A comparative examination of the socio-political-moral lives of patents

Mid-2017, the European Patent Office (EPO) amended its Implementing Regulations¹ to stipulate that patents shall not be granted in respect of plants or animals exclusively obtained by means of (non-patentable) essentially biological processes. This came about following public backlash against a 2015 EPO decision (relating to broccoli and tomatoes), finding that such products were patentable.² In December 2015, the European Parliament adopted a Resolution asking the Commission to look into the issue.³ This led to a 2016 European Union (EU) Commission Notice stating that such products should not be patentable.⁴ The EPO is not an organ of the EU; it is a private entity of which all EU Member States happen to be a party to, but which includes non-EU states. The EPO is, thus, not technically subject to the EU, its Directives, Regulations or Notices. Nevertheless, a few days after the Commission Notice was released, the EPO stayed all proceedings on plants or animals obtained by an essentially biological process – it wished to see how EPO Member States would react to the Notice and it would act accordingly.⁵ After observing that several Member States already had laws interpreted in line with the EU Commission Notice and several were planning to follow suit, the EPO proposed to amend its Implementing Regulations in June 2017.⁶ The Amendments were formalised in June 2017.⁷

The European experience with such plants or animals obtained from biological processes illustrates just one battle in the ongoing war around the patentability or life forms or related components. This book about ‘patent politics’ pertaining to life forms is, thus, timely. Perhaps more importantly, it is well-written and competently and seamlessly deals with the complex issues surrounding the patenting of life forms. In around 200 pages (not including endnotes, bibliography or index), Parthasarathy identifies and explores key political and cultural differences underpinning the development of patent law in Europe and in the United States. Or, in the author's own words, it ‘reveal[s] the moral and political orders embedded in [those] patent systems’ (at 193). The developments in Europe discussed in the opening paragraph underscore Parthasarathy's main thesis that the socio-political culture in Europe allows for civil society's concerns to be factored into the patent regime. As she makes clear in Patent Politics, this is not the case in the United States, where patents are viewed as a techno-legal species. This book teases out and explores this difference.

To be clear, Patent Politics does not offer any doctrinal legal analysis. It does not undertake a typical comparative law approach. The lack of legal analysis is not a failing – there are enough excellent legal analyses of life-form patents out there.⁸ Parthasarathy's methodology allows her to lay out how differences in culture, theoretical understandings of the role of patents and the ‘accepted’ stakeholders, has resulted in differences in the United States and the European approach to the patentability of life forms. Moreover, she highlights that the law is flat until given dimension by its political and institutional environments. Put another way, while international agreements mean that many jurisdictions have similar law on the books, the law in practice is determined by the culture, politics and institutions within which it is interpreted and applied.

Her core thesis is that the United States takes a ‘market making’ approach to patents, whereas Europe understands patents as ‘market shaping’. If the role of patents is to make markets, patents are essentially incentives to invent and innovate. No more, no less. The grant of patents is morally neutral – patents are ‘legal, technical, and economic entities’ (at 15). Any social or moral concerns will be corrected through the market (i.e. by producers and consumers). Patents are solely there to ensure that products and services are brought to market, to then be regulated by market forces. That is, demand or lack thereof would reflect the public interest. Overall, the US patent system only has room for one relevant (and ‘unquestionable’) externality; namely, that patents incentivise innovation.

In contradistinction, if patents are viewed as market shaping, they are not neutral but are ‘socio-economic objects’. Patents are ‘moral certifications of inventions’. As a consequence, Europe is concerned with the way that inventions are created, and the direct social, economic and moral implications of inventions. Patents are seen as constituting a cog in a larger apparatus of regulation that addresses innovation, healthcare, the environment, morality and the concerns of civil society. Thus, the patent system is used to pro-actively shape the marketplace.

It is these core distinctions regarding the role of patents in the United States and in Europe that Parthasarathy uses to explain the divergent manner in which the two jurisdictions have dealt with biotechnology.

In Chapter 1, Parthasarathy examines the ‘public interest’. Under a market making ideology, it is in the public interest to maximise what is brought to market, for the market to scrutinise. Parthasarathy, thus, notes that there is no distinction between the inventor's interest and the public interest, and the US patent regime does not internally regulate patentability according to non-innovation policies and concerns. In comparison, Europe acknowledges that the inventor's interest is not the same as the public interest. The potential negative externalities of patents are understood to constitute something to be internally regulated. Instead of leaving it to the market to sort products and services in accordance with any social or moral concerns, patent law is designed in line with non-innovation related policies and concerns.

This is followed by an analysis of the patentability of life forms in Chapter 2. The United States has long deemed products of nature to be non-patentable subject matter. However, in Diamond v Chakrabarty,⁹ the Supreme Court did not focus on the issue of whether life forms are products of natures, but whether the claimed invention was a technology as opposed to a product of nature. The experience was quite different in Europe, where lengthy debates, amid controversy and intense lobbying, resulted in exceptions to patentability. Specifically, methods of medical treatment, a host of biotechnologies, and more importantly a general exception for inventions the commercial exploitation of which would be contrary to ordre public or morality.

