Intellectual Property: Deposits of Biological Materials in Support of
Certain Patent Applications (Letter Report, 10/16/2000, GAO/GAO-01-49).

Under United States patent law, a patent must describe the subject
invention in detail sufficient for a person skilled in the particular
field to use or make it. In cases involving biological materials, the
inventor may have to deposit a sample. Some members of the biotechnology
industry believe that biological deposits make patent infringement
easier, reasoning that a person or organization can obtain a sample of
the deposit and then reproduce the invention with minimal effort and
expense. GAO found that access to biological deposits once a patent is
granted has not to date increased the risk of patent infringement for
the biotechnology industry. The concerns, however, continue especially
after the American Inventors Protection Act of 1999 took effect, which
publishes the patent application 18 months from the date of filing and
is made available to the public at that time rather than at the time the
patent is granted.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-49
     TITLE:  Intellectual Property: Deposits of Biological Materials in
	     Support of Certain Patent Applications
      DATE:  10/16/2000
   SUBJECT:  Patent law
	     Patents
	     Biological research
	     Intellectual property
	     Proprietary data

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GAO-01-49

Report to Congressional Committees

October 2000 INTELLECTUAL PROPERTY

Deposits of Biological Materials in Support of Certain Patent Applications

GAO- 01- 49

Letter 3 Appendixes Appendix I: Scope and Methodology 16

Appendix II: Historical Analysis of Biological Deposit Requirements 18

Appendix III: Biotechnology and the U. S. Economy 23 Appendix IV: Biological
Deposits in the 31 International

Depositary Authorities Approved by the World Intellectual Property
Organization 26

Appendix V: Examination Time for Patents Issued From October Through
December 1999 That Were Supported by Biological Deposits in U. S. IDAs 31
Appendix VI: Comments From the United States Patent and

Trademark Office 32 Appendix VII: GAO Contacts and Staff Acknowledgments 33

Tables Table 1: Deposits on Hand for the 31 IDAs, 1997 Through 1999 26 Table
2: Deposits on Hand for the 31 IDAs Grouped by Country,

1997 Through 1999 27 Table 3: Deposits on Hand for the 31 IDAs Grouped by
Europe,

United States, Japan, and All Other Countries, 1997 Through 1999 28 Table 4:
Number of Samples Furnished by IDAs in 1999 Under

Rule 11 of the Budapest Treaty 29 Table 5: Average, Lowest, and Highest
Examination Time for

Seed and Other Patents Issued From October Through December 1999 That Were
Supported by Biological Deposits in U. S. IDAs 31 Table 6: Ranges of
Examination Time for Seed and Other Patents

Issued From October Through December 1999 That Were Supported by Biological
Deposits in U. S. IDAs 31

Abbreviations

ATCC American Type Culture Collection BIO Biotechnology Industry
Organization DNA deoxyribonucleic acid EPO European Patent Office GAO
General Accounting Office IDA International Depositary Authority JPO
Japanese Patent Office NRRL Agricultural Research Service Culture Collection
PTO United States Patent and Trademark Office WIPO World Intellectual
Property Organization

Lett er

October 16, 2000 The Honorable Orrin G. Hatch Chairman The Honorable Patrick
J. Leahy Ranking Minority Member Committee on the Judiciary United States
Senate

The Honorable Howard Coble Chairman The Honorable Howard L. Berman Ranking
Minority Member Subcommittee on Courts and Intellectual Property

Committee on the Judiciary House of Representatives

Under U. S. patent law, a patent must describe the subject invention in
detail sufficient for a person skilled in the particular field to use or
make it. For certain biological materials- such as seeds, fungi, viruses,
and bacteria- words alone may not always be enough for a proper description.
In these cases, the inventor may have to deposit a sample- referred to as a
biological deposit- in a facility where it will be available to others once
the patent is granted.

Some members of the U. S. biotechnology industry believe that biological
deposits make patent infringement easier, reasoning that a person or
organization can obtain a sample of the deposit and then reproduce the
invention with minimal effort and expense. These concerns increased with the
enactment of the American Inventors Protection Act of 1999, 1 which provides
that, beginning in November 2000, a patent application filed both in the
United States and another country will be published 18 months from the date
of filing and be made available to the public at that time rather than at
the time the patent is granted, as is now the case. The biotechnology
industry fears that the earlier publication, with the public having access
to the patent application, will also mean an earlier release of the
biological 1 The American Inventors Protection Act of 1999 is Title IV of
the Intellectual Property and

Communications Omnibus Reform Act of 1999, which itself was incorporated
into the Consolidated Appropriations Act for 2000 (P. L. 106- 113, enacted
Nov. 29, 1999).

deposits. In this context, the Congress mandated that we conduct a study and
submit a report to the Congress on the potential risks to the U. S.
biotechnology industry relating to biological deposits in support of
biotechnology patents. As agreed with your offices, the objectives of our
work were to determine (1) the patent infringement risks the U. S.
biotechnology industry faces as a result of biological deposits being made
available to others once a patent is granted and (2) the effect the new 18-
month patent publication requirement will have on these risks. For this
report, these risks relate to a person or organization gaining access to a
biological deposit once a patent is granted

and then using the deposit as a means to infringe on the patent supported by
the deposit by either transferring the deposit to third parties or exporting
the deposit out of the country. Further details on our scope and methodology
are included in appendix I. We also agreed to develop a historical analysis
of the current biological deposit requirements generated through statute,
regulation, case law, and treaty. This analysis is included in

appendix II. Results in Brief The public's access to biological deposits
once a patent is granted has not

to date increased the risk of patent infringement for the U. S.
biotechnology industry. On the basis of our review of court cases and our
discussions with biotechnology industry representatives and other officials,
we found no

documented cases of a person or an organization having ever obtained a
sample of a biological deposit and then using it to infringe on the patent.
This result to date of course does not mean that no potential risk exists.
To the contrary, because samples of a biological deposit can be obtained
once

a patent is granted, the potential exists today and will exist into the
future that an individual or an organization could use the deposit to
infringe the patent. To gain some perspective on the number of patents
potentially at risk- since there are no comprehensive data showing the total
number of patents outstanding that are supported by biological deposits- we

analyzed all of the 52,841 patents the United States granted during the last
3 months of 1999. We found that 308, or about 0. 6 percent, were supported
by biological deposits in U. S. facilities. Furthermore, we found that
patents for seeds- a field of biotechnology in which the deposit itself is
seen by the seed industry as providing the “factory” for the
seeds' reproduction- represent an even smaller subset, accounting for 53 of
the 308 patents. The new 18- month publication requirement for patent
applications need not have any effect on risks for patent infringement
because this

requirement does not change when biological deposits can be released to
persons other than the applicant. Generally, the statute requires that
patent applications be published at 18 months from the date of filing and be
made available to the public at that time, unless the applicant certifies
that he or she is not and will not be applying for a patent in any other
country or under a multinational agreement that requires 18- month
publication. However, the statute does not require an associated release of
a biological deposit concurrent with 18- month publication because even
though the

application may refer to the biological deposit, the deposit itself is not
part of the application. The required time for releasing deposits continues
to be the time a patent is granted. Background A patent is a government
grant giving an inventor the right to exclude

others from making, using, offering to sell, selling, or importing his or
her invention for a limited time. In the United States, the sole granting
authority for patents is the United States Patent and Trademark Office
(PTO), an agency within the Department of Commerce. PTO grants patents for
an array of inventions, including those in such technical fields as
microchips, software, telecommunications, and genetic research. Most patents
today are granted for a term of 20 years from the date the patent
application was filed.

