International Research Interdisciplinary Ph.D. Programme Research Fellowships International Research Industry Cooperation

Max Weber Multidisciplinary Workshop, EUI Florence, October 10th, 2012 Agnieszka Kupzok, LL.M. IP Impact of Brüstle vs. Greenpeace on the biotechnological sector – first indications Biotech – broad: DNA/RNA : Genomics, pharmacogenomics, gene probes, genetic engineering, DNA/RNA sequencing/synthesis/amplification, gene expression profiling, and use of antisense technology. Proteins and other molecules : Sequencing/synthesis/engineering of proteins and peptides (including large molecule hormones); improved delivery methods for large molecule drugs; proteomics, protein isolation and purification, signaling, identification of cell receptors. Cell and tissue culture and engineering : Cell/tissue culture, tissue engineering (including tissue scaffolds and biomedical engineering), cellular fusion, vaccine/immune stimulants, embryo manipulation. Process biotechnology techniques : Fermentation using bioreactors, bioprocessing, bioleaching, biopulping, biobleaching, biodesulphurisation, bioremediation, biofiltration and phytoremediation. Gene and RNA vectors : Gene therapy, viral vectors. Bioinformatics : Construction of databases on genomes, protein sequences; modelling complex biological processes, including systems biology. Nanobiotechnology : Max Weber Multidisciplinary Workshop, EUI Florence, October 10th, 2012

Overview Context Impact on the European patent system Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Overview Context Impact on the European patent system Importance of patenting in the biotechnological sector Impact on the biotechnological sector Further considerations

Context Highly politicized topic September 18, 2012 Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Context Highly politicized topic September 18, 2012 Legal Affairs Committee of the European Parliament voted to exclude research funding for hESC from Horizon 2020 Framework Program for Research and Innovation. The Brüstle judgement of the CJEU was used as a convincing argument. Today, the Legal Affairs (JURI) Committee of the European Parliament voted to exclude research funding for human embryos and human embryonic stem cells from the Horizon 2020 Framework Programme for Research and Innovation (2014-2020). The amendment to exclude funding was proposed by the rapporteur of the JURI committee, Mr. Borys. The JURI committee is responsible for determining the ethical principles and legal accountability of grants allocated to research. Today’s vote is a critical first step in excluding embryonic stem cell research from European Union funding for research and innovation.

Impact on the European Patent System (I) Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Impact on the European Patent System (I) CJEU opined on the wording of the Biotech Directive EPO adopted the wording of the Biotech Directive in its Implementing Regulations, in 1999. Due to Article 53 EPC, issues affecting “ordre public” are included in the patentability inquiry of the EPO. Combined with Rule 28c of the Implementing Regulations, which implements Art. 6(2)(c) of the Biotech Directive, the interpretation of ECJ influences the patentability in all EPO Member States EPO President 2011: “If the judges rule in favour of a restrictive interpretation of biotech patentability provisions, the EPO will immediately implement it.” Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions It is worth remembering that the EPO is an international organisation and not part of the system of European Institutions. Biotech Directive Article 6.2: On the basis of [the ordre public/morality exclusion] the following, in particular, shall be considered unpatentable: (a) processes for cloning human beings; (b) processes for modifying the germ line genetic identity of human beings; (c) uses of human embryos for industrial or commercial purposes; (d) processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to man or animal, and also animals resulting from such processes.

Impact on the European Patent System (II) Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Impact on the European Patent System (II) EPO Member States = EU 27 + 11 States Brüstle v. Greenpeace CJEU’s judgements have an impact on the EU 27. Art. 6(2)(c) included in EPO Implementation Regulations, Rule 28; Together w/Art. 53 (a) EPC Interpretation of Directive 98/44/EC Art. 6(2)(c) 11 Other MS at the EPO are: Albania, Switzerland, Norway, Turkey, Serbia, Croatia, Liechtenstein, Monaco, FYROM, San Marino, Iceland.

EPO Scenarios for the Future – analytical tool Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 EPO Scenarios for the Future – analytical tool 4 Scenarios to approach the changing circumstances: Market Rules – Predominance of Business Who’s World – Predominance of Geopolitics Trees of Knowledge – Predominance of Society Blue Skies – Predominance of Technology Does European law permit patent protection for inventions the preparation of which requires the use of human embryos? WARF/Stem cells (Enlarged Bd, 2009 The EU and the EPC legislators must presumably have been aware of the definitions used in national laws on regulating embryos, and yet chose to leave the term undefined. Given the purpose to protect human dignity and prevent the commercialization of embryos, the Enlarged Board can only presume that ‘embryo’ was not to be given any restrictive meaning in Rule 28 … EPC, as to do so would undermine the intention of the legislator.

