Sunday, May 4, 2008

Limitations on the scope of DNA patent claims in Europe: Monsanto struggles in its attempt to block importation of soy meal containing patented DNA

A while back Hal Wegner of Foley and Lardner forwarded me an English translation (courtesy of Dutch IP lawyer Charles Gielen) of a recent decision by a Dutch [corrected May 6] court in the case of Monsanto Technology v. Cefetra. I think the decision should be of great interest to the biotech community, so I’ve attached it here, and provide some of my own commentary below.

Monsanto holds a European patent (EP 0 546 090) essentially claiming a gene that encodes a glyphosate-tolerant form of the enzyme EPSPS, derived from bacteria. Expression of this gene in a recombinant plant, such as soy, renders the plant resistant to glyphosate (Round-Up®), and is the basis for Monsanto's highly successful line of Roundup-Ready® crops. However, Monsanto was unable to secure patent protection for the invention in Argentina, a major agricultural country, so farmers in that country are essentially free to use the technology without paying royalties to Monsanto.

In the currently pending case of Monsanto v. Cefetra, a Dutch court is struggling with the question of whether importation into Europe of Argentinian soy meal constitutes infringement of Monsanto’s European patent. Monsanto argues that because the processed soy meal comprises the patented DNA, the importation of the product is infringing. However, Cefetra argues that the mere presence of patented DNA in the processed soy meal does not amount to infringement of any of the claims, and so far has met with some success.

The Dutch court hearing the case held that "there can be no question” that Monsanto's claims directed to "isolated" DNA sequences were not infringed because DNA incorporated in soy meal is not present as "isolated matter.” Monsanto argued that the term isolated encompasses any DNA sequence taken out of its natural environment - in this case, the bacterial chromosome. But the court found that “the average person skilled in the art would understand the term isolated DNA as DNA that has been retrieved from the cell (core) of an organism for further treatment in a manner as is usual in the relevant profession.”

Likewise, the court held that claims directed to a method of producing a genetically modified plant harboring the glyphosate resistant gene were not infringed by the soy meal. While the court accepted that the soy plant and soybean have been directly obtained by the method, the court found that the subsequent crushing, separation, and treatment stages were "too drastic to still assume a direct relationship between the methods and the soy meal."

The remaining unresolved question for the court is whether claims directed to the DNA sequence per se, without any limitation to "isolated DNA," are infringed by the soy meal. The court found that even if the “DNA sequence is only present in the soy meal in minimal quantity, this does not deter from the fact that there is a breach of the Monsanto patent, if and to the extent that the scope of protection extends to the product, the DNA, as such.” In other words, the court rejected a de minimis argument, holding that even traces of DNA as a contaminant amount to literal infringement of a claim broadly directed to the DNA. The court did note that mere coincidental contamination, for example, resulting from residue from previous cargo in the ship, might not constitute infringement, but the court did not have to decide this issue because it was clear that the defendant's soy meal was the source of the patented DNA.

However, the defendants argue that Article 9 of the EU Biotech Directive bars patent protection for DNA present in an inert material such as soy meal. The Biotech Directive was issued by the European Parliament in 1998, essentially to clarify that biotechnological inventions are patentable in Europe, and provides direction with respect to the scope of that protection. Article 9 states that the “protection conferred by a patent on a product containing or consisting of genetic information shall extend to all material . . . in which the product is incorporated and in which the genetic information is contained and performs its function.” The defendants argue that since soy meal is dead material, the DNA present in the soy meal is incapable of performing its function of coding for a protein, and hence is not eligible for patent protection under Article 9. Monsanto counters that soy meal is not a biological material and thus does not fall under Article 9. Monsanto further argues that the Directive is intended to extend the scope of protection for biotechnological inventions, not to restrict it, and that in any event, it is “sufficient that the [claimed] DNA has exercised its function (namely the provision of resistance to glyphosate in the soy plant) or that the DNA, should it be isolated from the soy meal, can be incorporated in a cell in a soy plant and can then (once again) exercised its function."