In recent years, perhaps no field has seen a greater increase in new
technology than has the field of biotechnology. Biotechnology is an area of
science often defined as a combination of advances in our understanding of

cellular and molecular biology; plant, animal, and human genetics; and the
ability of the human immune system to fight disease. Biotechnology is a
collection of technologies having numerous applications, such as
manufacturing processes used in health care, food and agriculture,
industrial processes, and environmental cleanup. In appendix III, we provide
further information about biotechnology and the importance of the

biotechnology industry to the U. S. economy. While new products and
processes created through biotechnology can be patented, applications for
patents involving biological materials- such as seeds, fungi, viruses,
cells, cell lines, and bacteria- present a unique challenge. Under U. S.
law, a patent application must provide a description of the invention that
would enable a person skilled in the particular field to use or make it.
Words alone may not be sufficient to describe a biological material,
however. In such cases, an applicant can satisfy the description requirement
by referring in the application to biological material placed in

an approved depository that will provide samples to requesters once the
patent is granted. Other countries also have had to deal with the issue of
biological deposits. Accordingly, in an attempt to regulate biological
deposits throughout the world, the Budapest Treaty on the International
Recognition of the Deposit of Microorganisms for the Purposes of Patent
Procedure (Budapest Treaty) was established in 1977 and became operational
in 1981. Under this treaty,

signatory countries- including the United States, which ratified the treaty
in 1980- must recognize a biological deposit made in any depository approved
by the World Intellectual Property Organization (WIPO). The treaty also
established international standards for biological deposits and

provided that a deposit in any WIPO- approved depository will be recognized
as meeting the deposit requirements throughout the world. At present, there
are 48 signatory nations to the Budapest Treaty and 31 depositories- known
as International Depositary Authorities (IDA)-

recognized by WIPO. The United States has two IDAs- the American Type
Culture Collection (ATCC) in Manassas, Virginia, and the Agricultural
Research Service Culture Collection (known as NRRL 2 ) in Peoria, Illinois.
PTO issued regulations in August 1989 on the requirements for depositing
biological materials for patent purposes. Appendix II provides an overview
of the current requirements on biological deposits as generated through
statute, regulation, case law, and treaty.

Some within the U. S. biotechnology industry believe that U. S. patents
supported by biological deposits are subject to higher risks of infringement
or abuse than are other patents. They note that once a patent supported by

a deposit has been granted, others may obtain samples of the deposited
materials and then use them for their own gain without any regard to patent
rights. They also say that the patent holder may have few effective remedies
since (1) reporting and tracking mechanisms are limited; (2) relief or
recovery of damages may be impossible in other countries, particularly if
these countries do not recognize the patentability of the materials in
question; and (3) even where possible, lawsuits are difficult and expensive.
In an industry in which certain inventions may require an

investment of hundreds of millions of dollars and potential revenues can run
into the billions, the organizations holding the U. S. patents to 2 The
depository formerly was named the Northern Regional Research Laboratory and
continues to be known by the former acronym.

biotechnological inventions do not want to take these risks. They also
believe they are held to a higher standard than other patent holders in the
United States- who do not have to make deposits- and their counterparts in
other countries- who are provided greater protection against potential
misuse. The concerns over biological deposits appear to have increased after
enactment of the American Inventors Protection Act of 1999. Among other
things, this act provides for PTO's publication of patent applications

regarding inventions for which patent protection has been or is to be
applied for in another country where 18- month publication is required. The
industry is concerned that, under the new requirement, the biological
deposits might become available earlier than in the past. PTO is considering
whether regulations should be issued concerning the early

release of biological deposits but plans no action pending issuance of our
report on the subject.

Access to Biological Fears that access to biological deposits would result
in an increased risk of Deposits Has Not

patent infringement within the U. S. biotechnology industry have, to date,
not been realized. We were unable to identify a single case in which a
Increased the Risk of person or organization had gained access to a
biological deposit and then

Patent Infringement for used it to infringe the underlying patent. This
information does not mean,

the Biotechnology however, no potential risk exists. To the contrary,
because samples of a biological deposit can be obtained once a patent is
granted, the potential Industry

exists today and will exist into the future that an individual or an
organization could use the deposit to infringe the patent. To put the number
of patents potentially at risk in perspective- since there are no
comprehensive data showing the total number of patents outstanding that are
supported by biological deposits- we analyzed all of the 52,841 patents the
United States granted during the last 3 months of 1999. We found that 308,
or about 0.6 percent, were supported by biological deposits in the two IDAs
located in the United States. We also found that patents for seeds
represented an even smaller subset, accounting for 53 of the 308 patents
that were supported by biological deposits.

No Cases of Abuse Have We could find no court cases where biological
deposits had ever allegedly Been Documented

been misused to infringe on a patent. Also, since the case law might not
show (1) cases that were dropped, settled, or resolved at the trial court
level or (2) suspected cases of abuse that had not been litigated, we also
asked knowledgeable patent attorneys; representatives from the

biotechnology industry; and officials from PTO, ATCC, NRRL, and WIPO to
refer us to known or suspected cases. None of these were able to provide a
single documented instance implicating biological deposits in a case of
patent infringement.

Although we found no documented cases of abuse, this does not mean that
there is no potential risk that access to biological deposits could be
misused. To the contrary, because samples of a biological deposit can be
obtained once the patent is granted, the potential exists today and will
exist into the future that an individual or an organization could use the
deposit to infringe the patent.

While Comprehensive Data There are no comprehensive data showing the number
of biotechnology

Are Not Available, Relatively patents that are supported by biological
deposits and that therefore are Few Patents Appear to Be

potentially at risk. However, on the basis of our review of statistics
Supported by Deposits provided by WIPO, the IDAs, and PTO, relatively few
patents appear to be supported by deposits.

WIPO is the only organization that accumulates and reports statistics on
biological deposits held by the 31 IDAs it has approved. However, a WIPO
official told us that the organization reports only those statistics it
receives. For example, WIPO's annual reports did not provide statistics for
11 IDAs in 1998 and 9 IDAs in 1997. 3 Also, this official said that WIPO
does not validate the data or ensure that all of the 31 IDAs submit reports.
We asked each of the 31 IDAs to verify the statistics they had provided

WIPO in 1997 and to provide us with new data for 1998 and 1999. As shown in
appendix IV, the 27 IDAs that responded reported 39,623 biological deposits
on hand at the end of calendar year 1999, compared with 36,735 at

the end of 1998 and 33,318 at the end of 1997. The data do not indicate,
however, how many patents are supported by these biological deposits because
a single deposit may support more than one patent and a single patent may
have more than one deposit.

Two of the largest IDAs are ATCC and NRRL. Together, these two U. S.
depositories reported 20,461 deposits- 51.6 percent of the world total- at

3 A case in point involves one of the U. S. IDAs- NRRL. In the 1997 WIPO
report, NRRL was not listed, even though NRRL officials said that they had
forwarded their statistics to WIPO. NRRL's data showed that it had 2,808
deposits on hand at Dec. 31, 1997.

the end of 1999. At this same time, PTO reported that a total of 1,242,853
U. S. patents were in force. To gain a better understanding of the
relationship between patents and

deposits in the United States, we analyzed all 52, 841 patents granted by
PTO during the last 3 months of 1999. We found that 308, or about 0. 6
percent, of these patents indicated they were supported by a deposit in ATCC
or NRRL. Only 1 of the 308 patents indicated that a deposit was made

in both depositories. Biological Deposits

In our discussions with representatives from the biotechnology industry,
Supporting Seed Patents seed company representatives expressed the view that
self- replicating Illustrate the Potential Risks plant varieties are unlike
other inventions, including those created by other

segments of the biotechnology industry. The difference is that the seed is
its own “factory” and that a person intent on infringing the
patent in question merely has to obtain a sample, plant the seeds, and
harvest them, all at low cost. There is no need for a laboratory or other
production facilities.

