those genes that affect response to disease and drugs.
Incyte shares its discoveries on a non-exclusive basis for research purposes with a worldwide network of pharmaceutical, biotechnology and academic collaborators. This nonexclusive business model, based on Incyte's ability to put its discoveries in the hands of as many researchers who can profitably use them, has enabled Incyte to become the leading genomics information company, in terms of numbers of employees, customers, revenues and data collections.
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Founded in 1991 with 10 employees, Incyte now employs approximately 1300 employees. Incyte is based in Palo Alto. Approximately 1000 of its employees work in the San Francisco Bay Area; another 200 work in Incyte's St. Louis, Missouri facility, and another 100 are in Cambridge, England.
In the year 2000, Incyte expects to spend approximately $180 million dollars on research and development. Of its approximately 1300 employees, more than 10% hold Ph.D.'s. These statistics demonstrate the capital, both monetary and intellectual, that Incyte is investing in its discovery of genes and the role they play in disease and drug response.
Incyte was the first company to license its information, via database subscriptions, on a nonexclusive basis to pharmaceutical researchers. Incyte pharmaceutical subscribers now number more than 20, and account for approximately 75 percent of worldwide pharmaceutical research and development expenditures, as illustrated by the following slide.
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More recently, Incyte has begun to provide its databases to leading biotechnology and academic researchers. This year, Incyte began to make its information products available on-line, and plans to make all of its information products available through this medium by the end of this year. Incyte also has a vast network of distributors who distribute its products in Europe and Asia. All of these distribution channels are dedicated to the broad dissemination of Incyte's genomic discoveries and their use to alleviate disease.
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Based on revenue generation, Incyte has for several years been named as one of the fastest growing companies in Silicon Valley, a region noted for spectacular growth. Based on its 1999 revenues of about $157 million, Incyte had more revenue than any other genomic information company, confirming our position as the number one genomic information company.
Incyte's nonexclusive business model enables it to derive its revenues by providing useful discoveries to researchers more efficiently than would be possible were they to generate the discoveries themselves. In this way, Incyte has developed a business that leads the world in its sector, while at the same time accelerating the genomics revolution that promises unheard-of benefits for health care.
II. THE GENOMICS REVOLUTION
Human genes have obviously existed at least as long as humans. In over 10,000 years of modern civilization, however, humans have never been able to use genes to diagnose, cure or predict disease until now.
In the last several years, companies like Incyte Genomics have isolated, purified, sequenced and discovered a commercial utility for genes and put them into commercially useful formats for development of drugs and diagnostic tests. It is this transformation of a gene as it occurs in nature into a purified, isolated commercially viable product that entitles companies like Incyte to patents on these discoveries.
By providing its customers with a systematic understanding of the structure and function of ALL of the genes in the genome, Incyte is helping researchers to focus their efforts on genes known to be in classes that are important to disease or drug response. This enables researchers to avoid much of the trial and error that previously characterized pharmaceutical research. This increased efficiency should result in less expensive drugs and diagnostic products. This systematic understanding of the structure and function of genes will also enable the development of safer drugs. Because the interaction of drugs and genes will be better known, undesirable side effects that sometimes accompany drug treatment will be reduced and make patients less subject to unanticipated results that have long plagued drug use treatments.
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By providing its information products nonexclusively to those who are in the best position to utilize the information, Incyte is making a substantial contribution to the increased efficiency of drug and diagnostic development. Under this model, Incyte is able to focus its efforts on its core competency. As a result, its customers avoid the inefficiency and duplication of effort that would be required if they were to engage in target identification and validation on their own.
In this way, the evolution in the pharmaceutical industry parallels the demise of the old vertical computer industry. Until the early 1980's, the computer industry was characterized by a high degree of vertical integration, as illustrated by the following chart:
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Under this model, computer companies developed their own microprocessors, operating systems, computer designs and in many cases, their own applications programs. They sold their integrated products through their own dedicated sales forces. Because of the duplication of effort and high overhead associated with this model, computers were generally very expensive, and only researchers in government, academic institutions and large corporations could afford to use them.
Beginning in the early 1980's, a new, horizontal computer industry began to emerge, as illustrated by the following chart:
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The benefits of this evolution are well-known. By focusing their research and development efforts, and by achieving the economies of scale associated with the sale of their products through multiple channels, companies focused their efforts on individual parts of the value chain, many of which are only components of the products ultimately sold to end users. The result has been that the new computer industry has put computing power in the hands of millions of people throughout the world thanks to lower production costs which resulted in the creation of better, cheaper computers.
Similarly, the health care industry has historically been characterized by a high degree of vertical integration, as illustrated below:
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Like the old vertical computer industry, this vertically-integrated model is characterized by a high degree of inefficiency and duplication of effort. For example, individual pharmaceutical companies engaging in target discovery and validation largely duplicate the effort of their competitors.
In contrast, the emergence of genomics companies like Incyte Genomics, coupled with other related trends in health care, promise the creation of a new pharmaceutical industry, which might eventually look like the following:
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This new, horizontal pharmaceutical industry will be much more efficient, which should result in lower costs. By making use of standard, off-the-shelf genomics products, health care researchers will increasingly be able to avoid costly, time-consuming duplication of effort, which will speed drug development. The ultimate result will be to make new drugs available to health care consumers, at lower prices and with greater assurance of safety, than would otherwise have been possible.
The systematic understanding of the molecular basis for disease and drug response will also enable dramatic increases in the pipeline for new products. At the current rate, it is conceivable that by the year 2010, the genomics revolution will have enabled the understanding of the molecular basis for most major human diseases.
The potential, in terms of lives saved and health care cost reductions, are enormous. Recent developments provide evidence that the benefits of this revolution are already beginning to manifest themselves. Examples include the following:
In 1999, CV Therapeutics, an Incyte collaborator, was able to use Incyte gene expression technology, information about the structure of a known transporter gene, and chromosomal mapping location, to identify the key gene associated with Tangiers disease. This discovery took place over a matter of only a few weeks, due to the power of these new genomics technologies. The discovery received an award from the American Heart Association as one of the top 10 discoveries associated with heart disease research in 1999.
In an April 9, 2000, article published by the Bloomberg news service, an Incyte customer stated that it had reduced the time associated with target discovery and validation from 36 months to 18 months, through use of Incyte's genomic information database. Other Incyte customers have privately reported similar experiences. The implications of this significant saving of time and expense for the number of drugs that may be developed and their cost are obvious.
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In a February 10, 2000, article in the Wall Street Journal, one Incyte customer stated that over 50 percent of the drug targets in its current pipeline were derived from the Incyte database. Other Incyte customers have privately reported similar experiences. By doubling the number of targets available to pharmaceutical researchers, Incyte genomic information has demonstrably accelerated the development of new drugs.
In a May 26, 2000, article in the Wall Street Journal, one Incyte customer stated that by using Incyte's database, it quickly discovered a new histamine receptor gene which had long eluded researchers, and which is being used to develop an effective drug that is specific for brain tissue. In fact, after isolation of the gene and using high-throughput screening, a candidate drug was identified in less than a month. Again, by making new drug targets available to the pharmaceutical industry, Incyte helped the company go from picking a target receptor to developing a potential drug in just 18 months, a process that typically takes five years or more, clearly accelerating the drug discovery process by three-fold or more.
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As these examples demonstrate, the inventions of Incyte Genomics and others are already having a dramatic impact on the acceleration of drug and diagnostic test development. They give confidence that the 21st century will truly be the Genomic Age.
The genomic revolution is in its infancy. With the availability of a first draft of the human genome, discoveries in the field promise to accelerate. Incyte believes that the following discovery time line, while aggressive, is achievable:
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If this schedule is achieved, the implications for health care are enormous. The investments that pharmaceutical and biotechnology companies make in discovering drug targets will no longer be necessary, saving them and consumers untold billions of dollars. Using rapid, accurate technologies, it will be possible to test drugs for toxicity and effectiveness against known classes of genes, thereby eliminating many costly drug failures late in the drug development cycle. By understanding the role of genetic diversity in disease and drug response, safer, more effective drugs will be developed and health care providers will be in a position to tailor therapies to the genetic profiles of individual patients, resulting in personalized medicine.
The obvious result of this revolution will be safer and cheaper drugs that will be administered more efficiently and effectively. Perhaps even more importantly, diagnostic tests and new therapies will be developed for diseases that are currently untreatable.
III. THE IMPORTANCE OF GENE PATENTS IN THE DEVELOPMENT OF GENOMICS TECHNOLOGIES
Gene patents play a critical role in providing the incentives and legal infrastructure to support the role of genomics in accelerating drug development, thereby promising to deliver more drugs that are safer and cheaper.
The availability of patents to support the massive investment in genomic research is essential to capital formation. Investors in genomics companies require assurance that these companies will be able to profit from their research and development investments.
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The recent announcement by President Clinton and Prime Minister Blair on the issue of the public availability of genomic information from the Human Genome Project vividly illustrates this point. This announcement was erroneously interpreted by the investment community as signaling a governmental decision to eliminate gene patents. Within hours of this announcement, Incyte and other genomics and biotechnology companies lost billions of dollars in their market capitalization.
The swift reaction of the investment community demonstrates the importance that investors place on patents as a vehicle for profiting from private sector research and development. In the absence of patents, it will become much more difficult for companies like Incyte to obtain access to capital. This in turn will inevitably slow the development of genomic information and technologies, which will have a seriously negative impact on the promised acceleration in health care research.
Patents also encourage the broad dissemination of genomic information in two ways. First, to obtain a patent, a patent applicant is legally required to disclose enough information about his/her invention and its use to enable someone with reasonable skill in the art to use the invention. This disclosure requirement enables other researchers to learn the teaching of the patent, and to conduct their own research that will enable further innovation and invention.
Patents also provide a system of legal rules that encourage the patent owner to distribute his/her invention broadly. In the absence of patent protection, the only legal protection for genomic information is through trade secret protection. To be eligible for trade secret protection, the owner of information must demonstrate that it has taken reasonable steps to protect the secrecy of his/her information. This means that access to and use of the information must be restricted, and confidentiality agreements are required with those who have access to the information. These requirements are obviously antithetical to the broad dissemination and use of genomic information that are critical to the business models of companies like Incyte, and that are essential to the promised Genomic Revolution.
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By way of example, during the year 2000, Incyte plans to make all of its information products and clones available to customers over the internet. This broadening of the market for Incyte products will further accelerate the impact of Incyte's genomic information on health care research. In the absence of patent protection for genes, on-line distribution of proprietary information becomes much more problematic, as this method of distribution is arguably inconsistent with the preservation of trade secret protection.
For these reasons, the availability of gene patents provides crucial support for the acceleration of health care research.
IV. GENE PATENTS ARE CONSISTENT WITH THE GOALS OF THE PATENT SYSTEM, AND ARE HELPING TO ACCELERATE RESEARCH
Under Article III of the United States Constitution, Congress is authorized to establish a patent system to provide incentives to inventors, with the goal of promoting ''progress in science and the useful arts.'' Given this goal, genetic inventions, which enable further innovation in health care research, are particularly deserving of patent protection.
Gene patents are enabling a revolution in health care. Given the role of gene patents in creating incentives for genomic research, gene patents can be credited with dramatically increasing the efficiency of health care research, with the attendant promise of delivering new drugs that are safer and cheaper than otherwise would have been possible.
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Critics of gene patents claim that they will retard innovation. Those who make this argument have no concrete evidence to support this hypothesis. Indeed, the evidence to date indicates that genomic research, supported by the patent legal system, has accelerated innovation in health care research. Instead of identifying drug targets on an individual basis, health care researchers, armed with a systematic understanding of the structure and function of genes, are able to bypass previously-expensive and time consuming steps in the drug development process.
''Research tools'' like gene patents are particularly deserving of patent protection. Critics of gene patents often argue that they are merely research tools, and as such should not be eligible for patent protection, to avoid the risk of making research more expensive. Upon examination, this argument falls apart.
First, as mentioned above, under the Constitutional standard, inventions that enable further scientific progress are particularly deserving of protection. As one might expect, then, nothing in the history of the patent law or in court decisions interpreting it supports the distinction between unpatentable ''research tools'' and other patentable inventions.
Second, virtually any invention that improves productivity or efficiency, from a computer to PCR to the technology that was the subject of the famous Cohen-Boyer patent, are ''research tools.'' Consequently, if one were to accept the premise that ''research tools'' are somehow inappropriate subject matter for a patent, then a number of these fundamental inventions which have enabled tremendous growth in knowledge, and which in some cases are responsible for the development of entire markets, would not have been eligible for patent protection.
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Gene patents do not represent real invention. The amount of science required to identify and characterize genes is substantial. To date Incyte alone has spent upwards of $200 million to identify and characterize expressed genes. The fact that companies like Incyte have applied industrial principles to create high-throughput ''factories'' that make these inventions does not render the inventions somehow less significant or useful.
Some argue that the invention is not complete until the precise biological activity of an individual gene is identified; indeed, there is some indication that the Patent Office intends to apply the new guidelines in this way. This argument ignores the real world utility, described above, associated with the isolation, sequencing and identification of genes and their classification into categories whose general functions are known. If this standard were to apply, then only those companies that adhered to the inefficient, vertically-integrated pharmaceutical industry model would be entitled to patents. This approach would be at odds with the evolution of the pharmaceutical industry, with its attendant efficiencies.
Patent licensing issues that may or may not arise from the grant of gene patents should be addressed as licensing issues, not by misguided attempts to codify health care policy into the patent law by changing patentability standards that apply to only one category of invention. Some have argued that the grant of patents on full-length or partial genes will create licensing complications that threaten research. See, e.g., M.A. Heller and R.S. Eisenberg, Science 280:698–701 (1998). Unfortunately, these arguments apply equally to any fundamental invention that leads to further invention.
For example, the invention of both the transistor and the integrated circuit enabled the microprocessor industry, which has seen innovations by and patents issued to countless inventors. While many of these inventions overlap, the industry has been able to work out cross-licensing arrangements that have enabled the delivery of unprecedented computing power to the general public. If one applied the reasoning of commentators like Professor Eisenberg, then patents on the transistor and integrated circuit should never have been granted. The difficulty with this reasoning, then, is that those inventions that are most fundamental, and are presumably most worthy of patent protection, would be denied protection on the basis that they are most likely to block further innovation by others.
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United States patent law has generally left licensing practices unregulated, on the basis that markets will in most cases determine the most efficient incentives for the exploitation of patentable inventions. Incyte's business model demonstrates that market forces are accelerating the use of genomic inventions to the benefit of health.
As mentioned above, Incyte's nonexclusive business model has resulted in the use of its discoveries by a worldwide network of pharmaceutical, biotechnology and academic researchers. The effect of this model has been to accelerate the adoption and use of genomic inventions in health care research.
In addition, all of Incyte's agreements with its database collaborators include a provision in which they grant back to Incyte and its other collaborators non-exclusive freedom to operate under gene patents discovered by database collaborators through their use of Incyte databases. This arrangement, which Incyte refers to as the ''IP Trust,'' creates an efficient method for companies to share intellectual property that they derive from a common source; it is in many ways akin to the ''open source'' licensing terms that the Linux software community and other segments of the software industry have adopted.
It is important to keep in mind that the availability of gene patents has enabled Incyte to negotiate these nonexclusive patent sharing arrangements with its customers, which in turn help to accelerate the sharing of genomic discoveries while minimizing intellectual property disputes and their attendant effects on health care research.
V. THE PATENT LAW SHOULD APPLY TO GENES AND OTHER GENOMIC INVENTIONS IN THE SAME WAY IT HAS BEEN APPLIED TO OTHER CATEGORIES OF INVENTIONS
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Over the past 200 years, the patent laws have been applied, with minimal modification, to a range of new technologies that have accompanied major changes in the economy, including the industrial revolution and the emergence of information technologies as key drivers of economic growth. It is clear that the perceived stability of the patent system, and the incentives it provides, have been key elements of the United States' economic success.
Each time an enabling new technology has emerged, some have argued that the law should be modified to address issues that are perceived to be unique to that technology. In general, the United States has resisted the temptation to modify the patent laws in ways that are industry- or technology-specific. As a consequence, the courts have repeatedly demonstrated their ability to apply longstanding principles to new technologies in a fair and consistent manner. At the same time, emerging segments of the economy have demonstrated their ability to develop licensing practices that maximize the overall benefit derived from their inventions and discoveries.
The patent system is playing a key role in the genomics revolution. The benefits that genomics companies have delivered to date pale in comparison to those that we believe to be imminent. Given this promise, and the demonstrated ability of the patent laws and market forces to adapt to new categories of inventions, policy-makers, whether in Congress or the Patent Office, should be extremely circumspect in applying different legal standards to gene patents in a misguided attempt to address problems that are at this point only theoretical, and are in fact highly unlikely to occur.
Given the importance of the patent system to the genomics industry, Incyte believes that the role of the Patent Office in examining and issuing gene patents is critical. To serve this function, it is crucial that the Patent Office have the necessary resources. For this reason, Incyte is concerned about recent attempts to reduce the Patent Office's budget, which we believe will be harmful to its performance of its constitutionally-mandated role.
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For similar reasons, Incyte has generally supported the recent attempts by the Patent Office, to clarify existing law in the Interim Utility and Written Description Guidelines, in particular as they apply to Expressed Sequence Tags (ESTs). We favor this clarification of the proper application of current law to a new category of genomic inventions.
Incyte has concerns, however, about unattributed quotes that purport to announce a Patent Office ''decision'' to limit the issuance of gene patents. Some of these quotes suggest that the Patent Office will issue patents on genes only if the specific biological activity of the genes is disclosed in the patent application. These quotes, if true, may reflect one interpretation of a few isolated statements, primarily in the training materials that the Patent Office has distributed to its examiners to assist in their application of the new guidelines, and presumably do not accurately reflect actual Patent Office policy.
These statements indicate that in some cases, where the asserted utility in a gene patent application would apply to a category of genes, the utility is not ''specific'' enough to entitle the applicant to a patent. This is simply not the law; if it were, the inventor of a new and useful fishing pole would not be entitled to a patent because the utility (catching fish) applies to an entire category of inventions (nets, clubs, dynamite, etc.), as well as to the catching of all unspecified fish.
Other portions of the training materials appear to reflect a hostility to patents in which the claimed utility contemplates use as a ''research tool.'' Nothing in the patent law or the cases interpreting it, however, indicate that research tools are inherently unpatentable. In fact, the real world uses of Incyte's genomic inventions are more than adequate to meet the applicable legal standards.
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Incyte firmly believes that these quotes and statements, if anything, merely reflect the inherent difficulties faced by the Patent Office in its ongoing process of fine-tuning appropriate legal guidelines to accurately apply to a rapidly advancing and complex area of technology. We trust that the Patent Office will continue its long tradition of maintaining the highest level of service to both the public and to its customers, and that the final guidelines and training materials will fully reflect the correct legal standards regarding utility and written description. In particular, Incyte commends the Patent Office for soliciting and giving due consideration to input from the public in perfecting the final documents.
To the extent that concerns emerge about the effects of gene patents on health care, Incyte believes that they should be addressed through those legal regimes that are intended to apply specifically to the behavior in question. For example, the antitrust laws are available to address the use of patents in ways that are anti-competitive or abusive. Similarly, while Incyte firmly believes that the genomic revolution, with the support of the patent system, will reduce health care costs over time, if specific cost-related issues arise, they can be addressed through health care funding mechanisms.
VI. CONCLUSION
Private sector genomics companies are making substantial contributions to a revolution in the ability to detect, prevent and treat disease. Patents provide critical incentives to the private investment necessary to enable this revolution. They also encourage the dissemination and use of discoveries. Patent owners like Incyte Genomics have a responsibility to utilize their patents in a way that benefits both their investors and health care for the public. Incyte's nonexclusive licensing model, and the IP trust that it is developing based on that model, are accelerating the adoption and use of genomic discoveries. Incyte believes that the application of existing patent law principles to genomic inventions will support the continued acceleration of genomic research, resulting in an increase in the pipeline of new drugs that are safer and less expensive than has previously been possible.
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Mr. COBLE. Thank you, Dr. Scott. In the sense of fairness, now, Dr. Scott consumed 7 minutes, so I'm going to give you all 7 minutes as well. If you need to go two extra minutes, we will be generous.
Dr. Henner, I think I am correct when I say that Genentech operates a facility in my Congressional district in North Carolina.
Mr. HENNER. We have a sales force there, yes.
Mr. COBLE. Good to have you with us, Doctor.
