Unlimited License

An Analysis of the Canadian Biotechnology Advisory Committee's Report on Patenting Higher Life Forms
April 1, 2002

Public debates over controversial biotechnologies often revolve around questions about who will control them and what values will guide their development. Because patent policies shape the social, economic and legal environment for technological innovation and application, those concerned with the ethics and social implications of biotechnology have a significant stake in intellectual property issues.

Patents, which by definition reward inventors with monopoly rights in exchange for public disclosure of their inventions, harbour numerous tensions. For example, they encourage openness by granting exclusivity. They also create economic incentives for would-be innovators while generating new and often significant litigation and negotiating costs. Like all liberal economic policies, they strive, paradoxically, to attain a public benefit by encouraging private gain.

As nations go, Canada has long been unusually attentive to such tensions and fine-tuned its intellectual property polices to achieve the greatest good for the greatest number. From 1969 until 1993, for example, Canada permitted generic pharmaceutical manufacturers to infringe drug patents in exchange for mandatory royalty payments to patent holders. The policy of compulsory drug patent licensing enabled equitable access to pharmaceuticals at the expense--so the drug companies have maintained--of private investment in cutting-edge biomedical innovation.

Canada has also refused to award patents on higher life forms like plants and animals. Since Europe and Japan awarded a patent on a genetically engineered mouse in 1992, Canada is the last industrialized hold-out on higher life form patents. But a variety of factors, including pressure from international trade treaties, are prompting Canada to cede ground to those favouring strong intellectual property protections. The Canadian Biotechnology Advisory Committee,[1] which was established in 1998 to provide guidance to federal ministries on biotechnology issues, recently issued an interim report that recommends numerous changes to Canada's policies involving biotechnology patents.[2] Though several of CBAC's recommendations are to be welcomed, the report's tone and contents would suggest a poor prognosis for a future in which intellectual property policies protect the public interest.

On the positive side, CBAC urges that farmers who propagate patented seeds or animals or whose fields become contaminated with patented plant varieties be protected from infringement suits (these policies are called "farmer's privilege" and "innocent bystander protection," respectively). It also recommends a research exemption that would enable noncommercial scientists to conduct investigations on patented materials without fear of being sued for patent infringement. In researching the report, CBAC also solicited several highly informative reports on various aspects of biotechnology and patent law.[3]

But there are four major aspects of the CBAC report that I regard as highly problematic, among them CBAC's recommendation to extend intellectual property rights to higher life forms. In light of CBAC's decision to recommend patenting protection for higher life forms, I also object to the report's inattentiveness to such patents' effects on Medicare. Thirdly, I would urge that Canada adopt a policy that would exclude certain morally suspect innovative activities from patent protection. Finally, several other recommendations are noncommittal and should be replaced by more substantive recommendations.

1. Patenting Higher Life Forms

Critics of animal and plant patents have tended to object to them because of concerns over the commodification of life, animal rights, and dismissal of indigenous knowledge. Though I am sympathetic to such views, my objections are grounded on a different set of concerns. Above all, I was not persuaded by CBAC's arguments favouring extension of patent coverage to higher life forms. CBAC argued, firstly, that patenting fosters "openness and innovation." But there are many preferable mechanisms available to achieve openness and innovation, principle among them government sponsorship of research. Animal and plant breeding have a long history in the U.S. of openness and innovation in the absence of patents through publicly sponsored agricultural extension services and land-grant university programs. On the contrary, patents may work counter to such public openness by "lubricating," in one commentator's words, relationships between universities and private industry that erode openness.[4]

Though patents themselves involve public disclosure (since patents require that inventors make the details of their invention public), the commercial culture they nourish can undermine openness by reorienting research priorities toward market imperatives, increasing the frequency and intensity of conflicts of interest, and encouraging proprietary activities that involve suspending data and materials sharing. Indeed, in one study conducted by a team of researchers under the leadership of Harvard's David Blumenthal, 20% of surveyed academic life-science researchers reported delaying publication of their results by at least 6 months because of intellectual property related issues.[5]