The seed companies said that, while there is a concern with a person
committing infringement in the United States, a more serious problem exists
with the unauthorized use of the deposited material in other countries. Most
other countries will not issue patents for plant varieties.

Since there can be no infringement in these countries unless there is a
recognized patent, suing someone for patent infringement would be
impossible. Even if such suits were possible, they would be expensive, and
the seed companies would have a difficult time showing that the seeds were
replicated or were derived from the sample of the biological deposit in
question. 4

One seed company representative acknowledged that seeds of selfreplicating
plant varieties could be obtained from the market place and misused without
having to rely on accessing the deposited material. However, this
representative noted that hybrid seeds generally thought to be immune from
reverse engineering would still be at risk because the 4 See Biotechnology:
Information on Prices of Genetically Modified Seeds in the United States and
Argentina (GAO/ RCED/ NSIAD- 00- 55, Jan. 21, 2000). This report discusses
related issues, such as the protection a U. S. seed company has for a seed
patented in the United States that has not received patent protection in
Argentina.

seeds of the parental lines used to make the hybrid are often deposited to
enable the patent on the hybrid or on the parental line per se.

We could not determine how many of the biological deposits outstanding
worldwide involved seeds because no database provides this information.
According to WIPO, however, only 4 of the 31 approved IDAs even accept
seeds. As shown in appendix IV, these include ATCC, and one IDA each in
England, Japan, and China.

We asked ATCC to estimate the number of seed deposits on hand. ATCC
estimated that less than 8 percent of its deposits for patents were for
seeds. Also, during our review of patents issued by PTO during the last 3
months of 1999, we identified 53 seed patents for which a deposit had been
made in

ATCC. While these represented only 0.1 percent of all 52, 841 patents issued
during the period, they accounted for 17. 2 percent of the 308 patents for
which a deposit had been made at one of the two U. S. depositories.

The 18- Month The 18- month publication requirement, which goes into effect
on

Publication November 29, 2000, need not have any effect on the risks for
patent infringement because this requirement does not change when biological
Requirement Need Not

deposits can be released to persons other than the applicant. The statute
Affect the Release of generally requires that patent applications be
published at 18 months from Biological Deposits

the date of filing and be available to the public at that time unless
certain conditions exist. For example, applicants can avoid 18- month
publication by certifying their intent to forgo applying for patents in any
country or

under a multinational agreement that requires 18- month publication.
However, the statute does not require the release of a biological deposit
that an application refers to but that is neither part of the application
nor within PTO's custody or control. While Europe 5 and Japan currently have
18- month publication

requirements for their patents, they also have requirements that restrict
the release of biological deposits. Thus, patent owners are provided with
greater protection against infringement. Some within the biotechnology
industry would like to see the United States adopt some of these protections
in any future legislative action on this front.

5 “Europe” as used in this report refers to the 19 countries
that are members of the European Patent Organization.

The Law Does Not Require One concern of the biotechnology industry is that
the new 18- month

the Release of Deposits at publication requirement for patent applications
could result in the earlier

18- Month Publication release of biological deposits. It notes that deposits
currently are available at publication, which is concurrent with issuance of
the patent. If the

deposits are released with the application at 18 months under the new
requirement, the biotechnology industry believes that deposits in the future
would be available sooner because PTO typically takes more than 18 months to
examine biotechnology patent applications.

Our analysis of U. S. patents issued during the last 3 months of 1999
supports the biotechnology industry's view that most patents requiring
deposits take longer than 18 months to issue. As shown in appendix V, for
those 308 patents that were issued during the last 3 months of 1999
indicating that a deposit had been made with ATCC or NRRL, the average

examination time, which PTO refers to as “pendency,” was 36.9
months. 6 The average examination time for seed patents- 22.6 months- was
considerably lower. On the basis of these statistics, it does appear that
applications supported by biological deposits generally will be published
earlier under the new law. This does not mean, however, that the deposits
will be available earlier. To the contrary, we find no requirement that a
biological deposit be released at 18 months concurrent with publication of
the application. In our discussions with PTO officials, they noted that the
law does not permit any specific changes regarding the release of biological
deposits until after this report is issued. They said that deposits would
continue to be available

only after the patent is granted unless PTO changes its regulations to
require earlier release. They said that they did not know if they would
require the release of deposits at 18 months but, at any rate, would make no
changes to the regulations until after we had completed the study that is
the basis for this report.

We agree that PTO is not required to make any changes to the regulations
requiring the release of biological deposits concurrent with 18- month
publication. As amended, 35 U. S. C. sect. 122 requires only that “each

application for a patent shall be published, in accordance with procedures
determined by the Director, promptly after the expiration of a period of 18
months from the earliest filing date for which a benefit is soughtï¿½ .”
In its

6 PTO defines “pendency” as the period from the date when an
application is filed until the date when a patent is issued or the
application is abandoned.

use of the term “application,” the law refers in context to 35
U. S. C. sect. 111, which provides that an application for a patent is to
include

“( A) a specification as prescribed by section 112 of this title; (B)
a drawing as prescribed by section 113 of this title; and (C) an oath by the
applicant as prescribed by section 115 of this title. ï¿½The application must
be accompanied by the fee required by law. The fee and oath may be submitted
after the specification and any required drawing are submittedï¿½ .” A
specification in the patent may refer to a biological deposit; however, the
law does not require that the deposit itself be submitted with the
application. Thus, even if the application is published at 18 months, the
biological deposit does not have to be released until the patent is granted.
The only effect on the deposit is that the publication will notify others of
the existence and location of the deposit earlier than would have been the

case previously. PTO exercises limited control over deposits and no control
over depositories. The courts have held that deposits need not be publicly
released until the issuance of the patent. In the face of these decisions,
PTO may wish to seek specific legislation if existing practices are to be
changed.

An Application Does Not A patent applicant could avoid 18- month publication
by choosing not to file Have to Be Published at 18 applications in other
countries. The law requiring 18- month publication

Months if There Is No specifically exempts those applications filed only in
the United States,

Foreign Filing provided that the applicant certifies that he or she is not
going to file an application in any country or under a multinational
agreement that requires 18- month publication.

This provision would appear to be of particular benefit for patent
applications involving seeds, an area of concern regarding potential abuse
of biological deposits. PTO officials said that most countries do not
recognize the patentability of seeds. Thus, there may be less incentive to

seek foreign filing, and the seed companies can avoid 18- month publication
entirely by filing only in the United States.

Europe and Japan Have Patents issued by the European Patent Office (EPO) and
the Japanese

Protections Not Available in Patent Office (JPO) already are subject to 18-
month publication the United States

requirements, with EPO providing that samples of biological deposits are
available at that same time. In addition, both of these patent offices offer
protections for biological deposits that are not available on patent

applications in the United States. Information provided by EPO and JPO and
discussions with patent attorneys and representatives of the biotechnology
industry indicate that 18- month publication has not caused problems related
to the potential misuse of biological deposits in Europe or Japan.

In Europe, a sample from the deposit is available at the time the patent
application is published; however, the depositor can stipulate that the
sample is available only to an expert approved by either EPO or the
depositor. Also, the sample can be used only for experiments and testing
purposes, cannot be transferred to other parties, and can be obtained only
after a formal request is made through EPO.