STATEMENT OF DENNIS J. HENNER, PH.D., SENIOR VICE PRESIDENT, RESEARCH, GENENTECH, INC.
Mr. HENNER. Thank you. I'm pleased to be here before the committee today. I've been at Genentech since 1981, and at Genentech, we have a real passion for melding scientific advances to develop human therapeutics, and that's why I joined Genentech. We're very proud of our record of developing new therapeutics for the treatment of diseases such as cystic fibrosis, breast cancer, and heart attacks.
I'm going to confine my remarks today to three topic, in the interest of time. The first is what does Genentech do in the field of genomics research. The second is the important role that patents play in the development of this industry, and finally, the current state of the law and the role of the PTO in this area.
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Since I'm one of the first witnesses, let me just briefly talk about genes. Genes are the software that describe the instructions set for your body. Genomics is simply the study of all of the genes of the body. The genes encode proteins, which are the molecular building blocks of your body. They're the building blocks, they're the machinery inside the cell, and they're the messengers that move from cell to cell and tell the body what's going on in other parts of the body.
At Genentech, we specialize in making these proteins into human pharmaceuticals. Our particular focus has been on developing a rapid process for identifying such proteins, these molecular building blocks. They can serve as the basis for new therapeutical products. The raw material for these efforts are the databases of DNA sequences, such as the public information generated by the human genome project.
Once we identify these genes of interest, our teams of scientists then isolate, manipulate, and study them to determine if they have properties that might be useful for therapeutic purposes. We focus our studies on unmet medical needs such as cancer and heart disease.
In our company, we use computers. We use x-ray crystallography. We use nuclear magnetic resonance imaging machines. We use DNA sequencing machines, and all the latest tools of medical research in our work. The real heart of the effort is the 450 talented scientists who apply their collective expertise and intelligence to this task. They are what give Genentech a valuable edge in identifying potential new medicines for these serious unmet medical diseases.
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Let me talk briefly about the role of patents. At Genentech, we spend more than $350 million every year on research and development, more than 25 percent of our income. As you know, the corporate average for R&D; is less than 1 percent. Without the possibility of patents, our researchers would not have the resources to invent new medicines for treatments of these unmet medical needs.
In biotechnology, patents allow advances in science to be translated into technologies that can then provide these medicines. Without patents, the information on the human genome, in my opinion, will lie fallow and not be readily translated into new medicines. Patents are vital for companies like Genentech. They provide us the opportunity to recoup the significant investments we must make to discover and develop our medicines, and ultimately bring them to the market for the benefit of seriously ill people.
I want to make one further point on this. It's important to note that patent protection does not necessarily mean a lack of therapeutic competition. Many of our products, including Activase, used for treating heart attacks, have competitors in their therapeutic class.
The state of the law governing patentability of inventions. We support the Patent and Trademark Office in their recently drafted guidelines concerning the patentability of gene inventions. We feel the PTO has done an impressive job of walking this tightrope that's going to strike the correct balance between protecting R&D; investment and fostering new research.
The issues raised, as you've already noted in this current debate over patentability, are complicated. Two standards are currently the subject of extensive industry and PTO attention. The first is the requirement in our patent law that each invention have specifically identified usefulness or utility. The second requirement is that the applicant describe the invention in a way that proves he has possession of what is claimed, and which enables the practice of the full scope of these claims.
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We strongly believe the question of whether patents should be made available for gene inventions does not need to be revisited. The Supreme Court spoke to this issue very clearly and strongly in 1980 in the Chakrabarty decision. However, this strong pronouncement on the patent eligibility of all types of biotechnology inventions does not mean that every development that can be put into a patent application should receive patent protection. Rather, the criteria for patentability are designated to insure that patents are granted only for those inventions that meet some defined measure of inventiveness.
An important requirement for genome related inventions is that the applicant describe a substantial, specific, and credible utility, and these are in the latest guidelines, for the gene that they are claiming. We feel that these criteria strike the proper balance that needs to be achieved before someone can win a patent.
Regarding the issue of specific utility for genomics related inventions, we believe that in most cases, the utility of a particular gene or protein cannot be known unless one has determined its function. In other words, it's not enough to simply know a particular DNA sequence.
For appropriate patent protection to be granted, one must know the specific biological function of the gene or protein in order to insure the appropriate investment and follow-through will be made. If this line is inappropriately set, we think ultimately patients will suffer as numerous potential therapies may not be translated to actual products.
At Genentech, we believe that just using computer modeling is not sufficiently accurate to predict protein function based solely on gene comparisons. This is really just the starting point for our scientists to go into the lab, to make the proteins, and study what these proteins really do in the body. We would certainly not make significant investments in research or development simply on the basis of computer predictions alone.
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We found the current public debate about gene patenting to be fraught with a number of overgeneralizations and misunderstandings, but we tend to discount some mounting fears of a land rush of patent claims issuing from the early results of genomic research. Many may file applications, but we believe that of the PTO is doing its job in following these recently issued guidelines, that many fewer patents will actually be issued or that the claims will be narrowed.
We remain confident that the patent system will be able to properly adapt and respond to the unique issues that arise out of the genomics research field. The initial place for this evolution to occur is in the patent and trademark office and the Federal courts. The results coming out of these two places should provide the clarity that we, both in academic and industrial research, need on the question of what is or is not patentable. We do not see a need for and do not support legislative action that would alter these standards of eligibility, enablement and written description in the name of this one field of genomics research.
Thank you for the opportunity to share these views.
[The prepared statement of Dr, Henner follows:]
PREPARED STATEMENT OF DENNIS J. HENNER, PH.D., SENIOR VICE PRESIDENT, RESEARCH, GENENTECH, INC.
Good morning. My name is Dennis J. Henner. I am the Senior Vice President for Research at Genentech, Inc. I have been with Genentech since 1981, when I started as a research scientist in the Molecular Biology department. I currently serve as a member of three of Genentech's steering and management committees, namely the Executive Committee, the Genentech Product Development Committee, which oversees products in clinical development, and the Research Review Committee, which sets strategies for all of Genentech's research programs.
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Genentech, Inc. is a leading biotechnology company that uses human genetic information to develop, manufacture and market pharmaceuticals that address significant unmet medical needs. Genentech commits itself to the highest standards of integrity in contributing to the best interests of patients, the medical profession and its employees, and to seeking significant returns to its stockholders based on the continued pursuit of excellent science. The company has headquarters in South San Francisco and is traded on the New York Stock Exchange under the symbol DNA.
The focus of this hearing is the issue of patent protection for inventions arising out of genomics research. I would like to focus my remarks on three topics.
First, what Genentech is doing in the field of genomics research.
Second, the role patents play in commercial development of inventions in biotechnology sector.
Finally, Genentech's perspectives on the state of the law governing patentability of gene-related inventions and the role that the Patent and Trademark Office (PTO) should play in applying the law.
The Genentech Investment in Genomics Research
Genentech has invested heavily in genomics research. Our focus has been on developing a rapid process for identifying human proteins that can serve as a basis for new therapeutic products. The fodder for these efforts are the databases of DNA sequences, such as the public information generated by the Human Genome Project, and private databases to which one may subscribe. Computer scientists work hand in hand with biologists to develop algorithms to find novel genes that appear to be of therapeutic interest. Those genes are then isolated, and manipulated to express their encoded proteins. We study those proteins in a variety of assays to determine if they have properties that might be useful for therapeutic purposes, focusing on such disorders as cancer and congestive heart failure.
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A central part of the Genentech genomics research program is our Secreted Protein Discovery Initiative (SPDI). This program is focused on identifying, cloning and expressing secreted proteins. Our goal in this strategy is based on a recognition that while only three percent of all proteins are secreted by cells, these are the most likely to have potential therapeutic effects. In fact, of the more than $10 billion in annual sales of biopharmaceuticals, $9.6 billion result from sales of secreted proteins.
Genentech announced its SPDI program in March of 1998, and has been operating it from slightly before that date. SPDI represents an innovative new approach to biotechnology research. It has already generated several potential product leads, including some related to Genentech's studies in the area of angiogenesis (the formation and maintenance of new blood vessels), and it has the potential to lead to many more as Genentech moves into the next century. Combined with Genentech's other discovery research techniques and the company's strategic alliances, SPDI is one means by which Genentech intends to keep important, new therapeutic products flowing into its pipeline.
SPDI meshes computer technology and the latest techniques of molecular biology to identify possible pharmaceutical candidates within Genentech's defined areas of therapeutic focus (cardiovascular medicine and oncology), while remaining opportunistic in other areas. Computers search large databases of information about proteins, and biological assays are used to evaluate thousands of proteins of potential interest in the laboratory.
For example, Genentech currently is studying several proteins that may have beneficial therapeutic effects on angiogenesis, which is the growth of new blood vessels. Genentech is now conducting research on a human protein known as vascular endothelial growth factor (VEGF), which promotes the growth of new blood vessels, as a potential treatment of coronary artery disease. Also, the company is conducting clinical trials of several forms of an antibody to VEGF, which blocks VEGF from binding to its receptor, potentially inhibiting the growth of new blood vessels. Because tumors need to form new blood vessels to grow, Genentech is investigating one of these anti-VEGF antibodies as a potential cancer treatment. We are investigating the other anti-VEGF antibody as a potential treatment for age-related macular degeneration. Though Genentech scientists initially identified VEGF without the benefit of SPDI, using the tools of SPDI the company has been able to identify other related vascular growth factors. Like VEGF, these may have significant therapeutic potential.
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SPDI builds upon Genentech's existing expertise in cloning and expressing genes that encode proteins, only it adds the power of modern, very high-throughput techniques to do so, and subsequently to sequence and screen these proteins for possible therapeutic potential. This system is really a proprietary suite of many modern biomedical tools including, as an important component, genomics research. Applied collectively, the tools of SPDI give Genentech a valuable technological edge in identifying potential new pharmaceuticals.
Overall, about 25% of our research efforts are directly related to genomics efforts. However it's fair to say that almost no part of biological research, either commercial or academic, has not been dramatically influenced by the rapid progress in this field. In only a 4–5 year time frame, these advances will have influence the discovery or development of almost every new pharmaceutical product brought to the market.
The Role of Patents in the Biotechnology Industry
Since the inception of the biotechnology industry, Genentech has used patents to make commercial development of biotechnology products feasible. Patents are crucially important to biotechnology companies like Genentech because they provide us with the means for recouping the significant investments we must make to discover and develop our products and to then bring them to market. Genentech alone invests more than $400 million each year in the research and development of new therapeutic products. The availability of patent protection and the market exclusivity it may confer are very important considerations in Genentech's decision to make those investments. Further, patent protection does not mean a lack of therapeutic competition. Many of our products, including tPA, have competitors in their therapeutic class.
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We have found patent protection particularly crucial for two categories of products. Most important is protection that covers the product that is actually sold in the market. This means protection that covers a particular protein, such as t-PA, or in a formulation that allows that protein to be administered as a therapeutic agent. The second type of product patent protection concerns the materials that are used to produce the products we sell. This includes protection for nucleic acids that encode the protein, and the various types of cell lines that can be used to produce the protein. For all of these types of products, a strong posture on enforcing our patent rights has proven to be necessary to prevent our competitors from exploiting our most important technology.
Genentech also obtains patents on methods of producing the proteins that constitute our products, and methods of using those proteins to treat particular illnesses. In the latter case, we have found that it is often the case that a new indication for a known product will occur late in the life of the patent on the initial product, or sometimes after the initial patent has expired. The method protection will be the only form of patent protection that can be obtained, and becomes fairly important.
Patents with only method claims are less desirable than patents covering products. For patents on production processes, it is frequently the case that slightly different processes not covered by the patent can be developed, thereby allowing our competitors to circumvent the patents that we may hold. In addition, there may be practical limitations on enforcing patents on methods, for example due to the difficulty of knowing whether a particular patented method is being used by a competitor without the patent owner's knowledge.
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I note that patents on research tools used to discover genes are not especially valuable in our view, and we do not make a priority out of pursuing patent protection for most of the research tools that Genentech scientists invent. We do not believe that enforcing patents on research tools represents sound policy, as it tends to discourage the open research environment that we believe is so important to scientific advancement and the biotechnology industry.
The State of the Law Governing Patentability of Inventions Arising Out of Genome Research
Since its inception, the biotechnology industry has made an indelible impact on our patent system and on the evolution of our patent laws. Our industry has raised many significant new questions of how established patent precedent should be applied to situations that are unique from both a scientific and patent law perspective.
The first of these significant new questions was whether a man-made living organism was an ''article of manufacture'' that was eligible to be patented under section 101 of title 35, United States Code. The Supreme Court, in the seminal case of Diamond v. Chakrabarty, 447 U.S. 303, 100 S.Ct. 2204 (1980), answered the question ''yes.'' The Court cited the legislative history to the 1952 Patent Act(see footnote 1) to support their conclusion that ''anything under the sun that is made by man'' may be patented if the invention is new, useful and non-obvious (i.e., the three criteria for measuring the patentability of inventions).
The Chakrabarty decision helped fuel the early development of the biotechnology industry because it signaled that the full scope of products being developed in this industry could receive patent protection. The prospect of gaining an exclusive market position was crucial in enabling companies like Genentech to attract the investments needed to develop and to commercialize biotechnological inventions.
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A second example was the intersection of the biotech industry with the case of In re Durden, 763 F.2d 1406 (Fed. Cir. 1985). In this case, the Federal Circuit held that a method of producing a new product could be held to be obvious, notwithstanding the fact that the product produced had never been disclosed and was not known. Many patent lawyers were frustrated with this ill-reasoned decision, which involved synthetic chemical production methods. The biotechnology industry, however, found this doctrine to be more than just a nuisance. Many companies viewed the application of the Durden rule to biotechnological processes to be a serious threat to obtaining an essential level of protection. Consequently, the biotechnology industry took the lead in pressing for legislation that effectively overruled the Durden decision. In response to these concerns, the 104th Congress amended the law governing the issue of nonobviousness to overrule the potential impact of Durden on biotechnological process inventions via the Biotechnological Process Patent Amendments Act of 1995 (P.L. 104–41, November 1, 1995).
Our industry, together with the U.S. Patent and Trademark Office, is now in the midst of a third iteration of reassessing and evolving two criteria of patentability as they relate to inventions arising out of genomics research. These are the requirements that an invention have a specifically identified ''usefulness'' or ''utility'' under 35 U.S.C. 101, and that the disclosure of the invention in the patent application demonstrate that the inventor is in possession of and fully enables what is being claimed by the applicant under the disclosure requirements of 35 U.S.C. 112, first paragraph. Both of these standards have been the subject of an extensive amount of recent attention within our industry and within the PTO.
Before addressing these two standards, I want to emphasize that in our opinion, the question of whether patents should be made available for ''gene'' inventions is not an issue that needs to be revisited. As I noted above, patents are an absolutely fundamental requirement for commercial success in our industry. This is particularly true for patents on nucleic acids that code for important proteins, including those that correspond to naturally occurring genes. Patents must be available to allow us to gain exclusive rights in the starting materials and commercial production of proteins that serve as the basis of new pharmaceutical products. Thus, the proper focus for discussions on ''gene patenting'' is not on the question of whether patents should be granted on ''genes'' but rather on the question of when it is appropriate to grant such rights.
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Moreover, the strong pronouncement of the Supreme Court on the eligibility of certain biotechnology inventions for patent protection—with which we fully agree—does not mean that every development in the biotechnology sector that can be put into a patent application should receive patent protection. The criteria for patentability are designed to ensure that patents are granted only for those inventions that meet some defined quantum of inventiveness. Specifically, to receive a patent, the inventor must show that his invention is new, is not obvious and is useful. Our law, which the PTO applies through the patent examination process, also ensures that the applicant provides an adequate disclosure of the invention to not only allow others to reproduce and practice the invention, but to ensure that the inventors was in possession of what he claims as his invention. Exclusive rights, where granted, must be commensurate with the contribution of the inventor.
As I noted above, there are two patentability standards that are currently evolving to respond to the unique situation of innovations in the genomics sector. The first of these, the utility requirement, demands that an invention be ''useful.'' This so-called ''useful invention'' requirement derives from the Constitutional authority that allows Congress to confer grants of exclusive rights to inventors. As applied by the courts, the useful invention requirement demands that the inventor be able to identify a practical utility for the invention. One court has defined that standard to mean that an invention must have some ''real-world'' value. As the Federal Circuit held in Nelson v. Bowlar, ''[i]n other words, one skilled in the art can use a claimed discovery in a manner which provides some immediate benefit to the public.''(see footnote 2) Certainly, most inventions that utilize genetic information, either to produce protein therapeutics or to be used in a specific application such as a screening assay for a particular gene-linked disorder, will easily satisfy this requirement.
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The useful invention requirement also requires that the inventor be able to define a specific, rather than generalized utility for the invention. The Supreme Court, in the case of Brenner v. Manson, 383 U.S. 519, 148 USPQ 689 (1966), emphasized that a patent was ''not a hunting license.'' As the Court noted, the patent ''. . . is not a reward for the search, but compensation for its successful conclusion.'' Subsequent courts have clarified that the ''specific utility'' requirement is a fairly nominal requirement to meet, but nevertheless demands that an inventor be able to explain why the invention is believed to be useful in its present form.
In most cases, an assertion by the inventor as to why he believes his invention is useful will not be subject to extensive scrutiny. However, additional scrutiny is warranted if the inventor asserts that the invention may be useful for some purpose, rather than actually is useful for a specific purpose. Thus, if an inventor asserts that a new chemical compound is believed to be useful because it shares traits of another class of compounds, some additional inquiries will be needed to resolve the question of whether an adequate assertion of specific utility has been made. The resolution of this question will depend on whether, as a scientific matter, there is any reason to doubt that the new compound will not have the same relevant traits as the referenced class of compounds that have a specific utility.
The question of whether certain genomics-related inventions possess specific utility presents issues similar to the one described in the preceding paragraph. We believe that the utility of a particular gene or polypeptide rarely can be demonstrated until there has been a sufficient characterization of the function of a gene or its expression product, including through relevant biological assays. In most instances, the ability of a person skilled in this art to make predictions of utility for a polypeptide based on homology alone will be extremely limited.
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Homology analysis consists of analyzing nucleic acid sequences for similarities to known polypeptide and nucleic acid sequences. The degree of homology can be an important indicator that the sequence being analyzed is similar to, or within a class of known proteins based on the degree of identity it shares with the known sequence. Thus, a nucleotide sequence that is 90% similar to a known protein (either through comparison to the native gene sequence or a sequence constructed through reference to a known amino acid sequence) provides important insights that can be used to steer research efforts. Homology analysis, however, is a limited tool for predicting results. In our experience, homology analysis, standing alone, is not a sufficiently reliable indicator to base scientific or business decisions upon.
Instead, we have felt it scientifically appropriate and necessary to express the protein and to determine its activity through actual assays and analyses in the laboratory. In our view, a computer-based homology analysis should not be regarded as being a reliable indicator of a biological activity with regard to most nucleic acid or protein sequences. Accordingly, where a particular biological activity is the only basis for the utility of a particular gene or expression product, a homology-based prediction should not be capable of satisfying the requirements of our law in a majority of situations.
The second requirement that has been implicated by genomics-related inventions concern the two elements of the disclosure requirements of U.S. law found in 35 U.S.C. 112, first paragraph. These are the requirements that the disclosure provide a description that enables one of ordinary skill to practice the invention (i.e., ''enablement''), and that the disclosure demonstrate that what the inventor claims as his invention was in his possession when he filed the patent application (i.e. ''written description'').
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The enablement requirement serves a number of purposes. First, it ensures that third parties will be able to replicate the invention based on the disclosure of the applicant without resorting to ''undue experimentation.'' Second, it serves as a measure for the scope of rights that may properly be granted to the patent applicant. For example, if a third party would have to resort to extensive and unpredictable work beyond the teachings of the patent disclosure, the patent should not be entitled to receive a patent covering compounds that would require such work to obtain. This principle was illustrated in the case of Amgen v. Genetics Institute, where a claim to a protein defined primarily through reference to the desired biological activity of the protein, rather than its specific physical structure, was held unpatentable under the enablement requirement. The court in that case emphasized the unpredictability that existed in the field of protein expression in holding that a claim covering millions of potential variant forms of a protein invalid. Likewise, a claim to a therapeutic composition that uses a compound for which there is no disclosure or knowledge in the art of its therapeutic potential would likely cause problems with regard to the enablement requirement.