CBAC also claimed that patents foster innovation, but here the jury seems to be out. Although the evidence seems to support CBAC's claims with respect to chemicals and pharmaceuticals, the same might not hold for biotechnologies, which generally involve more components. A xenotransplant organ product, for example, might involve patents covering an animal used to harvest an organ, the organ itself, transgenes that influence its therapeutic properties, vectors used to deliver these transgenes, genetic regulators contained on the transgene vector, a transgene vector delivery method, etc. As the complexity of inventions increases, the transaction costs of negotiating licenses among separate patent holders give rise to economic inefficiencies that can exceed any incentives conferred by limited monopoly rights.[6] Patents can also deter innovation when "reach-through" provisions that exact royalties from any downstream applications of a particular technology are tacked onto licensing agreements.

CBAC's argument that patents are necessary for Canada to attract investment for R&D or to remain competitive is simply not borne out by the facts. According to survey data collected under contract for Industry Canada, "intellectual property protection was not perceived as a barrier" by Canadian biotechnology firms, regardless of their economic sectors. The report attributes this observation to Canada's small market size compared to U.S., Europe and Japan.[7] This leaves Canada with a peculiar--though not necessarily the most ethically consistent--possibility of having its patented crops and cattle and eating them too, as it were. Since others recognize patents on such materials, Canada has the option of expressing a morally enlightened patent policy while not suffering the economic consequences.

Absent very compelling rationales, I oppose any erosion of the public domain. This issue--identified only indirectly in CBAC's report as "Abuse of Economic Power" (somewhat inaccurately, I might add, since concerns can arise in the absence of "abuse" or "multinational corporations") --pertains to the fact that patents withdraw materials, methods and information from public ownership. I find this especially problematic in the life sciences, since much of the basic research leading up to inventions is underwritten by taxpayers. To quote Duke University legal scholar James Boyle, "If we undervalue the public domain, we will tend to give too many intellectual property rights, thus delivering a powerful anti-competitive, oligopolistic chunk of state-backed market power into the hands of established players. Result? Authors and creators lose. We all lose."[8]

Boyle raises another related objection to extending patent rights into novel areas that is only obliquely mentioned in CBAC's report.[9] This involves questionable and outmoded notions of "inventorship" in patent law: how can patents be assigned to small groups of individuals when many others make important contributions to the inventive process? Research leading up to development of a genetic test for Canavan disease, for example, was initiated by a group of families and foundations that recruited medical researchers, assembled registries of afflicted families, collected tissue samples, and provided pilot funding for early studies. Nevertheless, when scientists at Miami Children's Hospital obtained a patent on the so-called Canavan gene, the families and foundations who had actively participated in the research were omitted from the patent's title. Though the Canavan patent raises numerous concerns beyond the scope of this analysis, my point is that "inventorship" might just as easily have been awarded to the families and foundations that initiated the research in the first place. In the aftermath of the patent award, a once "free" and widely available genetic test (sponsored by one of the foundations involved in the initial research) became significantly more expensive, and Canavan gene testing was restricted to a handful of medical centre licensees.

Perhaps the Canavan families and foundations should have been more savvy about negotiating prospective patent rights with Miami Children's Hospital before they began supporting its research. Nevertheless, patents are designed to induce innovative activity by preventing would-be inventors from freeriding off the labours of others. In the case of the Canavan patent, an outmoded notion of inventorship enabled the Miami Children's Hospital to freeride off the efforts of the families and foundations. Such problematic patent awards run the risk of eroding public values that underpin health care, such as altruism and trust. In doing so, they further damage the values that allow a public sphere to exist in the first place.

2. The Health Care System

There are few reports in the scholarly literature examining the effects of patents on health care costs, quality and access, and therefore I endorse CBAC's recommendation that the federal government support research on such matters. However, I am utterly at a loss to understand how CBAC can justify leaping to liberalize Canadian patent law without having first looked to its effects on Canada's health care system. To my knowledge, CBAC did not solicit any reports on the effects of patents on Medicare prior to issuing its report.