In Japan, the patent application is also published 18 months from the date
of filing. However, a sample is not available at that time. At the end of
the examination period, the application is granted and published for a
second time, after which there is a 6- month “opposition
period.” Samples from a biological deposit can be released after the
second publication. As in Europe, a request must be made through JPO, and
the recipient is precluded from using the sample for any purpose other than
testing and

research. Also, the sample cannot be transferred to other parties. Unlike in
Europe, samples in Japan do not have to be released to an expert. To
determine whether we could draw any correlations between requirements for
the release of biological deposits and the actual numbers of samples
released, we reviewed data provided by WIPO and the IDAs on samples released
by the world's 31 approved IDAs in 1999. We found that, as shown in appendix
IV, ATCC was by far the leader, with an estimated 7,000, or 95 percent, of
the samples released to parties legally entitled worldwide during the year.
NRRL accounted for another 123 releases.

Conversely, the IDAs in Europe released 190 samples and the IDA in Japan
released 63 samples, together accounting for less than 4 percent of the
world's total. Representatives from the U. S. biotechnology industry told us
that they

believe that these numbers provide evidence that deposits are too easily
obtained and subject to less control in the United States. They also believe
that the controls placed over biological deposits in Europe and Japan offer

greater protection for patent holders than do those in the United States.
They said they would like to see similar controls placed over deposits in
this country, particularly if deposits are to be released concurrent with
18-

month publication of the patent applications.

Agency Comments We provided a draft of this report to PTO for its review and
comment. PTO generally made favorable comments about the report. Consistent
with our

report's findings, PTO stated that the Patent Act requires applicants to
describe the claimed invention in sufficient detail to enable a person of
skill in the art to practice the invention and that this requirement governs
all inventions from the simplest mechanical inventions to the most
sophisticated biological inventions. It also agreed with our finding that
very few applications actually take advantage of the opportunity to use a
deposit to fulfill the disclosure requirement. PTO added that the ability to
submit a

deposit enables American inventors to seek patent protection for their
inventions where patent protection might not otherwise be available due to
constraints imposed by merely using words to describe the invention. PTO
concluded that while this system is not unique to the United States, this
ability has contributed to the United States biotechnology industry being a

world leader in that field. The full text of PTO's comments is included in
appendix VI.

We performed our review between February and October 2000 in accordance with
generally accepted government auditing standards. We are sending copies of
this report to Senator Judd Gregg, Chairman, Subcommittee on Commerce,
Justice, State, and the Judiciary, Committee on Appropriations; Senator
Ernest F. Hollings, Ranking Minority Member, Subcommittee on Commerce,
Justice, State, and the Judiciary, Committee on Appropriations;
Representative Henry J. Hyde, Chairman, Committee on the Judiciary;
Representative John Conyers, Jr., Ranking Minority Member, Committee on the
Judiciary; Representative Harold Rogers, Chairman, Subcommittee on Commerce,
Justice, State, the Judiciary, and Related Agencies, Committee on
Appropriations; Representative Jose E. Serrano, Ranking Minority Member,
Subcommittee on Commerce, Justice, State, the

Judiciary, and Related Agencies, Committee on Appropriations; the Honorable
Norman Y. Mineta, Secretary of Commerce; the Honorable Jacob J. Lew,
Director, Office of Management and Budget; and the Honorable Q. Todd
Dickinson, Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office. We will also make
copies available to others on request.

If you or your staff have any questions or need additional information,
please call me at (202) 512- 3841. The key contributors to this report are
listed in appendix VII.

(Ms.) Gary L. Jones Director, Natural Resources and Environment

Appendi Appendi xes x I

Scope and Methodology The American Inventors Protection Act of 1999 mandated
that we conduct a study and submit a report to the Congress on the potential
risks to the U. S. biotechnology industry relating to biological deposits in
support of biotechnology patents. We agreed with the congressional
committees that the objectives of our work would be to determine (1) the
patent infringement risks the U. S. biotechnology industry faces as a result
of biological deposits being made available to others once a patent is
granted and (2) the effect the new 18- month patent publication requirement
will have on these risks. For purposes of this report, these risks relate to
a

person or organization gaining access to a biological deposit once a patent
is granted and then using the deposit as a means to infringe on the patent
supported by the deposit by either transferring the deposit to third parties

or exporting the deposit out of the country. We focused our efforts on
examining the risks of biological deposits being transferred to third
parties and/ or exported and on determining how the risks to the U. S.
biotechnology industry would likely be affected by the new requirement that
most patents be published 18 months from the date of filing and be made
available to the public at that time rather than at the

time the patent is granted. As part of our work, we developed a historical
analysis of the current requirements generated through statute, regulation,
case law, and treaty. We based our work on discussions with officials and
documentation available from the United States Patent and Trademark Office
(PTO); the American Type Culture Collection (ATCC) in Manassas, Virginia;
the Agricultural Research Service Culture Collection (known as NRRL) in
Peoria, Illinois; businesses and trade associations associated with the
biotechnology industry; law firms specializing in patents and

biotechnology; International Depositary Authorities (IDA) in other
countries; the World Intellectual Property Organization (WIPO); and patent
offices in Europe and Japan.

We developed our historical analysis of the current requirements by tracing
their development from the time the federal courts determined that utility
patents could be obtained on self- reproducing plants, through the

provisions of the Budapest Treaty on the International Recognition of the
Deposit of Microorganisms for the Purposes of Patent Procedure, through
PTO's issuance of regulations, to the 1999 changes in the patent law

requiring 18- month publication. We developed, to the extent information was
available, statistics on biological deposits made in IDAs and biotechnology
patents examined by PTO. To provide greater information than that available
from WIPO on

deposits in the 31 IDAs WIPO has approved, we contacted each of the IDAs by
letter, facsimile, or e- mail. We then compared the data provided by the
IDAs with the data available from WIPO. We made follow- up contacts with the
IDAs to obtain additional and clarifying information when necessary.

We did not otherwise validate or verify the information provided by the
IDAs, however, as we had no means to do so.

To obtain further information on deposits made in the United States, we
analyzed all the patents issued by PTO in October, November, and December
1999 that made reference to ATCC or NRRL. For each such patent, we
determined whether, when, and where the applicant had actually made a
deposit. We also obtained information on when the patent applications were
filed and the patents were issued. We used this information to determine how
long the applications took to issue and to

compare these times with the time that would have expired had the new
18month publication requirement been in effect. The data we accumulated are
not generalizable to the universe of patents outstanding but do provide a
comprehensive look at a cross- section of patents issued over a discrete
period.

To compare U. S. rules on biological deposits with the rules in other
countries, we developed information showing how biological deposits are
handled by the patent offices in Europe and Japan, both of which already

have an 18- month publication requirement and rank second and third,
respectively, in the volume of patent activity after PTO. We limited our
work to obtaining information that was readily available through published
documents and discussions with knowledgeable personnel. We did not otherwise
verify or validate the information obtained.

We performed our review between February and October 2000 in accordance with
generally accepted government auditing standards.

Historical Analysis of Biological Deposit

Appendi x II

Requirements To receive a patent in the United States, a product or process
must be new, useful, and nonobvious. Since the U. S. Supreme Court decision
in Diamond v. Chakrabarty, 447 U. S. 303 (1980), it is clear that a living
organism can be patented if it is the product of human invention and does
not occur naturally. This landmark decision has paved the way for a variety
of U. S. patents involving living materials, including fragments of
deoxyribonucleic acid (DNA).