The written description requirement, on the other hand, is designed to ensure that the inventor had actual possession of what is being claimed as the invention. This requirement as it relates ''gene'' claims was the subject of the decision of The Regents of the University of California v. Eli Lilly and Company, 119 F.3d 1559, 43 USPQ2d 1398 (Fed. Cir. 1997), cert. denied, 523 U.S. 1089 (1998). The Federal Circuit addressed the question of whether possession of only one species of a gene (e.g., mouse) entitled the discoverer of that gene to claim possession of analogous genes founding other species (e.g., human). The answer to that question was no, and the patent claim that covered these other species was held invalid. The Eli Lilly decision has numerous ramifications for work arising out of the genome-related research, particularly in those situations where a very limited disclosure has been made in the patent application.
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The proper application of the useful invention and disclosure requirements will, ultimately, depend on scientifically defensible presumptions. For example, whether the state of the art is such that scientists can specifically and credibly predict the biological activity of a protein based on homology analysis alone should dictate whether a utility claimed on the basis of homology will be legally sufficient. As I noted earlier, at Genentech, we do not believe that current computational models are sufficiently accurate to predict protein function based solely on homology analyses in most instances. This opinion on where the science is today carries through in our commercial research and development practices. We do not make significant investments in research and development on the basis of computer-based homology analyses. Instead, we will work to rapidly express the protein and to then perform basic biological characterizations of the protein to yield a much more reliable indicator of potential value.
An analogous situation exists with the intersection of scientific opinion and the disclosure requirements. Here, the issue is whether possession and disclosure of a particular partial nucleotide sequence can support a claim for nucleic acids that encode the full sequence of a particular protein, along with claims to the protein and other ''downstream'' products. In our view, possession of a partial and uncharacterized nucleotide sequence (e.g., an EST or an uncharacterized full sequence nucleic acid) usually will not satisfy the written description or enablement requirements for claims to the full sequence and downstream products. There is simply too much additional work and effort required before one can confirm the identity of the gene, and its relevance to downstream products.
Recent PTO Actions are On the Right Track
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The PTO has tackled the issues of utility and written description in recently promulgated draft guidelines for examination. The guidelines, along with training materials produced with the goal of illustrating how patent examiners are to apply the guidelines to specific fact patterns, represent a significant undertaking. Our impression of the undertaking to date is very positive. In particular, we believe that the PTO has done an impressive job in promulgating guidelines that accurately reflect what we believe is the current state of the law governing specific utility and written description.
We have expressed some concerns about the application of these guidelines as part of the PTO's notice and comment process. The most significant of these concerns relate to some of the scientific assumptions used by the PTO in examples in their training materials. We believe that the guidelines and the training examples ultimately will be consistent with law and will reflect a proper perspective on scientific assumptions.
The PTO, when it follows these guidelines, will invariably reject a significant number of applications that have been filed by companies and individuals involved in genomics research. The PTO has indicated that certain ''first generation'' EST filings are the most likely to receive the hardest review. The PTO has also indicated that a ''second generation'' of filings that disclose full sequences of genes will receive a more rigorous evaluation for compliance with utility, written description and enablement. We believe this is the proper course for the PTO to follow. In particular, we believe it is important for the PTO to not hesitate in rejecting those applications that seem to raise questions in relation to specific utility or as to the proper scope of claims. Imposing rejections and carrying them through on appeal will also generate more case law that can help answer some of the questions that remain open today.
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Concluding Observations
We have found the current public debates about gene patenting to be fraught with a number of overgeneralizations and misunderstandings. For example, there is a fair amount of confusion about what is actually being patented when one obtains a ''gene'' patent. A ''gene'' patent typically covers a specific chemical compound (i.e., a nucleic acid) that is produced using genetic information. Most frequently, the nucleic acid will have a physical structure that encodes the linear sequence of a particular protein. The physical structure of the nucleic will differ from what is found in the chromosome of an individual. Instead, the patent provides protection for a chemical compound made through use of genetic information but which has a structure that is relevant in a commercial context. A gene patent thus cannot give rights over a ''gene'' as it is found in your chromosomes. Likewise, the nucleic acid construct that the patent claims will cover will invariably not be found in this form within a living organism.
We also tend to discount the fears of a land rush of patent application filings coming out of genomics research. If the PTO is doing its job correctly, patents will be granted only in those situations where they are warranted, and the rights under those patents will be limited to the contributions of the inventor. Likewise, a gene patent—properly examined—should not enable its owner to prevent parties from doing research, such as sequencing or studying a portion of the genome of an organism. Of course, if the PTO does not follow through in applying the standards it has articulated in its recently announced guidelines, there will be ramifications within the biotechnology industry. Similarly, if patent owners choose to enforce their patent rights in injudicious ways, such as by suing academic researchers or taking a hard-line approach of not permitting research use of the genomics information, we believe unnecessary harm will have been done.
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In conclusion, we are confident that the patent system will be able to properly adapt and respond to the unique issues that are arising in the genomics research field. The initial place for this evolution to occur is in the Patent and Trademark Office and in the Federal courts. We do not see, and would not support, legislative action to alter the standards of eligibility, enablement, written description or otherwise in the name of genome research.
I have valued this opportunity to share the views of Genentech, Inc. Thank you for your consideration of my testimony.
Mr. COBLE. Thank you, Dr. Henner. Ms. Ryan?
STATEMENT OF M. ANDREA RYAN, VICE PRESIDENT, WARNER-LAMBERT COMPANY AND PRESIDENT-ELECT, AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION
Ms. RYAN. Good morning, Mr. Chairman, Mr. Berman.
Mr. COBLE. Ms. Ryan, could you pull the mike a little closer to you? Thank you.
Ms. RYAN. Thank you. The American Intellectual Property Law Association congratulates you and the subcommittee for holding this oversight hearing. We're particularly pleased to have the opportunity to offer our thoughts on this important subject today.
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The vast majority of the patent issues can be solved, or at least addressed by a straightforward analysis of the basic technology involved and the basic application of patent law. The U.S. Constitution gives inventors the right to protect inventions, ''To promote the progress of science in the useful arts.'' This led to the establishment of the U.S. patent system, which has been a model throughout the world for protecting innovation.
Over the years, the system has been changed and improved by the passage of laws such as the American Inventors' Protection Act, the AIPA, passed early in this Congress, and by the implementation of those laws by the courts. The U.S. patent system in its present form works well, and AIPLA beleives that it will continue to work well, even as technology changes and becomes more complex.
The issues surrounding patent protection for genes and related inventions is no less problematic than the issues addressed by the Supreme Court in 1980 in Diamond v. Chakrabarty. In that case, as other witnesses have already reminded the panel, the Supreme Court decided whether the fact that an invention was living should exclude the invention from the definition of patentable subject matter. The Supreme Court correctly answered that question in the negative, and stated that patent protection was available to anything ''under the sun that is made by man.''
The more difficult issues are the proper application of threshold patentability standards to vibrant new technology such as the human gene. Patent law has traditionally treated all organic substances, even genes as chemicals, as Commissioner Dickinson said earlier. Like other subject matter, they qualify as inventions if someone isolates them and shows they can be used for a specific and real world purpose.
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According to the ruling in Chakrabarty and established patent law, any product of nature is patentable if it is transformed in some way by man and is also new, useful, and non-obvious. The product of nature must be described in writing in a patent application that provides an adequate description of the invention, and enables any person skilled in biotechnology to make and use that product of nature. In addition, a real life practical utility of the product of nature must also be stated in the patent application.
Genes and other related gene technology may or may not turn out to be good targets for drug design. It may be possible to design drugs from the genetic information, but that will take years to determine, and those inventions should be patentable. One of the touchstones of patentability has always been whether or not the invention is a solution to a problem, and if so, how difficult was that problem to solve. You've already heard how difficult the problem is to solve.
The patent issues surrounding biotechnology and specifically genes and gene related technology are less than 20 years old, and it will take time to sort out the current application of the patent laws to these difficult issues. As the United States Patent and Trademark Office, the USPTO, works its way through the new applications and the courts deal with the challenges to already issued patents, more clarity will be found. The patent law, like the technology, will evolve and grow to address the new issues.
The Court of Appeals for the Federal Circuit is addressing and will continue to address the question of which genes, SNP's, EST's and other genetic materials are patentable or not. AIPLA approves of the USPTO's efforts to clarify and provide for consistency and the training of the examiners as to the manner in which the written description requirement and the utility requirement apply to patent applications.
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An adequate written description is fundamental to the proper functioning of the patent system. This is particularly critical in this area involving genes, gene sequences, and other biotechnology inventions. If the USPTO fails to exercise vigilance in the identification of written description and utility defects in order to reject claims in applications, patents with invalid, overly broad claims could be issued, spawning expensive and time consuming litigation that could have been avoided.
In addition, AIPLA believes that additional changes to the current patent law could also help to address some of the questions raised by the granting of patents in the area of genes and related subject matter. AIPLA commends this subcommittee for striving to achieve some of the changes which would be beneficial in this regard. HR 400, as you know, reported last year, contained what promised to be helpful expansions of the existing reexamination system and for full publication of all pending applications. Unfortunately, these changes were drastically curtailed during the subsequent legislative deliberation that led to the AIPA.
In closing, the U.S. patent system is serving both the Nation's sick and infirm, and the biotechnology community well. The USPTO has demonstrated that it is aware of the needs of the user community, and is seeking to improve the processing of gene and related patent applications. We believe that the Office is targeting test cases—and you've heard Under Secretary Dickenson confirm that—targeting to clarify the utility and written description questions that are outstanding, and that the experience and competence of the Court of Appeals for the Federal Circuit will aid immeasurably in providing any needed guidelines.
We look forward to working with the subcommittee in the future to resolve real issues as they arise in this very important field. Thank you, Mr. Chairman.
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[The prepared statement of Ms. Ryan follows:]
PREPARED STATEMENT OF M. ANDREA RYAN, VICE PRESIDENT, WARNER-LAMBERT COMPANY AND PRESIDENT-ELECT, AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION
Mr. Chairman:
The American Intellectual Property Law Association (AIPLA) congratulates you and the Subcommittee for holding this oversight hearing on the relationship between the human genome and the United States patent system. We are particularly pleased to have the opportunity to offer our thoughts on this very timely and important subject.
The AIPLA is a national bar association whose more than 10,000 members are primarily lawyers in private and corporate practice, in government service, and in the academic community. The AIPLA represents a wide and diverse spectrum of individuals, companies, and institutions involved directly or indirectly in the practice of patent, trademark, copyright and unfair competition law, as well as other fields of law affecting intellectual property. Our members represent both owners and users of intellectual property.
INTRODUCTION
AIPLA members practicing in the area of biotechnology are acutely aware of the important public policy issues that the Subcommittee is examining. AIPLA believes that these policy issues can be fully addressed by a straight forward application of existing principles of basic patent law.
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The U.S. Constitution gives Congress the power to enact laws to protect the rights of inventors. These rights are granted and exist under the Constitution ''to promote the progress of science and the useful arts.'' The foresight of the drafters of the Constitution in setting out a ''patent clause'' not only led in 1790 to the establishment of the U.S. patent system, but the action of the first of our 106 Congresses stands even today as a model throughout the world for promoting innovation. Over the years the U.S. patent system has been improved by the passage of more effective patent laws, such as the American Inventors Protection Act, which passed earlier in this Congress. The patent system has also been invigorated by the faithful manner in which these laws have been implemented by the courts, notably the Court of Appeals for the Federal Circuit—a new appellate court created in 1983. For the most part, the US patent system in its present form works effectively as an incentive to innovators. AIPLA believes that it will continue to work well even as technology changes and becomes more complex. Finally, we believe that where changes in the patent laws are needed, Congress will make them as it has many times over the past two decades. The Patent Law Amendments Act of 1984, the Drug Price Competition and Patent Term Restoration Act of 1984, the Patent Process Amendments Act of 1988, the Uruguay Round Agreements Act, and the American Inventors Protection Act of 1999 are all examples of innovative and responsive changes that have worked to improve the operation and effectiveness of the U.S. patent system.
DISCUSSION
The issues surrounding patent protection relating to newly discovered genes and the often novel proteins that are products of the expression of these genes raises public policy and substantive law issues of patent law that are in many respects even more complex than the issue addressed by the Supreme Court in 1980 in Diamond v. Chakrabarty. In that case, the Supreme Court decided whether the fact that an invention was living should exclude the invention from the definition of patentable subject matter. The Supreme Court answered that question in the negative, by a five-to-four margin, and stated in effect that patent protection should be made available to anything ''under the sun that is made by man''. Those words and that court decision were instrumental in launching the modern biotechnology industry—and establishing the preeminent role of the United States as a leader in that industry.
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The biotechnology patents that issued in the years that followed that important decision and the rapidly evolving technology brought us to the issue you are examining today. AIPLA believes that Chakrabarty was correctly decided by the Supreme Court. The Court's decision was firmly grounded in the legislative history of the 1952 Patent Act. The Congressional intent that ''everything under the sun made by man'' should be patentable was long applied to chemical substances. It is, therefore, inconceivable the Congress would permit the patenting of a genetically modified microbe that makes a life-saving drug, such as insulin, but not allow the person discovering the insulin gene to obtain a patent claiming the gene itself. Merely because there are clear and compelling policy justification for allowing patents related to genes to be patented does not, however, answer the most difficult questions: how broad should the protection afforded by such patents be, what work must be completed to make a gene-related invention ready for patenting, and how should patents of this type impact on research directed to understanding the gene and the full complexity of its biological role and functioning?
Patent law has traditionally treated all biological materials—even genes—as chemicals, or ''compositions of matter''—a traditional category of patent-eligible ''invention.'' Patents, however, do not extent to products of nature, as such. Thus, naturally occurring biological substances have traditionally been patented once they have been isolated and identified as useful for a specific purpose or a specific function. At that point, a naturally occurring biological material, such as a gene, a hormone, an enzyme or the like can only be patented in the isolated or purified form that does not exist in nature. According to the Supreme Court ruling in Chakrabarty and established patent law, any product of nature is patentable if it is transformed in some way by man and it is also new, useful, and non-obvious.
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The isolated or purified biological product cannot be validly patented unless the patent application that contains a claim to the product provides an adequate written description of the invention. Further, the disclosure in the patent application must enable persons skilled in biotechnology to make and use the claimed product. Some real-world utility for the claimed product must also be set out in the patent application—in some presently available form. Thus, for several decades, the patent law issue has not been whether an isolated or purified product obtained from nature, such as a gene-based invention, is eligible for patenting or is adequately disclosed in a patent application, but, rather, what is the proper form and scope of the application and claims for the patent to be granted?
A great deal has been written recently both in the popular press and in respected scientific journals on the topic of granting patents to inventions that relate to human genes and—most particularly—gene fragments. Some accounts in the popular press reflect a confusion concerning basic patent law principles and have generated much misinformation on this issue. Even worse, some accounts of the workings of the patent system have been erroneous and regrettably inflammatory.
In order to understand the patent issues raised, most recently by the publicity surrounding the human genome project and related subject matter, it is important to understand the basic science that leads to the inventions for which patent protection is being sought. One key to understanding biotechnology is in understanding the terms and definitions.
Any complex living being is made up of trillions of cells and inside every cell is a nucleus which contains a set of chromosomes. The information contained in all of the chromosomes in a cell is the genome of that being. The genome is the complete set of information for building and maintaining life of every organism. The genome contains the master blueprint for creating all cellular structure and activities for the living organism. The chromosomes which contain the genome are tightly coiled threads of DNA (deoxyribonucleic acid) and associated protein molecules. Each DNA molecule consists of two twisted strands of nucleotides and each strand contains many genes. A gene is a specific sequence of nucleotide bases. Genes encode for protein and express (produce) that protein. Proteins are the building blocks of nature and combine to make up cells which grow to create life. A gene per se is not life.
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Interspersed with the genes which carry the essential protein coding information are intron sequences which have no apparent coding function and are sometimes referred to as ''Junk DNA''. Genes make up only a small percentage of the genome. It is this small percent of the genome that is the focus of so much attention and generally raises the questions about granting patents. The genome is a map of the entire area, but what is most interesting to scientists and the patent attorneys who work with them is not the genome, but the genes, portion of genes, and the sequences of nucleotides that a gene is made up of, including SNPs (single nucleotide polymorphisms) which are variations which occur in the DNA sequence of the gene and ESTs (expression sequence tags). Scientists believe that these tools will help them to identify the multiple genes associated with complex diseases and to design better and more specific drugs and treatments for these diseases.
Much of the discussion about the use of genes and related inventions is still speculation. Genes and the other related gene technology may or may not turn out to be good targets for drug design. It may be possible to design drugs from the genetic information, but that will take years to determine. Not only must scientists determine what each gene does, but also precisely which proteins each gene produces. In order to design a drug, they will also need to know the structure and the function of the proteins which is expressed (produced) by the gene. This has been determined for some proteins, but in addition to knowing the protein structure, the actual folding of the protein also appears to be important in designing drugs to cure specific diseases. Determining the way a protein folds is apparently a difficult job. Steven Holyman of Millennium Pharmaceuticals focused the discussion on the right place when he recently said ''the race is in assigning to genes and to variations in genes a role in disease initiation and progress and drug response''.
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Nobel Prize winner, David Baltimore apparently agrees. In a recent article in the New York Times he recognized that ''the sequencing of the genome is a landmark of progress in specifying information, decoding it into its many coded meanings, and learning how it goes wrong in disease. While it is a moment worthy of the attention of every human, we should not mistake progress for a solution. There is yet much hard work to be done''.
Applying basic patent law to these concepts means that in spite of the fact that patents are being applied for and granted now, there is still much more to be discovered and those discoveries should not only be patentable, but valuable. One of the touchstones of patentability is whether or not the invention is the solution to a problem and if so, how difficult was the problem to solve. Paraphrasing Dr. Baltimore, the genome is not the solution; years of work remain to be done by researchers to apply genomic and gene related inventions to curing diseases and designing drugs which also in themselves should be patentable.
The patent issues surrounding biotechnology and specifically genes and gene-related technology are less than 20 years old and it will take time to sort out the application of the patent laws to this technology. As the United States Patent and Trademark Office (''the USPTO'') works its way through the new applications and the Courts deal with challenges to already issued patents, more clarity will be found. Time will help—there is no immediate need to solve all of these issues. The patent law like the technology will evolve and grow to address the new issues. The Court of Appeals for the Federal Circuit is addressing and will continue to address the questions of which genes, SNPs, ESTs and other genetic material are patentable. The Courts and the USPTO need time to work through these issues and they have the basic tools that they need to do this.
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AIPLA approves of the USPTO's efforts to clarify and provide for consistency in the training of its examiners as to the manner in which the written description requirement and the utility requirement for a patent application is to be applied to the examination of patent applications. An adequate written description is fundamental to the proper functioning of the patent system. The full benefits of a patent cannot be realized if it does not contain a written description which discloses the ''manner and process of making and using an invention in such full, clear, concise, and exact terms as to enable any person skilled in the art'' to make and use the invention. This is particularly critical in the area of patents and patent applications involving genes, gene sequences, and related biotechnological inventions.
We believe the Revised Written Description Guidelines and the Utility Guidelines as published by the Office have taken great steps forward in the complex area of the written description requirements for a biotechnology patent. The AIPLA urges that patent examiners should be instructed in the Revised Written Description Guidelines to exercise vigilance and to make rejections of patent claims on written description grounds whenever there is a clear and reasonable basis for doing so. If the USPTO fails to exercise vigilance in the identification and rejection of written description defects, patents with invalid, overly broad claims could be issued, spawning expensive and time consuming litigation that could have been avoided. Similarly, where the ex parte appeal process from USPTO decisions results in a decision that is favorable to inventors on written description grounds, the clear validity of the resulting claims will similarly reduce litigation and provide useful guidance to examiners.
AIPLA strongly urges the USPTO to follow the decisional law of the past decade that in certain respects has elevated the importance of the written description and utility requirements and use this guidance to reject claims in applications or invalidate claims in patents. AIPLA believes that it would be preferable for the law on the written description and utility requirements to be developed at an early stage through ex parte appeals from the USPTO rather than through later, more expensive post-issue litigation in the Federal Courts. This belief necessarily translates into a desire to see the USPTO rigorously apply the statutory written description and utility requirements as applied by the Federal Circuit. Moreover, AIPLA would urge the USPTO to identify appeals on these issues and expedite their disposition within the USPTO, to the extent consistent with law and regulation.
