The Scope of Patents and Analysis of the Monsanto Decision

The following memo begins with an examination of the status of patent protection for plant life in Canada, the United States and Europe.  The scope of patent protection will then be discussed in an attempt to reconcile the most recent Canadian decision regarding plant patents, Monsanto Canada  Inc. v. Schmeiser, in which the Federal Court found that the defendant had infringed the plaintiff's patent on genes and genetically modified cells by harvesting and replanting seeds produced from plants derived from these genetically modified cells. After a thorough investigation into U.S., European and Canadian case law, I have been unable to locate any case law specifically addressing the issue of patent scope. However, the patenting of partial DNA sequences and DNA sequences but not the proteins they produce have generated some case law in the U.S. which is useful in the analysis of determining the scope of patent protection on DNA and genetically modified cells, such as that which was patented in Monsanto.

Introduction

The patent process is ill prepared for the challenges arising in the world of biotechnology. With scientific advancement overcoming previous patenting hurdles such as disclosure and product of nature arguments, patents are routinely granted around the world on DNA, protein, cells and various other life forms, often with great concern.

Controversy also surrounds not only what can and should qualify for patent protection, but also to what extent.  Patents exist as an economic tool, which in an ideal world, balance incentive to invent, through profitability, with public disclosure of valuable information to foster further invention.  Broad interpretation of patent applications allow researchers to reap optimal rewards from their efforts and therefore provide incentive to conduct research. However, thought must be given to how far such patents will extend so as not to hinder future research by fears of unintentional patent infringement.  As full disclosure is an essential requirement for patentability and is essentially the price paid for patent protection, allowing overly broad claims could also inadvertently grant patentees a greater monopoly than what they are allowed.  Conversely, restricting claims to narrow interpretations could make patent claims commercially worthless and provide no incentive for further research. 

Determining patent scope becomes particularly important in certain areas of biotechnology where an ultimate product of the research, such as a naturally occurring protein, or plant derived from a genetically modified cell as in Monsanto, is not patentable.  In such cases, patentees would ideally wish to extend patent protection on genes and cells to the end product, in essence gaining patent protection on unpatentable subject matter.

The following memo discusses the current state of patent protection afforded to plant life in Canada, the U.S. and Europe. As patents are not granted on plants in Canada, the scope of patents on DNA and genetically modified cells will be examined using case law from these other areas of biotechnology in an attempt to understand the recent Monsanto ruling.

Facts: Monsanto Canada  Inc. v. Schmeiser

Monsanto Canada Inc., the plaintiff, held several patents on a chimeric plant gene which imparts Glyophosate Resistance and genetically modified Glyphosate-Resistant (GR) plant cells. Plants generated from these GR cells are commonly known as "roundup resistant" canola for their ability to survive after treatment with the common herbicide Roundup.  This GR canola was created by introducing a man-made transformation vector containing the gene which imparts tolerance to glyphosate (Roundup) into canola cells. The vector is designed to insert itself into the DNA of the transformed cell.  All cells in canola plants derived from a GR modified cell contain the GR insert. Seed produced by a GR plant will “largely be comprised of”^[1] GR modified cells as canola is mainly self germinating.

Glyophosate-Resistant canola is marketed by Monsanto as Roundup Ready canola.  Roundup Ready canola can be purchased only after 1) the purchaser attends a grower enrollment meeting describing the technology and the terms of the licence agreement, and 2) the grower/purchaser becomes certified to use the technology by attending this meeting and signing a grower agreement.  Upon purchase, the grower must also sign a Technology Use Agreement (TUA) provided by the retailer (acting as agent for Monsanto).  This TUA stipulates that the GR seed can only be used for planting one crop which is to be sold for consumption to a commercial purchaser authorized by Monsanto.  Further, the grower is not permitted to sell or give seed to a third party or save seed for replanting in subsequent years.  Under the TUA, Monsanto reserves the right to inspect fields and gather samples from purchasing farmers to ensure compliance with the purchasing agreements.

