[Congressional Record Volume 141, Number 160 (Tuesday, October 17, 1995)]
[Senate]
[Pages S15220-S15223]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     BIOTECHNOLOGY PROCESS PATENTS

  Mr. HATCH. Mr. President, this afternoon, the House gave final 
approval to S. 1111, a bill Senator Kennedy and I have authored to 
remove barriers to the patenting of biotechnology processes by 
establishing a modified examination by the U.S. Patent and Trademark 
Office [PTO] of those patent applications.
  Passage of this legislation is a tremendous testament to the 
foresight and capabilities of our House colleague, Representative 
Carlos Moorhead, chairman of the House Judiciary Subcommittee on Courts 
and Intellectual Property. Chairman Moorhead drafted the original 
legislation this session, H.R. 587, which was approved in committee on 
June 7, 1995.
  The bill now goes to the President for signature.
  Mr. President, under the provisions of S. 1111, if a claimed 
biotechnology process uses or produces a patentable composition of 
matter, the process will be presumed nonobvious for the purpose of 
examining the process. This modified examination will resolve delays 
and inconsistent determinations faced by biotechnology patentees under 
present PTO practices, and thereby increase innovation and stimulate 
the development of new products and processes.
  For the edification of my colleagues, I want to take this historic 
opportunity to explain the purpose of the bill and the need for the 
legislation.
  Biotechnology: The Office of Technology Assessment defines 
biotechnology as ``any technique that uses living organisms--or 
substances from those organisms--to make or modify products, to improve 
plants or animals, or to develop microorganisms for specific uses.''
  Biotechnology, in the sense of genetic manipulation, has been 
practiced by man for many hundreds of years. It has been used 
successfully by plant breeders in developing schemes for crossing 
plants to introduce and maintain desirable traits in various crops such 
as wheat or maize. Bakers and beverage producers have used yeast, a 
fungus, for leavening dough and for fermentation.
  Today, the practice of biotechnology is far more powerful, with 
promising applications in diverse industries ranging from 
pharmaceuticals, agriculture and nutrition to environmental cleanup, 
new energy resources and law enforcement.
  Some examples of widely known products made with the use of 
biotechnology include insulin, human growth hormone, home pregnancy 
tests, tests for diagnosing human immunodeficiency virus (HIV), vaccine 
against the Hepatitis B virus, and high-protein yielding corn.
  The dramatic breakthroughs and future promises of biotechnology 
became possible in the 1950's when scientists James Watson and Francis 
Crick discovered the structure of DNA, or deoxyribonucleic acid. 
Ironically, neither scientist seemed aware that their discovery would 
give birth to an entire new generation of technology. In a March 12, 
1953, letter to Max Delbruck, Watson wrote:

       In the next day or so Crick and I shall send a note to 
     Nature proposing our structure (of DNA) as a possible model, 
     at the same time emphasizing its provisional nature and the 
     lack of proof in its favor. Even if wrong, I believe it to be 
     interesting since it provides a concrete example of a 
     structure composed of complementary chains. If, by chance, it 
     is right, then I suspect we may be making a slight dent into 
     the manner in which DNA can reproduce itself.

  The discovery of DNA put more than a slight dent in our knowledge of 
basic biology: it became the basis of a new, promising industry that 
has led to significant breakthroughs in the ability to improve human 
life.
  DNA, known as the ultimate molecule of life, contains the codes that 
instruct cells to grow, to differentiate into specialized structures, 
to duplicate, and to respond to environmental changes.
  DNA guides the special functions of cells by directing the synthesis 
of proteins. A gene, which is comprised of a specific section of DNA, 
contains the special instructions the cell needs to synthesize 
proteins. Proteins give living organisms their unique characteristics. 
Some proteins give the organism its structure; others mediate the many 
biochemical reactions that occur within the body and are necessary for 
organisms to function.
  The DNA code for certain genes is sometimes defective. The defect may 
have been present at birth or later developed due to other factors such 
as infection, age, or exposure to ultraviolet light. When a defect 
occurs, the code for the synthesis of proteins is scrambled and causes 
the cell to produce either a defective protein or no protein at all. If 
the function of this defective protein is important, this can have 
serious consequences for the health of the organism. For human beings, 
the deficiency in the protein may lead to tragic disabilities like 
cancer and arthritis, or even lead to death. For corn and other 
agricultural crops, the incorrect protein may lead to limited 
resistance to insects or extinguishment of the crop all together.
  Once scientists determine which specific protein performs which 
function in an organism, they, with the aid of biotechnology, are able 
to effectively fight disease and other abnormalities. For example, when 
the absence of a certain regulatory protein leads to cancer, it is 
possible to stop the growth of cancerous cells by replacing the 
defective gene with a normal one that would produce the necessary 
protein in the body.
  It is also possible to reproduce the normal protein in another 
organism and then supply it in the human body. The technology enabling 
this method is known as recombinant DNA technology. A well-known 
example of such a method is the process used to produce insulin. 
Insulin is produced in mass quantities in microorganisms and then 