The Dutch court found this Article 9 argument important and novel, and has referred the question to the European Court of Justice. In particular, the ECJ has been asked to address whether Article 9 should be understood such that patent protection is extended in situations where “the DNA is present in a material and does not express its function at the time of the stated breach but has indeed expressed its function or possibly, following the isolation from the material and its incorporation in the cell in organism, could once again express its function.” The ECJ has also been asked whether Article 9 "stand[s] in the way for the national patent legislation to (additionally) allow absolute protection for the product (the DNA) as such, whether or not the DNA expresses its function and must the protection provided by article 9 therefore be considered exhaustive?”
Monsanto has already lost similar infringement lawsuits in 2007 in Spain and England. Monsanto’s Jan. 1, 2008 10-Q filing with the SEC reports that the English court found that patent valid, and that the patented sequence is present in the imported soy meal, but that the claims as interpreted by the court were not infringed. In Spain, the judge ruled that the soy meal does not fall under the protection of the patent as the [patented] DNA in the meal no longer expresses its function (apparently the same argument that the Dutch court is referring to the ECJ) I.
The 10-Q filing also reports that the “Argentine government has opposed our use of patent infringement actions as a means of securing payment for the use of our technology in Argentina and has been admitted as a co-defendant to the proceedings in the Netherlands and as an observer to the proceedings in Denmark. In addition, the national competition commission in Argentina (CNDC) has initiated a formal investigation regarding our patent infringement actions in the European Union.”
These cases raises a number of fascinating but perhaps troubling issues for the biotechnology industry. Claims directed to isolated DNA sequences are extremely common, particularly in the United States, where the patent office normally will not allow a claim directed to a DNA molecule per se, but will require the applicant to include a limitation like "isolated" to distinguish from naturally occurring forms of the molecule, e.g., naturally occurring genes. I'm not sure how common it is even in Europe to get claims to DNA molecules per se as a Monsanto was able to do in this case. But if a US court were to construe the term “isolated” as narrowly as this Dutch court did then patent owners might find themselves in possession of a very limited scope. In the US it is often assumed that a claim to isolated DNA covers the DNA essentially in any context different from us naturally occurring environment - people often refer to claims reciting isolated polynucleotide' as gene claims and assume that they broadly cover any use of the gene. However, depending on how a court interprets the term isolated, the scope of such claims might be much narrower, as exemplified by this Dutch court’s interpretation.

Also, consider the impact of new genetic use restriction technologies (GURTs) which essentially result in removal of recombinant genes from the seeds produced by recombinant plant. This technology has a number of advantages. For example, it would obviate much of the arguments by opponents of genetically modified crops, because the seeds and food produced by the plants would not contain any foreign DNA. It would also make it harder for farmers to save and replant genetically modified seeds, because the second-generation seeds would not retain the trait. But if farmers in a country such as Argentina, where an effective patent protection for a genetic modification is lacking, were able to get access to the first-generation seeds they would seem to be free to export the recombinant DNA-free crops to other countries without having to worry about infringing any patent directed to the DNA sequence encoding the trait.

Most importantly, it is a good example of the challenges biotechnological patent owners face in enforcing their patents. Although many critics of gene patents argue that gene patents are particularly restrictive of follow-on technology because it is difficult if not impossible to design around a gene, in practice the actual scope of protection is often dramatically limited in the courts, in many cases allowing accused infringers to escape liability.


Claes said...

I think you mean 'Dutch' when you say 'Danish' in the blog. This event is the Netherlands, not Denmark.

Interesting case. Does this mean that the European Union does not have a §271(f) equivalent (yes, I had to look it up)? If the export was made from Argentine to the US I assume §271(f) would have made the importer liable and the discussion on the definition of 'isolated' would be moot. Also related to the ongoing discussion of Waymark Corp.

Chris Holman said...

Claes - Thanks for catching the Dutch/Danish error, I corrected that one.

Regarding 271(f) equivalent in Europe, I'm not sure, I'll have to look into that, or maybe another reader could enlighten us.

Note that 271(f) only covers products that have not ben "materially changed" subsequent to use of the patented method and importation into US. The patented method produces a "transformed plant," and a US court applying 271(f) would have to assess whether going from plant to soy meal amounts to "material change." The Dutch court seemed to think so, finding that the soy plant and soy bean were "directly obtained" from the method, but not the soy meal.

I don't know if issue of "isolated" would necessarily be moot in the US. In the US, under recent Federal Circuit decision in Phillip's, courts are directed to look to patent specification first in interpreting claim language. Depending on how the term "isolated" is defined in the specification (either explicitly or implicitly) a US court might or might not come to a similar narrow reading of the term. I do think it is an issue for US patents - claims to "isolated" DNA sequences might not be as broad as some people think.

Please fill me in on Waymark Corp., I'm not aware of this one.

Chris Holman said...

more typos - sorry

I meant to say "Note that 271(f) only covers products that have not been "materially changed" subsequent to use of the patented method and PRIOR TO importation into US."

Claes said...

Waymark v. Porta Systems - 245 F.3d 1364 (Fed. Cir. 2001). This decision came up in a separate discussion with one of our customers. My limited understanding is that 'Waymark' says that just the intent to ship component abroad for assembly results in liability for infringement. Does that mean that just the (hypotethical) intent to synthesize the epo gene abroad infringes the patent? How do you define 'intent'?