An applicant for a patent involving biological materials must meet the same
requirements as other inventions. These requirements provide for a detailed
description and specification of the invention, as set out in 35

U. S. C. sect. 112: “The specification shall contain a written description
of the invention, and of the manner and process of making and using it, in
such full, clear, concise, and exact terms as to enable any person skilled
in the art to which it pertains, or with which it is most nearly connected,

to make and use the same, and shall set forth the best mode contemplated by
the inventor of carrying out his invention.” The practice of
depositing microbiological material in support of patent applications
appears to have been well established by 1955, by which time it is described
in the literature as being used to support applications for patents on a
variety of antibiotics. “Microbiology and a Standard Format for Infra-
Red Absorption Spectra in Antibiotic Patent Applications,” 37 J. Pat.
Off. Soc., pp. 855- 859 (1955). The practice developed to meet the
requirement that an application must include a specification containing a

written description of the invention and of the manner and process for
making and using it. 35 U. S. C. sect.sect. 111, 112 (1994). In the terms of the
statute, the specification must be

“ï¿½ in such full, clear, concise, and exact terms as to enable any
person skilled in the art to which it pertains ï¿½ to make and use the same,
and shall set forth the best mode contemplated by the inventor of carrying
out his invention.” Id. The need to meet these requirements applies
even if a process to be patented is based upon the use of a microorganism as
“starting material,” material the applicant may have a great
deal of difficulty describing uniquely using words, alone. The use of
biological deposits

“ï¿½ arose from a consideration of how the invention could be practiced
by others skilled in the art during the lifetime of the patent and after its
expiration. The written description of the microorganism in the absence of
its identification by the catalogue number of a recognized depository is
insufficient to enable others to reproduce the functional strain with

certainty and use the invention without involving extensive
experimentation.” 37 J. Pat. Off. Soc., supra, 856. In Application of
Argoudelis, 434 F. 2d 1390 (1970), the Court of Customs and Patent Appeals
discussed at length the problem of documenting a process patent in such
cases, that is, in cases where the starting material is a microorganism. As
the court stated the problem,

“ï¿½ a unique aspect of using microorganisms as starting materials is
that a sufficient description of how to obtain the microorganism from nature
cannot be given. Such a description could only detail an experimental
screening program similar to the screening programs followed in discovering
the microorganism in the first instance. If the microorganism involved were
of very common occurrence, it might be found in a relatively short time, but
if it were not of common occurrence, it might not be found for a very long
time, if found at all. The microorganism involved here, of course, was not
known and available to the workers in the art since it was newly discovered
by appellants.” 434 F. 2d at 1392.

In Argoudelis, the applicants sought to patent a process for producing
antibiotic compounds utilizing a microbiological organism the applicants had
identified. The applicants deposited cultures of the microorganism in a
public depository operated by the U. S. Department of Agriculture. The
deposit was made prior to filing the application, which referred to the
deposit and included a detailed taxonomic description of the microorganism.
At the time of the deposit, the applicants and the Department of Agriculture
agreed that prior to the issuance of a patent, the deposit would be subject
to rule 14 of the United States Patent Office Rules of Practice, pertaining
to the public disclosure of documents and other

materials filed in support of a patent application. Rule 14 provided that
access would not be given to such materials without the applicants'
approval, except as necessary to the proper conduct of the business before

the patent office. The Board of Patent Appeals and Interferences rejected
the application as deficient under 35 U. S. C. sect. 112 because the
microorganism was not known to the public and was not made known by virtue
of the deposit, which was secret and confidential. Several incidental points
are important to properly understanding and applying Argoudelis.

Streptomyces sparsogenes var. sparsogenes- the material that was deposited-
was not the intellectual property that the applicants sought to patent. The
subject matter was a process for the manufacture of sparesogenin and
sparesogenin A, antibiotics that can be produced by streptomyces sparsogenes
var. sparsogenes using the applicants'

process. The streptomyces sparsogenes var. sparsogenes was a starting
material used to carry out the applicants' process.

The biological deposit occurred outside the patent office. Public access to
the deposited material was to be permitted when a patent was issued.

The making of the deposit under terms that would result in its release if
the purpose for the deposit was accomplished, that is, if the patent
application was approved, was a voluntary release of confidentially held
information and material. The effect of placing the information and material
in the public domain was to “alter the playing field,” that is,
to change the base of knowledge that applied to determine the patentability
of the applicants' process.

By agreeing to the planned release of the deposit, the applicants altered
the capability that persons skilled in the art would have, allowing an
effective demonstration as to how the applicants' invention was made and
used.

Noting that under rule 14, public access would be allowed to the deposited
material once a patent was issued, the Argoudelis court reversed the Board's
decision. The court concluded that 35 U. S. C. sect. 112 does not require that
the deposited material be available to the general public at the time the
application is filed. Prior to that time, the applicant was not required to
give access to the biological materials except as might be necessary to
facilitate the patent office's review of his application. If the application
were not

issued, no deposit was required, a fact Judge Baldwin elaborated upon in his
concurring decision, as follows.

“It should be apparent, however, that this first aspect of the
enabling disclosure requirements of section 112 requires only that the
adequacy of the teaching disclosure be measured as of the issue date of the
patent. There is no sense in making an applicant publicly disclose any part
of his invention, much less its very essence, before he has been assured
that he will obtain the protection he is seeking in return for that
disclosure.” 434 F. 2d 1390, 1394- 1395.

Subsequent decisions have applied similar views. See, for example, Feldman
v. Aunstrip, 517 F. 2d 1351 (Court of Customs and Patent Appeals, 1975)
(access during review can be restricted, and the depository is not required
to be a public institution). The nature of the biological deposit
“requirement” is that it is not a requirement in the usual
sense. Use of deposits is dictated by the need in

particular circumstances to overcome what would otherwise be a deficiency in
the patent description concerning the enablement of others to practice the
patent. There is no requirement to deposit such material, per se.

Reinforcing this view, the courts have resisted arguments that biological
materials should be required if their introduction is not forced by the
necessity of proving the requirements for the patent. Use of biological
deposits has been discussed, for example, in so- called “best
mode” cases. At issue in such cases is whether, again under 35 U. S.
C. sect. 112, an applicant

in its application fully described the best mode contemplated by the
inventor for carrying out his or her invention. Best mode has been held by
the Court of Appeals for the Federal Circuit as having two components: (1)
whether at the time of filing the inventor contemplated a best mode of
practicing his or her invention and (2) whether his or her disclosure is
adequate to enable one skilled in the art to practice that best mode. The
applicant may not conceal a mode known to be better than that which is
disclosed. Amgen, Inc., v. Chugai Pharmaceutical Co., 927 F. 2d 1200 (Fed.
Cir., 1991). In Amgen it was argued that the plaintiffs should have made a
biological deposit so that the public would have access to exactly the best
mode contemplated by the inventor. Rejecting this point of view the court
stated, “When a biological sample required for the practice of an
invention is obtained from nature, the invention may be incapable of being
practiced without access to that organism. Hence the deposit is required in
that case. On the other hand, when, as in this case here, the organism is
created by insertion of generic material into a cell obtained from generally

available sources, then all that is required is a description of the best
mode and an adequate description of the means of carrying out the invention,
not deposit of the cells. If the cells can be prepared without undue
experimentation from known materials, based on the description in the patent
specification, a deposit is not required.” 922 F. 2d at 1211.

Additional requirements applying to biotechnology and the practices and
procedures for implementation of the final rule for deposits of biological
materials for patent purposes are prescribed in the regulations at 37 C. F.
R.

sect. 1.801 - 1. 809. These regulations, which became effective for all
applications filed on or after January 1, 1990, generally reflected policy
and practice- including those set out by judicial decision- existing prior
to January 1, 1990. The development of these regulations was several years
in the making- the advanced notice of proposed rulemaking was published

on September 9, 1987; the notice of proposed rulemaking was published on
October 6, 1988; and the final rule was published on August 22, 1989.