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injected into human beings to treat diabetes.
  Proteins produced through recombinant DNA technology are used not 
only to treat numerous diseases, such as cancer, allergies, blood 
disorders, and infections, but also for more prosaic tasks, such as use 
in laundry detergents and food production. All of the tools that 
currently allow scientists to perform such marvels are the product of 
innovative research utilizing biotechnology.
  Given the complexities of developing such treatments, the underlying 
research is often expensive and takes many years before it yields 
practical results. The biotechnology industry estimates that the 
average cost of discovery and bringing a single drug to market exceeds 
$230 million. It is also estimates that bringing a drug from initial 
discovery to final FDA approval takes an average of 12 years.
  Certain incentives are necessary to encourage biotechnology 
researchers to invest in the much needed, but often expensive, research 
endeavors. To date, the patent laws have been the source of such 
incentives. The biotechnology industry relies heavily on patent 
protection in recouping the costs of bringing new drugs to the market. 
Furthermore, adequate patent protection is vital in persuading 
investors to provide the necessary capital to the industry.
  The biotechnology industry has been one of the success stories in 
U.S. industry, creating new jobs and pioneering exciting breakthroughs 
that improve our way of life. However, the biotechnology industry now 
faces formidable challenges in continuing its ground-breaking research. 
Japan and Europe have invested heavily in biotech research and Japan 
has targeted pharmaceutical development as an industry of vital 
economic importance. In facing this competition, it is vital that the 
United States provide adequate and effective intellectual property 
protection for the biotechnology industry.
  General patent protection: A patent on an invention gives the patent 
holder the right to exclude others from making, using, or seling that 
invention. Under 35 U.S.C., section 101, an inventor may obtain a 
patent on ``any new and useful process, machine, manufacture, or 
composition of matter, or any new and useful improvement thereof . . 
.'' Once an invention is determined to be of the kind that may be 
patentable under section 101, it must also satisfy other requirements 
before a patent is granted on that particular invention. The two other 
major requirements are that the invention be ``novel'' and be 
``nonobvious.''
  If a U.S. patent is granted on a particular product, the owner of the 
patent can prevent others from manufacturing, selling, or importing the 
product in the United States. However, because patents are national 
rights, the owner of the U.S. patent cannot prevent others from 
manufacturing or selling the patented product in another country. In 
order to prevent others from exploiting his patented product in another 
country, the inventor must obtain a patent in that country.
  A patent may be granted for a new method of using or a new method of 
making a product. Such patents are referred to as ``process patents.'' 
It is not uncommon for an inventor to seek both product and process 
patent protection relating to the same invention. A process patent must 
meet the same basic requirements for patentability as a product patent, 
that is, that the claimed invention be new, useful, and nonobvious. The 
owner of a process patent may prevent the sale or manufacture of a 
product made using that process.
  The courts have described the difference between a process patent and 
a product patent as one relating to scope:

       A product patent gives the patentee the right to restrict 
     the use and sale of the product regardless of how and by whom 
     it was manufactured. A process patentee's power extends only 
     to those products made by the patented process. A process 
     patent thus ``leaves the field open to ingenious men to 
     invent and to employ other processes. . . .'' A sale of a 
     product made by a patented process does not itself infringe 
     the patent; it is the unauthorized use of the process that 
     infringes the patent.