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If anything in the patent system needs to be changed immediately to address the issues surrounding the patenting of genes, pieces of genes and in fact all of the burgeoning new science of biotechnology, it is increased support for the USPTO. The patent examiners are the individuals who make the initial and critical decisions as to when to grant or not to grant a U.S. patent. If the USPTO does not have the funds to continue to hire and train these examiners, the quality and quantity of patents granted in this important technology will be seriously impacted. If Congress continues to divert funds from the Office budget, the hiring, training, and retention of examiners—and ultimately the quality of biotechnology applications—will suffer. AIPLA has consistently and strongly supported the proposition that the USPTO should be permitted to retain and use all of its user fee revenues to support the operations of the Office. In this regard, I would like to publicly thank you, Mr. Chairman, for the leadership that you exercised in challenging the appropriators on the floor of the House to provide adequate funding for the Office. I would also like to thank Chairman Hyde, Ranking Member Conyers, and Representatives Lofgren, Goodlatte and Frank for their support of your effort.
In addition, AIPLA believes that additional changes to the current patent law could also help to address some of the questions raised by the granting of patents in the area of genes and related new subject matter. AIPLA recognizes and commends the efforts of this Subcommittee for striving to achieve some of the changes which would be beneficial in this regard. H.R. 400, as reported by this Subcommittee last year, contained what promised to be a very helpful expansion of the existing reexamination system. It would have allowed members of the public limited participation in the reexamination process before the USPTO, including the ability to appeal and to participate in appeals in the Office and before the Court of Appeals for the Federal Circuit. This would have provided a very cost effective means of challenging problematic patents granted in this area. Unfortunately, the inter partes reexamination procedures were drastically curtailed during the subsequent legislative deliberations that led to the AIPA. Another limitation that was adopted that we would like to address at a future time involves the exception to 18-month publication in the AIPA. Full publication of all pending applications would provide researchers and companies in the biotechnology field greater certainty regarding their freedom to pursue costly and expensive research in this field.
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QUESTIONS
Questions have been raised regarding whether there are any unintended impacts of the existing patent laws on basic scientific research and on the freedom of doctors to use new gene related inventions in the treatment of patients. This latter concern was the subject of legislation some four years ago when Congress excluded from the definition of infringement surgical and medical procedures that a doctor might perform on a patient. While AIPLA opposed that amendment on the basis that it was based on only a single example of dubious real-world significance and was inconsistent with the obligations of TRIPs, it is nonetheless the law and should remove this concern from the list of allegedly harmful consequences of granting patents in the area of gene and related inventions.
Regarding the allegation that the patent laws may have unintended adverse impacts on basic scientific research, certainly the explosion of investment in the biotech field would not support such a conclusion. To start with, patents never ''lock up'' information or prevent the use of gene sequence information in any context. The patent system is designed to assure that information gets disclosed to the public rapidly. The information concerning an invention—what it is, how it can be made, what it is useful for—go immediately into the public domain, free for all to use. Thus, the patent system has led to the publication of massive quantities of information concerning genes and their function. Everyone has free and unfettered access to that information. While inventions can be patented, information cannot.
Second, the Supreme Court has long recognized that not all ''uses'' of a patented invention represent an infringement of the patent owners rights. Although very limited, an ''experimental use'' exemption does exist. It has been developed by the courts to assure that a patented invention can be used to understand the basic function of the invention and develop alternatives to it. If only as a logical matter, the patent system can never promote progress in the useful arts if the grant of a patent locks out others from gaining a basic understanding of what is patented, how to design around it, and how to improve upon it. Absent an experimental use exception, patents could theoretically freeze, not promote progress in the useful arts and frustrate the development of improvement inventions that Congress has specifically authorized to be patented. Many commentators believe that this so-called ''experimental use'' or ''research exemption'' under current case law is sufficient to assure that all basic research activities can peacefully co-exist with the broad, exclusionary rights of the patent owner to stop unauthorized uses of a patented invention.
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In this regard, gene research and gene patents interplay no differently compared to research and patents in other technological fields. Similar concerns have been raised in many technological areas. To date, we have not seen emerging technology fields blocked, locked down or frozen in place by a ''pioneer'' patent. One very likely reason that this has not occurred in other fields is the reality of pioneer innovators. Their seminal inventions often take years to bring to full fruition through wide adoption in the marketplace. This requires that the technology be developed quickly since, once a patent issue, the patent term winds down over the course of only a few years. For many seminal inventions, such Stanford's Cohen-Boyer patents, this has meant providing licenses to the entire industry—hoping to spur develop of implementing technology.
If an invention does, however, fall within the scope of an earlier valid dominating patent or was discovered as a result of using an earlier patented invention, the later inventor/patentee may need to obtain a license, if one is available, and to pay a royalty to the owner of the earlier patent—but this is no different than in any other technology field—including the other explosively growing fields, telecommunications, Internet, software, and semiconductor-based devices. The patent system has worked in the past and, given time and the reality of the marketplace, it should work in this field as well. In brief, one should be rather chary about designing solutions in search of a problem for our time-tested and venerable patent system. Should such a problem materialize in the future, it can be appropriately dealt with at that time.
CONCLUSION
The U.S. patent system is providing unprecedented hope for the nation's sick and infirm while serving the biotechnology community. The USPTO has demonstrated that it is aware of the needs of everyone impacted by the patent system. It is seeking to improve its processing of gene and related patent applications. As indicated, however, the Office has a desperate need for all of the fee revenue it receives to keep pace with its ballooning workload in this complex field and improving the quality of its work. We are confidant that with your assistance, the issue of consistent and adequate PTO funding will be successfully addressed. We believe that the Office is targeting test cases to clarify the utility and written description questions that are outstanding, and that the experience and competence of the Court of Appeals for the Federal Circuit will aide immeasurably in providing any needed guidance. We will certainly be monitoring the developments in this very important and rapidly moving field and look forward to working with this Subcommittee to resolve real issues as they arise.
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In summary, we urge the Congress to stay the current course in terms of the patent laws themselves. The patent system is working in this area as it has worked effectively elsewhere—to make information on new inventions promptly available to spur further innovation, to provide incentives for investments that will produce new businesses and new products, and—ultimately—to secure the blessing of accelerating innovation for ourselves and our posterity.
Mr. COBLE. Thank you, Ms. Ryan. Dr. Severson?
STATEMENT OF JAMES A. SEVERSON, PRESIDENT, CORNELL RESEARCH FOUNDATION ON BEHALF OF THE ASSOCIATION OF UNIVERSITY TECHNOLOGY MANAGERS
Mr. SEVERSON. As you've already noted, I'm speaking before the subcommittee this morning in two capacities. My first role is I'm the President of the Cornell Research Foundation. We're a not for profit subsidiary of Cornell University, and we have as our main mission the identification, protection, and licensing for commercial development of inventions that are made at Cornell University.
The second hat I'm wearing this morning is that I'm the current President of the Association of University Technology Managers, also referred to as AUTM, or autumn as an acronym. We're a non-profit association with membership of more than 2300 technology managers and business executives from across the country who manage intellectual property, one of the most active growth sectors in the U.S. economy today. AUTM's members come from more than 300 universities, research institutions and teaching hospitals, and a similar number of companies and government organizations.
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In the context of my remarks to you today, I'll refer to something called technology transfer, and by that, I mean the transfer of research results from universities to the commercial marketplace for the public benefit. The growth of the pursuit of patents resulting from research on campuses can be traced to the passage in 1980 of the Patents and Trademarks Act, or Public Law 98–620, which is also referred to as the Bayh-Dole Act.
The Bayh-Dole Act was intended to promote investment by the private sector in the commercialization for the public good of discoveries made using research funds provided by the Federal Government. This pioneering legislation created a uniform policy among Federal agencies that fund research at universities and other not for profit institutions to allow them to elect to retain title to inventions made to grant funds provided by the Federal Government. Prior to the Bayh-Dole Act, the government retained title to these inventions, but it was cumbersome for the company to obtain a license to that technology, and consequently, very few inventions were licensed for development and commercialization.
By all accounts, this relatively simple change in the rules to allow universities to manage innovations made on campus has had a profound impact on the development and commercialization of inventions made at universities, and ultimately on the economy. Starting in fiscal year 1991, AUTM has conducted an annual survey of the patenting and licensing activities at U.S. universities. During the periods surveyed, annual patent applications by universities have doubled to last year more than 11,700. The number of licenses entered into by universities have grown more than three-fold over that period to over 3600 individual licensing agreements. In fiscal year 1998, 364 companies were formed out of university technologies.
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In fiscal year 1998, AUTM estimated that university technology transfer activity resulted in $33.5 billion in economic activity, supported over 280,000 jobs in our economy, and resulted in over $7 billion in Federal and State tax revenues. We think that these measures reflect a delivery of commercial products to the public, products that in many instances would not have reached the public without the protection afforded to institutions of higher education by the Bayh-Dole Act.
One of the issues that I understand that this committee is concerned about hearing from me is how patenting of inventions made at universities influence publication and influence the sharing of research results. Universities feel, AUTM feels, that the concepts embodied in Bayh-Dole and the development of inventions made with Federal funds for the public good are an excellent fit with our missions.
Universities see their missions broadly as teaching research and outreach, and technology transfer is part of the mission of outreach, and it's one way that university research programs can connect to the local community. Universities are often described as an engine for economic growth, and today, the protection commercialization of academic research is one way that universities use to attract and retain and reward talented faculty who wish to see the results of their research programs benefit society.
A continuing commitment to the protection of research results is important for universities to develop closer ties to companies and to attract additional funds to support research programs. Most universities are not engaged in gene sequencing to the same extent as companies, and universities have not engaged in broad scale patenting of genetic information. For the most part, invention disclosures that are made to technology transfer offices for gene sequences are considered for patenting on a case by case basis, and in the context of the requirements of the Bayh-Dole Act. Specifically, we ask the question, what is the best way to both protect what may be an important commercial discovery, and also disseminate this information for the public.
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It's important to recognize that many of the inventions that are made at universities are at a very early stage of development and require extensive follow-on research, up to and including proof of principle before any company will invest in its commercial development. In many cases, university inventions don't make this threshold and no further development occurs. Publication is a critical core value for universities, and is carefully respected by university administration, those of us who manage tech transfer, and those of us who manage contracts and grants at universities.
In practice, the pursuit of patent applications rarely delays the publications and results. Tech transfer practitioners at universities work to protect inventions within the deadlines that researchers have to publish a manuscript or to make presentations at scientific conferences. Often, it's necessary for us to work with inventors to balance collaboratively the need to publish the results of their research against desires to protect what may become important intellectual property. Accordingly, much of gene sequence information that's developed at universities is placed into the public domain, either through publication in the scientific literature or by listing gene sequence information in publicly available databases for broad access.
In many instances, the best way for universities to make information publicly available and to benefit the public is through the use of non-exclusive licenses to technology. I'd like to give you one example from our work at Cornell. In 1989, Professor Ray Wu in the Department of Molecular Biology and Genetics at Cornell, disclosed to us a gene isolated from rice, and its associated promoter, that looked like it had specific interest as far as the strength with which this promoter affected transcription of the gene. A patent application was filed on that invention, and Cornell made that invention widely available to the research community through biological materials transfer agreements which are a common mechanism that researchers use to disclose information and make information available to their peers.
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As a result of this information and dissemination, it was discovered that this was a valuable promoter and was very useful in making plants available for disease resistance and for herbicide tolerance. I make this illustration to you for two points. First of all, that it's possible if a patent application is pursued that there's still the opportunity to a university to share the gene itself and its information and biological materials with other institutions for other discovery and development. Also, that there's a significant amount of time required for university technologies to be developed.
In summary, technology transfer, the transfer of research results to the commercial marketplace for the public benefit is an important way that universities, hospitals, and research institutes demonstrate the relevance of their research programs, introduce innovation into the commercial sector, and enrich the lives of our citizens. We feel that these discoveries can be pursued without disrupting the core values of publication and the sharing of information, research results, materials, and know-how.
I appreciate the invitation to speak with you today, and I look forward to your comments. Thank you, sir.
[The prepared statement of Dr. Severson follows:]
PREPARED STATEMENT OF JAMES A. SEVERSON, PRESIDENT, CORNELL RESEARCH FOUNDATION ON BEHALF OF THE ASSOCIATION OF UNIVERSITY TECHNOLOGY MANAGERS
SUMMARY
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Technology transfer, the transfer of research results to the commercial marketplace for public benefit, is an important way for universities, teaching hospitals, and research institutions to demonstrate the relevance of their research programs, introduce innovation to the commercial sector, and enrich the lives of citizens. It has been estimated that in fiscal year 1998 the patent and licensing activities of U.S. universities resulted in $33.5 billion in economic activity, supported 280,000 jobs in the economy, and resulted in $7 billion in federal and state tax revenues.
Patents to genetic discoveries made during university research can be pursued without disrupting the core values of publication and sharing of information, research results, materials, and know-how. Universities purse patents to gene discoveries in the context of the Bayh-Dole Act, the pioneering, enabling legislation that enabled universities to take title to inventions made with the use of federal research support. Within the concepts embodied in the Bayh-Dole Act, universities carefully consider and balance the needs for publication of research results, the sharing of materials with other researchers, and the desire for commercial development of discoveries in the public interest. Often, the technology transfer manager and the researcher work collaboratively to protect an invention within the deadlines that the researcher has for publication. Universities can, and do, protect inventions to genetic information for commercial development, and effectively disseminate research results and materials. This activity supports economic growth, allows universities to attract, retain, and reward talented faculty, and promotes closer ties with industry that often result in additional research support.
STATEMENT
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Mr. Chairman, my name is James Severson. I am pleased to speak before this subcommittee in two capacities. The first is that I am the President of the Cornell Research Foundation, a not-for-profit subsidiary of Cornell University, which has as its main mission the identification, protection, and licensing for commercial development of inventions made at Cornell University. In my second capacity, I am the current President of the Association of University Technology Managers (''AUTM''). AUTM is a nonprofit association with membership of more than 2,300 technology managers and business executives who manage intellectual property—one of the most active growth sectors of the U.S. economy. AUTM's members come from more than 300 universities, research institutions, teaching hospitals, and a similar number of companies and government organizations.
In the context of my remarks to you, technology transfer refers to the transfer of research results from universities to the commercial marketplace for public benefit.
The growth of the pursuit of patents resulting from research on campus can be traced to the passage in 1980 of the Patents and Trademark Amendments Act (P.L. 98–620, also known as the Bayh-Dole Act). The Bayh-Dole Act was intended to promote investment by the private sector in the commercialization for the public good of discoveries made using research funds provided by the federal government. This pioneering legislation created a uniform policy among federal agencies that fund research to enable not-for-profit research institutions to elect to retain title to inventions made with grant funds provided by the federal government. Prior to the Bayh-Dole Act, the government retained title to these inventions, but it was cumbersome for a company to obtain a license, and, consequently, few inventions were licensed for development and commercialization.
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The Bayh-Dole Act requires institutions that retain title to inventions and patent them to show a preference in their licensing activities for small companies and to require that products to be sold in the United States are manufactured in the United States. The government retains the right to practice the invention on a royalty-free basis and retains march-in rights to ensure that important inventions are commercially developed. Also, the Bayh-Dole Act specifies that any income derived from the licensing of inventions be used to support further research and education, support patent protection for other discoveries with commercial application, and to provide an incentive to researchers to participate in these activities.
By all accounts, this relatively simple change in the rules for the management of innovations has had a profound impact on the development and commercialization of inventions made at universities, and on the economy. Starting in fiscal year 1991, AUTM has conducted an annual survey of the patenting and licensing activity of U.S. universities, teaching hospitals, and research institutions. During the period surveyed, annual patent applications by universities doubled to 11,704, the number of licenses that universities have entered into grew 3-fold to over 3600, and in fiscal year 1998 364 new companies were formed with university technology. For fiscal year 1998, AUTM estimated that university technology transfer activity resulted in $33.5 billion in economic activity, supported 280,000 jobs in the economy, and resulted in $7 billion in federal and state tax revenues. These measures reflect the delivery of commercial products to the public; products that in many instances would not have reached the public without the protection afforded to institutions of higher education by the Bayh-Dole Act.
The concept embodied in Bayh-Dole, development of inventions made with federal funds for the public good, is an excellent fit with the mission of universities. Most universities see their mission as teaching, research, and outreach. Technology transfer is an important part of the broad goal of outreach, and represents one way that university research programs connect to the local community. Many local and state leaders in business and government look to research universities as a source of new ideas and business opportunities to enhance the vitality of the local economy, and to attract and develop jobs in their community. Universities are often described as ''an engine for economic growth''. Today, the protection and commercialization of academic research is one way for universities to attract, retain, and reward talented faculty who wish to see the results of their research programs benefit society. A commitment to the protection of research results is important for universities to develop closer ties to companies, and to attract additional funds to support research programs.
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I understand that this subcommittee is interested in learning how patents for genes affect openness and sharing of information among academic institutions. This issue is complex and impinges upon the publication and dissemination of research results, and the sharing of research tools.
Most universities are not engaged in gene sequencing to the same extent as companies, and universities have not engaged in the broad scale patenting of genetic information. For the most part, invention disclosures made for gene sequences are considered for patenting on a case-by-case basis and in the context of the requirements of Bayh-Dole. Specifically, the question that universities ask is ''What is the best means to protect and disseminate this information for the public good?'' Many inventions made at universities are at a very early stage of development and require extensive follow-on research, including proof of principal, before any company will invest in its commercial development. In many cases, innovations never reach the threshold for commercial development.
Should patenting go forward, one issue that is considered is the effect on the publication of the results of the research. Publication of research results is a core value for universities, and in my experience, the ability of university researchers to publish is carefully protected by university administration, grant and contract officers, and technology transfer managers. In practice, the pursuit of a patent rarely delays the publication of results. Technology transfer practitioners at universities work to protect an invention within the deadlines that researchers have to publish a manuscript or present data at scientific conferences. Often the parties must balance collaboratively the need to publish against the desire to protect valuable intellectual property. Accordingly, much of the gene sequence information that is developed at universities is placed into the public domain by publication in the scientific literature, or by listing the gene sequence in publicly available databases for broad access by the scientific community.
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If a university pursues a patent, licensing on a nonexclusive basis (that is, making is available to a number of companies) is often the best means for technology transfer to benefit the public, especially if the gene is useful as a tool, or if the gene is a potential target for drugs. This practice makes the invention widely available and derives the broadest benefit from the invention. I would like to give you an example from our program at Cornell. In 1989, Professor Ray Wu of the Department of Molecular Biology and Genetics disclosed to the Cornell Research Foundation a gene that he isolated and sequenced from rice for a protein called actin and its associated promoter. The discovery was striking because of the strength with which the promoter affected the transcription of the gene. Feeling that the strong promoter might have value, the case manager at the Cornell Research Foundation initiated a patent application on the discovery. In addition to pursuing a patent for the discovery, Dr. Wu and Cornell made the invention widely available to other researchers through biological materials transfer agreements, a common mechanism for researchers to exchange research materials. As a result of this wide distribution, the promoter was available to numerous research programs, and, subsequently, it was discovered that this promoter is the best available in helping make plants tolerant to certain herbicides. At this point, Cornell Research Foundation has nonexclusive licenses with 12 companies that are developing crop plants with herbicide tolerance.
I make this example to illustrate two points. This first is that even if a patent has been pursued, there is still the opportunity for the university to share the gene itself, and associated information and biological materials, with other researchers for further discovery and potential development. The second point is that discoveries made at universities are an early stage and may take a significant time to their way into products. Professor Wu made his discovery in 1989, but products that make use of his discovery are still in development.
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In other instances, exclusive licensing may be preferred, and may offer the only practical way to induce a company to assume the risks of time and investment in early-stage inventions. To illustrate with another example from Cornell, in 1994 William Holloman of the Department of Microbiology of the Cornell Medical College working with a colleague discovered a class of enzymes that is extremely efficient for the repair of breaks in chains of nucleic acids, the building blocks of genes. This basic repair mechanism is termed recombination, and is important from the standpoint of understanding the biology of how cells repair themselves. However, it was also recognized that these enzymes might be useful to develop novel methods to repair genetic defects in cells. A start-up company approached Cornell Research Foundation to obtain a license to the discovery. Because of the long period required to develop products, and the cost involved in development, the only means to attract venture capital backing was through an exclusive license to the patents for this discovery. Even though an exclusive license was granted for the invention, Professor Holloman published the results of his research after the submission of the patent application, and he continues to conduct basic research in the same area.
