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Great scientific developments are unfolding before us and we shouldn’t get in their way. Or so it appeared at a July 13 oversight hearing on gene patents before the House Subcommittee on Courts and Intellectual Property. Comments from seven biotech industry leaders and Q. Todd Dickinson, director of the U.S. Patent and Trademark Office, about recent advances in genetics were generally characterized by measured optimism or mild concern, despite the controversy surrounding the patenting of human genes. GENERAL OPTIMISM We are going to “identify the genes for every human disease,” said Dr. Randal W. Scott, president of Incyte Genomics, which owns 500 gene patents, making it second only to the U.S. government in gene patent ownership. “These genes are the future of all medical research.” “Genomics now is in the same place as the computer industry in the 1970s,” Scott said. Sequencing is getting faster and faster, and genomic technology appears to “follow Moore’s Law and Metcalfe’s Law.” (According to Moore’s Law, computer chip speed doubles every 18 months. According to Metcalfe’s Law, the value of a network grows with the square of the number of participants. Thus, each additional participant adds an incremental amount of value to every other member, thereby increasing the aggregate value of the network exponentially.) Furthermore, Scott said, the level of specialization is increasing in the pharmaceutical industry just as it did in the computer industry. Early on, each computer company tried to do everything. Each developed its own microprocessors, operating systems, software, and dedicated sales forces. Then they started focusing on individual parts of the value chain. As a result, computer products became a mix and match of parts from their most efficient sources. After reciting the foreseeable benefits of gene-related inventions, Scott concluded that the patent laws should be applied to gene-related inventions in the same way that they are applied to other inventions. Dickinson’s testimony addressed some of the popular criticism of patenting genes. “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,” Dickinson said. “However, genes are basically chemicals … and chemicals and pharmaceuticals … have long been patentable. … 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.” It is a general axiom of patent law that discoveries, as opposed to inventions, are not patentable. However, Dickinson pointed out, the courts have long held that products that result from “processes of extraction, concentration and purification of natural materials” may be patentable. Dickinson acknowledged, however, that the “sensitivity” surrounding the topic of gene patents was a substantial factor in the PTO’s decision to adopt new, stricter utility guidelines for biotech inventions. Scott’s and Dickinson’s optimistic, pro-patent stance was largely seconded by Dennis J. Henner Ph.D., senior vice president of research at Genentech Inc.; Carl F. Dixon, president of the Kidney Cancer Association; and M. Andrea Ryan, president of the American Intellectual Property Law Association. Ryan, however, added a sobering point. “Much of the discussion about the use of genes and related inventions is still speculation,” she said. “Genes and the other related gene technology may or may not turn out to be good targets for drug design.” Others witnesses expressed concerns about overreaching patents and raising the bar for patentability, especially in regard to the utility requirement. OVERREACHING PATENTS Nobel Prize winner Dr. Harold Varmus M.D., chief executive officer of Memorial Sloan-Kettering Cancer Center, testified that preliminary work is being over-rewarded, thereby distorting incentives. “The traditional standards for patenting, especially nonobviousness and utility, have been difficult to define fairly in this [gene patenting] context,” he said. As a result, patent protection is aggressively being sought “increasingly early in the process,” i.e., patenting is being pushed farther and farther back from commercially useful technology to cover the basic research behind that technology. In other words, Varmus implied, someone performs “the preliminary and frankly obvious work of determining [a] DNA sequence,” receives a broad patent on it, and then attempts to apply it to specific “downstream” developments, thereby removing the incentive for much of these more technically challenging downstream developments. “For example,” he continued, “some [patents issued on genes] grant rights to many other functionally related genes, solely on the basis that their sequences resemble the submitted one. 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.” The Bayh-Dole Act of 1980 is partly to blame for the aggressive IP atmosphere, Varmus claimed. The act was designed to allow institutions efficiently to license patents for discoveries made with federal funds. However, in addition to aggressive patenting, the act “has fostered policies that have inhibited the use of new scientific findings” and “reduced open exchange of ideas.” Jon F. Merz of the Center for Bioethics obliquely echoed Varmus’ criticism of the Bayh-Dole Act. “Most of these disease genes to date have been found at least in part with federal funding,” he said. “The public should not be made to pay twice.” In other words, because the taxpayers pay for the research that leads to the inventions, they should not have to pay again in the form of increased prices and reduced utilization brought about by the patents on those inventions. James A. Severson Ph.D., president of the Cornell Research Foundation and a representative of the Association of University Technology Managers, defended the act. “Prior to the Bayh-Dole Act,” he said, “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.” Due to the act, he said, university technology transfer activity has tripled and, in 1998 it “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.” RAISING THE BAR By fall, Dickinson said, the PTO should finalize new utility examination guidelines for Group 1600. These guidelines will “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.” Dickinson implied that a utility inferred from computer modeling or prediction would not be deemed sufficient. In an accompanying written statement, Dickinson expanded on the meaning of “a specific, substantial and credible utility.” For instance, in regard to “specific” Dickinson wrote that “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 … in the absence of an identification of what condition can be diagnosed.” According to Varmus, however, “the new PTO guidelines don’t go far enough.” He said he was concerned about “patent clutter” caused by patents on gene fragments. “Patenting of incomplete genes and of gene variations implies that multiple parties may hold title to part or all of the same gene,” he said. “This feature can greatly complicate licensing genetic components for new technologies.” BRAVE NEW WORLD The overall tenor of the hearing was that the PTO appears to be roughly on track, and that no further patent legislation would be considered by this Congress. Dickinson, who said that he believes no statutory changes are in order, was praised by Chairman Rep. Howard Coble (R-N.C.), Rep. Ed Pease (R-Ind.), and Rep. Zoe Lofgren (D-Calif.). Lofgren added that the PTO was likely to do a much better job at fine tuning the patent system than Congress. However, she said, the next Congress may consider legislation, including provisions of H.R. 400 that were not incorporated, or that were watered down in, the American Inventors Protection Act of 1999. Rep. John Conyers (D-Mich.) appeared to be the lone pessimist on the subcommittee. Arriving during the final third of the hearing, Conyers stated that “this is the scariest hearing I’ve had in the Judiciary Committee.” All these “intellectual property people calmly and rationally talking about making people and fixing things. … I’m scared to death about where this is going.” Are there any concerns about the larger direction this is taking? he asked the panel of witnesses. The panel had little to say in response.

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