Chapter 3 addresses the patentability of animal life forms and concerns that arose with the development of genetic manipulation technologies, such as moral and ethical concerns. Parthasarathy highlights how the United States deems these concerns to be outside the realm of the patent system. The USPTO is a purely techno-legal office, without the expertise to decide on issues of morality. Moreover, the United States has a narrow definition of who can sue a patent holder, meaning that public interest groups – more often than not – lack legal standing. In contrast, the EPO acknowledges the incentive and the post-grant effects of patents, and it takes into account the various concerns through its ordre public provision. EPO examiners are trusted to decide on ordre public, and weigh the potential harm against the potential benefits of animal inventions. Furthermore, any person can oppose an application or seek revocation of a patent through the EPO.

The following Chapter investigates the patent politics around human embryonic stem cells. Parthasarathy notes that the debate in the United States shifted in gear, moving towards terminology that the patent system understands; namely the role that patents are supposed to play in promoting innovation. Opponents raised the argument that life-form patents might inhibit rather than incentivise invention. Simultaneously, debates appeared around the need for a robust experimental-use exception. The only real change that resulted from this was the strengthening of the utility standard. The US patent system does not make room for the potential negative externalities resulting from the patentability of human embryonic stem cell. In Europe, applications and granted patents were strategically targeted to slowly re-shape life-form patents, especially vis-à-vis ordre public and morality, and the idea of human dignity. Unlike in the United States, it was considered inappropriate to leave concerns regarding human dignity to researchers and the market. Governments and the patent system had to take on moral responsibility. As a result, human embryonic stem cells were deemed to be unpatentable. Moreover, so were processes and products that resulted in, or from, the destruction of human embryonic stem cells.

The final substantive chapter discusses the distributive implications of patents. This includes consumer access to inventions, competitor access to inventions, access to non-patented products and the resultant effects on market competition. Consistent with the framework of the book and preceding Chapters, Parthasarathy notes the United State's inability to concede that patents have effects beyond stimulating innovation. Confirming this, the author opines that challenges to life-form patents in the United States fell within the ‘prevailing idea that patents were not the problem, but that patent holders occasionally might be.’ (at 157) This included the Myriad Genetics BRCA (breast-cancer genes) case,¹⁰ which was clearly brought for public policy reasons and because of concerns about the distributive effects of gene patents, but was argued under the ‘product of nature’ doctrine. This is quite different in Europe, where the EU Parliament and interest groups have been very clear that the issues at stake are grounded in the socio-economic impact of life-form patents. This was exhibited in the multiple ways in which the challenges against the BRCA patents were brought across the EU and within the EPO. Moreover, the EPO has directly recognised the distributive effects of patents, even if it concurrently noted its limited ability to check against the negative externalities of patents beyond its bureaucratic scope.

There are a few small errors in legal understanding, which recur and are slightly distracting. First, the author repeatedly refers to patents as monopolies or as creating monopolies. In fact, though some patents do form the basis of market monopolies, patents do not automatically equate to market monopolies. Most granted patents are never worked or exploited, and of those that are the majority do not result in market monopolies. This is because patents do not preclude the introduction of close substitutes or competing products/services.¹¹

Second, Parthasarathy repeatedly states that the Paris Agreement and TRIPS Agreement have ‘harmonised’ patent law around the world. While these two international agreements have created certain similarities in patent systems in different jurisdictions, they have not had a harmonising effect. This is because: the agreements do not cover all aspects of patent law, allowing for variation in things such as the laws on parallel importing; the terms used in the agreements have to be implemented and interpreted at the national level, e.g. jurisdictions interpret the standard of the inventive step or non-obviousness differently; and some jurisdictions have stronger patent protection than required by the Paris or TRIPS Agreements.

Third, the author refers to inventors and inventors’ interests (as opposed to the public interest), but does not identify the nuance that most patents are not owned by the inventors of the invention. That is to say, there is a distinction between inventors and patent owners, such that – when we talk about the role of patents and the relevant stakeholders – it is not sufficient to only refer to inventors and the public at large.

Fourth, the author occasionally seems to conflate ordre public and morality, when these are distinct legal concepts. I would have welcomed some discussion on the different meanings of the terms.

Finally, Parthasarathy potentially paints the contrast between the United States and Europe too starkly. She notes that Europe considers the role of patents within the greater scheme of innovation, healthcare and ethics/morality, whereas the United States takes a purely ‘techno-legal’ approach. The concrete line she draws is muddied by the fact that the US courts will address innovation policy and the ‘laws of nature’/’natural products’ doctrines are clearly judicial recognition that too much patentability (or patents over certain products, processes or information) can hinder follow-on invention. Thus, while Parthasarathy is correct that they will not address issues relating to healthcare and ethics/morality, they will examine patentability against the role of patents as a driver of innovation. The US courts also acknowledge, within the antitrust framework, that the use of patents can be anti-competitive.

