Locating Gene Patents within the Patent System

In her skillfully written paper, Rebecca Eisenberg (2002) addresses the controversial issue of patenting human genes. Although this question has been settled as a matter of patent law, the idea of allowing patents on genes continues to stir much popular debate. Some of this debate is based upon the erroneous perception that a patent on a gene confers upon its owner some type of ownership claim over the human body. As Eisenberg points out, however, the gene in its natural state—in other words, in the body itself—is not the subject of patent claims. Rather, gene patents cover specific sequences isolated from their natural environment.

In his response to Eisenberg's paper, Evans (2002) makes the interesting point that the public (and religious) disquiet over gene patenting arises not from some sense that "we" are actually being "sold" or "owned" but rather from the expressive power of such patents. On this view, gene patents teach us that "we are creators, when in actuality God is the creator." This claim proves too much, however. A large percentage of biomedical intervention— including, but not limited, to all forms of assisted reproduction—could be attacked on the grounds that it allows human to "create" in a manner that God did not contemplate. In any event, the patent system is not the proper place to address moral disquiet founded in religion or other forms of noninstrumental morality. If such disquiet needs to be addressed, it should be addressed through separate legislation (Ho 2000).

Once the various noninstrumental concerns about gene patents are set aside, it becomes clear that the debate over whether gene patents should be granted (or, more accurately, the debate over whether the thousands of gene patents that have been granted are a net good) needs to be framed by the same instrumental goals that frame all patent debates. As Robertson (2002) rightly points out, gene patents—and related patents on genetic tests, which have recently garnered much attention (Merz et al. 2002)—are hardly sui generis as an economic matter.

Like all patents, gene patents impose significant costs. They require, for example, that the consumer—whether a patient potentially affected by the genetic disease or a scientist who wants to conduct further research using the patented gene—pay a supracompetitive price. Moreover, because patent licenses must be negotiated before patents can be used, the presence of patents may create significant transaction costs. Finally, to the extent that the patent holder is disinclined to license to competitors, patents may also impede creativity in follow-on research.

The costs associated with patents are hardly small. In some situations, however, these costs are outweighed by certain benefits—namely that patent rights provide incentives to generate invention and to develop that invention toward a commercial end product. In those situations we should presumably grant patents: not only do the benefits outweigh the costs on balance, but we can address at least some of the adverse distributional consequences—for example, reduced access to healthcare by poor and/or uninsured patients—on the demand side, through healthcare subsidies (Rai 2001).

Identifying accurately the situations where the economic advantages conferred by patents outweigh their disadvantages is a highly fact-specific task. Our patent statute wisely confers this task on institutions—the U.S. Patent and Trademark Office (PTO) and the courts—that can make such assessments on a case-by-case basis. In particular, such fact-specific patentability standards as nonobviousness and utility work relatively well as a proxy for the relevant economic considerations. For example, if coming up with a given invention is obvious, there is probably little need for a patent to provide the requisite incentive to invent.

To the extent that the PTO or the courts have inappropriately liberalized the nonobviousness or utility requirements, such laxity needs to be addressed. Fortifying nonobviousness and/or utility may exclude some applications for gene patents. But such fortification...