PTO has also incorporated guidelines for biological deposits in its
operating manuals. For example, PTO's Manual of Patent Examining Procedure,
chapter 2400- Biotechnology provides guidance on the practices and
procedures for implementation of the deposit rules. According to section
2402 of the manual, “Every patent must contain a written description
of the invention sufficient to enable a

person skilled in the art to which the invention pertains to make and use
the invention. Where the invention involves a biological material and words
alone cannot sufficiently describe how to make and use the invention in a
reproducible manner, access to the biological material may be necessary for
the satisfaction of the statutory requirements for patentability under 35 U.
S. C. 112.” PTO's manual and 37 C. F. R. sect. 1. 801 also define
biological material as including material that is capable of self-
replication, either directly or indirectly. Representative examples include
bacteria, fungi, yeast, algae, protozoa, eukaryotic cells, cell lines,
hydridomas, plasmids, viruses, plant tissue cells, lichens, and seeds.
Viruses, vectors, cell organelles, and other non- living material existing
in and reproducible from a living cell may be deposited by deposit of the
host cell capable of reproducing the non- living

material. Other countries also have had to deal with the issue of biological
deposits. Accordingly, in an attempt to regulate biological deposits
throughout the world, the Budapest Treaty on the International Recognition
of the Deposit of Microorganisms for the Purposes of Patent Procedure
(Budapest Treaty) was established in 1977 and became operational in 1981.
Under this treaty,

signatory countries- including the United States, which ratified the treaty
in 1980- must recognize a biological deposit made in any depository approved
by the World Intellectual Property Organization (WIPO). The treaty also
established international standards for biological deposits and

provided that a deposit in any WIPO- approved depository will be recognized
as meeting the deposit requirements throughout the world. At present, there
are 48 signatory nations to the Budapest Treaty and 31 depositories- known
as International Depositary Authorities (IDA)-

recognized by WIPO. PTO has established procedures on what constitutes an
acceptable depository in the United States. These are set out in PTO's
manual and 37 C. F. R. sect. 1. 803.

Appendi x II I Biotechnology and the U. S. Economy According to the
Biotechnology Industry Organization (BIO), 1 biotechnology is often defined
as “a combination of advances in our understanding of molecular and
cellular biology, plant, animal and human genetics and how the human immune
system fights disease.” BIO notes that the term actually covers a
range of technologies, with the use of cells and biological molecules being
the common link, and cites the following as examples:

Monoclonal antibody technology involves the use of immune system cells that
create antibodies that can be used for such purposes as distinguishing
cancer cells from normal cells, locating environmental pollutants, and
diagnosing infectious diseases.

Cell culture technology involves the growing of cells outside of living
organisms and is useful for such purposes as developing methods to kill
insect pests without harming beneficial insects. Also, this technology may
be used in the future to treat certain human diseases by replacing
malfunctioning cells with normal cells grown outside the body.

Biosensor technology combines biology and microelectronics by linking a
biological component such as a cell or antibody with a transducer. This
creates a biosensor that can be used in such applications as measuring the
nutritional value and safety of food, locating and measuring environmental
pollutants, and measuring vital blood components.

Genetic modification technology, or recombinant DNA technology, allows the
combining of genetic material from two different sources to create
recombinant DNA. Genes may be combined at the molecular

level through the use of genetic modification. The technology is beneficial
in such applications as the creation of safer vaccines, the treatment of
genetic diseases, the creation of enhanced biocontrol agents in agriculture,
and the development of biodegradable plastics.

Antisense technology uses small nucleic acids to block the genes responsible
for making specific proteins and are being studied as ways to slow food
spoilage, control viral diseases, inhibit inflammation, and

1 BIO includes more than 900 member companies. This organization, supported
by the expertise and collective influence of its members, speaks on
legislative, regulatory, and public policy issues affecting the
biotechnology industry.

treat diseases such as asthma and cancer. Protein engineering technology is
used in conjunction with genetic modification to improve existing proteins-
usually enzymes- and to create proteins not found in nature. Unlike most
industrial chemical

catalysts, these biocatalysts dissolve in water and work best at neutral pH
and comparatively low temperatures. Thus, they have proved useful in
developing cleaner and energy- efficient production processes in the
chemical, textile, pharmaceutical, pulp and paper, food and feed, metal and
minerals, and energy industries. These emerging technologies have made the
biotechnology industry an important part of the U. S. and world economies.
The companies entering the industry tend to be new, small, highly
capitalized, and researchintensive.

BIO cites the following statistics: There are 1,283 biotechnology companies
in the United States.

Approximately one third of these companies employ fewer than 50 employees,
and more than two thirds employ fewer than 135 people. In 1998, the U. S.
industry had a market capitalization- the amount of

money invested in the industry- of $97 billion. The U. S. industry employs
more than 153,000 people in high- wage, highvalue jobs.

The U. S. industry is one of the most research- intensive industries in the
world, spending $9. 9 billion in research and development in 1998. The top
five biotechnology companies spent an average of $121, 400 per employee on
research and development, compared with an average of $30,600 per employee
for the top pharmaceutical companies.

One of the most visible and important projects under way in the field of
biotechnology is the Human Genome Project, which is identifying and mapping
all the genes in the human body. The research from this project is expected
to revolutionize the treatment of human illnesses and to result in a
plethora of new medical products and processes. Another area that has had an
impact is the area of agricultural biotechnology. The industry has created
disease resistant plants such as cucumbers, melons, pumpkins, and squash.
Such innovations are important

given an ever- increasing population worldwide and scarce agricultural
resources. Biological products and processes can pay enormous dividends.
However, they also come at a high cost. For example, bringing a new
pharmaceutical to market can cost hundreds of millions of dollars, and there
is no guarantee that the product will be successful. Before a company is
willing to take the financial risk on a new product, it wants to ensure that
it will have the exclusive rights to benefit from it. Thus, obtaining patent
protection is extremely important for these companies. In a February 2000

article in PTO TODAY Online, Lila Feisee, a quality administrator in PTO's
Technology Center 1600, which handles biotechnology patent applications,
noted that patent protection also offers benefits to the public:
“Biotechnology patents allow for the dissemination of potentially
valuable scientific information. The availability of the information
disclosed in biotechnology patents enables others in the field of science to
build on earlier discoveries. Not only can other researchers use the
information in a patent, but by disclosing cutting edge scientific
information, the

patent system avoids expensive duplication of research efforts. It is only
with the patenting of biotechnology that some companies, particularly small
companies, can raise capital to bring beneficial products to the market
place or fund further research. In addition, this capital provides jobs that
represent an immediate public benefit independent of the technological
benefits. Continuing employment opportunities represents a national resource
for the future because it encourages the youth of today to become the
scientists and inventors of tomorrow. Thus, the patent system not only
fosters our society today, but also ensures our future ability to innovate
and grow.” According to PTO, biotechnology patents are an increasing
part of its workload. In calendar year 1999, PTO issued 16,882 patents that
were examined by Technology Center 1600. This represented 10 percent of all
patents issued by PTO during that year.

Biological Deposits in the 31 International Depositary Authorities Approved
by the World

Appendi x V I Intellectual Property Organization This appendix provides
historical information on the number of biological deposits on hand at the
31 International Depositary Authorities (IDA). In addition, historical
information is provided on the number of samples of deposits furnished under
rule 11 of the Regulations of the Budapest Treaty.