The defendant, Schmeiser, was a canola farmer in rural Saskatchewan who had not purchased Monsanto GR canola seed from Monsanto or a representative retailer and consequently had not entered into either the grower agreement or the TUA with Monsanto.  Schmeiser first became aware of the presence of GR canola on his land in 1997 and subsequently planted his 1998 crop using seeds from 1997 (derived from the 1996 crop).  Testing of 1997 and 1998 samples (seeds which were allowed to germinate) of canola taken from Schmeiser’s fields showed 95-98% of canola plants were Roundup resistant.  This percentage was considered too high to be a result of pollen or seed movement from GR canola from neighbouring fields into those of Schmeiser. 

Issues

1) The Current State of Plant Patent Protection

a) The U.S.

b) Europe

c) Canada

2) The Monsanto Decision - The Scope of Patent Protection

Analysis

1) The Current State of Plant Patent Protection

a) The U.S.

Several different regimes exist in the U.S. to deal with the protection of plants and associated technology.  In 1930, the U.S. enacted the Plant Patent Act (PPA) to allow for patent like protection of plants which were otherwise not patentable due to lack of disclosure and objections based on the product of nature argument^[2].  However, the PPA only established protection for asexually reproduced plants as progeny created through asexual reproduction is genetically identical to the parent organism, usually created from grafts or cuttings^[3].  Patent protection was extended to sexually reproducing plants in 1970 under the Plant Variety Protection Act (PVPA) which was based upon UPOV, the WIPO plant variety protection regime^[4]. Protection under the PVPA does not limit an individuals ability to save and replant seed or use protected seed for research purposes to create new varieties, both without compensating the holder of the PVPA protection.  While these Acts were intended to fill the property protection void created by the inability of plants to meet the initial requirements of general patent legislation, several shortcomings were recognized in both the PPA and the PVPA.  For example, some plants failed to qualify for protection under either Act, neither Act protected the method by which the new variety was created, and the protection afforded by these plant specific Acts was limited compared to that offered under the Utility Patent Act (UPA).^[5] 

The U.S. Supreme Court in Diamond v. Chakrabarty reopened the debate on the patentability of plants by holding that the terms ‘manufacture’ and composition of matter’ read with the preceding word ‘any’ were to be interpreted in the broadest possible way to include “anything under the sun that is man made”^[6].  This case effectively removed the product of nature obstacle from the patenting of plants.  Further clarification regarding the patentability of plants was provided  in Ex parte Hibberd^[7] where the U.S. Patent and Trademark Office (PTO) stated that the PPA and the PVPA were not intended to exclude plants from UPA protection, if otherwise applicable^[8].  This interpretation was supported by a USPTO policy announcement in October 1985 stating that applications, including claims to plants, seeds and plant parts would be examined.^[9]  Since the announcement of this USPTO policy, numerous patents have been issued for plants under the UPA.

The patentability of plants was recently considered, and clarified, in Pioneer Hi-Bred International, Inc. v. J.E.M. AG Supply, Inc ^[10] where the court conclusively found that seeds and seed grown plants are patentable subject matter under 35 U.S.C. ‘101. 

b) Europe

Patenting in the European Union (EU) can currently be accomplished in one of two ways, first by applying directly to the national patent office of a particular country and second, by applying to the European Patent Office (EPO) which operates under the authority of the European Patent Convention (EPC)^[11].  National patent offices of EU nations were required to implement the objectives of the Biotechnology Patent Directive by July 2000.^[12]  This directive was created as a legal framework for the patenting of biotechnology in the EU in hopes of clarifying intellectual property protection afforded to biotechnology innovations.  While this directive permitted the patenting of transgenic plants, until recently great confusion surrounded the issue of transgenic plant patentability under the EPO.  The December 1999 Novartis decision of the EPO’s Enlarged Board of Appeal clarified the EPO’s approach to patentablity of transgenic plants, which had been confused with numerous decisions attempting to define the term “plant variety”. In Novartis, the board concluded that the wording of the EPC, which specifically denies patents for “plant varieties”, did not exclude transgenic plants from EPO patent protection^[13].