There are a few points where I would have liked Parthasarathy to have gone further or deeper. For example, she states (at 197): ‘Patent systems have become a target because of their early and formative involvement in shaping innovation trajectories and because of their roles in shaping commodities and markets.’ This is quite a loaded statement, which she does not give support to. One could equally argue that patents represent the end-point, after years of research, regulatory consent for biotech research (required in many jurisdictions) and so on. Or one could view patents as a mid-point, following on from the research and so on, and then facilitating commercialisation. Furthermore, I would invite Parthasarathy to consider whether patents are not the focus of disputes and controversy because they represent the point at which property is granted – there is a public, bureaucratic process resulting in exclusivity, which patent owners are then entitled to enforce, all of which is highly visible. Parthasarathy notes (at 197) that perhaps we need to ask in which forum we want to address these concerns, if not the patent system, but she does not go any further. Some discussion on areas around patents, such as regulating research or the antitrust regime, would have made her analysis more complete.

In this vein, Parthasarathy does not engage with plant variety/breeders’ rights (PVRs/PBRs). There are mentions, but the relationship between patents and PVRs/PBRs is one that cannot be ignored in the discussion on life-form patents. This could be because Parthasarathy says very little about plant-based life forms. This makes Chapter 5 somewhat lacklustre, as she mentions the EPO broccoli/tomatoes decision (discussed in the opening paragraph of this review), but does not explain it (or its legal bedding) in the same detail as the other cases discussed in the book. Chapter 5 on distributive justice would also be stronger if it reflected the complexity of access issues. For example, while she discusses consumer and competitor access to patented products/services, Parthasarathy does not address the fact that life-form technology is made more complicated by issues relating to access to initial biological samples, patented biological samples and to data around biological samples. That is, even if patent-free, this is not necessarily to say that a life-form technology is accessible to all.

Overall, this book makes sense of a socially and politically divisive topic and lays it out conveniently for the reader. Its engaging and non-legalistic style broadens its potential audience beyond academics. It will be of interest to anyone concerned with life-form patents, or how the US and European patent systems are different, even when the black-letter law might appear similar. More ambitiously, by shining a light on the socio-political-cultural framework in which patent-related decision are made in Europe and the United States, the book potentially helps one to anticipate – and possibly even affect – future battles. The book is well worth its US$25.00/£19.00 price tag.

Notes

1. To the European Patent Convention (16th edition, 2016).

2. OJ EPO 2016, A27 (G 2/12) and A28 (G 2/13).

3. European Parliament Resolution of 17 December 2015 on Patents and Plant Breeders’ Rights, 2015/2981(RSP).

4. Commission Notice on certain Articles of Directive 98/44/EC of the European Parliaent and of the Council

5. ‘EPO Stays Proceedings in Certain Biotechnology Cases’ (12 December 2016) EPO News <https://www.epo.org/news-issues/news/2016/20161212.html >.

6. President of the EPO ‘Exclusion from Patentability under Article 53(b) EPC of Plants and Animals Produced by Essentially Biological Processes – Amendment of Rules 27(b) and 28 EPC’ (6 June 2017) CA/56/17.

7. ‘Decision of the Administrative Council of 29 June 2017 Amending Rules 27 and 28 of the Implementing Regulations to the European Patent Convention (CA/D 6/17)’ (2017) OJ EPO A56. The release of the stay of proceedings was published at the same time; Notice from the European Patent Office dated 3 July 2017 Concerning the Resumption of Proceedings Following the Decision of the Administrative Council of 29 June 2017 to Amend Rules 27 and 28 EPC in Order to Exclude from patentability under Article 53(b) EPC Plants and Animals Exclusively Obtained by Essentially Biological Processes’ (2017) OJ EPO A62.

8. See for example the works of Axel Metzger, Herbert Zech, Johanna Gibson, Dan L Burk, Rebecca S Eisenberg, Rochelle C. Dreyfuss, Dianne Nicol, Jane Nielsen, Jessica C Lai and Matthew Rimmer.

9. Diamond v Chakrabarty, 447 US 303309–10 (1980).

10. Association for Medical Pathology v Myriad Genetics, 133 S.Ct. 2107 (2013).

11. As noted by RA Epstein ‘Intellectual Property: Old Boundaries and New Frontiers’ (2001) 76(4) Ind LJ 803, 817. See also EW Kitch ‘Elementary and Persistent Errors in the Economic Analysis of Intellectual Property’ (2000) 53 Vand L Rev 1727, 1729–30; KW Dam ‘The Economic Underpinnings of Patent Law’ (1994) 23 J Legal Stud 247, 249-51, who submits that a better description for patents would be the grant of ‘economic rents’ (a cost advantage that one economic actor enjoys over competitors). The fact that patents seldom confer market monopolies (and the fact that patent owners can price discriminate) means that the deadweight loss usually associated with monopolies may not be so extreme; FS Kieff ‘Property Rights and Property Rules for Commercializing Inventions’ (2001) 85 Minn L Rev 697, 727–32.