In the absence of measures like compulsory licensing or pricing regulations, patents may inadvertently undermine public institutions like Medicare by granting patent holders the right to demand extravagant rents on life-saving inventions. Although I am unaware of any scholarly literature documenting an antagonistic relationship between intellectual property regimes and publicly-financed health care, there are logical as well as circumstantial reasons to be concerned. For instance, the prescription drug industry notoriously benefits from strong intellectual property regimes, but expenditures on prescription drugs are growing faster than any other category of health care spending. At the same time, our neighbours to the south, who enjoy the strongest life-science intellectual property protections, also suffer the most expensive and inegalitarian health care system in the industrialized world.

Despite the fact that it enjoys the world's most developed system of biomedical innovation, for the most part the U.S. does worse than any other industrialized nation on public health measures like longevity, infant mortality, and years of productive life lost. There are historical reasons beyond the scope of this analysis to believe that the U.S. emphasis on private incentives (of which patents are an important example) have contributed to its poor public health performance.

Inflationary trends, which would likely be aggravated by strong intellectual property protections, pressure health care providers to delist services. Survey data reported by Jon Merz and his collaborators at the University of Pennsylvania Center for Bioethics indicate that patents often deter pathology laboratories from providing diagnostic services. They also report that uncertainty due to bankruptcies or mergers of patent holding companies can also delay the dissemination and utilization of critical gene tests.[10] Effects on pricing and availability can lead to depriving low-income people of essential interventions while weakening the resolve of more affluent populations to remain in a public system. In medicine, the Hippocratic dictum "at least, do no harm" trumps all other ethical norms governing medical intervention. In the absence of reliable information showing likely shared health care benefits, "doing no harm" on life science patents means staying the course on Canada's restrictive patent regimes.

3. Allowing Values to Guide Patent Policy

I believe strongly that Canada's patent law should incorporate provisions for public order objections, which would prevent morally problematic inventions from receiving patent protection. I was therefore disappointed that the CBAC opted not to clearly endorse such a policy in its interim report. As CBAC's report acknowledges, patents "are not socially and ethically neutral," since they reward certain types of activity (e.g., particular forms of invention) while penalizing others (e.g., infringement). Moreover, definitions as to what constitutes patentable matter and judgments of "utility" or "non-obviousness" are conditioned by a nation's sociopolitical values, as revealed by various controversies surrounding patents involving indigenous knowledge. It therefore seems folly to pretend that value judgments can or should be excluded from the process by which a patent office awards titles.

CBAC laudably keeps the door ajar to explicit consideration of moral values by recommending that human beings be excluded from patentability. The question thus is not whether values should guide the awarding of patents, but rather which values, and why.

I regard intellectual property as a body of law designed to help a society achieve its policy objectives. Since innovation is generally considered a public good, liberal patent regimes are consistent with a public consensus that technological innovation benefits society. Yet an unqualified commitment to technological innovation, in my view, seems obsolete. While on balance technologies have made our lives immeasurably better, they have also enabled some of the 20th century's most grotesque horrors.

The tailoring of intellectual property laws to achieve policy objectives has a long history in this country. But even in the laissez-faire U.S., patent laws have long been used to achieve policy ends as well. For instance, until the mid-20th century, patents on inventions deliberately designed to defraud or promote what was to contemporary society regarded as depravity (e.g., gambling devices) were routinely denied. Patent filings on nuclear devices with military applications, though sanctioned by the U.S. PTO, undergo special review by the Department of Defense, which reserves the right to retain title to any patent in exchange for compensating the original patent holder. This policy is intended not so much to deter innovation as to ensure that patent rights don't fall into the wrong hands. Though the aim is national security rather than morality, I see no reason why such a model couldn't be extended to particular life science innovations that entail menacing social and ethical implications.

Areas might exist where limiting patent coverage--by either banning patents outright or reserving the government's right to claim patent titles--would remove incentives for undertaking socially problematic research, while expressing a society's revulsion toward particular innovative activities. Thus, while rendering a particular class of inventions (like techniques to modify the human germ-line) unpatentable would not by itself prevent its development and use, such a prohibition would provide an extra layer of protection against the development of morally problematic inventions. Moreover, unlike restrictions on federal R&D activities, patent restrictions would have the advantage of reaching both the private and public sectors.