Chris Holman said...


This is getting a bit confusing. Actually, it is 271(g) which is implicated by the Dutch Monsanto case (infringement by importation of product made by patented method), not 271(f). When you mentioned 271(f) I thought 271(g), and my last comments were directed to 271(g), not 271(f).

I took a look at Waymark. It does not say anything about intent to ship a component being infringement. 271(f) basically has to do with exporting components of a patented invention for final assembly outside US. Waymark says that one who exports components for assembly outside US with the intent that they be assembled outside US can be liable under 271(f), even if the actual final assembly never occurs. Here is actual text of 271(f)(2):

Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

Intent to synthesize a gene outside the US could not amount to infringement of US patent. Actual synthesis, using a process patented in US, might be infringement if the product is imported into US, and it has not been "materially changed." In Amgen v. Roche, the Federal Circuit will address the question of whether Roche's PEGylation of EPO is a material change sufficient to avoid 271(g) infringement. The district court found infringement, maybe Fed Cir will see things differently.

Mere "intent" to infringe is never enough, there has to be some act of infringement. Under 271(g) and (f), infringement can be based on importation of product, or exportation of components.

Ingrid Blank said...

In view of the fact that the genome is fluid and not a tidy collection of independent genes after all, with each sequence of DNA linked to a single function, but operate in a complex network, the presumption of independently operating genes, on which the entire biotech technology industry is built and above all the patentability of such genes is virtuallz null and void in any case. This was highlighted in an article published in the New York Times on July 1, 2007:
A Challenge to Gene Theory, a Tougher Look at Biotech

Last month, a consortium of scientists published findings that challenge the traditional view of how genes function. The exhaustive four-year effort was organized by the United States National Human Genome Research Institute and carried out by 35 groups from 80 organizations around the world. To their surprise, researchers found that the human genome might not be a “tidy collection of independent genes” after all, with each sequence of DNA linked to a single function, such as a predisposition to diabetes or heart disease.

Instead, genes appear to operate in a complex network, and interact and overlap with one another and with other components in ways not yet fully understood. According to the institute, these findings will challenge scientists “to rethink some long-held views about what genes are and what they do.” Biologists have recorded these network effects for many years in other organisms. But in the world of science, discoveries often do not become part of mainstream thought until they are linked to humans.

With that link now in place, the report is likely to have repercussions far beyond the laboratory. The presumption that genes operate independently has been institutionalized since 1976, when the first biotech company was founded. In fact, it is the economic and regulatory foundation on which the entire biotechnology industry is built.

Innovation begets risk, almost by definition. When something is truly new, only so much can be predicted about how it will play out. Proponents of a discovery often see and believe only in the benefits it will deliver. But when it comes to innovations in food and medicine, belief can be dangerous. Often, new information is discovered that invalidates the principles — thus the claims of benefit and, sometimes, safety — on which proponents have built their products. For example, antibiotics were once considered miracle drugs that, for the first time in history, greatly reduced the probability that people would die from common bacterial infections. But doctors did not yet know that the genetic material responsible for conferring antibiotic resistance moves easily between different species of bacteria. Overprescribing antibiotics for virtually every ailment has given rise to “superbugs” that are now virtually unkillable.

The principle that gave rise to the biotech industry promised benefits that were equally compelling. Known as the Central Dogma of molecular biology, it stated that each gene in living organisms, from humans to bacteria, carries the information needed to construct one protein.

Proteins are the cogs and the motors that drive the function of cells and, ultimately, organisms. In the 1960s, scientists discovered that a gene that produces one type of protein in one organism would produce a remarkably similar protein in another. The similarity between the insulin produced by humans and by pigs is what once made pig insulin a life-saving treatment for diabetics.

The scientists who invented recombinant DNA in 1973 built their innovation on this mechanistic, “one gene, one protein” principle. Because donor genes could be associated with specific functions, with discrete properties and clear boundaries, scientists then believed that a gene from any organism could fit neatly and predictably into a larger design — one that products and companies could be built around, and that could be protected by intellectual-property laws. This presumption, now disputed, is what one molecular biologist calls “the industrial gene.”

“The industrial gene is one that can be defined, owned, tracked, proven acceptably safe, proven to have uniform effect, sold and recalled,” said Jack Heinemann, a professor of molecular biology in the School of Biological Sciences at the University of Canterbury in New Zealand and director of its Center for Integrated Research in Biosafety.
Ingrid Blank/South Africa

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