The New Patent Puzzle
by Neil Munro
from National Journal
March 2, 2002

       The world's first cloned cat, CC, was advertised as a prototype for the pet-cloning market by her corporate parent, Texas-based Genetic Savings & Clone. But she is also a prototype for a much larger market for "animal models," or animals created for use in medical experiments. And she is a precursor to what many researchers and biotech entrepreneurs see as an important new arena -- the cloning and use of human embryos for specific research and commercial purposes.
       Cloning technologies depend on patents for their commercialization and growth. The U.S. Patent and Trademark Office has already begun awarding these valuable patents for cloning techniques for many types of "modified" animals, and for some cells grown from human stem cells. Biotech experts predict that the patent office will eventually grant patents for methods used in human-embryo cloning. But in the new biotechnology, "the boundary is quite blurred" between what is human and what is nonhuman, said Kent Cheng, a lawyer with the NewYork-based law firm of Cohen, Pontani, Lieberman & Pavane, which specializes in patent issues.
       The market in animal models is already large, with one company claiming revenue of more than $500 million a year. In 2000 alone, 25,560 ordinary cats -- plus another 1.4 million animals, not counting mice, rats, and birds -- were used in medical experiments. The cats were used principally for research into AIDS, the human brain, and various viruses. Specially bred disease-free cats can be sold for up to $600.
       But even that is far less than the price of designer mice -- mice that have been given human genes, or carry unusual mice genes, or have particular genes "knocked out." The price of these mice, many of which are patented, can exceed $2,000 for a breeding pair, depending on the desires of the buyer and the seller. There are more than 1,000 types of these specialty mice, said Joyce Peterson, a spokeswoman for the Jackson Laboratory in Bar Harbor, Maine. The lab develops and breeds mice and other animals for research. Indeed, these mice are so important that the National Institutes of Health is funding two groups, each of which is to develop 50 new types of mouse models each year, Peterson said. Overall, the annual U.S. market for animal models is more than $1 billion.
       The technology used to clone CC allows cats to play in this specialty market. Twenty cloned cats would produce the same quality of research data that now requires 40 ordinary cats, said Duane Kraemer, a professor at Texas A&M University and a principal at Genetic Savings & Clone.  And these genetically engineered cats can be patented, hindering other companies from developing them, according to Charles Long, the company's general manager. To clone CC, Genetic Savings & Clone paid to use other companies' patented cloning techniques, "but we hope to change the process so significantly that we wouldn't be bound by other patents, and we'd have our own [genetic-engineering patents] that someone might license," Long said. "That's the position you want to get yourself in -- to get others to pay."
       That's where the Patent and Trademark Office enters the picture. Companies can obtain patents on new animals that are "novel" and "nonobvious," and that have substantial, credible, and significant utility. The patent office has already awarded many patents for modified mice, including mice that carry human genes, and mice designed to mimic human psoriasis, Huntington's disease, cancer, and many other ailments.
       These patents can be very valuable, especially for companies that stake years of expensive research on the prospect of winning them. For example, Advanced Cell Technology Inc. in Worcester, Mass., holds patent No.5,945,577, which is for the creation, via cloning, of genetically modified nonhuman mammals. Two other companies, Geron Corp. in Menlo Park, Calif., and Infigen Inc. in DeForest, Wis., have protested, arguing that ACT's patent interferes with their patent applications. In early February, the patent office agreed to consider the dispute, but the fight over the patenting of nonhuman mammals is only a precursor to a much more difficult debate: To what extent can human clones be patented?
       Some researchers say that cloned human "embryo models" will provide the best -- and in some cases, the only -- way to study some aspects of human biology, particularly the gradual emergence of genetic diseases and traits.
       The leading proponent of human research cloning is Irving Weissman, who helped found a biotech company, StemCells Inc., in Palo Alto, Calif., which is now backed by biotech giant Amgen. He argues that stem cells from human embryos produced by cloning can serve as valuable laboratory models and as the foundation for the next stage in biotech's evolution. Such models should be created and used, Weissman said, even if other researchers use stem cells from adults to repair diseases.
