Editor's Note: This article initially appeared in the April 1998 issue of IP Magazine

The U.S. patent system derives from the Constitution's stated principle of "promoting the useful arts and sciences." A patent allows an inventor to exclude others from making, using or selling the claimed invention for a limited period of time, now 20 years from the filing of the patent application.

For the inventor, the reward is a virtual monopoly. But there is a significant hurdle: A patent application must include a written description fully disclosing the invention so that the public can fully and freely use the invention after the patent expires. The claims that define the patent and invention must be fully commensurate with the description.

When rival inventors -- and the investors who back them -- confront a claim whose scope is clearly defined, they can design around its provisions to bring to market a distinct invention of their own. It's a trade-off that makes life more predictable, assuring that innovation does not come to a standstill. But if the scope of the claim is unclear or unjustifiably broad, rival innovation may be severely curtailed.

The founding fathers could not have contemplated the biotechnology and high-technology developments of the 20th century as they laid the basis for the patent system. But the predictability they did hope for could be threatened by an evolving policy on the patentability of gene sequences, which is emerging from the U.S. Patent and Trademark Office in Washington.

The policy -- in the form of first Office Actions on a series of applications for patents on expressed sequence tags, ESTs -- could greatly complicate basic gene therapy research by substantially allowing patents for small sequences of a gene that may later be used by the patent holder to corner ownership and uses of entire genes.

Protein Mini-Factories

The controversy over the patenting of ESTs has been brewing for a decade.

Since the 1970s, scientists have been isolating proteins and laboriously determining their gene sequences. Genes that encode therapeutically useful proteins can be of enormous scientific and financial value because they permit large-scale production of the encoded proteins through recombinant DNA technology. By inserting the genes into bacteria, or other easily grown cells, mini factories are created, each turning out millions of copies of a single protein. Since the first recombinant protein -- human insulin or humulin -- was marketed in the U.S. by Eli Lilly in 1982, an estimated $30 billion of recombinant proteins have been sold. The stakes are high.

Within the PTO, controversy has continued as to whether ESTs themselves are patentable, to say nothing of whether the claims can and will cover the full-length sequences.

Both the isolated gene and the pure recombinant protein can be, and have been, patented. While critics have deplored providing proprietary protection for such "products of nature," the work necessary to obtain gene and protein products having therapeutic value is admittedly laborious and often technically demanding.

Not so with ESTs. Readily available automated machines can be used to rapidly identify ESTs.

In 1991, technology was developed that permitted "shot gun" sequencing, the identification of short DNA sequences scattered virtually at random throughout the 100,000 or so genes of the human genome. These short sequences -- usually about 500 nucleotides in length -- are termed expressed sequence tags. As mere fragments of genes, ESTs by themselves generally have no intrinsic function in an organism. However, they provide scientists with a critical tool to probe the human genome to identify full-length genes.

ESTs themselves are a far cry -- and an enormous amount of painstaking scientific work distant -- from the full-length genes necessary for the production of proteins. So why the fuss over patenting a fragment whose use lies only in identifying full-length genes? Because of uncertainties as to the scope of patent protection to be afforded by patents on ESTs.

A Simmering Controversy

The controversy has been brewing for the better part of a decade. In 1992, the National Institutes of Health filed two patent applications together claiming more than 4,000 ESTs. Craig Venter, then an NIH scientist, had developed techniques to rapidly identify ESTs. Faced with the imminent publications of some 4,000 ESTs, NIH filed two patent applications claiming these ESTs and the full-length genes the ESTs can be used to identify.

Genes?

Yes, genes. While ESTs themselves are only gene fragments, the patent application claimed not only the identified ESTs, but also the genes that they "tag."

The NIH subsequently abandoned its two EST applications in the face of public outcry. Representatives from both the scientific and legal communities expressed outrage that patent rights to genes could be awarded on the basis of work that provided no insight into how the gene might function.

Use or production of a full-length gene in which the listed sequence constitutes a short embedded part would fall within the purview of a claimed patent. . . .

However, other institutions and companies have continued to file patent applications on ESTs and related genes; at present there are applications covering more than 1 million ESTs on file in the PTO. In early 1997, with indications that the PTO was ready to issue the first Office Action on an EST application, the biotech committee waited with bated breath.