In summary, technology transfer, the transfer of research results to the commercial marketplace for public benefit, is an important way for universities, hospitals, and research institutes to demonstrate the relevance of their research programs, introduce innovation into the commercial sector, and enrich the lives of citizens. These discoveries can be pursued without disrupting the core values of publication and sharing of information, research results, materials, and know-how.
I appreciate the invitation to speak before you today and I look forward to your questions and comments.
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Mr. COBLE. Thank you, Dr. Severson. Mr. Dixon?
STATEMENT OF CARL F. DIXON, PRESIDENT AND EXECUTIVE DIRECTOR, KIDNEY CANCER ASSOCIATION
Mr. DIXON. Thank you, Mr. Chairman and members. Thank you for inviting me today. I am here representing the Kidney Cancer Association, which for over a decade has been dedicated to helping kidney cancer patients and their families deal with the physical, emotional, and social impact of kidney cancer. As the only national kidney cancer patient organization directed by patients for patients, the association realizes the importance of a national policy which encourages and rewards the development of gene and genomic inventions.
Kidney cancer is an uncured disease. There are approximately 200,000 Americans who have kidney cancer. About 30,000 new cases are diagnosed each year, and each year about 12,000 Americans die from kidney cancer. The incidence of kidney cancer in the Nation is increasing at an annual rate of about 3 percent. It is one of only three types of cancer with an increasing incidence. The average age of a kidney cancer patient at the time of diagnosis is 62 1/2 years.
As an important part of the association's mission, we encourage research. We hope that kidney cancer will soon cease to be an uncured disease. Private sector research and development provides the best hope for cures for kidney cancers and other forms of cancer, including those likely to come from genes. At the same time, research and development is the riskiest form of investment, offering at best a very long term payback.
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All of us are excited about the implications of the completion of the working draft of the sequence of the human genome. This project produced more than 22.1 billion bits of raw sequence data. Thus far, analysis of this data shows 38,000 predicted genes, which have been confirmed by experimental evidence. There may be thousands more, and dozens of disease genes have been pinpointed.
What makes up these genes? They are composed of deoxyribonucleic acids, or DNA, and are associated with different proteins. Genes are found in condensed strands called chromosomes. Among individuals, there is genetic variation. These variations are commonly in the form of single nucleotide polymorphisms, or SNP's. Each SNP molecule in its natural state is simply a molecule with a double helix structure.
In order to be used in any way, each SNP molecule has to be processed into an industrial version. In other words, it has to be taken out of its natural environment and isolated. Next, each SNP molecule must be profiled, linked or associated with a specific condition such as kidney cancer. This would then enable one to use the SNP molecule, for example, to pinpoint a risk for or diagnose kidney cancer. In fact, my association is presently funding research to profile a gene or genes associated with kidney cancer. We recently awarded our Eugene P. Schoenfeld grant to Stanford University's Department of Urology to begin this process.
So then what happens? Once a SNP molecule is isolated, profiled and useful application is found for it, then actual development can begin. The discovery of a useful application results in the industrialization of the molecule. At this point, a patent application would be filed. No one would begin the expensive process of drug development without intellectual property protection.
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After securing protection for intellectual property, commercial development can begin. At this point in time, the molecule is analogous to insulin, interferons and Interlukens. These are all molecules of naturally occurring substances which have gone through a similar type of process. All of these molecules are protected by patents having an initial 20-year term, and all of these molecules have led to life-saving therapies. In fact, the only FDA approved therapy for kidney cancer is from Interluken 2 and the most widely used therapy for kidney cancer is alpha interferon. Neither of these substances would have been commercially developed, we believe, if they had not been able to be patented as they were under the existing law.
Again, the association respectfully requests that you continue to treat a SNP molecule like these other molecules. All exist in nature, but they're only useful after they have been isolated, profiled and industrialized. All are lifesaving only after a medicine has been developed. SNP molecules should be subject to the same type of patent protection as these other molecules.
The development of cures for uncured diseases such as kidney cancer will come out of the human genome project only if commercial development can take place. This development can take place only if commercial enterprises are able to commit substantial amounts of capital to research and development. These commitments will only be made if a commercially standard 20-year from filing patent term is available for SNP molecules.
Thank you again for having this committee meeting and for allowing us to testify.
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[The prepared statement of Mr. Dixon follows:]
PREPARED STATEMENT OF CARL F. DIXON, PRESIDENT AND EXECUTIVE DIRECTOR, KIDNEY CANCER ASSOCIATION
Thank you for allowing me to talk to you today. I am Carl Dixon, the President and Executive Director of the Kidney Cancer Association (''KCA'' or ''Association'') a voluntary, patient organization, which for over a decade has been dedicated to helping kidney cancer patients and their families deal with the physical, emotional and social impact of kidney cancer. I hold a JD from the University of Chicago's Law School and an MA from the Fletcher School.
As the only national kidney cancer patient organization, directed by patients for patients, the Association realizes the importance of a national policy which encourages and rewards the development of gene and genomic inventions.
Kidney cancer is an uncured disease. There are approximately 200,000 Americans who have kidney cancer. About 30,000 new cases are diagnosed each year. And each year about 12,000 Americans die from kidney cancer. The incidence of kidney cancer in the nation is increasing at an annual rate of about 3%. It is one of only three types of cancer with an increasing incidence. The average age of a kidney cancer patient at the time of diagnosis is 62.5 years.
The KCA appreciates the opportunity to provide written and oral testimony to the House Subcommittee on Courts and Intellectual Property of the Committee of the Judiciary (the ''Subcommittee''). The Association is available to assist the Subcommittee with needed information as it continues to review gene patent and other genomic inventions. The Association commends the Subcommittee for assessing and reviewing the complex subject of gene patents and other genomic inventions.
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An important part of the Association's mission is encouraging research, so that kidney cancer ceases to be an uncured disease. Private sector research and development provides the best hope for finding new cures for cancer, including those likely to come from genes. At the same time, research and development is the riskiest form of investment, offering at best a very long term payback.
All of us are excited about the implications of the completion of the working draft of the sequence of the human genome. This project produced more than 22.1 billion bases of raw sequence data. Thus far analysis of this data shows 38,000 predicted genes, which have been confirmed by experimental evidence. There may be thousands more. Dozens of disease genes have already been pinpointed.
What makes up these genes? They are composed of Deoxyribo nucleic acids, DNA, that are associated with different proteins, such as histones. Genes are found in condensed strands, called chromosomes. Each of us has 23 pairs of chromosomes.
Among individuals there is genetic variation. The variations are commonly in the form of single nucleotide polymorphisms, also known as SNPs. Each SNP molecule in its natural state is simply a molecule with a double helix structure. In order to be used in any way each SNP molecule has to be processed into an industrial version.
In other words, it has to be taken out of its natural environment and isolated. Next each SNP molecule must be profiled—linked or associated with a specific condition, such as kidney cancer. This would then enable one to use the SNP molecule for example, to pinpoint a risk for or diagnose kidney cancer.
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In fact, the Association is presently funding research to profile a gene or genes associated with kidney cancer. It recently awarded a grant to Stanford University's Department of Urology to begin this process.
What happens next? Once an SNP molecule is isolated, profiled and a useful application for it is found, then actual development begins. The discovery of a useful application results in the ''industrialization'' of the SNP molecule. At this point, a patent application for the SNP molecule would be filed. No one would begin the expensive process of drug development without intellectual property protection.
After securing protection for intellectual property—i.e., the isolated, profiled and industrialized SNP molecule—commercial development can begin. At this point in time the SNP molecule is analogous to insulin, interferons and interleukins. These are all molecules of naturally occurring substances which have gone through a similar type of process. All of these molecules are protected by patents having an initial term of 20 years from the effective date of filing. All of these molecules have lead to life saving therapies.
The Association respectfully requests that you treat a SNP molecule like these other molecules. All exist in nature but are useful only after they have been isolated, profiled and industrialized. All are life saving only after a medicine has been developed. SNP molecules should be subject to the same type of patent protection as these other molecules.
The development of cures for uncured diseases, such as kidney cancer, will come out of the human genome project only if commercial development can take place. This development can take place only if commercial enterprises are able to commit substantial amounts of capital to research and development. These commitments will only be made if the commercially standard 20 year from filing patent term is available for the SNP molecule.
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Mr. COBLE. Thank you, Mr. Dixon. Dr. Merz?
STATEMENT OF DR. JON F. MERZ, ASSISTANT PROFESSOR OF BIOETHICS, CENTER FOR BIOETHICS, UNIVERSITY OF PENNSYLVANIA
Mr. MERZ. Good morning. I'm very pleased to have the opportunity to address the committee. I wish to direct my comments to the emerging pattern of exclusive licensing of so-called disease gene patents. These patents generally claim a gene sequence in which one or more mutations are found to be associated with disease or risk of disease. In addition to claims covering all uses of the chemical sequences, the patents also claim all methods of diagnosis of disease by identifying in a specific patient the disclosed genetic differences.
In a recent survey published in Nature found that 14 of a sample of 27 disease gene patents have been very broad diagnostic claims had been licensed as of the date of our survey. All 14 licenses were exclusive, and all were coming out of academic institutions. Of course, not all such patents are being exclusively licensed, and a notable exception is the patent covering the first cystic fibrosis discovery, which is being broadly licensed by the University of Michigan to anyone who performs CF testing.
Nonetheless, the pattern of exclusive licensing raises various concerns. Primary among these is that some patent holders are exercising their patent rights to prevent physicians from performing genetic testing of their patients. Several surveys that I've done with my colleagues, Mildred Judd, Debra Leonard and others, have shown that a substantial number of laboratories have abandoned clinical tests that they have developed and validated, and many laboratories report that they have not developed a clinical test because of a known patent.
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The first point that I'd like to draw from this is that most of these disease genes to date have been found, at least in part, with Federal funding. The exclusive licensing of patent claims which anyone skilled in the art can immediately practice upon publication of the paper is contrary to a long-standing policy that the public should not be made to pay twice for inventions that they've funded. Exclusive licensing should be reserved for inventions that require substantial downstream investment and development efforts to bring a commercial product to market.
The second point is that there's no clear line here to be drawn between clinical testing and research testing. The state of the art of genetic tests is such that much more clinical study is necessary to validate and extend the early discovery of a disease gene. Thus, the restriction of physicians from performing clinical testing will directly reduce the knowledge about the genes. This may very directly harm patients whose care can be affected by incomplete medical knowledge.
A third point is that the restriction of physicians in the United States from performing clinical testing with U.S. patents gives a competitive advantage to physicians who are free to practice medicine in other countries. Two examples from 1999 will elucidate this. Relating back to the hemo-chromatosis test that we have found is not being offered by perhaps one in four laboratories in the United States. Several of the researchers in early 1999 discovered that the patented and published probes used for the test yielded a higher rate of false positive results because of polymorphism in the noncoating portion of the HFE gene.
In another case, a clinician who performed over 2,000 clinical tests for APO E4 for Alzheimer's disease affirmed the occurrence of two rare mutations in this population, which presented difficult clinical issues regarding how to perform the test and regarding how to counsel patients about new mutations and information of limited or questionable clinical utility. In these cases, the clinical researchers were from Australia and Canada.
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A fourth important point here is that almost without exception, disease gene patentees are physicians. The rush to patent genetic discoveries conflicts with 150-plus year moral stance of the American Medical Association. Such patents give physicians the right to restrict, and alternatively, to profit directly from the practice of medicine by other physicians. This was, to my mind, the primary concern behind the Ganske-Frist Amendment to the patent statute in 1996. That law frees physicians in institutions from infringement of pure process patents, but the law does not extend biotechnology patents, and it does not protect pre-approved laboratory services.
From this fourth point, I'd like to make three final remarks. First, molecular pathologists practice medicine too. They have nonetheless been carved out from the Ganske-Frist protections. Second, releasing physicians from infringement is a radical policy that has led at least some institutions of which I'm aware to simply stop filing patent applications on surgical and other medical procedures. If patents are such a strong incentive to innovate, then this well may result in fewer such innovations with the kind of tough balancing that's going on. It should be a public health concern if this is happening.
Third, it may well be that the reward structure of patents could have been retained in medicine by statutorily requiring compulsory licensing of all medical technologies and by limiting royalties to a reasonable sum. Gene patents are too basic to believe that the patents may be avoided or worked around by new innovations, and because of this, the patents grant real monopolistic power in a market that's already fraught with inefficiencies.
Thank you.
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[The prepared statement of Dr. Merz follows:]
PREPARED STATEMENT OF DR. JON F. MERZ, ASSISTANT PROFESSOR OF BIOETHICS, CENTER FOR BIOETHICS, UNIVERSITY OF PENNSYLVANIA
Good morning. I am very pleased to have the opportunity to address the Committee.
I wish to direct my comments to the emerging pattern of exclusive licensing of so-called Disease Gene Patents. These patents generally claim a gene sequence, one or more mutations in which are found to be associated with disease or risk of disease. In addition to claims covering all uses of the chemical sequences, the patents also claim all methods of diagnosis of disease by identifying in a specific patient the disclosed genetic alleles, mutations, or polymorphisms.
In a recent survey published in Nature, Anna Schissel, Mildred Cho, and I found that 14 of a sample of 27 disease gene patents had been licensed as of the date of our survey, and all licenses were exclusive. Patents covering the diagnosis of various neurological diseases including Charcot-Marie-Tooth disease, Spinocerebellar Ataxia, and Apolipoprotein-E in Alzheimers Disease have all been exclusively licensed to Athena Diagnostics. The first patent on the breast and ovarian cancer gene—BRCA1—was exclusively licensed to Myriad Genetics. Not all such patents are exclusively licensed, of course. Most notably is the patent covering the most common allele of the cystic fibrosis gene, which is being broadly licensed by the University of Michigan to anyone who performs CF testing.
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Nonetheless, the pattern of exclusive licensing raises various concerns. Primary among these is that some licensees are exercising their patent rights to prevent physicians—in particular, molecular pathologists—from performing genetic testing of their patients.
In a pilot survey of a convenience sample of 74 laboratory physicians, my colleagues Mildred Cho, Debra Leonard, and I found that 25% reported abandoning a clinical test that they had developed, and 48% reported that they had not developed a clinical test because of patents. Respondents also reported paying royalties for using patented technology ranging from 9% for Polymerase Chain Reaction (PCR) to 75% for the human chorionic gonadotropin (hCG) patent, which covers but a small part of the maternal serum triple test.
In a follow-up nationwide survey of 112 laboratories capable of performing testing for hemochromatosis, a common disease causing iron-overload in the body, my student Antigone Kriss, along with Debra Leonard, Mildred Cho, and I, examined knowledge of and performance of the patented test. This survey showed that a good number of laboratories had adopted the test immediately upon publication of the research paper disclosing the test, more than a year prior to the issuance of the patent. Subsequent to the grant of the patent and its exclusive license to Smithkline Beecham (SB), nearly all of our respondents stated they knew of the patents, while about half of the laboratories had received letters from SB. Nineteen percent of our respondents reported that they did not develop the genetic test for hemochromatosis and another 4% stated they had abandoned the test, at least in part because of the patents.
One important point that I would like to make is that most of these disease genes to date have been found at least in part with federal funding of the research. The exclusive licensing of patent claims which anyone skilled in the art can immediately practice is contrary to a long-standing policy that the public should not be made to pay twice for inventions. Exclusive licensing should be reserved for inventions that require substantial downstream investment and development efforts to bring a commercial product to market.
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A second point is that there is no clear line to be drawn between clinical testing and research testing, because the state of the art of genetic tests is such that much more clinical study is necessary to validate and extend the early discovery of a disease gene. Thus, the restriction of physicians from performing clinical testing will directly reduce the knowledge about these genes, which may very directly harm patients whose care can be affected by incomplete science.
A third point is that the restriction of physicians in the United States from performing clinical testing gives a competitive advantage to physicians who are free to practice medicine in other countries. Two examples from 1999 exemplify this.
Relating back to the hemochromatosis test that we have found is not being offered by some laboratorians, several researchers in early 1999 discovered that the patented and published probes yielded a high rate of false positive tests because of a polymorphism in the non-coding portion of the HFE gene.
In another case, a clinician who performed over 2000 clinical tests for Apo-E4 for Alzheimer's Disease affirmed the occurrence of 2 rare, 1 in 1000 mutations, which presented difficult clinical issues regarding how to perform tests and how to counsel patients about new mutations and about information of limited or questionable clinical utility.
In these cases, the clinical researchers were from Australia and Canada.
A fourth important point here is that almost without exception, disease gene patentees are physicians. The rush to patent genetic discoveries conflicts with the 150-plus year moral stance of the American Medical Association because it gives physicians the right to restrict and to profit directly from the practice of medicine by other physicians. This was, to my mind, the primary concern behind the Ganske-Frist amendment of the patent statute. That law, description of which I am sure is unnecessary here, frees physicians and institutions from infringement of ''pure process'' patents. But the law does not extend to biotechnology patents, and does not protect CLIA-approved laboratory services. From this, I'd like to make 3 final remarks:
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First, releasing physicians from infringement is a radical policy that has led at least some institutions to simply stop filing patent applications on surgical and other medical procedures. If patents are a strong incentive to innovate, then there may be fewer such innovations, which should be a public health concern.
Second, molecular pathologists practice medicine too. They have nonetheless been carved out from the Ganske-Frist protections.
And, third, it may well be that the reward structure of patents could have been retained in medicine by statutorily requiring compulsory licensing of all medical technologies, and by limiting royalties to a reasonable amount. Gene patents are too basic to believe that the patents may be avoided or worked-around by new innovations. Because of this, these patents grant real monopolistic power in a market already fraught with inefficiencies.
Thank you.
Mr. COBLE. Thank you. You were so timely, Dr. Merz, that I didn't realize you'd finished. Thank you, sir. Dr. Varmus, although hitting number seven in the line-up, you'll be the clean-up hitter, and you'll have the final word.
STATEMENT OF DR. HAROLD VARMUS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, MEMORIAL SLOAN-KETTERING CANCER CENTER
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Mr. VARMUS. Thank you. I can take Dr. Merz's extra time as well, I assume. Thank you.
Mr. Chairman and members of the committee, thank you very much for holding this hearing. I'm here today as a member of the academic biomedical research community with a long-standing interest in how——
Mr. COBLE. Dr. Varmus, pull the mike a little closer to you if you will.
Mr. VARMUS. Yes, thank you. Mr. Chairman, I appear as a member of the academic biomedical research community with a long standing interest in how discoveries in biology and medicine are transformed into medical usefulness. I appear as someone with great respect for the American system of intellectual property protection, but also as someone concerned about whether this system is being used not just well but optimally to achieve the public health benefits of modern biology.
In particular, I'm troubled and will speak to recent tendencies to protect intellectual property increasingly early in the process of discovery and research that ultimately leads to commercial products. Today's hearing may have been triggered by recent announcements about the human genome, but the issues extend well beyond DNA and genes and antedate the human genome project by several years.
In the 1980's, the Bayh-Dole Act, which you've heard described by Dr. Severson, and the growth of a young biotechnology industry, provided an energized and altered atmosphere for biological work. This new environment brought with it many benefits, including powerful new methods to diagnose and treat diseases, but it has also introduced new elements into biomedical research. Patents have been issued on many things for which intellectual property protection might not have been previously sought, and I will refer to such things as ''research tools,'' materials and methods that aid for the biological research but are not of immediate medical utility.
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Universities have established sometimes aggressive and usually expensive offices to protect intellectual property, including research tools. Companies and universities have sometimes employed onerous licensing terms, even for academic investigators. Ideas and materials have been less openly exchanged in many well documented situations.
Now, patents for one class of research tools, namely cloned genes and their sequences, have been especially perplexing because the traditional standards for patenting, including non-obviousness and utility, have, as you've heard, been difficult to define fairly in this context. In my opinion, many of the thousands of gene patents that have been awarded appear to reward unduly the preliminary and frankly obvious work of determining DNA sequence, and to diminish the value of the innovative scientific work required ultimately to determine gene function and medical utility.
As we've discussed already, some of the first patents to be issued on human genes produced little controversy because the genes were clearly disease related and posed immediate utility for diagnostic testing or new therapies. Examples that have been mentioned already today include the insulin gene, the cystic fibrosis gene, and one of the breast cancer susceptibility genes known as BRCA 1. As methods to clone and sequence DNA have improved, and, in particular, as random selection of DNA fragments for sequencing became more popular, many more patents were applied for and issued on much less substantial grounds, and often with surprisingly broad claims.
