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The Potential Impact of Monsanto Technology LLC v. Cefetra et al. on Patent Infringement

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 - Richard Peet, Vid Mohan-Ram, and Philippe Vlaemminck, , August 17, 2010 http://www.ip-watch.org/weblog/2010/08/17/the-future-of-biotechnology-patents-in-the-european-union/
A recent Court of Justice of the European Union opinion in Monsanto Technology LLC v. Cefetra BV et al.1 may unintentionally inflict serious economic harm on the European biotechnology industry. In its ruling, the European Court of Justice (ECJ) interpreted Directive 98/44/EC (the “Directive”) in the context of patent infringement as requiring functionality for there to be infringement of important types of claims. The ECJ reasoned that patent claims covering isolated DNA or transgenic products that contain the patented DNA cannot be infringed if the DNA is not functional at the time of alleged infringement.

As a result of the ECJ decision, there is a significant risk that countless biotechnology products are not protected by enforceable patent claims. An accused infringer, for example, could deny infringement by simply asserting that the patented polynucleotide or gene does not perform its function at the time of alleged infringement. Because many genes are only temporarily functional, or functional only in some tissues or organs, or have many functions, this defense may have merit. Furthermore, the opinion’s impact may extend far beyond a narrow conception of the biotechnology industry. For example, the viability of patents claiming isolated DNA or RNA sequences used as reagents – including reagents used in diagnostic methods such as gene tests and DNA chips – are now in jeopardy.

The ECJ decision is surprising because Article 9 of the Directive, which was an important basis for the ECJ’s ruling, was intended to define what constitutes patentable subject matter when the claims in question cover living and replicating organisms. Article 9 was not intended to define the scope of enforceable rights in the context of alleged patent infringement. We believe that, in the context of patent infringement, so long as the patented genetic information is present in the commercial product, its activity at the time of commercialization is immaterial. We propose steps the biotechnology industry in Europe and the U.S. might take to remedy the serious consequences of the ECJ ruling including legislation and World Trade Organization litigation.

In the meantime, intellectual property owners should immediately review their portfolios with an eye toward obtaining additional protection that is not affected by the ECJ’s decision. Utility patent claims, for example, covering products with unique characteristics, have always been important but now have increased significance in view of the opinion, as do method claims. Plant biotechnology companies also should obtain Plant Breeder’s Rights for important plant varieties to protect harvested material and products made from harvested material. <cut>

The Future of DNA Patents in Europe
Biotechnology companies should immediately undertake a careful review of their options and intellectual property protection strategies.

Plant biotechnology companies should give careful attention to obtaining Plant Breeder’s Rights protection pursuant to the International Convention for the Protection of New Varieties of Plants (UPOV). Some countries have adopted UPOV provisions which extend the plant breeder’s rights to harvested material and products made from harvested material. Article 14.2 of the 1991 UPOV Convention extends the plant breeder’s rights to harvested material obtained from the protected variety, and Article 14.3 extends the rights to ”products made directly from harvested material of the protected variety ---, unless the breeder has had a reasonable opportunity to exercise his right in relation to the said harvested material.” Soybeans and soybean meal would fall within the protection provided by Articles 14.2 and 14.3, respectively.

Biotechnology companies also should review utility patent claim strategies. The ECJ’s opinion increases the importance of claims directed to methods of making a product. For example, a method of making soybean meal comprising the steps of harvesting seed from a glyphosate tolerant plant transformed with the EPSPS gene, extracting oil from said seed and recovering the soybean meal, would have been very useful in Monsanto’s effort to prevent import of soybean meal made from seed produced by glyphosate tolerant plants in Argentina. Furthermore, special attention should be given to how the function(s) of any claimed polynucleotides are described in a patent application to increase the likelihood of enforcement.

The ECJ’s ruling increases the importance of claims directed to a product that recites the product’s unique characteristics without reference to the genetic material that confers those characteristics. A conventional transgenic product claim might recite a tomato fruit transformed with a gene X which confers trait Y. If gene X is not expressed in the fruit, import of the fruit into an EU member state would not constitute and infringing act according to the ECJ. If a claim to a tomato fruit comprising trait Y is patentable, import of tomato fruit comprising trait Y would constitute an infringing act, even if the gene which controls the trait is not expressed in the fruit.

The enforceability of patent claims directed to isolated nucleotides used as reagents, such as reagents in diagnostic methods, are put at significant risk by the ECJ’s opinion. These nucleotides do not perform their function in a reagent vial or kit. Thus, patent claims directed to this subject matter may not be enforceable in view of the ECJ’s judgment. Method claims such as claims to use of a nucleotide in a diagnostic method, have increased importance in view of the opinion.

Furthermore, the biotechnology industry should consider seeking political and legislative reversal of the ECJ’s opinion. The US biotechnology industry may want to urge the US government to take action at the WTO because the Directive, as interpreted by the ECJ, now makes it very difficult to effectively enforce patent claims for biotechnology inventions in the EU. We believe this undermines the intent of the Directive’s drafters and, more importantly, violates Article 27 and/or 30 of the TRIPS Agreement.

The European biotechnology industry should therefore consider initiating discussions with various EU institutions including the EU Commission and the European Parliament, as well as the member states, to amend the Directive to clarify that for biotechnology inventions, patent infringement can occur regardless of whether the patented genetic information is performing its function at the time of alleged infringement.