Table 1: Deposits on Hand for the 31 IDAs, 1997 Through 1999 At December 31
International depositary authority a Country 1997 1998 1999

Australian Government Analytical Laboratories Australia 176 211 262 Belgian
Coordinated Collections of Microorganisms Belgium 167 198 237 National Bank
for Industrial Microorganisms and Cell Cultures Bulgaria 732 737 746 Bureau
of Microbiology at Health Canada Canada a 0 2 China Center for Type Culture
Collection China b, c b b China General Microbiological Culture Collection
Center China 396 449 b Czech Collection of Microorganisms Czech Republic 56
62 65 Collection Nationale de Cultures de Micro- organismes France 1,348 1,
503 1, 762 Deutsche Sammlung von Mikroorganismen und Zellkulturen GmbH
Germany 3, 310 3,658 4, 009 National Collection of Agricultural and
Industrial Microorganisms Hungary 193 199 211 Advanced Biotechnology Center
Italy 7 8 11 Collection of Industrial Yeasts Italy 0 2 4 National Institute
of Bioscience and Human- Technology Japan 6, 198 6,594 6, 961 Microbial
Strain Collection of Latvia Latvia 2 4 9 Centraalbureau voor
Schimmelcultures Netherlands 742 763 789 Korean Cell Line Research
Foundation Republic of Korea b b b Korean Collection for Type Cultures
Republic of Korea 417 563 719 Korean Culture Center of Microorganisms
Republic of Korea 121 143 180 All- Russian Scientific Centre of Antibiotics
Russian Federation b b b Russian Collection of Microorganisms Russian
Federation 17 25 25 Russian National Collection of Industrial Microorganisms
Russian Federation 75 118 126 Culture Collection of Yeasts Slovakia 0 0 0
Colecciï¿½n Espaï¿½ola de Cultivos Tipo Spain 149 176 230 Culture Collection of
Algae and Protozoa United Kingdom 3 3 4 European Collection of Cell Cultures
United Kingdom 1, 048 1,153 1, 205 International Mycological Institute
United Kingdom 127 158 168 National Collection of Type Cultures United
Kingdom 91 98 100 National Collection of Yeast Cultures United Kingdom 39 39
45 National Collections of Industrial, Food and Marine Bacteria Ltd. United
Kingdom 1, 174 1,260 1, 292

(Continued From Previous Page)

At December 31 International depositary authority a Country 1997 1998 1999

Agricultural Research Service Culture Collection United States 2,808 2, 976
3, 105 American Type Culture Collection United States 13, 922 15,635 17, 356

Total 33, 318 36,735 39, 623

Note: According to WIPO's February 2000 publication, Intellectual Property
Laws and Treaties, only 4 of the 31 approved IDAs accept deposits of seeds:
the China Center for Type Culture Collection; the National Institute of
Bioscience and Human- Technology in Japan; the National Collections of
Industrial, Food and Marine Bacteria Ltd., in the United Kingdom; and the
American Type Culture Collection.

a There were 31 approved IDAs in 1997, 1998, and 1999. However, during this
period, one IDA- the National Collection of Food Bacteria in the United
Kingdom- had its IDA status terminated on June 5, 1997. This IDA reported no
deposits on hand at Dec. 31, 1997. A second IDA- the Bureau of Microbiology
at Health Canada- received its sanctioning as an IDA on Nov. 30, 1998, and
began official operations in mid- 1999.

b WIPO has not reported 1999 data, nor did the IDA respond to our request
for data. c This IDA reported to WIPO that it had 1,076 deposits on hand at
Dec. 31, 1996. WIPO has reported no information on this IDA since then.

Source: GAO- developed data based on contacts with individual IDAs and WIPO.

Table 2: Deposits on Hand for the 31 IDAs Grouped by Country, 1997 Through
1999 Total number of deposits at December 31 1997 1998 1999

Percentage Percentage

Percentage Country a Number of total Number of total Number of total

Australia 176 0.53 211 0. 57 262 0. 66 Belgium 167 0.50 198 0. 54 237 0. 60
Bulgaria 732 2. 20 737 2.01 746 1. 88 Canada a a 0 0. 00 2 0. 01 China (2
IDAs) 396 b 1.19 449 b 1.22 b b Czech Republic 56 0. 17 62 0.17 65 0.16
France 1,348 4. 05 1, 503 4.09 1,762 4. 45 Germany 3, 310 9. 93 3,658 9. 96
4, 009 10. 12 Hungary 193 0. 58 199 0.54 211 0. 53 Italy (2 IDAs) 7 0. 02 10
0.03 15 0.04 Japan 6, 198 18. 60 6, 594 17.95 6,961 17.57 Latvia 2 0. 01 4
0.01 9 0. 02 Netherlands 742 2. 23 763 2. 08 789 1.99

(Continued From Previous Page)

Total number of deposits at December 31 1997 1998 1999

Percentage Percentage

Percentage Country a Number of total Number of total Number of total

Republic of Korea (3 IDAs) 538 b 1.61 706 b 1.92 899 b 2.27 Russian
Federation (3 IDAs) 92 b 0.28 143 b 0.39 151 b 0.38 Slovakia 0 0. 00 0 0.00
0 0. 00 Spain 149 0. 45 176 0. 48 230 0.58 United Kingdom (6 IDAs) 2, 482 7.
45 2,711 7. 38 2, 814 7.10 United States (2 IDAs) 16,730 50. 21 18, 611
50.66 20, 461 51. 64

Total c 33,318 100. 01 36,735 100.00 39, 623 100.00

a There were 31 approved IDAs in 1997, 1998, and 1999. However, during this
period, one IDA- the National Collection of Food Bacteria in the United
Kingdom- had its IDA status terminated on June 5, 1997. This IDA reported no
deposits on hand at Dec. 31, 1997. A second IDA- the Bureau of Microbiology
at Health Canada- received its sanctioning as an IDA on Nov. 30, 1998, and
began official operations in mid- 1999.

b Data were unavailable or incomplete. One IDA in the Republic of Korea, two
IDAs in China, and one IDA in the Russian Federation did not respond to our
inquiries; WIPO had no 1999 statistics. c Percentages may not equal 100.00
because of rounding.

Source: GAO- developed data based on contacts with individual IDAs and WIPO.

Table 3: Deposits on Hand for the 31 IDAs Grouped by Europe, United States,
Japan, and All Other Countries, 1997 Through 1999 Total number of deposits
at December 31 a Grouping 1997 1998 1999

Europe b 8, 205 9, 019 9, 856 United States 16, 730 18,611 20, 461 Japan 6,
198 6, 594 6, 961 All other countries 2, 185 2, 511 2, 345

Total 33, 318 36,735 39, 623

a Data are incomplete because one IDA in the Republic of Korea, two IDAs in
China, and one IDA in the Russian Federation did not respond to our
inquiries; WIPO had no 1999 statistics. b Includes those countries that are
member states of the European Patent Organization. Source: GAO- developed
data based on contacts with individual IDAs and WIPO.

Under the Budapest Treaty on the International Recognition of the Deposit of
Microorganisms for the Purposes of Patent Procedure, there are specific
rules that were adopted as regulations under the treaty. Rule 11 establishes
when a sample of a biological deposit can be furnished to interested
industrial property offices, such as PTO or EPO (rule 11. 1); to or with the
authorization of the depositor (rule 11.2); and to parties legally entitled
(rule 11.3). For example, under rule 11.1, PTO could request a sample be
furnished to it if the application referring to the deposit had been filed
with PTO. Under rule 11.2, a sample can be furnished to the depositor or any

authorized party the depositor names. Under rule 11.3, a sample can be
furnished to parties legally entitled as long as the industrial property
office makes various certifications, such as the party has a right to a
sample under the law governing patent procedure before that office.

