The Court of Appeals for the Federal Circuit (CAFC) heard arguments from Monsanto Corporation on the patentability of genetic markers, known as Expressed Sequence Tags (ESTs). (In re Fisher, Fed. Cir., No. 04-1465; May 3, 2005) Monsanto argued that its application should not have been rejected by the U.S. Patent and Trademark Office (USPTO) for not being useful. Reviewing a conclusion by the Board of Patent Appeals and Interferences that the patent applications failed to satisfy the utility requirement of 35 U.S.C. sec. 101, the court is looking at whether the application must disclose the utility of what is being marked by the markers or just the utility of the markers themselves.

A large proportion of the DNA in the mammalian genome does not appear to encode any known protein. Within the genome are genes (sections of DNA that encode proteins) that are transcribed to form mRNAs, which are in time translated to produce proteins. Within the genome are ESTs, short random fragments of DNA that are isolated from mixed mRNAs and converted back to cDNAs. Because each EST is related to an mRNA, it must represent the part of a gene which encodes a protein. Using known techniques the location of the EST on the genome can be determined. Related are SNPs, sites in the genome in which there is variation among the population of one base in the sequence, which are often in the regulatory regions (promoters) rather than in coding regions of the genome. ESTs and SNPs are important because of their potential use in understanding genetics and diseases. If a certain population with a certain condition is found to have the same SNP, that may be significant. The production of a particular protein associated with a condition may be investigated through a corresponding EST.

The PTO found that the ESTs claimed in the application failed to meet a standard for “credible, substantial, and specific” utility implemented in 2001. This case is a test of the new utility standard, which the PTO implemented because of the concerns of the National Institutes of Health and other research organizations, that patents on ESTs could entangle later genomic research and technology. This is also a test of the patentability of “research tools” or technologies that are primarily used to advance other research.

Opponents of EST patents have argued that permitting EST patents will encourage researchers to search for and patent ESTs rather than focus on characterizing full-length genes. It has also been argued that allowing the patenting of ESTs will disproportionately favor large pharmaceutical companies and that patenting ESTs will inevitably lead to costly disputes. Another argument is that too many EST patents will increase licensing complexity and costs, and lead to grave market inefficiencies. Proponents of EST patents have argued that, at one time, the electronics and computer industries faced similar objections, yet patent protection in those industries actually spurred innovation and lead to better and/or less expensive products.

Monsanto is arguing that the PTO had erred in claiming that the utility of ESTs depends on knowledge of the characteristics or function of the gene sequences that the ESTs correspond. Monsanto argued there are other uses for the tags not requiring a knowledge or interest in the corresponding gene sequence and that, for example, the mapping is desired to establish a statistical correlation between identified sequences and plant traits identified by cross breeding, arguing that the utility requirement is satisfied for every tag that is properly disclosed. The USPTO, however, argued that Monsanto’s application asserted no specific, “real world” utility for the claimed ESTs. Judge Rader specifically asked if the PTO had not “set the bar too high,” suggesting that valuable sequence information might go undisclosed and would be retained as trade secrets. The USPTO then asserted that DNA fragments require further research and discovery to be useful, comparing EST patent applications to “raffle tickets.”

The CAFC’s decision is expected later this year. We’ll keep you posted.

See a nice detailed description of the issues at the Patently-O blog.

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