The biotechnological sector Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 The biotechnological sector Very innovative, dynamic, and characterized by a large amount of SMEs European Commission estimated in 2011 that the sector contributed 1,55% of gross value added in the EU. Biotechnology is the driving force in innovation processes in several industries (pharmaceuticals, agrochemical, energy, environment) Biotechnology is one of the most research-intensive sectors Protection of research results, especially due to the high portions of revenue invested in R&D plays an important role. biotechnology is increasingly recognized as the next wave in the knowledge-based economy. Biotechnology has been at the core of a number of important developments in the pharmaceutical, agrochemical, energy and environmental sectors. In particular, progress in the field of molecular biology, biotechnology and molecular medicine has highlighted the potential of biotechnology for the pharmaceutical industry. THE FACT THAT IT IS RESEARCH INTENSIVE IMPLIES THAT BIOTECH IS ALSO IS INVESTMENT INTENSIVE. SUCH COMBINATION MAKES THE SECTOR PRONE TO RISKS BECAUSE RESEARCH IMPLIES SPENDING RESOURCES IN THE PRESENT WITH AN UNCERTAIN BENEFIT IN THE FUTURE.

Patenting in the biotechnological sector Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Patenting in the biotechnological sector Allows to secure rights in this sector characterized by long development trajectories. Especially significant, as R&D is characterized by high costs of development and relatively low cost of imitation Is an essential component, when SMEs are established in the sector as spin-offs. Provide a contracting basis between “basic” research in the biotech sector and development of specific products and treatments by pharmaceutical companies. Patents are the main mechanism to secure intellectual property in this high-tech sector with long development trajectories. However, to secure the returns on investments in innovation, firms can A second important point to bear in mind about the biotechnology industry, is that there are generally very high costs for the development of new products and processes, but relatively low costs of imitation. The costs of performing biotechnology research are to be considered in the context of the high risks involved in any research project. It is hard to

Impact of Brüstle v. Greenpeace on the biotechnological sector Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Impact of Brüstle v. Greenpeace on the biotechnological sector Due to the investment intensive R&D in the biotechnological sector, inability to patent is expected to l lead to lower financing, especially seed financing and venture capital Lack of financing may function as a barrier to entry. Lack of proprietary rights may shift the structure of the sector toward “in-house” R&D by big pharmaceutical companies The guarantee to the investors that patents provide comes at a social cost of the society faced with higher prices charged by the company having exclusivity. Lack of patents in the hESC may lead to cheaper medication. Progenitor's and iPSCs Become the Alternative “Where’s the investment money today? It’s in processes and equipment that do embryonic stem cell research,” Grady J. Frenchick, an attorney in the intellectual property department of the law firm Whyte Hirschboeck Dudek S.C., told GEN. “All of that is potentially business to be had, and that’s where much of it lies today.” Frenchick also points to investor interest in “companies and inventions that will essentially be at the next stage of this process.” An example of such a company is Stem Cell Therapeutics (SCT). On May 18, it was awarded a U.S. patent for “platelet-derived growth factor (PDGF)-derived neurospheres define a novel class of progenitor cells.” The patent covers methods of using PDGF to produce neural progenitor populations that can differentiate into neurons and oligodendrocytes but not astrocytes. Dr. Daley noted, “Harnessing progenitors has considerable practical value. Finding the right recipes for making healthy tissues from pluripotent cells is a major challenge. Progenitors tend to be poised to make disease-relevant tissue, so a focus on deriving progenitors, which typically can be expanded to some degree, is appropriate.” SCT finished last year with a nearly $4.5 million loss, down $196,791 from 2009’s loss. Its working capital dropped from $4.1 million to $2.6 million but received a $2 million boost when SCT completed an equity offering last month. The patent it won last month can only help it reap more. Another way stem cell companies are trying to avoid investor jitters about hESC work is by focusing on induced pluripotent stem cells (iPSCs), reasoning that patients’ bodies would be unlikely to reject their own tissue. For example, on April 7, Cellular Dynamics closed on a $30 million series B private equity round. The firm has raised $100 million since 2004. But iPSCs are still a long way from being widely used in therapeutic development. On May 13, Nature published research by Yang Xu, Ph.D., and a team from University of California, San Diego showing a severe immune rejection in mice after they were implanted with iPSCs derived from their own skin cells. Dr. Xu’s team will study further which cells triggered the reaction, and under what conditions. The work was funded by NIH and CIRM.