The main issue in the patentability of plants in the EU revolves around the ambiguous and undefined term “plant variety”.  The EPC specifically excludes plant and animal varieties from patentability under Article 53(b).  Therefore, much debate had centred around the actual meaning of variety.  Plant innovation was defined as a new variety could only be protected by plant variety protection laws such as the UPOV (International Convention for the Protection of New Varieties of Plants) or potentially under the national patent office system.  However, similar to the plant variety protection provided in the U.S., farmers are permitted to save and replant seed of protected varieties and breeders are permitted to use the protected seed for further breeding, both without compensating the creator of the original protected seed.  The push for full patent protection for genetically modified and transgenic plants was inevitable given the reduced protection provided by plant variety legislation.

Attempts to define “plant variety” started in 1984 with Ciba Geigy^[14] in which patent protection was sought for chemically treated plant propagation material (no genetic modification).  The Technical Board of Appeal of the EPO first indicated that the EPO had no general exemption to the patentability of biological material. In light of the EPO’s denial of patents for plant varieties, the Board of Appeals adopted the UPOV expansive definition of “plant variety” and determined that this definition included entire plants, seeds and propagating materials.  However, since the biological material in question had been chemically, and not genetically, modified and did not involved breeding of plants, the Board held that a new variety had not been created and allowed the patent application.

The definition of “plant variety” was narrowed in Lubrizol ^[15].  The disputed patent application was for a process which consisted of a novel combination of known breeding techniques and the resulting plants and seeds.  The Board of Appeal found that in order to qualify as a plant variety, the plant must possess the qualities of homogeneity and genetic stability, neither of which were present in plants in this case as breeding of these heterozygous plants would not produce genetically identical progeny.  This lack of homogeneity and stability lead the Board to conclude that the patents claimed did not fall under the definition of “plant variety” and allowed product-by-process patents.

The patentability of genetically modified transgenic plants was finally addressed in Plant Genetic Systems (PGS)^[16]. Since the EPO Board of Appeal had previously upheld the patentability of a genetically engineered mouse in Harvard Oncomouse^[17], it was assumed that patent protection would also be granted for transgenic plants. PGS was granted patents for the process of created their transgenic plant as well as claims for seeds, plants, and plant cells that had been created by this process. This decision was appealed by environmental groups, eventually to the Technical Board of Appeal, where it was argued that the patents violated Article 53(b) because transgenic plants were plant varieties and therefore unpatentable^[18].  According to PGS, the patents were generic and were not, and in some cases could not be, associated with a particular variety of plant.

The Board of Appeals, looking back to the UPOV definition of plant variety which states that “a plant variety is characterized by at least one single transmissible characteristic distinguishing it from other plant groupings....” as well as being sufficiently homogeneous and genetically stable, found that the transgenic plant seeking patent protection was in fact a new variety and therefore not patentable subject matter^[19]. The procedure used to create this plant was also excluded from patent protection because it could be used to create new plant varieties^[20].  However, cells derived from the transgenic plant were not considered to be a plant variety and were therefore patentable under the EPO category of microbiological products.  This decision was criticized for leaving a void in plant protection between plants which were not new varieties and therefore incapable of plant variety protection and which also failed to qualify for EPO patent protection^[21]. For example, a transgenic plant could be classified as a new variety by the EPO and fail to qualify for patent protection but also lack the stability and homogenosity to qualify for plant variety protection, the situation encountered in Lubrizol ^[22].

