United States: Federal Court Rules Gene Fragments are not Patentable

The U.S. Court of Appeals for the Federal Circuit has given its answer to the long standing question of whether or not gene fragments are patentable. In a 2-1 decision on September 7, 2005, the Court upheld the rejection by the U.S. Patent and Trademark Office ("PTO") of a claim to five expressed sequence tags ("ESTs") in a patent application owned by Monsanto as unpatentable for lack of utility under 35 U.S.C. § 101. In re Fisher, Fed. Cir., No. 04-1465 (September 7, 2005). The ESTs were fragments of corn genes whose structures and functions were unknown. The Court viewed them as useful only for further research. If allowed, the claim would cover any gene or genetic construct containing these ESTs. The ruling undermines the patent strategy of some companies to sequence, and file patent applications on, large numbers of ESTs in an attempt to obtain claims that would dominate genes that had yet to be discovered.

Background

The issue of patenting gene fragments was first raised in 1992, when the NIH filed a patent application on 2,750 human ESTs. Many scientists vociferously objected, questioning the scientific value of the ESTs and asking how something of such limited value could be patentable. On the other hand, the process of finding the ESTs was innovative and provided a basis for great improvements in the rapid sequencing of genomes.

Biotech patent lawyers also debated the patentability of gene fragments. Many properly pointed out that the threshold for meeting the utility standard was never seen as particularly high and that the ESTs did have "real world" uses, albeit generally in the laboratory for further research. Others argued that this utility was not enough; like many of the scientists, they focused on the fact that the primary use of the ESTs seemed to be as a tool to find genes and proteins, which themselves were unknown and, therefore, had no known function. For this reason, these attorneys argued that such ESTs lacked patentable utility. Underlying the debate was the recognition that claims to ESTs would dominate the corresponding genes and proteins that companies were seeking as therapeutic targets and medicines. Despite a thirteen year long controversy, In re Fisher was the first decision to rule on the issue.

Fisher’s claimed invention was directed to five substantially purified nucleic acid sequences that encode protein fragments in corn plants. The sequences were approximately 300-400 nucleotides in length. Such sequences are commonly referred to as "expressed sequence tags" or "ESTs." High-throughput, automated techniques are used to find and sequence thousands of ESTs from cDNA libraries, which contain nucleic acid molecules that correspond to the genes in the genome of an organism. Often, multiple ESTs are associated with a given cDNA molecule. Fisher did not know the structure or the function of either the full genes (i.e., the cDNA molecules) or the proteins encoded by them. Fisher asserted seven -different utilities for the ESTs, including using them as probes to find the full length genes and identifying the presence or absence of a polymorphism. Although only one claim covering five ESTs was pending in the application, the application disclosed over 32,000 ESTs, and the PTO had deferred examination of claims covering over 4,000 ESTs.

The examiner rejected the claim on the grounds that ESTs had no specific and substantial utility because the claimed uses were not specific to the ESTs, being generally applicable to any EST, and because there were no known uses for the proteins that would be identified by processes involving the ESTs. The Board of Patent Appeals and Interferences (the "Board") upheld the examiner’s rejection, relying on Brenner v. Manson, 35 U.S. 519 (1966), in which the Supreme Court ruled that a claim to a process of making a compound having no known use lacked utility under Section 101.

Federal Circuit decision

The Federal Circuit upheld the Board’s decision, concluding that substantial evidence supported the Board’s finding that the claimed ESTs lacked specific and substantial utility.

The Court rejected Fisher’s argument that the Board had applied a heightened standard for utility to the ESTs and that the asserted uses were specific and substantial, regardless of what was known about the corresponding genes. The Court cited Brenner v. Manson and certain lower federal court decisions relating to the patentability of chemical compounds.

According to the Court, Brenner requires an applicant to show a specific and substantial utility for a claimed invention in order to meet the utility requirements of Section 101. Although the Supreme Court did not define "specific" and "substantial," the Federal Circuit found guidance in other federal court decisions. It defined substantial utility as a significant and presently available benefit to the public, and specific utility as a well-defined and particular benefit to the public.

The Court rejected Fisher’s argument that one did not need to know a gene’s function in order for the corresponding EST to have utility. The Court considered each of the seven asserted uses, but found that they were neither substantial nor specific. As to substantial utility, the Court found that: 1) the asserted uses were merely hypothetical possibilities and objectives, and 2) the claimed ESTs were no more than research intermediates that might help scientists isolate the corresponding genes and conduct further experiments on them. The Court also noted that Fisher provided no disclosure or proof that the ESTs could be used in the ways claimed. As to specific utility, the Court found that the claimed uses were not specific to the particular ESTs and that any corn EST could be used that way. The Court noted that nothing about the seven uses set the five claimed ESTs apart from the more than 32,000 ESTs disclosed in the application or, in fact, from any EST derived from any organism. The Court cited with approval the following language from Brenner:

[A] patent is not a hunting license. It is not a reward for the search, but compensation for its successful conclusion. Id. at 536.

Brenner involved a process for preparing compounds of unknown utility. The Court stated the present case was even more analogous to the facts in In re Kirk, 376 F.2d 936 (CCPA 1967) and In re Joly, 376 F.2d 906 (CCPA 1967). Both cases involved intermediate compounds that produced compounds of no known use. The claims to the intermediate compounds were held to be unpatentable for lack of utility

The Court also cited with approval the PTO’s Utility Examination Guidelines, 66 Fed. Reg. 1092 (Jan. 5, 2001), which require examiners to apply the specific and substantial utility test set forth in Brenner, and it noted Example 9 of the PTO’s "Revised Interim Utility Guidelines Training Materials". There, a cDNA fragment disclosed as being useful as a probe to obtain the corresponding full-length gene was deemed to lack a specific and substantial utility.

Dissent

In his dissenting opinion, Judge Rader argued that the ESTs have utility as research tools for isolating and studying other molecules. He compared the ESTs to other research tools, such as a microscope, and he found them to be more akin to such patentable research tools than to the unpatentable methods in Brenner. Therefore, he would have reversed the rejection and the finding of lack of utility.

Implications

The Federal Circuit’s decision is an important, but not necessarily final, ruling on the patentability of gene fragments. The Court noted in its discussion of substantial utility that the applicants had not provided evidence of such utility. This leaves open the possibility that Fisher or another applicant may be able to build a better factual record on this point and that the Court could find such a record persuasive in a later case.

If upheld, the Fisher decision appears to be a favorable one for the biotechnology industry. It would undermine the strategy of some companies of filing patent applications on large numbers of ESTs for which the full genes were not known or, if known, whose biological function had not been identified. The biotechnology industry has been concerned that such companies would be able to obtain patents that effectively would allow them to control the later use and development of the full genes, when such genes were discovered and characterized. In fact, such claims would allow the patentee to control any gene containing the EST, any construct containing the gene, and, in effect, any recombinant protein expressed from that gene. This situation would be exacerbated by the fact that it would be possible for multiple EST claims to the same gene to issue in patents owned by different entities, creating a licensing nightmare for any company developing products based on the gene. This decision should alleviate these concerns.

It could also remove a substantial burden on the PTO of dealing with applications involving exceedingly large numbers of ESTs. The PTO could then allocate those resources to other biotech applications and perhaps lower their average pendency time.

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