INTELLECTUAL PROPERTY

Genomics Firms See Patents As Key Asset

Executives say that intellectual property portfolios are crucial to their companies' competitive advantage, especially when trying to create drugs against genome-derived targets. Incyte Genomics, for example, believes it has the largest number of issued U.S. patents--at more than 600--covering full-length human genes, the proteins they encode, and antibodies directed against them. Meanwhile, Hyseq claims to have the largest number of gene-sequence patent applications filed among similar companies.

The unraveling of the human genome created an abundance of genetic information and the desire to obtain rights to it. Although patents on gene sequences were and continue to be an area of heated debate, the U.S. Patent & Trademark Office (PTO) has allowed them and finalized its requirements almost two years ago.

In January 2001, PTO issued guidelines, affirming an interim policy proposed two years earlier. Gene sequences are patentable only if they are shown to have specific, credible, and substantial utility. Although gene patents were already allowed, this utility requirement imposed a higher standard than had existed. Companies simply can't try to patent strings of base pairs, unless they also understand and show the medical or diagnostic utility.

Despite PTO's affirmative stand, and a similar one at the European Patent Office, biotech firms are still wary that these positions could change anytime. And with the vast numbers of filed applications, drug developers expect interferences to arise at PTO during review and within the courts after patents are issued. The courts have yet to set many precedents on how they will interpret the validity and scope of gene-sequence patent claims.

The public disclosure and availability of gene sequences have also complicated the situation, possibly adversely affecting companies' ability to obtain patent protection. Genomics companies may also find as they bring products forward that they infringe patents held by others. There have already been a few squabbles among some of them over technology rights.

While patent conflicts are common in the drug industry, emerging drug producers may find them problematic and may require litigation or licensing to have the freedom to operate. "The inherent value of intellectual property will always be mitigated by the time and investment that's needed to transform it into something useful, namely, drugs or diagnostics," comments David S. Block, executive vice president of Celera Genomics.

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Copyright © 2002 American Chemical Society