The most recent transgenic plant patent application, submitted by Novartis for genetically modified plants which contained pathogen resistant genes as well as the process for creating the plant, was originally denied patent protection by the EPO using the above reasoning from PGS.^[23] On appeal, the application was referred to the highest EPO appeal authority, the Enlarged Board of Appeal.  Four key questions were submitted to the Enlarged Board to clarify the appropriate EPO approach to the patentability of transgenic plants, the most important being the clarification of the term “plant variety” and how the analysis thereof should be approached. 

The Enlarged Board of Appeal found that inventions which were ineligible for protection under plant variety protection systems (under UPOV) were intended to be patentable under the EPC and EPO provided that the other requirements for patentability were met.  Therefore, the term “plant variety” in the EPO should be read as to cover those plant innovations which are otherwise protected under the UPOV plant variety protection, basically inclusion under UPOV equals exclusion under EPO ^[24].  Note that this is an opposite approach to that of the U.S. where protection under plant variety acts does not preclude patent protection.

Given this interpretation, Article 53(b) of the EPC, which denies the patenting of “plant varieties was described by the Enlarged Board of Appeal as defining the borderline between patent protection and plant variety protection. If the subject matter of the application was a single variety of plant, no patent can be granted. However, should a patent application include technology which could affect or be introduced to many varieties of plants, i.e. plant varieties may fall within the scope of the claim, patent protection would not be denied on this basis.  The method by which the a new plant variety was created was considered to be of no consequence, as once a claim was determined to be for a plant variety it wouldn’t matter if that new variety had been created using traditional breeding techniques or genetic modification^[25]. 

Therefore the Novartis decision brought consistency to the patenting process in Europe which now permits the patenting of transgenic plants under both the national patent process, in light of the Biotechnology Patent Directive and the EPC and EPO.

c) Canada

Concerns over the patenting of life forms in Canada were first addressed in Re Application of Abitibi Co. (1982), 62 C.P.R. (2d) 81.  No genetic modification was present in Abitibi, however yeast cells had been subjected to certain unique conditions which caused natural modification of the yeast.  This yeast culture was considered to be patentable subject matter, however the Patent Appeal Board was careful to indicate that their decision extended to life forms which were more associated with en masse production much like the formation of chemical compounds and left the issue of the patentability of higher life forms undecided.

The patentability of plants was subsequently brought before the Supreme Court of Canada in Pioneer Hi Bred Ltd. v. Canada (Commissioner of Patents) [1989] 1 S.C.R. 1623.  The question before the court was whether or not a plant variety which had been created by controlled experimental cross breeding using plants which had been discovered in nature could be considered patentable subject matter.  The court avoided providing an answer regarding this issue by simply stating that the natural origin of the crossbred plants created a disclosure deficiency, and without sufficient disclosure a patent cannot be granted.  This outcome provided no assistance in clarifying the patentability status of plants in Canada.  As well, the plant had been created through cross breeding and not genetic modification.

In Harvard College v. Commissioner of Patents^[26] the patentability of higher life forms was again brought before the courts.  The patent claims being sought encompassed the modified genetic insert (plasmid), single cells which had been transformed with the plasmid and the resulting mouse. Only the latter claim was rejected as non-patentable by the Commissioner of Patents.  The patentability of the plasmid and the cells transformed by the plasmid were not disputed.  While denial of the mouse patent was supported at trial, the Federal Court of Appeal held that the genetically modified mouse was patentable subject matter ^[27].  The Court of Appeal admittedly relied heavily on the U.S. Diamond v. Chakabarty^[28], finding that patent legislation should be interpreted widely in the absence of legislative directive to the contrary and since the Patent Act did not exclude living matter from patent protection the transgenic mouse should qualify as a composition of matter.  The fact that the natural process of gestation was required to create the actual transgenic mouse from the original genetically modified cell or zygote was not seen as a bar to patentability and did not cause the organism to cease to qualify as a “composition of matter”^[29].  So long as the subject matter claimed is not strictly a process of nature, the use of laws of nature in the invention does not alone disqualify an invention from patent protection.