  The Process Patent Amendments Act of 1988 provided additional 
protection for process patent owners. Under this act, the process 
patent owner may not only prevent unauthorized domestic use of the 
process, but also the importation of foreign-manufactured products if a 
U.S. patented process was used in making the products. This amendment 
provides protection to domestic U.S. process patent holders against 
foreign companies using the U.S. patented process overseas and 
importing the resulting product into the United States without any 
recourse by the process patent owner for infringement. Therefore, a 
patent on the final product, or at least a patent on the process for 
making that product, is necessary in order to effectively protect 
innovators from the unfair competition of imported ``knock-offs'' of 
their creations.
  Although a product patent is generally considered to provide better 
protection for innovators than process patents, they are often not 
available for products of biotechnology. Biotechnology products are 
difficult to patent because they are usually the recombinant version of 
a naturally occurring protein. In many cases, the naturally occurring 
version of the protein has been identified and described in the 
literature to some extent. Even if this protein has not been completely 
characterized, the patent application on the recombinant version of the 
protein may be denied because, in the eyes of the PTO, it is not novel, 
or it is obvious in light of the previous disclosure. In patent law 
parlance, that product has already been discovered and does not warrant 
a patent under the U.S. patent code.
  A good example of this problem is human insulin. Human insulin was 
discovered in 1921 when scientists first extracted the protein from a 
dog's pancreas. In 1951, Frederick Sanger identified the chemical 
structure of human insulin and won the Nobel Prize for this discovery. 
He would not have been able to obtain a patent on insulin despite the 
fact that his discovery earned him the Nobel Prize. Then in 1979, David 
Goeddel synthesized human insulin using biotechnology methods, enabling 
patients to gain access to the product they needed to control their 
diabetes. Even Goeddel would not have been able to receive a product 
patent on insulin.
  The difficulties in obtaining patents on products of biotechnology, 
therefore, make the availability of effective process patent protection 
vital in providing a reward for the achievements of biotechnology 
pioneers. Moreover, adequate protection is necessary to encourage the 
continued investment in biotechnology research and development.
  Biotechnology process patenting: The ability of the biotechnology 
industry to obtain process patent protection has been undermined by the 
lack of clarity in the rules for the patentability of such process 
patents. Not only does the lack of adequate and effective process 
patent protection affect the industry's ability to fend off unfair 
competition of foreign-made products using U.S. patented starting 
products, but it also inhibits venture capital investment in 
biotechnology research.
  The uncertainty in the rules of process patent protection has been 
the result of the Patent and Trademark Office's [PTO] inconsistent and 
erroneous application of In re Durden, and other related and 
conflicting decisions issued by the U.S. Court of Appeals for the 
Federal Circuit [CAFC].
  Although In re Durden did not involve a biotechnology invention, the 
principles espoused by the court in that case have had a significant 
effect on the patentability of biotechnology processes. In re Durden 
involved an appeal of the PTO's denial of a patent for a process to 
make certain new chemical compounds. The process used was similar to 
one already familiar to those in the industry, however, it used a novel 
and nonobvious starting material and produced a novel and nonobvious 
chemical product. As stated by the court, the issue in the case was 
``whether a chemical process, otherwise obvious, is patentable because 
either or both the specific starting material employed and the product 
obtained are novel and nonobvious.'' The court concluded that the 
process was not patentable. Given the particular facts of In re Durden, 
it held that a process using a new starting material to make a new 
product will not automatically be presumed nonobviousness for 
patentability purposes. It noted 

