The New Patent Policy on Natural Products Is a Game Changer for Universities and Life Sciences Companies

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Since the 19th Century, it has been considered a given that a person who identifies and purifies a useful natural substance is entitled to a patent, so long as the substance had never before existed in pure form. Due to a new policy enacted by the U.S. Patent and Trademark Office (USPTO), this has recently changed, with serious effects on companies and universities that conduct research in the life sciences. In the view of the USPTO, such inventions can no longer be patented because of the Supreme Court’s decision in Association for Molecular Pathology v. Myriad Genetics, 569 U.S. 12 (2013). On March 4th of this year, the USPTO issued lengthy guidelines (“the Guidance”) to their patent examiners, instructing them to reject any patent claim to a purified natural product.1 From all accounts the examiners have taken this guidance to heart and have been rejecting a wide range of life sciences inventions as a result.

This article explains the contents of the Guidance, their practical effects on the patenting of life science inventions, and possible ways life sciences companies and universities can mitigate their negative impacts.

What Was the Status Quo Ante?

Prior to the Myriad decision, purified natural substances could be patented. The Myriad decision held that isolated DNA that has exactly the same sequence as is found in nature cannot be patented. This created doubt as to whether other purified natural substances had lost their patent-eligible status.

An early example of a patent for a purified natural substance is U.S. Patent 141,072 issued to Louis Pasteur in 1873, which claimed beer yeast “free from organic germs of disease.” Likewise, Jokichi Takamine was the first to purify adrenaline, for which he was granted U.S. Patent No. 730,176. Felix Hoffman received U.S. Patent 644,077 in 1898 for purified acetyl salicylic acid, the active ingredient in aspirin.2 Perhaps the best example of a patent for a purified natural substance is Selman Waksman’s U.S. Patent 2,449,866 for the landmark antibiotic streptomycin. Waksman’s claim 13 reads, in its entirety, “Streptomycin.”

Countless additional examples exist. These are some of the most valuable products of the revolution in biology sparked by the discovery in the 19th Century that organisms are composed of chemicals. They include a large fraction of modern drugs and other useful materials.

What Inventions Are Affected?

The Guidance states that it applies to all “natural products” or combinations of natural products. That categorization by itself is unhelpful, as all possible inventions must contain one or more natural products (for example, an aluminum can contains aluminum, a naturally occurring element). The Guidance provides some clarification by providing the following non-exclusive list of materials that fall under the new rules:

  1. Chemicals derived from natural sources (including antibiotics, fats, oils, petroleum derivatives, resins, toxins, etc.)
  2. Foods
  3. Metals and metallic compounds that exist in nature
  4. Minerals
  5. Natural materials (rocks and soil)
  6. Nucleic acids
  7. Organisms (including bacteria, plants, and multicellular animals)
  8. Proteins and peptides
  9. Other substances found in or derived from nature

It should be noted that some categories of materials are limited to those “found in nature” or that “exist in nature,” and others are limited to those “derived” from nature. However, others, such as minerals, organisms, nucleic acids, peptides, and proteins, contain no such limitations, and are apparently subject to the new rules regardless of whether they are found in nature or derived from natural sources.

Which Inventions Can Be Patented?

Any invention that involves some “natural product” (including but not limited to those listed above) must comply with new requirements in order to be eligible for patenting. This applies to any invention that includes a natural product as one of its parts, or that uses a natural product in some type of process. It also applies to inventions that do not involve any natural product, but instead involve something that is not “significantly different” from a natural product.

The Guidance proposes a set of 12 factors that must be considered by a patent examiner in determining whether any invention that involves a natural product is eligible for patenting. The goal of the Guidance is to help a patent examiner determine whether a patent claim is “significantly different” from a product of nature. Unfortunately, the subjective nature of the factors and the large number of factors prevent straightforward and predictable analysis.3

More helpful are the five examples of common types of patent claims for natural products given in the Guidance;4 in each of the five examples the Guidance provides a conclusion as to whether the invention is eligible for patenting. These examples are summarized below.

Plasmids are analyzed in Example A. In that example, the Guidance states that a plasmid that is defined only by its function, if that function exists in natural plasmids, cannot be patented. The Guidance also considers whether a bacterium containing two plasmids defined by their functions can be patented. The Guidance concludes that such a bacterium could be patented, so long as natural bacteria do not contain two such plasmids, and the plasmids confer a function that is not found in natural bacteria. The implication of this example is that, if a change to the structure of a naturally occurring thing (such as a bacterium) results in a change in function, this is a significant enough difference to allow it to be patented.

Phytochemicals are considered in Example B. In that example, the Guidance states that a purified form of a natural phytochemical cannot be patented, even if the phytochemical is useful when purified and nearly useless in its natural state. This example states that a modified (methylated) form of a phytochemical can be patented in cases in which the modified form has a function that the natural form does not. The example finally states that a process of treating a disease with the natural phytochemical may be patented, if limited to a specific dosage regimen. The Guidance does not address whether the treatment method could be patented absent the specific dosage regimen. This last question is significant, as it is rare that a working dosage regimen will have been established for a new drug by the time a patent application has been filed.

Examples A and B imply that a change to the structure of a naturally occurring thing resulting in a change in function is a sufficient difference to allow it to be patented.

Fireworks are oddly included in Example C, which does not seem relevant to the life sciences. However, this example states that “gunpowder as recited in the claim [is] not markedly different from what exists in nature.” The clear implication is that the USPTO views gunpowder – a mix of various substances made in several ways that never existed prior to its creation by human hands – as a “natural product” that cannot be patented. Merely by including gunpowder in the invention, the “natural product” analysis must be performed. In light of such reasoning, it is difficult to imagine an invention that does not involve a “product of nature” in the eyes of the USPTO, regardless of whether in the final analysis the invention can be patented.