While denying patent protection to the transgenic mouse for a variety of reasons, the trial judge noted that granting such a patent would not increase the amount of protection already afforded to the appellants by the patents granted on the plasmid, the injection process of the plasmid into the zygote and the transgenic cells. The Court of Appeal disagreed, stating that process patent protection did not afford sufficient protection to the product, in this case the mouse, as additional oncomice could be bred from original purchased mice and could be distributed freely without infringing the patent^[30].  

2) The Monsanto Case - The Scope of Patent Protection

Validity of the Patent and Infringement

Schmeiser challenged the validity of Monsanto's patent on Roundup Ready canola on the basis that the subject matter was not patentable and that the Plant Breeders' Rights Act, S.C. 1990, c.20 (the PBRA), which permits farmers to retain and replant seed, applies in this situation where the Patent Act, R.S.C. 1985, c.P-4 (the PA) and the PBRA conflict.  With respect to unpatentability, Schmeiser focussed specifically on the lack of human intervention required for replication of the patented gene and the fact that the modified gene could be inserted into numerous varieties of canola, each indistinguishable from the other and unmodified plants of the same variety.

The court rejected all of Schmeiser's arguments regarding the validity of Monsanto's patents.  First, the PBRA was designed to create a new intellectual property right in plant varieties. In this case, the subject matter in question is not a plant variety or varieties, but rather a man-made gene insert and genetically modified cells containing the insert.  Even if the PBRA did have application in this situation this Act was not intended to nor does it preclude registration of plant related inventions under the PA.  The fact that replication of the patented gene could occur in the absence of human intervention was also not a factor that precluded registration of the modified gene or the cell containing the modified gene.  The court cited Harvard v. Canada (Commissioner of Patents), [2000] 4 F.C. 528 (F.C.A.) (Harvard Mouse) as authority which implicitly supported the Monsanto patent, as in Harvard Mouse patents granted for the modified gene sequence and cells derived from the process where unchallenged with respect to validity, the sole question being the patentability of the entire organism (the mouse).

In both the trial division and the appeal of Harvard Mouse the issue was raised regarding what additional protection, if any, would result should the transgenic animal be patented. While the trial judge believed there would be none, the appeal court felt that this patent protection of the organism was the only way to protect the actual product of the invention and not just the process.  The same question must be asked in Monsanto in order to determine if the rights granted by the court are in effect equivalent to granting a patent on the transgenic plant as a whole.

In Monsanto, the defendant was found guilty of patent infringement for saving and growing the plants which contained the patented genes and cells without receiving a licence to do so from the holder of the patent, Monsanto.  It is difficult to determine if the outcome would have been at all different had there been a direct patent issued on the GM plant. Without a patent on the plant itself, the reasoning used by the Court of Appeal in Harvard Mouse would suggest that there would have been no patent infringement in Monsanto, yet infringement was found.

Products of DNA

Traditionally, patent protection was not available to products of nature for several reasons, many of which revolved around the failure to comply with the legal requirements for patentability^[31].  Now that scientific advancement has overcome these hurdles, the law has been left to determine the scope of such patents.  Several U.S. cases have involved the determination of protection granted to the protein products of patented DNA.  Although DNA is not a component of the proteins for which it encodes, these cases have inquired as to what extent a DNA patent encompasses proteins derived from that DNA.