[[Page S 15222]]
that the patentability of each process claim must be evaluated on a 
case-by-case basis.
  Since the In re Durden decision, it has become increasingly difficult 
to obtain process patent protection in the United States for genetic 
engineering inventions. It is reported that the PTO frequently cites 
this case in automatically rejecting applications for biotechnology 
processes.
  The reasoning used in rejecting biotechnology process patent 
applications is as follows: The basic process of genetic engineering, 
recombinant DNA technology, is known. It consists of inserting a DNA 
molecule into a living cell so that the cellular machinery produces the 
specific protein encoded by the inserted DNA molecule. Therefore, when 
a new DNA molecule has been invented, it is assumed ``obvious'' that it 
can be used in a recombinant DNA process to produce the protein it 
encodes. Since nonobviousness is a condition for patentability, the 
process for producing the protein is rejected by the PTO as obvious. 
Under In re Durden, the process is rejected even if the starting 
materials used in the process in producing the final product are new 
and patentable.
  The Court of Appeals for the Federal Circuit revisited the issue in 
the subsequent case of In re Pleuddemann. As with In re Durden, this 
case involved a challenge of the PTO's denial of a patent to a process. 
The challenger had a patent on a starting material that he used in the 
process at issue to make a patentable final product. Except for the use 
of the patented starting material, the process for making the final 
product was already known in the industry. The court held that the 
process in this particular case was patentable. In its opinion, the 
court emphasized that In re Durden was not to be read as a ``per se'' 
rule against patenting old processes that use new starting materials or 
produce new products.
  The court distinguished In re Durden in this case on the ground that 
the process at issue in In re Pleuddemann involved a process of 
``using'' rather than a process of ``making,'' which was the claimed 
process at issue in In re Durden. This distinction between the two 
types of processes was lost on many and has caused further confusion on 
the status of the law on patenting processes. It is not clear why a 
method of ``using'' a starting material should be treated differently, 
for purposes of determining nonobviousness, from a method of ``making'' 
the end product.
   Relying on In re Pleuddemann, some applicants have manipulated 
phrasing in crafting patent applications to explain processes in terms 
of ``using'' rather than ``making.'' However, the PTO continues to 
reject such claims citing In re Durden and arguing that such claims are 
really a process of making claim in disguise
  Although biotechnology innovators have difficulties obtaining patents 
on products and processes of biotechnology, they can receive patents on 
new starting materials they discover. However, unlike patents on 
products or the process by which those products are developed, U.S. 
patents on the starting materials fail to provide adequate protection 
from unfair foreign competition.
  The U.S. patent on the starting materials--typically a new DNA 
molecule, a genetically altered host cell or a vector--can prevent 
others from using them in the United States in any way, including using 
them to produce a final product. However, without process patent 
protection, the patent owner of the starting materials cannot prevent 
another from taking the patented materials to another country, use it 
to produce a product based on such material, and import the product 
back into this country for commercial sale.
  Under the patent laws, there is no infringement of the patent on the 
starting materials because there is no ``use'' of the materials in the 
United States. Without process patent protection, the inventor can not 
challenge the unfair importation of the product and is forced to watch 
helplessly as foreign copy-cats reap the harvest to which he, as a 
pioneer, is entitled.
  The uncertainty in the examination of biotechnology process patents 
under current U.S. law has become a serious impediment to the 
development of new technologies in this industry. The confusion in the 
case has led to inconsistent results by patent examiners. The 
inconsistent application of the case law, in turn, has led to severe 
delays or denials of issuance of process patent protection to deserving 
patent applicants. The resolution of this problem will provide both 
certainty for patent applications in this field and adequate protection 
against unfair foreign competition.
  It is not clear if or when the CAFC will resolve the confusion in the 
case law relating to process patents. Currently, there are two cases 
pending in the CAFC relating to this issue. These two cases have been 
pending before the CAFC for over 3 years, and there is no indication 
when the court might issue a decision on them. Even if the court issues 
a decision on these cases, it is by no means certain that they will 
resolve the confusion caused by In re Durden and related cases. The 
PTO, in congressional hearings, testified that it does not believe it 
can resolve the problem administratively because of the seemingly 
conflicting court opinions.
  S. 1111 resolves the In re Durden problem in our patent law by 
providing that a biotechnological process of making or using a product 
may be considered nonobvious if the starting material or resulting 
product is patentable. This change will provide a degree of certainty 
to the protection of biotechnology inventions and will simplify the 
PTO's examination of biotechnology process patent applications. This 
bill will also allow U.S. researchers to enforce their patents claiming 
a certain starting material against the unfair importation of products 
made overseas using such material.
  As my colleagues are aware, the Senate has gone on record in support 
of this change in the law many times, most recently in 1994 when we 
approved the Deconcini-Hatch legislation. I am proud that the Congress 
has now given final approval to the bill, and I am hopeful the 
President will sign the measure as soon as it reaches his desk.
  Mr. President, I ask unanimous consent that the text of S. 1111 and a 
section-by-section summary be printed in the Record at this point.
  There being no objection, the material was ordered to be printed in 
the Record as follows:

                                S. 1111

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. BIOTECHNOLOGICAL PROCESS PATENTS; CONDITIONS FOR 
                   PATENTABILITY; NONOBVIOUS SUBJECT MATTER.