A year later, the wait continues. No patent has thus far issued. Within the PTO, controversy has continued as to whether ESTs themselves are patentable, to say nothing of whether the claims can and will cover the full-length gene sequences.

However, according to the PTO's John Doll -- director of the groups charged with examining patent applications relating to biotechnology -- a consensus has finally been reached. The PTO has determined the policy to be followed in examining applications disclosing and claiming ESTs, and written guidelines are in preparation.

The policy can be summarized simply. Where a new EST has been identified, the following claim will satisfy the written-description requirement:

An oligonucleotide comprising Sequence ID No. X.

But the requirement is not satisfied by the claim:

"A gene comprising Sequence ID No. X."

Written Description Required

As one aspect of ensuring that an invention will inure to the public benefit, a patent application must provide a "written description" that enables others to practice the invention. ESTs are conventionally represented by a four-letter code that specifies the order of nucleotides. PTO regulations require that a sequence listed in a patent application be denoted by a Sequence ID Number. Nucleotide sequence listings will be found to satisfy the written-description requirements, according to Doll. Since other scientists can easily and reliably duplicate an EST once provided with its nucleotide sequence, such a decision is hardly surprising.

A more troubling issue raised by the PTO's new policy is the scope of the claim: What products will infringe the claim?

The word "comprising" is critical to this determination. It is a term of art in patent law that renders the claim "open-ended" so that it covers both the listed nucleotide sequence and, more importantly, the listed sequence in combination with additional sequences. Given this interpretation, use or production of a full-length gene in which the listed sequence constitutes a short embedded part falls within the purview of the claim.

. . . Thus, the creative and laborious work required to identify therapeutically useful genes may result in products that infringe a claim to one of the multitude of ESTs.

As a result, the creative and laborious work required to identify therapeutically useful genes may result in products that ultimately infringe a claim to one of the multitude of ESTs.

On the other hand, by deciding that an EST sequence does not provide an adequate written description of a claim directed to "a gene," the PTO has preserved the possibility for a gene itself to be patented once its full-length sequence is determined.

So what is the importance of this new policy of the PTO? Recall that patent protection allows the patentee to preclude others from making, using or selling his patented invention. Although not obligated to do so, the patentee can contractually agree to permit another to practice the claimed invention, via a licensing agreement. Consider the situation where one person sequences and patents an EST and another identifies, sequences and patents a gene tagged by the EST. The EST patent-holder can prevent the gene-discoverer from using the gene (or demand compensation for the use). The gene patent-holder, on the other hand, can prohibit the EST patent-holder from making and using the claimed full-length gene (but not other genes that might encompass the claimed EST).

Equitable Rewards?

Do patent rights thus awarded accurately reward the relative contributions of the "inventors?" Probably not. The patent claiming the ESTs can be termed a dominating patent: It dominates the longer, and the more specific, gene sequence. Yet the sequencing of the EST is determined by methods, or even automation, well known to those working in the field. The EST itself may have little intrinsic value save to perhaps accelerate identification of the gene. (In fact, the EST need not even be used to obtain the gene.)

In the meantime, it is clear that the search for therapeutically useful proteins will continue. What is less clear is who will eventually reap the rewards of the search.

Cathryn Campbell is a partner in the San Diego and Seattle law firm of Campbell & Flores. She specializes in biotechnology and intellectual property law.

(c) 1998 THE RECORDER

Reprinted By Permission

4 March 1999, Author's Note: In keeping with the Patent Office's new policy, the first patent claiming EST sequences was issued on 6 October 1998 to Incyte Pharmaceuticals. U.S. Pat. No. 5,817,479, entitled Human Kinase Homologs, claims 44 ESTs which are fragments of genes encoding protein kinases. Unlike the ESTs of the NIH application, these EST sequences were identified by their specific similarity to known protein kinase cDNAs. The function of the EST -- or at least the function of the genes from which they are derived -- is therefore known. Thus, the ESTs have usefulness, or patentable utility, for diagnostic evaluations of specific protein kinases in different cells, for example.