This issue of protection for products of patented invention was recently addressed by the U.S. courts in Columbia University v. Roche Diagnostics ^[32].   Columbia held patents on cotransformed cells, methods of cotransformation, cotransformed cell lines, and methods of obtaining specific proteins produced by these cotransformed cells, but no patent was held on the specific proteins in question (Erythropoietin (EPO)) produced by these patented processes.  The defendants, situated in Germany, came to possess Columbia’s patented cells through their partnership with the U.S. based Genetics Institute (GI) who had created cotransformed cells after the issuance of Colombia patents.  The patented cells were used in Germany to produce the unpatented product, EPO, which was then imported and sold in the U.S.   Since the patented cells and processes were actually used in Germany and since at the time U.S. patent legislation contained a loophole which allowed for the importation of products produced using valid U.S. patents, Columbia attempted to claim patent infringement based on the “fruit of the poisonous tree” argument, basically claiming that patent infringement occurred when the EPO was sold in the U.S. since it was produced using  patented cells and processes.  Columbia also argued that the EPO and EPO producing cell lines exported to Roche by GI were equivalent to components of a patented invention and therefore violated s.271(f) of the Patent Act. ^[33]. 

The “component” argument was quickly rejected by the court as EPO and EPO generating cells were not considered to be “components” of any patented invention or process at issue.  Neither the cotransformed cells or the EPO were incorporated in the end product EPO in question and their use in creating EPO did not qualify as “assembly” as required by the s.271(f).  While acknowledging that s.271(f) had been extended to cover chemicals which could be combined to create a patented compound, the court would not classify EPO and EPO cell lines as non-infringing components of a greater infringing compound ^[34].  Basically, the court found that the patent protection afforded to  individually patented units cannot be extended to protect an unpatentable end product. If this reasoning were applied to the Monsanto case, the patented GM cells would not be considered components of Round-up Resistant plants and therefore patent protection could not be extended to the unpatentable end product, being the entire plant.  However, it must be noted that the patented DNA is not actually contained in the protein it produces, whereas in the Monsanto situation the patented DNA is present throughout the plant.

The “fruit of the poisonous tree” argument was also unsuccessful at extending patent rights from the cotransformation process and cotransformed cells to the EPO produced by the cells.  Since 271(a) of the Patent Act refers only to protection of a patented “invention” the court was unwilling to extend this section to include by-products that are derived from that invention.  Accordingly, no infringement was found as the defendants had not imported a “patented invention” into the U.S.  Similar to the rejection of the above component argument, the court would not extend protection to the unpatented product of a patented invention.

The rejection of both of these arguments in Columbia indicates the reluctance of the U.S. courts to extend the scope of patent protection beyond the exact invention which was specifically disclosed in the patent application as well as indicating a general policy that products derived from a patented invention or process will not be protected under the same patent.

In Amgen, Inc. v. United States International Trade Commission ^[35], Amgen alleged that the importation of proteins produced by genetically modified cells for which Amgen held U.S. patents violated the United States Tariff Act^[36].  Because the U.S. Tariff Act only prohibited the importation of patented end products or products created by a patented process and Amgen’s patent was only for specific DNA sequence and the genetically modified cell containing the sequence, Amgen argued that the patent claims on the genetically modified cells were ‘hybrid’ claims that covered both the host cell as well as intercellular processes taking place within the cell.  This argument was rejected by both the International Trade Commission and by the Federal Circuit court.  The court further clarified that “a host cell claim does not ‘cover’ intracellular processes any more or less than a claim to a machine ‘covers’ the process performed by that machine.”^[37] .  If such reasoning had been applied to the situation in Monsanto, none of the patent claims held by Monsanto would have extended to include protection for the genetically modified plant, as the creation of a plant is based on intra and intercellular processes for which Monsanto did not have patents.

Partial DNA Patents

With the granting of patents on DNA becoming common place, much concern has emerged over the consequence of patenting partial gene sequences, commonly known as Expressed Tag Sequences (ESTs). These sequences represent only a small portion of a gene and if allowed patent protection, could affect the patentability of the entire gene, as the small patented EST sequence would be wholly contained in this complete gene.  This situation can be seen as analogous to patented DNA which is used to transform cells which may subsequently mature into higher life forms such as animals or plants, as in Monsanto.  Both situations involve a small piece of patented DNA existing in a larger entity and both situations raise issues of the scope of the patent protection granted to this DNA.