       Section 103 of title 35, United States Code, is amended--
       (1) by designating the first paragraph as subsection (a);
       (2) by designating the second paragraph as subsection (c); 
     and
       (3) by inserting after the first paragraph the following:

       ``(b)(1) Notwithstanding subsection (a), and upon timely 
     election by the applicant for patent to proceed under this 
     subsection, a biotechnological process using or resulting in 
     a composition of matter that is novel under section 102 and 
     nonobvious under subsection (a) of this section shall be 
     considered nonobvious if--
       ``(A) claims to the process and the composition of matter 
     are contained in either the same application for patent or in 
     separate applications having the same effective filing date; 
     and
       ``(B) the composition of matter, and the process at the 
     time it was invented, were owned by the same person or 
     subject to an obligation of assignment to the same person.
       ``(2) A patent issued on a process under paragraph (1)--
       ``(A) shall also contain the claims to the composition of 
     matter used in or made by that process, or
       ``(B) shall, if such composition of matter is claimed in 
     another patent, be set to expire on the same date as such 
     other patent, notwithstanding section 154.
       ``(3) For purposes of paragraph (1), the term 
     `biotechnological process' means--
       ``(A) a process of genetically altering or otherwise 
     inducing a single- or multi-celled organism to--
       ``(I) express an exogenous nucleotide sequence,
       ``(ii) inhibit, eliminate, augment, or alter expression of 
     an endogenous nucleotide sequence, or
       ``(iii) express a specific physiological characteristic not 
     naturally associated with said organism;
       ``(B) cell fusion procedures yielding a cell line that 
     expresses a specific protein, such as a monoclonal antibody; 
     and

       ``(C) a method of using a product produced by a process 
     defined by (A) or (B), or a combination of (A) and (B).''.

     SEC. 2. PRESUMPTION OF VALIDITY; DEFENSES.

       Section 282 of title 35, United States Code, is amended by 
     inserting after the second sentence of the first paragraph 
     the following: 

[[Page S 15223]]
     ``Notwithstanding the preceding sentence, if a claim to a composition 
     of matter is held invalid and that claim was the basis of a 
     determination of nonobviousness under section 103(b)(1), the 
     process shall no longer be considered nonobvious solely on 
     the basis of section 103(b)(1).''.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by section 1 shall apply to any 
     application for patent filed on or after the date of 
     enactment of this Act and to any application for patent 
     pending on such date of enactment, including (in either case) 
     an application for the reissuance of a patent.
                                                                    ____


               Section-by Section Analysis and Discussion


      Section 1. Biotechnological Process Patents; Conditions For 
                Patentability; Nonobvious Subject Matter

