• The Federal Circuit rejects the patentability of ESTs
  • October 10, 2005
  • Law Firm: Dinsmore & Shohl LLP - Cincinnati Office
  • Casting a shadow of uncertainty over the validity of nearly 1200 issued biotech patents, and delivering a potentially fatal blow to tens of thousands of pending applications, a split panel of the Federal Circuit held that an invention directed to expressed sequence tags (ESTs) is unpatentable under 35 U.S.C. ยง 101 for lacking a specific and substantial utility. The court refused to allow that ESTs rise to the level of "research tools" and referred to them instead as "no more than research intermediates," that "may" be helpful, but which fail to provide "an immediate, well-defined, real world benefit to the public."

    An EST is a very short segment of an expressed gene. The nucleus of every somatic cell contains a full complement of an organism's DNA. Expression of a gene occurs when a cell activates it. However, a cell may only need a few genes, while the remainder of the DNA sits dormant. An EST, therefore, must, by virtue of it having been expressed in a cell, be a part of a gene that has a function in that cell. The EST can be used to identify an expressed gene and as a sequence-tagged site marker to locate that gene on a physical map of the genome.

    ESTs were first discovered and utilized as tools during the initial phases of the Human Genome Project. Patent applications directed to ESTs and the rapid sequencing method of producing them were soon filed, but abandoned after a 1992 USPTO ruling that gene fragments could not be patented unless the function of the gene is known. The NIH subsequently dedicated their ESTs to the public domain. The race to patent ESTs began in earnest when the NIH team leader, Charles Venter, left the NIH and joined forces with private interests.

    Fueled by concerns that EST patent applicants were attempting to stake out proprietary claims that extended beyond their actual achievement to include discoveries yet to be made by others, a critical outcry soon followed. ESTs clearly constitute a powerful research tool, though are of limited value without substantial subsequent development. Problematically for downstream licensing concerns, different ESTs from the same gene may be isolated by different groups of researchers, and a single EST may recognize more than one gene in a gene family. Hence EST is not specific enough to be the only marker for a gene or to be the marker for only one gene. The EST discovery process does not identify the underlying gene or what it does, it only indicates that a gene is present and that it does something.

    Judge Michel, writing for the majority, based the decision on a Supreme Court case holding that an invention must have a "substantial utility," and that a "specific benefit" must exist in "currently available form" to satisfy the utility requirement. The Federal Circuit adopted the USPTO position that a substantial utility defines a "real world use" and that utilities that require or constitute carrying out further research to identify or confirm a real world context of use are not substantial utilities. They dismissed the applicant's asserted uses as being so general as to be meaningless, since the utilities alleged by the applicants could apply to any EST derived from any organism. The Federal Circuit rejected the concept of an EST as a research tool because, on its own, an EST is unable to provide any information about the structure or function of an underlying gene. Specifically, the court held that until the corresponding genes and proteins have a known function, a claimed EST lacks utility.

    In a blistering dissent, Judge Rader appeared to suggest that the court "contorted" the utility analysis in order to achieve a desired outcome. Rader acknowledged, however, that the panel may have felt their hands tied by poor precedent that makes application of an effective nonobvious analysis to genomic inventions nearly impossible. Rader opined that ESTs are undeniably research tools, and, as with any research tool, there is never any assurance that a tool will discover anything of use, only that it is capable of doing so. Radar chastised his colleagues for failing to seek ways to apply the correct obviousness analysis.

    While rendering the value of some patent portfolios uncertain, others in the biotech and pharmaceutical industries applaud the decision as removing a stacked downstream licensing specter from genetic drug development. Given the stakes on both sides, this is an issue that is likely to wind its way to the Supreme Court.