Microbial consortia are the subject of Example D. In this example, a microbial consortium cannot be patented, when all of the species in the consortium are natural, and each species has the same function in the consortium as it does alone. Although the example acknowledges that such a consortium has a wider range of uses than would a single species, it states that because “no species acquires a different use” the consortium is not significantly different from the species in isolation from one another.

In this example, despite a difference in both structure and function between the invention and what is natural, the Guidance concludes that the invention cannot be patented. This example could stand for the proposition that a combination of natural things, in which the function of the whole is no more than the sum of its parts, is not “significantly different” from the things alone. Although the “structure” of the consortium is new, because the species had never lived in consortium in nature, there was no new function as a result.

Polymerase chain reaction (PCR) primers are the subject of Example E, specifically when a pair of primers contains only natural sequences (as is true when primers flank natural genes). The example concludes that a claim for the pair of PCR primers cannot be patented. Both of the primers are isolated versions of naturally occurring sequences, and absent any additional structures or components to distinguish the primers from what occurs naturally, the Guidance finds that the two primers in combination are no more patentable than either would be alone.

In contrast, the Guidance concludes that the process of using the primers in PCR can be patented, for the reason that the specific steps required by PCR (denaturing, polymerizing, renaturing, and providing the proper reagents) limit the use of the primers to a specific artificial application.

This last example is extremely helpful, as it clearly explains that at least one aspect of this common type of biotechnological invention can be patented.

What Should Life Sciences Inventors Do?

Despite the wide-ranging implications of the Guidance, patent applicants should not necessarily forgo attempts to protect their purified natural products or combinations of natural products for the following reasons.

The Guidance May Be Invalidated

The Guidance does not have the force of law. Patent examiners will follow the Guidance, but courts and higher administrative authorities (such as the Patent Trial and Appeals Board, which reviews the examiners’ decisions) are not bound by them. The Guidance is a significant departure from the law as it was previously understood and is a significant departure from international standards of patenting. Inevitably it will be challenged in a court of law. The Guidance has received considerable criticism from legal commentators, and it is quite possible that it will be invalidated, in whole or in part, upon such challenge. Consequently, patent applicants should consider maintaining the ability to claim subject matter that might be rejected under the Guidance, in case such a challenge should succeed.

Pay Attention to Foreign Markets

Countries outside of the United States have not shown any interest in following the lead of the USPTO in creating this new exception to patenting. The U.S. and most industrialized countries have signed the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which allows its participants to exempt only specific types of subject matter from patenting. “Natural products” are not one of the permitted exemptions.5 Although the United States remains the world’s largest market in terms of nominal GDP, the European Union (EU) as a whole exceeds the GDP of the U.S. Taken together, the EU, China, and Japan have a GDP that is slightly less than twice that of the United States. Even if the Guidance survives judicial challenges, these foreign markets remain quite lucrative and permit purified natural substances and combinations of natural substances to be patented, so inventors should consider retaining the ability to claim these types of inventions in foreign patents. Based on the increased patenting risk in the U.S., life sciences innovators may also wish to consider shifting the focus of their research to problems that are consequential in major markets outside of the U.S., and away from problems that are unique to the U.S. or primarily of consequence in the U.S.

Consider Trade Secrecy

Patents are not the only form of intellectual property protection available. Certain types of inventions can be protected as trade secrets, and as the U.S. weakens its patent laws, trade secrecy is becoming a more popular form of IP protection. The balance between secrecy and patenting has always been a consideration for innovators in every area of technology, but the Guidance is yet another nudge in the direction of secrecy for life sciences inventions.

For drugs, biologics, and medical devices, trade secrecy is generally impractical, because of the need to obtain regulatory approval from the U.S. Food and Drug Administration.6 For inventions subject to the Guidance that do not require regulatory approval, an analysis should be conducted to determine whether the invention should be maintained as a trade secret.

Before publishing or presenting newly identified genes or other useful natural substances, serious consideration should be given to maintaining any newly discovered natural substance in strict secrecy until its commercial potential can be ascertained, so that patent applications can be filed for all commercially viable, artificially modified forms. In addition, if the substance could be useful in an industry outside of those which have mandated rules of public disclosure, then consideration should be given to maintaining the invention as a permanent trade secret.

[1] The Guidance discusses to a lesser extent inventions that involve “natural principles,” but that topic is not within the scope of this article.

[2] Although acetyl salicylic acid is not naturally occurring, it had been made in impure form before Hoffman purified it.

[3] As examples of the subjective nature of the factors, Factor (c) requires a determination of whether the public is “substantially foreclosed from using” the natural product. Factor (g) requires the patent examiner to determine whether elements of the invention are “markedly different in structure.” Terms such as “substantially” and “markedly” are intentionally vague, and would be interpreted differently by different people.

[4] The Guidance contains three examples of “laws of nature,” which are not discussed here.

[5] TRIPS allows participants to declare that inventions cannot be patented for diagnostic methods, therapeutic methods, surgical methods, plants, animals (but not microorganisms), essentially biological processes for the production of plants or animals, and anything that threatens public order, public morality, human health, animal health, plant health, or the environment. Note that the Guidance specifically states that microorganisms are “natural products,” but that TRIPS specifically states that microorganisms are not exempt from patenting.

[6] This is also true to some extent for food additives, cosmetics, dietary supplements, and pesticides, although not in all circumstances.