       "Even if we could treat one disease, or two or five or 10, with adult stem cells that are around, I would not block research that would open up whole fields," Weissman said. He was speaking at a February 6 Senate Judiciary hearing chaired by Sen. Dianne Feinstein, D-Calif., who has drafted a bill that would ban the implantation of cloned embryos in women's uteruses. Feinstein's bill stands in opposition to legislation pushed by Sen. Sam Brownback, R-Kan., that would ban human cloning for any purpose. The House has already passed a comprehensive ban on human cloning.
       Weissman is well-versed in patent policy. In 1997, he sold his SyStemixInc. for a reported price of $570 million, netting himself $25 million. The company's value was based on its critical patents, including a patent for one of the earliest mouse models, called a SCID-hu mouse, which incorporates a human immune system transplanted from an aborted fetus. Several competing varieties of the SCID mice are now used, along with cats and other models, to study AIDS.
       According to Weissman, the patent office will be reluctant to grant a single broad patent for all research cloning of human embryos, partly because his discussion of the concept in public means it couldn't pass the "novelty" test. But Weissman predicted that the patent office will be much more likely to grant narrow patents to those who actually create cloned human embryos with particular genetic features and then use them to create millions of stem cells carrying those genetic features for study by researchers. These features could include a predisposition to breast cancer, or to Lou Gehrig's disease, for example. He asserts that it would be in the public interest to grant patents to researchers who first develop such "nuclear transfer models," because they provide the best model for the study of diseases. Weissman believes that there could be very many such patents granted, especially as scientists develop improved versions of these models. He says that an embryo itself cannot be patented, because it has no utility except as a source of valuable stem cells for researchers. At least one other researcher, however, says the embryos themselves are valuable for study.
       The patent office has gone part way toward realizing Weissman's prediction.  Last September, the office granted a patent to Neuralstem Inc. in Gaithersburg, Md., for brain cells grown from stem cells extracted from aborted fetuses. The brain cells are sold in batches for $990 to companies that develop and test drugs. The cells may also be used for transplantation into patients with Parkinson's disease.
       But no human-embryo-based patents should be awarded, says Peter Di Mauro, a scientist and patent agent with the Washington-based International Center for Technology Assessment, which opposes human cloning. Even if the embryo-based models prove useful, he said, they violate the patent office's rules that inventions should not be "detrimental to the public interest." He also contends that the many other models can provide the information scientists need.
       The Patent and Trademark Office is not eager to join the debate on granting patents for cloning human embryos. When asked for a comment, its chief spokesman, Richard Maulsby, would say only, "The U.S. Patent and Trademark Office does not issue patents drawn to human beings."
       The key issue will be the patent office's interpretation of patents that involve humans and cloning, said Lila Feisee, a patent expert for the Biotechnology Industry Organization. "The patent office won't sit down and define 'human' ... but I do know that they do patent stem cells, and methods of ... deriving them from cloned embryos."
       But Bruce Lehman, who served as head of the patent office from to 1993 to 1998 and now heads the Washington-based International Intellectual Property Institute, said that, on that difficult issue, "I would not have even proposed a decision myself [because it] is something that would go up to the President." Lehman said that the question lies "at the heart of the 'is an embryo a person' debate," but it does not implicate the 1973 Roe v. Wade decision legalizing abortion, principally because there is no pregnant mother involved. But supporters of President Bush and patent office director James Rogan, said Lehman, include those who believe "any human embryo ... is [human] life," so "it would be completely inconsistent for them to patent that kind of subject matter." He added, "I'm glad I don't have to be involved in that; the factory manufacturing of human beings is a very serious issue."
       Already, some researchers, including Michael West, the head of ACT, argue that a cloned embryo of less than 14 days, or perhaps one that hasn't developed a brain, is not human but is merely cellular life that can be owned and patented.
       Others, including some scientists, anti-abortion-rights advocates, and left-of-center opponents of biotechnology, argue that human life exists from conception. "I don't think the Supreme Court has been able to answer that question," Feisee said.
       Political opposition may delay the award of a patent, Weissman said, "but in the end, a judge or some judges will decide" the legal issue. If a model is worth developing, he said, it is worth patenting.