For example, to meet a utility standard, the DNA in question might do no more than serve as what we would call a molecular probe, a trivial property that most pieces of human DNA would possess. Some patents grant rights to many other related genes not included in the process of discovery, solely because their sequences resemble the submitted one. Indeed, there's an example of a patent issued to the Incyte Corporation that would give them rights to an entire family of genes that encode enzymes known as kinases. Such extensive rights could discourage others from studying these gene families to achieve practical goals.
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Other issued patents covered gene functions that were only speculative at the time of submission, allowing the patent holder to claim title to applications that became known only after extensive additional studies by others. One very well publicized example of such a situation is the patent that was granted to Human Genome Sciences on a member of the so-called seven transmembrane receptor family that turned out to be an important part of the receptor for HIV, the cause of AIDS.
Patenting of incomplete genes and of multiple variation of a gene means that multiple parties may hold title to part or all of the same gene, and this feature can greatly complicate licensing genetic components for some of the new technologies described earlier.
Now, as you've heard, the PTO has considered recently raising the bar to gene patenting, especially for the utility standard, and I thank them for taking on this re-examination of their standards. Although the new proposal is an improvement and the final position PTO has not yet been determined, I believe that the bar may still not be raised high enough. Under the new proposal, a patent could still be issued for a gene or a portion of a gene based on a still quite superficial and potentially misleading set of information about the properties of the gene based on computer-based comparisons, with little information about how the gene might be used to diagnose, prevent, or treat disease. In this respect, there may be some confusion between establishing some functional property of the gene and its actual utility in medical treatment. Obviously establishing the legitimacy of such claims, even experimentally, would doubtless require legal proceedings such as those that follow accusations of infringement.
A few words about licensing practices. In my view, over-valuing inventions, especially research tools, often engenders licensing policies that are unduly restrictive. You've heard mention of exclusive licensing rather than non-exclusive licensing and its impact on developing genetic tests for important diseases. In addition, another class of onerous licensing provisions contain so-called reach-through provisions that would provide royalties from any downstream commercial products to those who own property in very early stages of development that may now be of uncertain value.
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How can we reduce the overly zealous protection of research tools without damaging the healthy metabolism of an obviously vital enterprise? I believe the steps should be taken, but gingerly and with due deliberation. Indeed some steps have already been taken. The NIH, for example, over the last few years, has attempted to increase awareness of the need to promote fair exchange of materials. Partly in response to some of the NIH directives, many institutions have agreed to simplify exchange of biological materials by using a so-called uniform biological materials transfer agreement.
Some organizations, mainly academic, have refused to accept onerous licensing agreements that contain, for example, reach-through provisions. Some industries, to their great credit, have agreed to make protected items, including genetically engineered mice, or methods for modifying genes, freely available to the not-for-profit sector, although admittedly, in some cases, only after prolonged negotiation.
At times, Congress has contemplated research exemptions to provide academic scientists unfettered access to certain types of protected materials. As described earlier, the PTO has been contemplating changes in the criteria by which certain research tools, particularly gene sequences, are granted patent protection.
In addition, public disclosure of an invention can prevent others from seeking property protection for the same thing, thereby preserving easy access. In 1996, the human genome sequencing consortium began placing all human sequence data immediately in the public domain. You've heard mention earlier from Commissioner Dickinson about the group of pharmaceutical companies that in 1998 agreed to pool resources to identify and disseminate those markers of human genetic variation that we call SNP's, thereby blocking the two early patenting before utility was established.
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In summary, Mr. Chairman, this is a time of unprecedented excitement in biology, but overly enthusiastic protection of intellectual property too early in the process of product development can impede the delivery of public health benefits from these discoveries. Several potential remedies exist, but should be approached cautiously. I thank you for holding this important hearing, and will be pleased with my colleagues to answer any questions that you might have.
[The prepared statement of Dr. Varmus follows:]
PREPARED STATEMENT OF DR. HAROLD VARMUS, PRESIDENT AND CEO, MEMORIAL SLOAN-KETTERING CANCER CENTER
Mr. Chairman and Members of the Subcommittee:
I am Harold Varmus, the President of Memorial Sloan-Kettering Cancer Center in New York City. From 1993 to the end of 1999, I served as Director of the National Institutes of Health (NIH). Before that, I was a member of the medical school faculty at the University of California, San Francisco for over two decades. Throughout these three phases of my career, I have been actively involved in experimental studies of the molecular basis of cancer and the growth cycle of retroviruses.
I appear here today as a member of the biomedical scientific community with a long-standing interest in the ways in which we distribute, use, and place value on the ideas and materials that are produced by publicly and privately funded research. I have great respect for the system of intellectual property protection that has allowed American industry to prosper in so many fields, including several areas of science and medicine. I also have significant concerns about whether this system is being used optimally to realize the opportunities offered by modern molecular genetics to improve the health of the public. In particular, I am troubled by widespread tendencies to seek protection of intellectual property increasingly early in the process that ultimately leads to products of obvious commercial value, because such practices can have detrimental effects on science and its delivery of health benefits.
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Today's hearing and much of the current debate about patenting and use of biological materials were triggered by the recent acceleration of the sequencing of the human genome and the public discussions of human genes as intellectual property. But the issues extend well beyond DNA and genes and antedate the Human Genome Project by several years.
THE BAYH-DOLE ACT AND THE TRANSFORMATION OF BIOLOGY
In 1980, Congress passed the Bayh-Dole Act, which was designed (as other witnesses will no doubt review in greater detail) to allow institutions to pursue and possess patent protection for discoveries made with funds provided through grants from Federal agencies, such as the NIH, thereby enhancing the transformation of biological discoveries into medically useful products. At about the same time, new methods in molecular biology and genetics were stimulating the growth of a young biotechnology industry and reducing the distance between fundamental discoveries in biology and potentially profitable applications to medical practice.
In this more complicated and energized atmosphere for biological work, patents were issued on many things—such as methods for introducing DNA into cells, genetically altered experimental animals, and sequences of cloned pieces of DNA—for which intellectual property protection might not have previously been sought. (It is customary to refer to such things as ''research tools'' since they are useful for the conduct of research and the development of scientific advances into health consumer products, but are not themselves such products.)
This new environment has brought with it many benefits, most obviously a vigorous biotechnology industry that has produced novel and powerful methods for diagnosing and treating disease. But it has also changed the conduct of biomedical research in some ways that are not always consistent with the best interests of science. It has promoted the creation of sometimes aggressive and usually expensive offices at many academic institutions to protect intellectual property and to regulate the exchange of biological materials that would at one time have been freely shared among academic colleagues. It has encouraged some companies to make protected materials and methods available to investigators under terms that seem unduly onerous. In a few well-publicized cases, and likely in many more undocumented ones, it has fostered policies that have inhibited the use of new scientific findings, even in the not-for-profit sector, and has reduced open exchange of ideas and materials among academic scientists.
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GENE PATENTS
Efforts to seek intellectual property protection for cloned genes, gene variants, portions of genes, DNA copies of messenger RNA, and the proteins encoded by genetic information have presented an especially perplexing problem because the traditional standards for patenting, especially non-obviousness and utility, have been difficult to define fairly in this context. As a result, some of the gene patents issued to date do not display the traditional balance between the exclusionary right granted by the patent to the inventor and the disclosure to the public of a new, useful, and non-obvious invention that might otherwise have been maintained as a secret. Such patents appear to reward excessively the preliminary and frankly obvious work of determining DNA sequence, and to diminish the prospect of financial return from the innovative scientific work required to determine gene function and utility.
Some of the first patents to be issued on human genes produced little controversy because the genes were clearly implicated in the causation or treatment of disease, and the genetic information was immediately applicable to the design of diagnostic tests or therapies. However, with the expansion of efforts to clone and sequence human DNA, many more patents were applied for and issued on much less substantial grounds. To meet a utility standard, the Patent and Trademark Office (PTO) required no more than that the DNA in question serve as a molecular probe, a property that would be attributable to the majority of pieces of human DNA.
Furthermore, some of the issued patents have seemed very broad in their claims. For example, some grant rights to many other functionally related genes, solely on the basis that their sequences resemble the submitted one; such apparently extensive rights might well discourage others from studying members of such gene families to achieve practical goals. Other issued patents appear to cover many possible gene functions that were only speculative at the time of submission, thereby allowing the patent holder to claim title to applications that became known only after extensive additional studies by others. Moreover, patenting of incomplete genes and of gene variations implies that multiple parties may hold title to part or all of the same gene; this feature can greatly complicate licensing genetic components for new technologies.
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Recently, to the relief of many of us, the PTO has considered raising the bar to gene patenting, especially for the utility standard. Although the new proposal is an improvement and the final position of the PTO has not yet been announced, I believe that the bar may still not be raised high enough. Under the new proposal, a patent could be issued for a gene or a portion of a gene based on still quite superficial and potentially misleading information about the properties of the gene or about how it might be used to diagnose, prevent, or treat disease. Such information may be dependent only on the similarity between the new gene and others previously described. Establishing the legitimacy of such claims, even if the predictions were confirmed experimentally, would doubtless require legal proceedings, such as those that follow accusations of infringement.
LICENSING PRACTICES
One of the goals of U.S. patent policy is to encourage development of useful products by inventors and those to whom inventions are licensed. However, some of the recent developments described above have created a situation in which pursuit of the protected information and materials by both the for-profit and not-for-profit sector may be restricted, rather than promoted, as intended historically. Sub-optimal use is likely to result when the patent appears to others to over-value the invention and when the terms of use—that is, the licensing policies—are unduly restrictive. For example, potential licensees are frequently confronted with so-called ''reach-through'' provisions that would provide royalties from any downstream commercial products to those who own property that may now be of uncertain value and vague utility. This situation does not encourage vigorous development of the protected discoveries. Likewise, an inappropriate insistence on exclusive, rather than non-exclusive, licensing of genetic sequences for diagnostic tests could slow the development of this important application of genetic tools.
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SOME RECOMMENDATIONS
What can be done to minimize the difficulties of overly protecting research tools, including DNA sequences, without damaging the metabolism of an obviously vital scientific and industrial enterprise? Some steps have already been taken. The NIH has attempted to increase awareness of these problems by endorsing a study panel's recommendations for promoting fair exchange of materials and debate of unresolved issues. Many institutions have agreed to simplify the exchange of biological materials among investigators by supporting the use of a Uniform Biological Materials Transfer Agreement. Some organizations have been loath to accept the terms of onerous licensing agreements, such as those with inappropriate ''reach-through'' provisions, even though such principled resistance may deprive their investigators of desired materials. Occasionally, industries or others holding patents or exclusive licenses to important materials (such as genetically altered mice) or methods (such as techniques for altering genes in cells) have agreed to make the protected items freely available to the not-for-profit sector. Members of Congress have, from time to time, considered research exemptions that would allow academic scientists unfettered access to certain types of protected materials and methods. And, as described earlier, the PTO has been contemplating changes in the criteria by which certain research tools, especially gene sequences, are granted patent protection.
Public disclosure of an invention, by individuals or by groups acting in joint self-interest, can prevent others from seeking patent protection for the same thing, thereby preserving easy access to research tools. For example, in 1996, the international human genome sequencing consortium adopted a policy that all human sequence data would be placed immediately in the public domain. As another illustration, in 1998, a group of pharmaceutical companies and a private philanthropy pooled resources to identify and disseminate markers of human genetic variation (single nucleotide polymorphisms, or SNPs). This coalition, known as The SNPs Consortium, argued it was in the best interests of its members to place such information in the public domain, without restriction, to optimize the chances that further work would be done to determine the significance of the markers.
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SUMMARY
Contemporary biologists are privileged to work at a time of unprecedented excitement. But overly enthusiastic protection of intellectual property, too early in the process of product development, can impede the delivery of public health benefits from discoveries in many important fields, including genomics. There are several potential remedies, but they should be approached cautiously to avoid jeopardizing the highly productive scientific atmosphere that the United States currently enjoys.
Thank you for holding this important hearing. I will be pleased to answer any questions that you or your colleagues may have.
Mr. COBLE. Dr. Varmus, you may publicly express your thanks to Dr. Merz. You did get to use his extra minute-and-a-half.
Lady and gentlemen, thank you very much for a very, very worthwhile hearing. At the risk of sounding like a Johnny one-note, I want to address funding one more time. Is there a member at the table who does not believe that the Patent and Trademark Office should retain all of its user fees? Your silence indicates that you're set. Am I correct about that? I just want that for the record.
Mr. VARMUS. May we speak positively to that?
Mr. COBLE. Well, I figure your silence indicates your positive response, and I thank you for that. Dr. Varmus, this is a question that would be propounded by a layman, and in terms of gene patenting, I think I qualify as a layman. Why would anyone want to patent a gene?
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Mr. VARMUS. Well, of course, it depends a little bit on who you are, but you might want to patent a gene because one had been discovered and you might be interested in commercial reward for that scientific work. But, in the course of doing that, you might recognize that the ability to recruit investment in a commercial endeavor that's required to bring the products of that gene to market would be enhanced by intellectual property protection.
There's very little doubt, as you've heard, that the legality of patenting genes has been well established in this country by a variety of decisions all the way up to the Supreme Court. I think it could be argued whether or not patenting of genes is actually required for the productivity of the biomedical research enterprise, but the reasons why one might want to do it, I think, are quite clear.
Mr. COBLE. Dr. Severson, by your own admission, you come to us wearing two hats, your commercial hat and your research hat. Let me ask you, Doctor, what are the consequences for the scientific community in this matter? Would this sort of approach that we're pursuing, would it likely inhibit or frustrate or block the efforts of research and discovery as some indicate it might?
Mr. SEVERSON. I don't think so. I think universities are places where faculty and researchers pursue knowledge, and people like me who are involved in trying to get the results of research at universities commercialized get involved from time to time when a faculty member, as Dr. Varmus notes, thinks there is some value and wants to be recognized for the results of their discovery.
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In my own practical experience, very rarely do patents from outside organizations inhibit the ability of university people to do their own research programs.
Mr. COBLE. Are you aware whether or not any scientist or physician has been sued for research on a gene relating to a patent?
Mr. SEVERSON. No, I'm not aware of that, sir.
Mr. COBLE. Ms. Ryan, if you will, how about your commenting on the adequacy of the utility standard to be applied that will be, I guess, laid out in more detail with the guidelines Mr. Dickenson mentioned earlier.
Ms. RYAN. Yes, Mr. Chairman. AIPLA commented fairly extensively on the guidelines when they were published, both on written description and utility, but for the most part, we found them to be very, very positive. We had very little to add or to criticize in what the Office had done. So, we look forward to seeing the final guidelines.
I think everything that Under Secretary Dickenson mentioned here today only underscores that this is a very positive development that everyone at this table, I think, would agree we need to see and work with. In fact, the Under Secretary also stated that the Office is currently working under those guidelines, which is a very positive step.
Mr. COBLE. Thank you. Mr. Dixon, critics of the patent system suggest that we should adopt a compulsory license for gene patents. How about your comment on what impact this development could have on the future of cancer research?
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Mr. DIXON. The Association very strongly believes that research would be severely chilled and delayed if such a compulsory licensing arrangement were to be adopted.
Mr. COBLE. Reverting to Ms. Ryan's comment, do most of you agree that the Patent and Trademark Office is pretty much on course at this juncture? Is there anyone who does not agree with that? Doctor?
Mr. VARMUS. Well, I think they're on course in the sense that they're revising the standard in the right direction, but I don't believe they've gone far enough, that the computer comparisons that we discussed earlier, first of all, are not necessarily indicative of the substantial functional identification of what a gene carries out to warrant patent protection in my view.
Secondly, sometimes those identifications are extremely misleading and vague.
Mr. COBLE. Well, I see my red light has appeared, so I will recognize the gentleman from California, Mr. Berman.
Mr. BERMAN. Well, Mr. Chairman, I want to congratulate the staff for putting together an excellent panel of witnesses. It's been very helpful. I'm torn between, with my very limited knowledge, sticking to the questions that my staff raised with me and the questions which would more clearly reveal my ignorance that just came up as I listened to the people testify. So, maybe if we have two rounds, I can start with the staff inspired issues and then move to the freelancing.
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Let me start with Dr. Varmus. Pinpoint even a little more particularly some of your concerns about even the new guidelines in the context of issues like the patenting of the fragment, this issue of the patenting of a fragment allowing you to grab control of the entire gene—not you, the patent holder, and this whole issue of what I guess is called homology, the notion that a gene X being similar or very close to gene Y, you can now make assumptions about gene X's utility and functions that allow you to grab a patent on that simply because it's very close to gene Y.
Mr. VARMUS. Well, with respect to the fragments, I think it's possible for fragments to meet substantial criteria of value. For example, it would be possible to know that a fragment of a gene comes from a portion of a gene that has been clearly implicated in disease and would have certain well defined uses.
Mr. BERMAN. So that means you would know the utility as well?
Mr. VARMUS. Yes, I think that's perfectly possible. The problem here is that this can give rise to a situation known as patent clutter, and one version of submarine patents in which a patent might have been issued earlier on a piece of a gene on the grounds that it would be useful for forensic purposes or as a marker for a chromosome, and then you might engender patent disputes later, which, as the Commissioner mentioned, would then have to be settled by court proceedings.
The issue of the homology criteria is one that perhaps is best summarized in the following way. The tremendous amount of work on human genes and biology generally has allowed us to anticipate that any new gene that's isolated from any organism will have a relationship with something that's been discovered before. That relationship might simply be enough to allow you to say that the encoded protein will be at a certain place in the cell. Or it might allow you to say this gene is likely to make a protein that has a certain enzymatic function or a function that is related to the control of which genes get read out to make proteins in the cell.
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Those are useful guides to further research, but they don't inform the user with respect to a utility that would eventually have a commercial application. In contrast, if one can link a gene to a likelihood that an individual who has a certain version of that gene will develop a disease, and that therefore the gene is likely to be useful as a material on which to base a diagnostic or predictive test, then a higher kind of utility standard has been met.
Mr. BERMAN. I guess my last two questions for this round I'll ask. First, I'm curious. Well, one question is I'd like to hear Dr. Scott and Dr. Henner respond to some of the concerns you have raised. The second question is to the extent you are familiar with Dr. Scott's company's business model, and I don't know if you are, but I had a chance to meet with his company yesterday, and concerns about—I mean, other people spoke to this issue, too, but about this exclusive licensing somewhat obviated or lessened by virtue of that kind of business model. So, I don't know. If you know their model, maybe you want to go first.
Mr. VARMUS. Well, not in detail, but I do applaud the fact that they are a non-exclusive licenser.
Mr. BERMAN. I guess that would obviate it, wouldn't it? All right.
Mr. SCOTT. Let me jump in. First let me that while I agree, actually, with many of Dr. Varmus's comments, there are some gray areas where we would probably strongly disagree, and primarily it's around the concept that a patent should be rewarded for commercial utility, not for biological function, and there's an important distinction.
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PSA is a common test for prostate cancer, and a great example of where the commercial utility is simply the observation that this protein appears in the bloodstream, regardless of its particular biological or biochemical function. So, it's clearly possible to demonstrate commercial utility in cases where we don't have biological function.
The second comment is with regard to homology based patents. We don't believe that's an all or nothing phenomenon, that in fact, there are molecules where you have a very weak hemology or maybe just a partial hemology to a domain that really doesn't tell you a whole lot about what that molecule does, and if you don't have any association with a commercial utility or disease, you should not get a patent.
On the other hand, structure function relationships are the basis for biochemistry. Function is heavily related to structure, and there are many, many families now for which the function can be reasonably predicted from the structure, and better and better so every year. So, we think that the standards there even are a moving target.
Mr. BERMAN. Are what?
Mr. SCOTT. The standards are a moving target, and once we know more and more about a family, we can begin to predict more and more accurately the function of new members of that family based on everything that's already gone on before that.
A good example is Johnson & Johnson just announced recently the discovery of a third histamine receptor, H3 receptor, out of our database for which the only original information was the knowledge that this showed a high degree of hemology with the H1 and H2 receptors but became a very plausible issue in terms of all the drugs that are on the market today targeted for asthma and for other diseases that, in fact, may be crossing over and hitting that third receptor.
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So, the fact that a very closely related third receptor was identified was of incredible value and importance within the pharmaceutical industry to understanding pharmacology and toxicology and how drugs interact.
Mr. VARMUS. Can I just respond briefly? I think one has to acknowledge that there is a gray area here. One could raise the question of whether knowing something about the function of a gene or whether knowing that that gene was already protected by a patent would encourage or discourage other investigators from trying to establish whether or not that gene might be important.