Table 4 shows the extent to which samples of deposits have been provided
under rule 11 of the Budapest Treaty. It is also important to note that the
numbers in table 4 represent the number of times that samples have been
provided. If a sample of one deposit was provided on 10 different occasions
under rule 11.3, it would be counted as 10. Table 4: Number of Samples
Furnished by IDAs in 1999 Under Rule 11 of the Budapest Treaty

Number of samples furnished in 1999 under

International depositary authority Country Rule 11. 1 Rule 11. 2 Rule 11. 3

Australian Government Analytical Laboratories Australia 0 0 0 Belgian
Coordinated Collections of Microorganisms Belgium 0 8 0 National Bank for
Industrial Microorganisms and Cell Cultures Bulgaria 0 18 0 Bureau of
Microbiology at Health Canada Canada 0 0 0 China Center for Type Culture
Collection China a a a China General Microbiological Culture Collection
Center China a a a Czech Collection of Microorganisms Czech Republic a a a
Collection Nationale de Cultures de Micro- organismes France 0 14 15
Deutsche Sammlung von Mikroorganismen und Zellkulturen GmbH Germany 0 27 159
National Collection of Agricultural and Industrial Microorganisms Hungary 0
2 6 Advanced Biotechnology Center Italy 0 0 0 Collection of Industrial
Yeasts Italy 0 0 0 National Institute of Bioscience and Human- Technology
Japan 0 12 63 Microbial Strain Collection of Latvia Latvia 0 0 0

(Continued From Previous Page)

Number of samples furnished in 1999 under

International depositary authority Country Rule 11. 1 Rule 11. 2 Rule 11. 3

Centraalbureau voor Schimmelcultures Netherlands 0 2 4 Korean Cell Line
Research Foundation Republic of Korea a a a Korean Collection for Type
Cultures Republic of Korea 0 14 0 Korean Culture Center of Microorganisms
Republic of Korea 0 0 0 All- Russian Scientific Centre of Antibiotics
Russian Federation a a a Russian Collection of Microorganisms Russian
Federation 0 0 0 Russian National Collection of Industrial Microorganisms
Russian Federation 0 2 0 Culture Collection of Yeasts Slovakia 0 0 0
Colecciï¿½n Espaï¿½ola de Cultivos Tipo Spain 0 2 0 Culture Collection of Algae
and Protozoa United Kingdom 0 0 0 European Collection of Cell Cultures
United Kingdom 0 5 1 International Mycological Institute United Kingdom 0 6
0 National Collection of Type Cultures United Kingdom 0 0 0 National
Collection of Yeast Cultures United Kingdom 0 0 0 National Collections of
Industrial, Food and Marine Bacteria Ltd. United Kingdom 0 3 11 Agricultural
Research Service Culture Collection United States 0 12 123 American Type
Culture Collection United States b b 7,000 b

Total 0 127 7, 382

Notes: Under the Budapest Treaty, samples of deposits can be furnished to
industrial property offices (rule 11.1), to the depositor or with the
authorization of the depositor (rule 11.2), and to parties legally entitled
(rule 11.3). According to WIPO's February 2000 publication, Intellectual
Property Laws and Treaties, only 4 of the

31 approved IDAs accept deposits of seeds: the China Center for Type Culture
Collection; the National Institute of Bioscience and Human- Technology in
Japan: the National Collections of Industrial, Food and Marine Bacteria Ltd.
in the United Kingdom; and the American Type Culture Collection.

a WIPO has not reported 1999 data, and the IDA did not respond to our
request for data. b The 1999 number is an estimate from this IDA. This IDA
could not distinguish how many deposits were provided under rule 11. 1, rule
11. 2, and rule 11. 3. The IDA noted, however, that most of its distribution
is under rule 11. 3 since it complies with the U. S. rule on making the
deposit available. This IDA also cautioned that these numbers represent the
estimated

number of vials (samples) and not necessarily the number of deposits.
Source: GAO- developed data based on contacts with individual IDAs and WIPO.

Examination Time for Patents Issued From October Through December 1999 That
Were

Appendi x V

Supported by Biological Deposits in U. S. IDAs Table 5: Average, Lowest, and
Highest Examination Time for Seed and Other Patents Issued From October
Through December 1999 That Were Supported by Biological Deposits in U. S.
IDAs Examination time in months Number of Description patents Average Lowest
Highest

Seed patents 53 22. 6 6. 1 57. 6 All other patents 255 39. 9 8. 4 113. 1

Total 308 36. 9 6.1 113. 1

Note: Examination time, which PTO refers to as “pendency,” is
the period from the date when an application is filed until the date when a
patent is issued or the application is abandoned. Source: GAO analysis of
data from PTO's patent database.

Table 6: Ranges of Examination Time for Seed and Other Patents Issued From
October Through December 1999 That Were Supported by Biological Deposits in
U. S. IDAs Number of patents examined Greater than 18

Greater than 24 Greater than 30

More than 36 Description 0- 18 months to 24 months to 30 months to 36 months
months Total

Seed patents 17 23 3 7 3 53 All other patents 21 28 38 36 132 255

Total 38 51 41 43 135 308

Note: Examination time, which PTO refers to as “pendency,” is
the period from the date when an application is filed until the date when a
patent is issued or the application is abandoned. Source: GAO analysis of
data from PTO's patent database.

Comments From the United States Patent and

Appendi x VI Trademark Office

Appendi x VII

GAO Contacts and Staff Acknowledgments GAO Contacts (Ms.) Gary L. Jones,
(202) 512- 3841 John P. Hunt, Jr., (404) 679- 1822 Acknowledgments Kelly
Fitzgerald, Frankie Fulton, Bert Japikse, and Paul Rhodes also made key
contributions to this report.

(141410) Lett er

GAO United States General Accounting Office

Page 1 GAO- 01- 49 Biological Deposits in Support of Patents

Contents

Contents Page 2 GAO- 01- 49 Biological Deposits in Support of Patents

Page 3 GAO- 01- 49 Biological Deposits in Support of Patents United States
General Accounting Office

Washington, D. C. 20548 Page 3 GAO- 01- 49 Biological Deposits in Support of
Patents

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Appendix I

Appendix I Scope and Methodology

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Appendix II

Appendix II Historical Analysis of Biological Deposit Requirements

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Appendix II Historical Analysis of Biological Deposit Requirements

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Appendix II Historical Analysis of Biological Deposit Requirements

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Appendix II Historical Analysis of Biological Deposit Requirements

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Page 23 GAO- 01- 49 Biological Deposits in Support of Patents

Appendix III

Appendix III Biotechnology and the U. S. Economy

Page 24 GAO- 01- 49 Biological Deposits in Support of Patents

Appendix III Biotechnology and the U. S. Economy

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Page 26 GAO- 01- 49 Biological Deposits in Support of Patents

Appendix IV

Appendix IV Biological Deposits in the 31 International Depositary
Authorities Approved by the World Intellectual Property Organization

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Appendix IV Biological Deposits in the 31 International Depositary
Authorities Approved by the World Intellectual Property Organization

Page 28 GAO- 01- 49 Biological Deposits in Support of Patents

Appendix IV Biological Deposits in the 31 International Depositary
Authorities Approved by the World Intellectual Property Organization

Page 29 GAO- 01- 49 Biological Deposits in Support of Patents

Appendix IV Biological Deposits in the 31 International Depositary
Authorities Approved by the World Intellectual Property Organization

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Appendix V

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Appendix VI

Page 33 GAO- 01- 49 Biological Deposits in Support of Patents

Appendix VII

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