However… Patenting is neither a guarantee nor a bar to market success Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 However… Patenting is neither a guarantee nor a bar to market success There are alternatives to patenting in securing benefits from investment: strategic business behavior, lead time. Territorial nature of patent law limits the bar on hESC to the EU + other EPO Member States. Territoriality implies that foreign firms will not obtain patents on hESC-related inventions in the EU, either. Territoriality of patent law also implies that researchers in Europe can apply for patents elsewhere, notably in the United States. Nature of innovation focuses on finding alternatives: Induced Pluripotent Stem Cells (iPSCs) (Nobel Prize 2012) Progenitors Progenitor's and iPSCs Become the Alternative “Where’s the investment money today? It’s in processes and equipment that do embryonic stem cell research,” Grady J. Frenchick, an attorney in the intellectual property department of the law firm Whyte Hirschboeck Dudek S.C., told GEN. “All of that is potentially business to be had, and that’s where much of it lies today.” Frenchick also points to investor interest in “companies and inventions that will essentially be at the next stage of this process.” An example of such a company is Stem Cell Therapeutics (SCT). On May 18, it was awarded a U.S. patent for “platelet-derived growth factor (PDGF)-derived neurospheres define a novel class of progenitor cells.” The patent covers methods of using PDGF to produce neural progenitor populations that can differentiate into neurons and oligodendrocytes but not astrocytes. Dr. Daley noted, “Harnessing progenitors has considerable practical value. Finding the right recipes for making healthy tissues from pluripotent cells is a major challenge. Progenitors tend to be poised to make disease-relevant tissue, so a focus on deriving progenitors, which typically can be expanded to some degree, is appropriate.” SCT finished last year with a nearly $4.5 million loss, down $196,791 from 2009’s loss. Its working capital dropped from $4.1 million to $2.6 million but received a $2 million boost when SCT completed an equity offering last month. The patent it won last month can only help it reap more. Another way stem cell companies are trying to avoid investor jitters about hESC work is by focusing on induced pluripotent stem cells (iPSCs), reasoning that patients’ bodies would be unlikely to reject their own tissue. For example, on April 7, Cellular Dynamics closed on a $30 million series B private equity round. The firm has raised $100 million since 2004. But iPSCs are still a long way from being widely used in therapeutic development. On May 13, Nature published research by Yang Xu, Ph.D., and a team from University of California, San Diego showing a severe immune rejection in mice after they were implanted with iPSCs derived from their own skin cells. Dr. Xu’s team will study further which cells triggered the reaction, and under what conditions. The work was funded by NIH and CIRM.

Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Conclusions Straightforward securing of investment through patenting is not possible for hESC-based research. Morality and “ordre public” considerations led to a limitation of rules governing technological progress. Alternative perspective could be to observe that EU polity is willing to sacrifice future economic gains in order to protect the dignity of human life. The CJEU judgment affects the biotechnological sector disproportionately strongly, due to the sector’s characteristics and reliance on the patent system. But other observers say the impact may be relatively minor. Europe-based companies can still file for patents in the United States and other countries where such protection is allowed. And any therapies using ES cells will have to go through significant regulatory hurdles before they are approved for use in Europe, notes Alexander Denoon, of the London law firm Lawford Davies Denoon, which specializes in biotechnology patents. "Under the current regulatory framework, it will be virtually impossible to convince a regulator to approve a generic," he said in a statement. "Thus the regulatory protection for approved medicines will be very high."

Thank you for you attention! Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Thank you for you attention! But other observers say the impact may be relatively minor. Europe-based companies can still file for patents in the United States and other countries where such protection is allowed. And any therapies using ES cells will have to go through significant regulatory hurdles before they are approved for use in Europe, notes Alexander Denoon, of the London law firm Lawford Davies Denoon, which specializes in biotechnology patents. "Under the current regulatory framework, it will be virtually impossible to convince a regulator to approve a generic," he said in a statement. "Thus the regulatory protection for approved medicines will be very high." agnieszka.kupzok@yahoo.com

Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 European Parliament

Agnieszka Kupzok Impact of “Brüstle“ on the Biotech sector October 10th, 2012 Bruestle Brüstle v Greenpeace eV (CJEU, 2011) 26. [‘Human embryo’] must be regarded … as designating an autonomous concept of European Union law… 29. [U]nlike Article 6(1) of the Directive, which allows the … Member States a wide discretion in applying the [public ordre/morality] exclusion from patentability … Article 6(2) allows the Member States no discretion with regard to the unpatentability of the processes and uses which it sets out, since [its] purpose is to delimit [Article 6(1)]… 34. The … European Union legislature intended to exclude any possibility of patentability where respect for human dignity could thereby be affected. It follows that the concept of ‘human embryo’ … must be understood in a wide sense. 45. That interpretation is … identical to that adopted by the Enlarged Board of Appeal of the European Patent Office [in Warf]… The goal of efficiency in Chicago law and economics manifests itself in the normative prescription that rights should be assigned in a way that maximizes the wealth of society.