Mr. HENNER. If I could just very briefly, I've already spoken to the PTO's guidelines which we very clearly support, the issue of homology which Dr. Varmus raised and which I raised. I think from a very practical consideration, one can look at two genes that are 98 percent identical that have completely opposite effects in the body. So, I think one has to be very careful on using those. As Dr. Varmus said, that's the start of further experimentation.
Mr. COBLE. Fortunately, we have suffered no interruption from the Floor. In view of the interest, I think we may well have a second round of questioning. The gentleman from Michigan, Mr. Conyers.
Mr. CONYERS. Thank you, Mr. Chairman. I'm still getting adjusted to the new order, and so I'm a bit skittish. You know, this has a scenario like a movie where a lot of intellectual people come together and calmly and rationally talk about a whole new world of making people and reproducing things, and we want to look at the fine question of the patents.
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I'm very nervous about it. You know, there are great benefits involved, but I'm still trying to gain some of the positive optimism of my friend, Ms. Lofgren. I'm still in the scary stage, so I need witnesses that help me try to get over it and say well, look, you know, it's a new century, new universe. We've made animals. We'll be making people pretty soon. I mean, you know, let's talk about this intelligently, can't we? I mean, why start raising your voice in a room full of very thoughtful people?
I'm scared to death of where this is going. Doctors Varmus and Merz, is there any cautionary concerns among any of you about the larger direction? I know we're Judiciary and intellectual property is our thing, but we've just stepped out of space, you know, into a whole new thing, and I'm not over it yet. Maybe I need two pills and check me tomorrow and see if I'm feeling better, and maybe I'd have a different approach to this. This is the scariest hearing I've had in the judiciary committee. Please calm my fears or ameliorate my condition somewhat, can you, anybody?
Mr. VARMUS. I'm not sure I can do that entirely, Mr. Conyers, but let me say a couple of things. As in any case when dramatic scientific discoveries are being made, there will be people with imagination who will project stories of how that information might be used that can give rise to very significant concerns. But I think experience with isolated genes has already progressed far enough to allow us to see the way in which genetic information can be used in incredibly valuable ways that benefits patients now.
Take, for example, the isolation of the human insulin gene, which was mentioned earlier as being the source of human insulin to be given to patients instead of insulin derived, as it was for many years, from pork. Take, as another example, the isolation of genes for growth factors for blood cells that in my hospital, Memorial Sloan-Kettering, is now used on a daily basis to protect patients who've undergone chemotherapy and bone marrow transplantations from the ravaging effects of inadequate immune protection against infection.
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Mr. CONYERS. Oh, I'm happy about all the potentials and the actual progress. I don't quarrel with them a moment.
Mr. VARMUS. Let me address the specific actions that have been undertaken to try to address the fears that you have. Some of these fears, of course, are addressed to misuse of genetic information, discrimination against people whose information may be the basis of discrimination for employment or insurability, and there is a great deal of legislative action, as you know, on these topics and a great deal of thought has been given to this by the genome project.
In addition, there are concerns about not making human beings and about genetically altering human beings by introducing genes the way we do in animals.
Mr. CONYERS. But isn't it true if we're cloning sheep now, we're not very far from people. Can you help me out there?
Mr. SCOTT. I'd actually like to comment on that as a representative of industry because in fact, I think many of your fears are well grounded, and I don't think they should be sort of cast aside but rather, we should be engaging in a very open and honest public debate about the future of genetic technologies in terms of, you know, what I would call directed evolution, or actually changing the human species that's not been done to any of our knowledge yet, but the technology may allow for that in the future. As a company who is sort of dedicated to the curing and effect on disease, I would suggest that this technology should be first used to solve the problems that we have in our society and to solve the problems of occurrent disease. In fact, we would actually be encouraging that we not do germ line manipulation or change the human species, in essence, for probably some significant time until religious or ethical societal groups have had a chance to comment and look at that.
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Mr. CONYERS. Thank you very much. Well, that completes the paradox, Chairman Coble. I asked this question, and I was hoping my government scientists would rush in, but industry people rushed in. So, thanks a lot, everybody.
Mr. COBLE. Well, I say to my friend from Michigan, John, I don't believe you hold a corner on the anxiety market. I think probably we all share that.
The gentlelady from California, Ms. Lofgren?
Ms. LOFGREN. Thank you, Mr. Chairman. Following on to Mr. Conyers, I am actually an optimist, and clearly, every scientific advance presents challenges, but it also presents opportunities that are great. When I think about what all of you are doing, each in your separate capacities, what it means is that my children will be stronger and healthier than I am and have longer life spans, and that we will have a better world. We do need to be alert to the icebergs in the sea. I think that's really what this hearing is about, to make sure that we can continue to advance scientific discovery, that our patent system has worked so well to accomplish that, but the new challenges that are before us don't keep that system from working optimally.
I hope I can just recognize two people who are on the panel because they're both from my neck of the woods, and that's Dr. Scott and Dr. Henner came all the way from Silicon Valley to be here, and I appreciate that, and I found your testimony very interesting. I always feel it's a special honor and privilege when a Nobel Prize winner appears before the United States Congress. It's one of the things that makes this job worth doing, is to be able to listen to Nobel Prize winners give their opinion, so thank you, Dr. Varmus, for being here.
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You know, what is interesting to me is how much of what Dr. Henner and Dr. Varmus had to say that was the same, even though you're coming from different places in the whole economy. I'd like to explore some of the potential solutions to the issues that you've both identified. Going to the issue, and I think Dr. Henner mentioned it in his testimony, going to the computational models that are yielding patentable material of potentially questionable patents because of the utility standard, at least in the past.
Ms. Ryan mentioned the process in H.R. 400 that was lost in the negotiations to get patent reform through the Congress. I'm wondering if you, Dr. Varmus, or you, Dr. Henner, have had a chance to consider the re-examination provisions that were in H.R. 400 and whether that might be beneficial in sorting through the issue that you both identified in terms of the computational model yielding patents.
Mr. HENNER. I can't respond to that in detail, but I can mention that as a company, we obviously have interests both in the United States and in Europe, where there is a re-examination procedure, and in those cases, we've been very active in challenging patents after they issue. So, for the most part, I think that is a good system.
Mr. BERMAN. Well, Europe, it's actually a full blown opposition process, just to include that in the context of possible change.
Mr. HENNER. I would support the general concept, but I don't know the details of the provision that was deleted.
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Ms. LOFGREN. All right. Well, perhaps, you know, I'm very interested in this, and I think we're through with patent law for this Congress, but in the 107th Congress, doubtless we'll be looking at improvements, not only the fee issue, which will unfortunately not be resolved probably, but this issue. Maybe we can send this panel copies of H.R. 400 that didn't make it across the finish line and ask them for their thoughts and comments for the next Congress.
The other comment I had, and again, going back to the utility standard, if I'm hearing you right, Dr. Varmus, your concern continues to be that the proposed utility standards may not be sufficiently tight to avoid the early, premature issuance—I don't want to put words in your mouth—of a patent that really does lead to the reach-through problem in a way that you've identified elsewhere in your testimony.
I'm wondering as we move forward, and the Commissioner has shown a great willingness to continue to review standards in his office as technology emerges, and it does so in increasingly accelerated fashion, as we're all aware, whether in the interim as that goes forward, you have proposals outside of patent law to deal with the reach-through problem that you identified?
Mr. VARMUS. Well, the reach-through problem identified, Ms. Lofgren, has to do with licensing.
Ms. LOFGREN. Correct, but it also has to do with when the rights are issued.
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Mr. VARMUS. Yes, the case we sometimes refer to as a type of submarine patent in which a patent claim is issued to a discoverer, and then when a function, a more explicit function is identified, there's an ''ah-hah,'' I've got that patent, and now you have to license for me.
Ms. LOFGREN. Correct, but the question really is, I'm jumping ahead because I know the chairman is looking at my red light, but if we're going to have a next round, whether you could think through while we go through this process of the Patent Office continuing to revise and review its standards to make sure that we're getting that right balance, are there other remedies that Congress or the patent office or some other entity ought to look at that would provide interim protection while that process is going forward?
Mr. VARMUS. I'd be happy to speak to that.
Ms. LOFGREN. Or perhaps Ms. Ryan has some ideas on that.
Mr. COBLE. Dr. Merz, I'm going to let you put your oars in the water. I don't think anybody has questioned you yet. I would be interested in your comment, Dr. Merz, on the licensing issue, particularly with exclusive licensing in the diagnostic realm. Now, is it your belief that these are, ''false,'' of the patent system, or perhaps the antitrust enforcement, if you have an opinion?
Mr. MERZ. I'm not exactly sure that it's either one of those. I think that it's, there's a very small number of actors who are actually doing this, and I think they want to control the market, they want to control the resource. They just basically want to deliver a service. They can't sell a product, you know, where they could sell a kit, but then they'd have to go through FDA and get it licensed to sell kits around the country. So, there's all these reasons that they want to actually just sell the service. There's other cases where it's just greed, I think. Most of it, it's just that's the business model that they've adopted.
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Genetics, for instance, wants to do sequencing of the genes because they're continuing to do discovery in BRCA1 and BRCA2, so they're continually finding new mutations and the like, and that unfortunately, has given them the ability to dictate that sequencing is the standard of care for testing of patients throughout the country.
Mr. COBLE. I thank you, sir. The gentleman from California. If the gentleman will yield just a minute, we have a 15 minute vote and two 5-minute votes. Let the gentleman from California pursue you all for his 5 minutes. Then we will go to the floor and we'll be back. Well, stand easy for just a minute. Rather than keep you all confined, we have this arsenal of talent and knowledge here. I didn't want to lose it, but in view of time, Howard, you go ahead, and then we'll be in touch with you all subsequently if we need to for additional questions. The gentleman from California.
Mr. BERMAN. Curiosity probably has no other value, but I'm just, this issue of genes, learning about the gene, the protein that produces for purposes of determining predisposition to disease—perhaps this gets right to Mr. Dixon's issue—versus diagnosis of a disease, can you know that the disease exists from knowing that the gene exists, or do you just know that the predisposition exists, and the predisposition tells you to do other things medically in terms of testing? Is there an answer to that question.
Mr. VARMUS. Perhaps I can deal with that. We all have the same set of genes, but we have variant forms of each gene. Certain variations can predict at varying levels of certainty whether or not the individual will develop a disease. So, if you have mutations of the cystic fibrosis gene, the likelihood may be very high. In Huntington's disease, it may be close to 100 percent. Certain other predispositions of the kind that Mr. Dixon's referring to may be much more subtle. In fact, there may be constellations of genes that exist in variant form that increase the likelihood that an individual might develop kidney cancer.
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One of the challenges before us now is to take much larger amounts of genetic information, especially with respect to variations in the human population, and try to sort out predispositions to disease that will guide appropriate medical care.
Mr. BERMAN. Dr. Severson, I want to ask you a show me the money question.
Mr. SEVERSON. Yes, sir.
Mr. BERMAN. An academic at a university working on this identifies a gene. The university gets the patent. Let's say he did it with some NIH funding, or they did it without NIH funding or Federal funding. Now the university, you and your folks in your association, you're out on behalf of the universities you work for trying to commercialize that. You work with the biotechnology companies and the drug companies. You give them a license?
Mr. SEVERSON. Yes.
Mr. BERMAN. An exclusive license?
Mr. SEVERSON. It depends on the technology. In some instances, as I mentioned in my testimony, it makes sense to make it broadly available through a non-exclusive license. In other instances, it may be important for the investment that the company has to make to further develop it to enter into an exclusive license.
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Mr. BERMAN. But now the university has a royalty stream of revenue, presumably at some point, in your fondest hopes.
Mr. SEVERSON. Yes, that's right.
Mr. BERMAN. Or do you get a flat fee initially for that license?
Mr. SEVERSON. In some cases, that's done, yes. More likely it's a royalty bearing license.
Mr. BERMAN. Does the professor who did this work get a cut into this, or is he happy with his salary?
Mr. SEVERSON. Most universities, in fact, all universities, and it's actually prescribed in the Bayh-Dole Act, are required to develop policies for revenue sharing that include providing incentive to the inventors for participating in the process and to also fund further research and education at the institution. So, there are royalty policies that divide up the net income, and inventors are one group that receive a portion of the money once it comes in.
Mr. BERMAN. Do the technology managers get a cut?
Mr. SEVERSON. Usually not, sir. We're salary men.
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Mr. BERMAN. Okay, and the Federal Government, if it's an NIH funded research project, do they get into this action?
Mr. SEVERSON. No. Well, NIH has its own technology transfer office and has a group that's comparable to, say our group at Cornell or a group at the University of California.
Mr. BERMAN. But they're making grants to Cornell.
Mr. SEVERSON. Well, we have both. The intramural program at the NIH has a technology transfer office that does what universities do, but the Bayh-Dole Act grants the universities the right to pursue intellectual property protection for discoveries made under the terms of grants. NIH does both things. It conducts its own research in-house with the government scientists and gets grants.
Mr. BERMAN. And Bayh-Dole governs what happens to universities when it's a grant from you.
Mr. SEVERSON. And other grantees.
Mr. BERMAN. But does it give you, not you, but does it give NIH, Federal Government, a cut of that?
Mr. SEVERSON. No.
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Mr. BERMAN. All right. My last question—oh, I'm sorry. I'll stop.
Mr. COBLE. Ms. Lofgren, can you do it? Can you touch your base in 3 minutes? If not, we'll come back.
Ms. LOFGREN. Sure. I don't think we should hold this distinguished panel back.
Mr. COBLE. All right, let's proceed.
Ms. LOFGREN. Just a quick question. I'll ask Ms. Ryan. I know she had a comment for me on my prior question. If she could get that to me in writing, I would appreciate it.
The final question I have, you, Dr. Varmus, had very pointed criticisms on patents on research tools, and your feeling that this chilled the advance of science. I was interested, Dr. Hanner, in his written testimony, says that patents on research tools used to discover genes are not especially valuable in your view. So, I'm wondering whether there should be a remedy. I mean, if it's not valuable in the commercial setting and in the judgment of the Nobel Prize winner, impedes the advance of science, is there a remedy that the two of you would recommend to us on the patents on research tools?
Mr. COBLE. And Doctor, if you could do it very quickly, I would appreciate that.
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Mr. VARMUS. Yes. My view is the discussion is important. This hearing is important to air these concerns. On the NIH website, you'll see a report on research tools and how we're encouraging investigators, both in the commercial and not for profit sector to pay attention to these things. We're dealing with trends. The atmosphere is healthy, but there are some trends that are troublesome, and people need to be aware of them. Not everything is working right, and much of this can be changed not by legislation but by simple awareness of the implications of certain practices.
Ms. LOFGREN. Before I hear from Dr. Henner, I actually agree that Congress should not be passing a lot of legislation in this area. I think it's very clear that the patent office, with the leadership of the current Commissioner, is making adjustments in a thoughtful way and certainly probably much better than the Congress would be able to do, so I just wanted to make sure you knew that. Dr. Henner?
Mr. HENNER. We agree that research tools should be made, for the most part, widely available, and I think we have a staff that actually spends a lot of their time sending out these materials broadly to academic groups. I agree with Dr. Varmus, and I think he did an admirable job on some of these issues on transgenic animals as a research tool, and bringing public attention to bear was a very effective mechanism for dealing with these issues.
Ms. LOFGREN. Well, I'm going to stop. I have lots of other questions, but we also have a series of votes on the floor. It's just been really a treat for me to have such smart people telling us such interesting things today. Thank you so much.
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Mr. COBLE. Folks, pardon my accelerated departure, but we are on a short leash. We appreciate very much your attendance and your contribution today. I'm sure we will be in touch subsequently. This concludes the oversight hearing on gene patents and other genomic inventions. The record will remain open for 1 week.
Thank you for your cooperation, and the subcommittee stands adjourned.
[Whereupon, at 11:51 a.m., the hearing was adjourned.]
A P P E N D I X
Material Submitted for the Hearing Record
PREPARED STATEMENT OF THE COLLEGE OF AMERICAN PATHOLOGISTS
KEY POINTS
The College of American Pathologists believes that:
1. Information derived from mapping of the human genome represents a naturally occurring, fundamental level of knowledge, which is not invented by man and should not be patented. Throughout history, medicine has progressed from the discovery of basic anatomy to histology and cytology, none of which are patented, to the most recent discovery of genes. The recent trend of issuing and using patents on genes to monopolize gene-based testing violates the medical community's tradition of sharing information to bring the greatest benefit to patients.
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2. Gene based diagnostic test services are part of medical practice. As such, they should be widely available to physicians to promote optimal patient care, medical training, and medical research.
3. The research, development and practice of genetic testing in academic and other medical centers is essential to medical progress, the training of physicians, researchers and healthcare professionals, and the continued improvement of the quality of medical care.
4. Most discoveries of human or pathogen genes can be effectively translated into gene-based diagnostic test services without the incentives provided by patents or exclusive license agreements.
5. When patents, exclusive license agreements, or excessive licensing fees are used to prevent physicians and clinical laboratories from providing gene-based diagnostic test services, this limits access to medical care, jeopardizes its quality, and raises its cost.
6. Exclusive licenses that limit gene-sequence-based test services to a single provider are not in the public interest because they interfere with medical training, practice and research, the advancement of medical knowledge, and enhancement of the public's health.
THE COLLEGE OF AMERICAN PATHOLOGISTS
The College of American Pathologists (CAP), representing 16,000 physicians who practice clinical and/or anatomic pathology appreciates the opportunity to submit comments to the House Judiciary Subcommittee on Courts and Intellectual Property regarding an issue of critical importance to pathologists and the patients they serve: access to genetic testing. College members practice their specialty in community hospitals, independent clinical laboratories, academic medical centers and federal and state health facilities.
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Pathologists play an integral role in the primary health team. They are physicians who obtain and interpret data as the result of examination of tissues, blood, and other body fluids for diagnosis and patient rare. The mission of the College of American Pathologists is to represent the interests of patients, the public, and pathologists by fostering excellence in the practice of pathology and laboratory medicine worldwide.
IMPACT OF GENE PATENTS ON MEDICAL PRACTICE
We are in the midst of a scientific revolution in genetics that promises extraordinary advances in clinical medicine. As the medical specialists in the diagnosis of disease, CAP members recognize that genetic testing is an area of growth and change for pathology and medical practice in the decades to come. Pathologists therefore have a keen interest in ensuring that gene patents do not restrict the ability of physicians to provide quality diagnostic services to the patients they serve.
Gene patents pose a serious threat to medical advancement, medical education, and patient care. Information derived from mapping of the human genome represents a naturally occurring, fundamental level of knowledge, which is not invented by man and should not be patented. When patents are granted, subsequent exclusive license agreements and excessive licensing fees prevent researchers, physicians and laboratories from providing genetic based diagnostic services. As a consequence, patient access to care is limited, quality is jeopardized and training of health care providers is restricted. This is particularly true when the United States Patent and Trademark Office grants extremely broad patents on genetic discoveries.
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The field of Molecular Pathology uses genes and their mutations to predict or diagnose disease in the fetus, the newborn, children and the adult. The list of diseases that can now be diagnosed or predicted from gene based tests is growing rapidly. Physicians and scientists can easily and rapidly translate the fundamental information derived from mapping the human genome into diagnostic genetic tests and use these tests for patient care. Because information about gene sequences is so fundamental to understanding specific diseases, patent holders can essentially gain ownership of diseases through patents. Exclusive or restrictive license agreements on gene-based tests have been used to prevent physicians and clinical laboratories from performing these tests as diagnostic medical procedures.
Patients suffer because diagnostic test services are less readily and affordably accessible. Medical education and research related to laboratory testing are also threatened. In fact, CAP members have received ''cease and desist'' notification letters from the patent holder indicating that continued patient testing would be a patent infringement. Examples of diseases where testing has been halted due to physicians receiving such a letter include breast cancer, Alzheimer disease, Canavan disease, and Charcot-Marie-Tooth disease. In further support of this point, in a 1998 informal survey of 74 clinical labs performing molecular testing it was found:
25 % had received a ''cease and desist'' letter from a patent holder or licensee preventing them from continuing to perform a clinical test service that they had developed and were offering.
Forty eight percent had decided not to develop or perform a test for clinical or research purposes because of patent restrictions.
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Thousands of gene patents have been granted and over 10,000 patents are pending. Physicians should not be further restricted from medical practice and providing quality care.