Since Europe and Japan already have public order clauses in their patent acts, enactment of such provisions in Canada would not be a significant departure from international practice. Moreover, I strongly believe Canada should adopt provisions in its patent code that enable third parties to challenge patents on grounds of public order, as was recently done when Germany challenged a European Patent Office patent award on a technique involving human germ-line modification.

4. Gesture versus Substance

Several other recommendations, although praiseworthy on their face, are phrased so weakly in the interim report as to raise questions about the seriousness of CBAC's concerns.

For instance, CBAC's recommendation that Canada actively participate in international negotiations on liability issues pertaining to biotechnology patents is too weak to be meaningful. Canada should take the lead in such negotiations and develop a stringent and unambiguous domestic policy that would hold patent holders liable for undesired spreading or contamination due to their products. Liability law, besides compensating injured parties, is a useful policy instrument for ensuring that innovators incorporate safety considerations in their products' designs.

I also object to the almost meaningless though nice-sounding recommendation to exclude "human beings" from patentability. CBAC should clarify its commitment to such a provision by describing what it means precisely. Would CBAC urge a ban on patenting human embryonic stem cells? If so, at what stage of potency? What about gametes? It should also be noted that, although Canada's Assisted Human Reproduction Act would prohibit practices like germ-line modification, nearly a decade has passed since a Royal Commission recommended a ban on such practices, and the fate of the pending bill remains very much uncertain. The hazards of this parliamentary torpor would be partly mitigated by provisions in the patent code that ban patents on such techniques.

CBAC has also recommended that federal granting councils and other relevant bodies "explore" options for "sharing the benefits of research with communities or populations involved in the research." This recommendation seems unduly tepid; why not urge that federal councils develop options rather than simply "exploring" them?

The stakes of patent legislation are especially high as today's knowledge economy supplants yesterday's manufacturing economy. It is perhaps not overstating matters to say that patent law will determine who, to use writer Seth Shulman's phrase, will "own the future."[11] At the same time, intellectual property law may represent an untapped body of law for achieving nuanced policy objectives related to a society's social, economic, political and moral values. For instance, if patents do indeed stimulate life-science invention (and there are reasons to think that they might not), patent law might offer society a mechanism to moderate the frenzied pace of technological change in controversial areas so that our moral and political institutions can "catch up."

Regardless, assuring that progressive political values guide the research, development, and application of life-science technologies will require that such values have a greater presence in discussions about patent policy.


  1. The CBAC has garnered criticism from the Left, which objects to the committee's industry-weighted membership and chairman Arnold Naimark, whose review of the Olivieri affair on behalf of the Hospital for Sick Children in Toronto was very controversial.
  2. Available at http://cbac.gc.ca/documents/IP_biotech_en.pdf
  3. Available at http://cbac.gc.ca/english/reports/ip.aro
  4. Leonard John Deftos. Harvard v. Canada: The myc Mouse That Still Squeaks in the Maze of Biopatent Law. Academic Medicine 76, 7 (2001): 684-92
  5. David Blumenthal et al. "Withholding Research Results in Academic Life Science: Evidence From a National Survey of Faculty." JAMA 277, 15 (1997): 1224-8.
  6. See for example M.A. Heller and R.S. Eisenberg. "Can patents deter innovation? The anticommons in biomedical research." Science 280, 5364 (1998):698-701
  7. James G. Heller Consulting Inc. "Background Economic Study of the Canadian Biotechnology Industry." June 1995. (available at http://strategis.ic.gc.ca/SSG/ip00109e.html)
  8. James Boyle. Shamans, Software and Spleen: Law and the Construction of the Information Society. Cambridge: Harvard University Press (1996) at 179.
  9. ibid.
  10. Jon F. Merz et al. "Diagnostic testing fails the test." Nature 415, (2002): 577-579.
  11. Seth Shulman. Owning the Future. New York: Houghton Mifflin Co. (1999).

Jonathan Kimmelman is a CCPA Research Associate with a Ph.D. in Molecular Biophysics and Biochemistry.