       Section 1 provides a mechanism for applicants to facilitate 
     the procurement of a patent for a biotechnological process 
     that makes or uses a novel and non-obvious biotechnology 
     product, overruling the decision in In re Durden, 763 F.2d 
     1406 (Fed. Cir. 1985). This section would amend section 103 
     of title 35, United States Code, to ensure that a 
     biotechnological process would not be considered obvious, and 
     thus unpatentable, if it either makes or uses a composition 
     of matter that itself is novel and non-obvious.
       The legislation has an impact on only one element of 
     patentability of biotechnological processes--the element of 
     non-obviousness. There is no guarantee of patentability even 
     if the process claim satisfies the non-obvious provisions of 
     the revised section 103. The process must still satisfy all 
     other requirements of patentability, including novelty and 
     utility among other requirements.
       To qualify as non-obvious under this section, the claims to 
     the process and the composition of matter, to which the 
     process is linked, must be contained in either the same 
     application for patent or in separate applications having the 
     same effective filing date. Additionally, the composition of 
     matter and the process at the time it was invented, must be 
     owned by the same person or be subject to an obligation of 
     assignment to the same person.
       Section 1 also allows an applicant to demonstrate the 
     independent patentability of a process under current law or 
     proceed under the non-obviousness rule established by this 
     section. Independent patentability may be demonstrated, for 
     example, by showing the non-obviousness of the process 
     through proof that the process demonstrates unpredictable 
     results.
       Finally, this section provides five possible definitions of 
     the term ``biotechnological process.'' These definitions 
     limit the applicability of this section to biotechnological 
     process patents. The new definitions are broad enough to 
     include most genetic engineering technologies that are 
     currently being used by biotechnology researchers.
       The first proffered definition explains a 
     ``biotechnological process'' as a process of inducing an 
     organism to express a characteristic not naturally associated 
     with it through the methods of genetic engineering or other 
     methods. Such a process may cause an organism to ``express an 
     exogenous nucleotide sequence.'' An example of such a method 
     is the process by which human insulin is produced in 
     commercial quantities. The DNA sequence for human insulin is 
     inserted into the bacteria E. coli so the bacteria begins 
     expressing, or producing, human insulin in its cellular 
     machinery.
       This second definition of a ``biotechnological process'' 
     specifies that such a process could be altering an organism 
     to ``inhibit, eliminate, augment, or alter expression of an 
     endogenous nucleotide sequence.'' A popular example of a 
     product produced by such a process is the Flavr-Savr Tomato. 
     This process involves the alteration of tomatoes to eliminate 
     the inter-cellular production of an enzyme that causes the 
     tomato to rot. By eliminating the expression of this 
     ``rotting'' enzyme, the tomato is allowed to have a longer 
     shelf-life.
       The third qualifying definition interprets 
     ``biotechnological process'' as altering an organism to 
     ``express a specific physiological characteristic not 
     naturally associated with said organism.'' The Hepatitis B 
     virus vaccine is produced utilizing such a process. The 
     ``antigen,'' or surface protein to which the human immune 
     system responds, for Hepatitis B is inserted into yeast to 
     yield commercial quantities of the protein. The expression of 
     the protein does not occur naturally in yeast but does so 
     because its genetic coding has been altered. The protein is 
     then removed from the yeast and injected into humans to 
     induce the body to safely and naturally produce an immune 
     reaction to fight the deadly virus, which causes liver damage 
     and cancer. The use of such a process to combat many human 
     and animal diseases, including AIDS.
       The fourth qualifying definition comprises ``cell fusion 
     procedures.'' An example of such a process is the method used 
     for producing monoclonal antibodies, referred to by 
     scientists as ``hybridoma technology.'' This technology 
     involves fusing spleen cells that produce certain desired 
     antibodies to a specialized ``immortal'' cell--usually a 
     cancer cell--that no longer produces an antibody of its own. 
     The resulting fused cells, or ``hybridomas,'' grow 
     continuously and rapidly like a cancer cell, yet they produce 
     the desired antibodies. Monoclonal antibodies are widely used 
     in targeting special cells to diagnose infections and cancer. 
     The possibility of their use in the direct treatment of 
     cancer and immune disorders is currently a major focus of 
     biomedical researchers.
       Finally, the fifth definition of a qualifying 
     ``biotechnological process'' is described as any method of 
     using a final product that has been produced by a process 
     defined by any of the other four definitions provided or a 
     combination of the processes thereof.


                   Section 2. Presumption Of Validity

       This section provides that if a patent claim to a 
     composition of matter--either the starting material or the 
     final product--is held invalid because the Patent and 
     Trademark Office determines that it is non-obvious, the 
     patent process application that is dependent on that 
     composition of matter will no longer be entitled to rely on 
     that composition of matter for a presumption of non-
     obviousness. In such a case, the inventor must show that such 
     a process is non-obvious without relying on this legislation.


                       Section 3. Effective Date

       The amendments made by this act are effective on the date 
     of enactment. The amendments will apply to all patents filed 
     on or after the date of enactment and all patent 
     applications, including applications for the reissuance of a 
     patent, pending on the date of enactment.

                          ____________________