HISTORY OF MEDICAL ADVANCES AND PATENTS
Throughout history, medical discoveries have progressed from the discovery of basic anatomy to histology and cytology, none of which are patented, to the more recent discovery of genes. The recent trend of using patents to monopolize gene-based testing services is a radical departure from historical precedent in clinical laboratories, and it works against the goal of making these procedures widely accessible and affordable to the public. Especially troubling is the fact that under patent protection, the increasing understanding of the utility of the test, as well as the underlying disease processes, also becomes proprietary, thereby imposing a profound change in how the profession and the public acquire knowledge about these rapidly evolving tests and their applications.
The United States Constitution states that the purpose of the patent system is ''to promote the progress of science and useful arts. '' Patents promote medical progress when they assist the development and broad application of medical advances. A typical example is the development of new drugs: private industry undertakes a large and risky investment in developing new drugs and seeking FDA approval for their marketing. The public benefits when a new FDA-approved drug is made available to all patients and all physicians. Because the human genome is a product of nature, identifying the human genome sequence is not comparable to the invention of a new product such as inventing a new therapeutic drug. Gene-based diagnostic test services can usually be developed directly from the knowledge of the underlying gene-sequence. Development of such diagnostic tests, as compared to developing therapeutic drugs, requires less time and investment. Thus, patents or exclusive licenses are rarely required as inducements to encourage diagnostic test services to be made readily available to patients and physicians.
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NEED FOR PROTECTION AGAINST PATENT INFRINGEMENT
For more than a century, medical and surgical methods and processes for diagnosing and treating disease were not considered patentable. In 1952, Congress amended the patent law, adding to the list of subject matter which could be patented ''new and useful processes.'' Since 1952, the patent office has routinely issued method or process patents for purely medical and surgical procedures not associated with any drug or medical device. As many as 100 of these medical procedure patents are issued each month. Examples include patents granted on a method for cataract surgery or a patent granted on an orthopedic surgery technique. Until recently, such patents were rarely enforced. However, over the past decade, the holders of some of these medical procedure patents actively have sought to enforce them.
In 1996, Congress recognized that medical procedure patents might impede the advancement of medicine, curtail academic access, place unreasonable limits on the research community, and interfere with medical education and the quality of care provided to the patient. As a result, in October 1996, legislation was signed into law (Frist-Ganske Amendment, 35 USC Sec. 287) that permanently precludes the filing of infringement suits against physicians and other medical practitioners for the performance of ''medical activities'' that would otherwise violate patents on medical or surgical procedures. A ''medical activity'' is broadly defined to include the performance of a medical or surgical procedure on a human body, organ or cadaver or on an animal used in medical research. However, the Act does not explicitly affect enforcement of biotechnology patents or extend to clinical laboratory services. With the advent of new and innovative approaches to gene based diagnostic testing, and the promise of enhanced and expanded diagnostic testing, laboratory services and clinicians should have the same protection from patent infringement as other medical providers and procedures.
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SUMMARY
We are facing the unprecedented situation in which a single patent owner can prevent physicians throughout the country from performing diagnostic procedures that use certain gene-based tests. This sets an extraordinary and dangerous precedent for patients and all of medicine, and in addition strays from the constitutional and social purpose of the patent system to promote progress. Therefore, current practices in the patenting and licensing of genetic sequences must be reexamined. The College believes that information derived from mapping of the human genome represents a naturally occurring, fundamental level of knowledge, which is not invented by man and should not be patented and that gene based diagnostic tests should be widely available and affordable for the greatest public benefit.
PREPARED STATEMENT OF THE AMERICAN SOCIETY OF CLINICAL PATHOLOGISTS
The American Society of Clinical Pathologists (ASCP) would appreciate your consideration in including this statement in the record of the House Judiciary Subcommittee on Courts and Intellectual Property hearing on gene patents and genomic inventions held on July 13, 2000.
ASCP is a nonprofit medical specialty society organized for educational and scientific purposes. Its 75,000 members include board certified pathologists, other physicians, clinical scientists (PhDs) and certified technologists and technicians. These professionals recognize the Society as the principal source of continuing education in pathology and laboratory medicine, and as the leading organization for the certification of laboratory personnel.
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The purpose of a patent is to protect an inventor's right to make, sell, or use their invention in the marketplace. According to Title 35, Chapter 10 of the United States Code, patents can be obtained for inventions that are useful, novel, and ''unobvious'' to ''a person skilled in the art to which said subject matter pertains.'' Patents allow inventors to commercialize and profit from their invention.
Patents apply to new or new uses of inventions, including laboratory test methods. There has been concern of late over the patenting of laboratory test methods. One example over the concern with patents for laboratory test methods began in October 1989, when a patent was issued for all human chorionic gonadotropin (hCG) screening tests for fetal chromosome abnormalities between weeks 18–25 of pregnancy. Over a period of years, the company holding the patent sent letters to laboratories across the country stating that in order to perform the hCG tests, they must sign a licensing agreement. The agreement permits either payment of a specific amount for each use of the test or a large lump sum settlement of several hundred thousand dollars for unlimited use of the test.
There are other issues to consider when examining the patenting of laboratory test methods. They include the quality of the test and access for patient care, future research, and cost of performing a laboratory test.
If laboratories choose not to pay the royalties to the patent holder, the patent holder may require laboratories to stop performing the patented method. If this occurs, fewer laboratories may be available to perform the patented laboratory test, thus reducing patients' access to necessary laboratory testing. If patients are denied necessary laboratory tests, physicians ability to properly examine, diagnose, and review patients' medical conditions may be hindered, thus compromising patient care.
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Companies who hold exclusive patent rights to disease-specific gene patents may prevent others from further researching that or related genes, precluding potential new discoveries. In the clinical setting, the inability of other diagnostic laboratories to establish testing for diseases involving a particular gene prevents adequate quality control to the assay. Laboratories are required by regulation to be involved in proficiency testing or interlaboratory exchanges of blinded samples to ensure that results are in agreement and correct. This cannot happen if only a single laboratory performs the test.
ASCP suggests that Congress examine several alternatives that may alleviate potential problems with the patenting of laboratory test methods. Congress may prefer to recommend altering current patent language or create an alternate mechanism to revise the patent process regarding laboratory test methods. Congress may want to explore excluding the enforcement of specific individuals or entities who may infringe on patents for specific activities. For example, patented laboratory tests that assist clinical researchers in their attempts to identify and cure cancer might be excluded from patent enforcement. Finally, Congress may wish to explore standards for licensing agreements between patent holders and those performing the patented laboratory test methods.
Thank you for the opportunity to share the views of the American Society of Clinical Pathologists. If you have questions or need additional information, please let us know.
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SUPPLEMENTAL STATEMENT OF DR. RANDAL W. SCOTT, PRESIDENT AND CHIEF SCIENTIFIC OFFICER, INCYTE GENOMICS
I. INTRODUCTION
Chairman Howard Coble of North Carolina invited the witnesses at the subcommittee hearing on July 13, 2000, to supplement their testimony to cover any new points that came up in the course of the hearing. I am pleased to submit additional comments on these points that may be of special interest to the members of the subcommittee and to the U.S. Patent and Trademark Office. I reiterate my appreciation to the Chairman and the members of the subcommittee for their great courtesy in holding the hearing and listening to the expression of our views and concerns. These issues are of surpassing importance to the genomics industry.
II. RESPONSE TO CONCERNS ABOUT THE RELIABILITY OF HOMOLOGY-BASED ASSIGNMENT OF FUNCTION, AND THUS UTILITY
A. The proper standard of review for reliability (''credibility'') of assertions of utility in patent applications.
First, it must be understood that the applicable standard of review for judging the credibility of a patent applicant's assertion of utility is intentionally different from the level of review that is generally used by a peer-reviewed scientific publication. This is, in fact, a legal issue, and not a scientific issue, and it is perhaps is the most confusing aspect of this entire discussion. It certainly is an issue that seems to have repeatedly confused most of the critics of the Patent Office's utility examination policies.
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Patent applications are, by statute and in accordance with case law, not required to be the final word in any area of technology. The purpose of the patent system is to ''promote the progress of science and useful arts'' by providing a reward for disclosure of one's invention to the public as soon as possible. The quid pro quo of receiving a patent is a limited period of exclusive right to the discovery, in exchange for fully disclosing that invention to the public, including how to make and use it, so that others might more quickly improve on it, and thus make new inventions based on that disclosure, even while that exclusive right is in effect. Whereas the typical biological scientist, working on a single protein, might want an extensive understanding of his protein before publishing his results to the world, a patentee is only required by law to disclose as much about his invention as would enable one of ordinary skill in the art to make it and to use it.
In order to promote such disclosure, and thus the early filing and issue of patents, this standard has always been quite low: in fact, in a recent case(see footnote 3) the Court of Appeals for the Federal Circuit specifically articulated that ''[t]he threshold of utility is not high: An invention is 'useful' under section 10 1 if it is capable of providing some identifiable benefit.'' The court also cited, with approval, well-established case law that further expounded upon the court's view of the present requirements of utility (''to violate Section 101 the claimed device must be totally incapable of achieving a useful result''(see footnote 4) . . . 'test for utility is whether invention 'is incapable of serving any beneficial end' ''(see footnote 5)) which clearly demonstrates a legal standard for utility far different from what a peer-reviewed scientific paper would require.
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It is also the case that the credibility standard in assessing patentable utility does not mirror a standard that might be applied to a rigorously refereed scientific journal. Absolute proof of utility is not a requirement for patentability, nor is absolute belief. All that is necessary is that one of ordinary skill in the art would not reasonably doubt the veracity of the assertion of utility, i.e., that the assertion does not ''contravene established scientific principles and beliefs.''(see footnote 6) In other words, examples of utilities that are considered incredible are very few, including perpetual motion machines, and, until recently, cures for baldness.
Clearly, identification of homology between gene sequences is an evolving art, one that is at the core of the bioinformatics and genomics revolutions. However, while there may be genuine scientific debate over the level of confidence a scientist might have with a particular prediction, based on the prediction techniques and algorithms used; it is clear that such assessments are routine, and, as appropriately used, reliable. But most important for this discussion, given the different standards that are dictated by patent law as compared with those imposed on peer-reviewed publication, the applicable patent law requires that homology-based assessments are to be taken as sufficiently reliable by the PTO unless the PTO provides evidence that a factual error or error in sound scientific reasoning was made that would lead one of ordinary skill in the art to doubt the veracity of the asserted utility. This should rarely, if ever, happen.
B. The scientific assessment of current technology of homology-based assignment of function, and thus utility
Again, keeping in mind the different standards for assessing the credibility of homology-based assignments of function, and thus utility, as between the patentability standards and the peer-reviewed journal standards, it is still astonishing how far this technology has come in recent years. In fact, the entire field of bioinformatics has evolved to analyze and assess the vast amounts of sequence data being generated by researchers, such as those at Incyte, as well as those at the Human Genome Project. These enormous efforts have involved massive investments of time, talent and money into developing assessment tools and computer equipment to perform the immense computational tasks required. These efforts have resulted in the ability of bioinformatics scientists to assign, in silico (computationally), with great reliability, the likely functional attributes of sequences based on increasingly complex comparisons with the structures and functions of previously characterized proteins, without the necessity of ever performing a single ''wet lab'' experiment to reasonably rely on these assignments. Of course, such wet lab experiments are important, e.g., for fine-tuning the precise biological activity of the molecule in more detailed analyses, and for doing further laboratory work to find other utilities for the molecules, such as their use in drug or disease testing, or their relationship to their biological pathways.
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Without a doubt, there is room for discussion on the absolute reliability of such in silico assignments of function. However, whereas the opponents of gene patenting emphasize that the possibility exists for incorrect assignment, in fact the majority of scientists believe and reasonably rely on such assignments, even if they prefer that the assignments be eventually verified through wet lab experiments. Certainly, both academic scientists and pharmaceutical companies alike routinely use bioinformatics analyses to focus their further investigations. It is interesting to note that businesspeople are unlikely to pay for that which is not useful or reliable, and in fact Incyte's commercial success represents a verification from sophisticated consumers of technology of the utility of these assignments.
Studies have been conducted examining the reliability of bioinformatics methods, and, have concluded that, while these methods are not perfect, they are remarkably reliable. While it is very difficult to present a brief and scientifically accurate description of these studies, some basic lessons can be gleaned from the recent literature about the credibility of these methods. For example, a recent study(see footnote 7) has examined one aspect of the reliability of sequence homology-based predictions of evolutionary functional relationships (based on pairwise comparisons of proteins whose relationships were known from their structures and functions), and was able to derive threshold values for reliable assignment of function based on homology. In fact, according to this paper, the problem was not with the assignments that were made, even at relatively low percent identities (30% identity over 150 amino acids; 40% identity over 70 amino acids), but rather that the real limitation was that the method failed to find the large majority of distantly related sequences. Nevertheless, as summarized by the authors, ''[b]ecause many homologs have low sequence similarity, most distant relationships cannot be detected by any pairwise comparison method; however, those which are identified may be used with confidence.'' (Emphasis added)
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Clearly, homology-based assignments of function are credible, and even widely used in scientific publications that apply a more rigorous standard for credibility than is applicable to the patent law. Absent another agenda, the skilled worker does not generally doubt the credibility of such assignments of function.
III. RESPONSE TO CONCERNS THAT KNOWLEDGE OF THE SPECIFIC BIOLOGICAL ACTIVITY OF A SEQUENCE IS NECESSARY TO HAVE UTILITY
The scientific as well as legal basis for this statement is simply wrong. While knowledge of the specific activity of a sequence is one way to establish a utility for that sequence, it is certainly not the only way. Once again, the variance between patentability and scientific standards seems to be clouding the issue.
There are many possible utilities for expressed human sequences. For example, utility can be based on the function of the encoded protein: in particular, when the encoded protein is an enzyme, which by definition catalyzes a particular chemical reaction, the protein (and derivatively, the nucleotide sequence encoding it) has utility as a catalyst of that reaction. Alternatively, a nucleotide or polypeptide sequence can be considered useful as a marker of a disease, if it is found to be expressed in conjunction with that disease, even if the biological activity of the protein is not known, and indeed even if the marker is a partial sequence. The PSA marker was used as a life-saving marker for prostate cancer for a number of years before its biological function as a protease was established, and even to this day the scientific basis for the association of its specific biological activity with prostate cancer is unknown. Nevertheless, such a disease association is clearly a patentable utility for a complete or partial polypeptide or nucleotide sequence.
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Still further examples of patentable utilities that do not require knowledge of the specific biological function of the encoded protein include forensic identification, use as chromosomal markers, use in tissue typing, etc. However, nowhere is the assertion that knowledge of the specific biological function of the encoded protein is necessary for utility more obviously incorrect than in the area of pharmacogenomic-based toxicity testing.
One of the most immediate, real-world utilities of sequence data developed by genomics companies such as Incyte is in the in vitro and in vivo screening of drug candidates for toxicity. This is because one of the most confounding and expensive aspects of developing new drugs is that, after investment of many millions of dollars and many years of development, the failure rate for new drugs in preclinical and early clinical development is, by one estimate, about 60% due to poor pharmacokinetics or toxicity(see footnote 8). Most of these problems were not easily detectable by traditional preclinical testing methods, yet toxicity in particular can be detected at a very early point by monitoring changes in expression levels of genes. However, it is not only particular known genes that are useful for toxicity analysis; in fact, in the best of all worlds, every gene which is known to ever be expressed in any tissue would be tested, at the very least as a negative control to show that its expression is not changed unexpectedly by a particular drug treatment, which would be indicative of a possible toxic side effect of the drug being tested.
There are a number of reasons why most expressed genes ideally would be examined for toxicity at the early stages of drug development. For example:
Many genes are similar to other genes both structurally and functionally (hence homology-based utility assignments), and may therefore have unintended responses to a drug. As a case in point, many drugs that target neurotransmitter receptors cross-react with receptors other than their intended target, e.g., there are receptors in the brain which cause drowsiness as a side effect in response to some antihistamines, whereas other antihistamines are specific for related receptors elsewhere in the body that mediate allergic reactions without this side effect.
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Many genes are part of a functional pathway of cascading effects, wherein expression of one gene can have multiple effects on other genes; for example, a drug which affects some member of a functional pathway may have unintended up- or down-stream effects on other genes which are structurally and functionally unrelated, due to increase or decrease in the level of substrate influence by that gene, which change would be indicative of a side effect.
Even sequences that are considered ''housekeeping'' genes (which were expected by toxicologists to not change under treatment conditions) have been shown to be altered under some treatment conditions, and thus require monitoring in toxicology experiments.
Therefore, it is clear that there is a utility for all expressed sequences in monitoring the effects of drugs and other toxic compounds, in particular in the critical area of therapeutic drug development. It is important to keep in mind that, while it is helpful to have prior knowledge of the biological activity of a given sequence that is used for this purpose, in fact this utility does not depend on knowing the specific biological activity of the sequence. Having possession of and being able to detect changes in expression of a given sequence in response to a treatment is sufficient to provide a real-world utility in toxicological testing for that sequence.
This toxicology screen and, as noted above, other uses for polypeptide and nucleotide sequences do not require knowledge of the specific biological activity of the sequence. Therefore, the concern expressed by some opponents of early gene patent filing is misplaced, and the assertion that a sequence cannot have utility until the specific biological activity of the sequence is known is both scientifically and legally wrong.
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IV. RESPONSE TO CONCERNS THAT ''RESEARCH TOOLS'' DO NOT MEET THE STATUTORY OR LEGAL REQUIREMENTS FOR UTILITY
Again, this concern is both scientifically and legally insupportable. A material whose only use is as a tool in research may indeed be patentable. Nevertheless, opponents of early gene patenting argue that patents on research tools in general should be precluded. However, the case law often cited as teaching this ''rule'' in fact excludes only those research purposes where the material itself is the subject of research. If these cases had held otherwise, any chemical material would, by virtue of its existence, be useful. Nowhere do those cases hold, explicitly or implicitly, that a material cannot be patentable if has some other beneficial use in research.
As noted above, in the case of polypeptide and nucleotide gene sequences, while one utility of the sequences is to provide the tools necessary to conduct additional research on the sequences themselves, it is not the only utility for these sequences. In toxicology testing, for example, the sequence is a research tool for identifying the level of expression of its corresponding gene in response to treatment with a completely different material, e.g., a new drug candidate which is the subject of the research. In the case of a nucleotide sequence, the nucleotide can be used as a specific probe to identify the change, if any, in the amount of expression of its corresponding gene in response to a drug treatment. In the case of a polypeptide sequence, knowledge of the amino acid sequence allows the determination of the change, if any in the amount of synthesis of the corresponding protein, e.g., by mass spectroscopy of proteins isolated from a two dimensional protein gel, in response to a drug treatment. This is a real-world use, that is specific to the sequence that is claimed in the patent application. Moreover, this use as a 44 research tool'' is one that provides an immediate benefit to the public by accelerating the pace of drug discovery, decreasing the costs of this research (by eliminating toxic drugs at the earliest possible stage in research), and ensuring that safer drugs with fewer side effects will be provided to the public sooner and more economically.
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Therefore, it is clear that sequences as ''research tools'' can have utilities that are distinct from the narrow exclusion of the case law, and that patent claims to these sequences have utilities that meet the statutory and legal requirements of the patent law.
(Footnote 1 return)
S. Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952); H. R. Rep. No. 1923, 82d Cong., 2d Sess., 6 (1952).
(Footnote 2 return)
Nelson v. Bowler, 626 F.2d 853, 856, 206 USPQ 881, 883 (CCPA 1980).
(Footnote 3 return)
Juicy Whip Inc. v. Orange Bang Inc., 51 USPQ2d 1700 (Fed. Cir. 1999)
(Footnote 4 return)
Brenner v. Manson, 383 U.S. 519, 534 [148 USPQ 689] (1966); Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1571 [24 USPQ2d 1401] (Fed. Cir. 1992)
(Footnote 5 return)
Fuller v. Berger, 120 F. 274, 275 (7th Cir. 1903)
(Footnote 6 return)
In re Jolles, 628 F.2d 1322, 1326 (CCPA 1980)
(Footnote 7 return)
S.E. Brenner et al., ''Assessing sequence comparison methods with reliable structurally identified distant evolutionary relationships,'' Proc. Nat'l Acad. Sci. 95:6073–6078 (1998)
(Footnote 8 return)
M D. Todd & R. G. Ulrich, ''Emerging technologies for accelerated toxicity evaluation of potential drug candidates,'' Curr. Opin. Drug Disc. & Dev. 2(1):58–68 (1999)